8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

February 13, 2004 (January 30, 2004)

Date of Report (Date of earliest event reported)

EPIQ SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

Missouri	0-22081	48-1056429
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

501 Kansas Avenue

Kansas City, KS 66105

(Address of principal executive offices)

(913) 621-9500

(Registrant’s telephone number, including area code)

Item 2.  Acquisition or Disposition of Assets

On January 30, 2004, the Registrant acquired Poorman-Douglas Corporation for approximately $115 million in cash.  Poorman-Douglas is a leading provider of technology-based products and services for class action, mass tort and bankruptcy case administration with revenue of $63.6 million for its fiscal year ended September 30, 2003.  The acquisition was effected through a reverse merger of P-D Holding Corp. (the parent corporation of Poorman-Douglas Corporation) into a wholly-owned subsidiary of the Registrant formed for that purpose.  The Registrant will operate Poorman-Douglas as a wholly-owned subsidiary from its current location in metropolitan Portland, Oregon.  The Registrant funded the acquisition with a combination of cash on hand and $92 million in borrowings under the $100 million credit facility described below.  Poorman-Douglas did not have any long-term indebtedness as of the closing date.

In connection with the acquisition, Jeffrey B. Baker, chief executive officer of Poorman-Douglas and Edward J. Nimmo, president of Poorman-Douglas, entered into four-year employment agreements with Poorman-Douglas Corporation, to continue in those capacities.  The employment agreements include customary provisions regarding base and incentive compensation, severance benefits upon certain terminations of employment, confidentiality and intellectual property provisions, and non-competition and non-solicitation provisions.  As an inducement to enter into the employment agreements, the Registrant granted stock options to Messrs. Baker and Nimmo for 200,000 shares and 100,000 shares respectively.  The options are 10-year options, with an exercise price of $18.20 per share and vest 20% per year on the first five anniversaries of the grant date.

The Registrant funded a portion of the purchase price with a $100 million syndicated credit facility arranged by LaSalle Bank National Association.  The credit facility consists of a $45 million senior term loan, a $30 million subordinated term loan and a $25 million senior revolving credit loan.  The senior term loan requires quarterly principal payments of $4.5 million beginning April 30, 2004, and matures on July 31, 2006.  The subordinated term loan and the revolving loan require interest only payments and mature on December 31, 2006, and July 31, 2006, respectively.

Interest on the credit facility is generally based on a spread over the LIBOR rates.  The credit facility contains financial covenants related to EBITDA, total debt and interest charges, and is secured by liens on real property and a significant portion of the Registrant’s personal property.

Item 7.  Financial Statements and Exhibits.

(a) and (b)Financial Statements and Pro Forma Financial Statements.

The financial statements required by Items 7(a) and (b) of Form 8-K will be filed by the Registrant on or before April 14, 2004.

(c)Exhibits.

The following exhibits are filed herewith:

10.1Agreement and Plan of Merger among P-D Holding Corp., the Registrant, PD Merger Corp., and Endeavour Capital Fund III, L.P., in its capacity as Shareholders’ Representative, dated as of January 30, 2004.

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10.2Agreement Related to Merger Agreement among the Registrant, P-D Holding Corp., certain shareholders of P-D Holding Corp. and Endeavour Capital Fund III, L.P., in its capacity as Shareholders’ Representative, dated as of January 30, 2004.

10.3Employment and Non-Competition Agreement between Poorman-Douglas Corporation and Jeffrey B. Baker dated as of January 30, 2004.

10.4Employment and Non-Competition Agreement between Poorman-Douglas Corporation and Edward J. Nimmo dated as of January 30, 2004.

10.5Stock Option Agreement between the Registrant and Jeffrey B. Baker dated as of January 30, 2004.

10.6Stock Option Agreement between the Registrant and Edward J. Nimmo dated as of January 30, 2004.

10.7Credit Agreement among the Registrant, Bankruptcy Services LLC and Poorman-Douglas Corporation, as Borrowers; the various financial institutions party thereto, as Lenders; LaSalle Bank National Association, as Administrative Agent; and Keybank National Association, as Syndication Agent; LaSalle Bank National Association, as Arranger, dated as of January 30, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EPIQ SYSTEMS, INC.
Date:  February 13, 2004
	By:	/s/ Tom W. Olofson
	Name:	Tom W. Olofson
	Title:	Chairman of the Board, Chief Executive Officer and Director

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EX-10.1

Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

by and among

P-D HOLDING CORP.,

EPIQ SYSTEMS, INC.,

PD MERGER CORP.

and

THE SHAREHOLDERS’ REPRESENTATIVE
IDENTIFIED HEREIN

Dated as of January 30, 2004

TABLE OF CONTENTS

ARTICLE I DEFINITIONS
1.1	Definitions
1.2	Other Definitions
ARTICLE II THE TRANSACTIONS
2.1	The Merger
2.2	Effective Time of the Merger
2.3	Effect of Merger
2.4	Closing
ARTICLE III THE SURVIVING CORPORATION
3.1	Articles of Incorporation
3.2	By-Laws
3.3	Directors
3.4	Officers
ARTICLE IV CONVERSION OF SHARES
4.1	Conversion of Shares
4.2	Dissenters’ Rights
ARTICLE V PAYMENT OF MERGER CONSIDERATION
5.1	Merger Consideration
5.2	Initial Payment
5.3	Post-Closing Adjustment
ARTICLE VI CONDITIONS TO CLOSING
6.1	Conditions to Parent’s and Merger Sub’s Obligations
6.2	Conditions to the Company’s Obligations
ARTICLE VII RESERVED
ARTICLE VIII REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
8.1	Organization; Corporate Power
8.2	Capital Stock and Related Matters
8.3	Authorization; No Breach
8.4	Subsidiaries
8.5	Financial Statements; Accounts Receivable
8.6	Absence of Undisclosed Liabilities
8.7	No Material Adverse Effect
8.8	Absence of Certain Developments
8.9	Assets.
8.10	Contracts and Commitments.
8.11	Intellectual Property Rights.
8.12	Litigation
8.13	Compliance with Laws
8.14	Environmental Matters
8.15	Employees
8.16	Employee Benefit Plans.
8.17	Tax Matters

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8.18	Brokerage
8.19	Bank Accounts
8.20	Affiliate Transactions
8.21	Customers and Suppliers
8.22	Accuracy of Written Due Diligence Materials
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
9.1	Organization and Power
9.2	Authorization
9.3	No Violation
9.4	Governmental Authorities and Consents
9.5	Litigation
9.6	Conduct of Business; Liabilities
ARTICLE X RESERVED
ARTICLE XI ADDITIONAL AGREEMENTS
11.1	Survival
11.2	Indemnification
11.3	Press Release and Announcements
11.4	Expenses
11.5	Further Assurances
11.6	Certain Tax Matters
11.7	Appointment of Shareholders’ Representative
11.8	Collection of Accounts Receivable
ARTICLE XII MISCELLANEOUS
12.1	Amendment and Waiver
12.2	Notices
12.3	Assignment
12.4	Severability
12.5	Interpretation
12.6	Complete Agreement
12.7	Counterparts
12.8	Governing Law
12.9	Schedules
12.10	No Third Party Beneficiaries
12.11	Dispute Resolution

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of January 30, 2004, is made by and among P-D Holding Corp., an Oregon corporation (the “Company”), EPIQ Systems, Inc., a Missouri corporation (“Parent”), PD Merger Corp., an Oregon corporation (“Merger Sub”), and the Shareholders’ Representative (solely in its capacity as the Shareholders’ Representative) identified in Section 11.7 hereof.

WHEREAS, the respective boards of directors of the Company, Parent and Merger Sub have each determined that it is in the best interests of their respective shareholders for Merger Sub to merge with and into the Company, and, accordingly, each has approved this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth herein;

WHEREAS, consummation of the transactions contemplated hereby requires the approval of (i) the holders of at least a majority of the issued and outstanding shares of the Company’s common stock, no par value per share (the “Company Common Stock”), and (ii) the holders of at least a majority of the issued and outstanding shares of Merger Sub’s common stock, no par value per share (the “Merger Sub Common Stock”); and

WHEREAS, as an inducement to Parent and Merger Sub to enter into this Agreement and consummate the transactions contemplated hereby, certain shareholders of the Company collectively holding 92.37% of the shares of Company Common Stock outstanding as of the date of this Agreement (collectively, the “Controlling Shareholders”) have executed the Related Agreement, pursuant to which, among other things, the Controlling Shareholders have (without limiting any obligations the Company Shareholders may have hereunder, pursuant to law or otherwise) expressly agreed to take certain actions and comply with certain obligations of the Company Shareholders described herein;

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants, agreements and conditions contained herein, and in order to set forth the terms and conditions of the Merger and the mode of carrying the same into effect, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such Person.

“Affiliated Group” means any affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign income Tax law) of which the Company or any of its Subsidiaries is or has been a member.

“Aggregate Base Purchase Price” means $115,000,000.00

“Aggregate Deemed Option Exercise Proceeds” means $5,585.00, which represents the aggregate exercise proceeds that would have been payable to the Company if all Vested Company Options outstanding immediately prior to the Closing had been exercised as of immediately prior to the Closing.

“Aggregate Series A Preferred Purchase Price” means $15,651,075.72, which represents the aggregate Series A Preferred Purchase Price calculated with respect to all shares of Series A Preferred Stock outstanding on the Closing Date and the Series A Preferred Purchase Price with respect thereto.

“Applicable Rate” means the prime rate of interest as published from time to time in The Wall Street Journal.

“Audited September 2003 Financial Statements” means the Company’s consolidated financial statements (including its consolidated balance sheet, income statement and statement of cash flows) as of, and for the twelve-month period ending, September 30, 2003, which financial statements have been prepared in accordance with GAAP consistently applied throughout the periods covered thereby and the requirements of Regulation S-X of the Securities Act of 1933, as amended.

“Cash on Hand” means, as of any time of determination, the Company’s and its Subsidiaries’ actual consolidated cash (bank) balances (net of any bank overdrafts and net of any restricted cash balances), as adjusted (to avoid duplication or for any other appropriate reason) for any deposits in transit, any outstanding checks and any other proper reconciling items, in each case as determined in accordance with GAAP (it being understood that, for the avoidance of doubt, outstanding checks shall include (and Cash on Hand shall be reduced by) the amount of any checks written to recipients of the Tax Bonus Payment but not otherwise delivered to the recipients thereof, or otherwise cleared, as of the Closing).

“Code” means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

“Company Disclosure Schedules” means the disclosure schedules described in Article VIII of this Agreement.

“Company Shareholders” means the holders of the outstanding shares of capital stock of the Company (including holders of Vested Company Options) as of the Closing.

“Confidentiality Agreement” means that certain Confidentiality Agreement, made and entered into as of August 27, 2003, by and between Parent and Poorman-Douglas Corporation (as amended, the “Confidentiality Agreement”).

“Distribution Errors” means any error or omission by the Company or any of its Subsidiaries with respect to any distribution of client funds prior to the Closing, whether in connection with a class action lawsuit, a bankruptcy case or otherwise.

“Deemed Number of Shares Outstanding” means 13,988,344, which represents the aggregate number of shares of Company Common Stock outstanding as of the Closing, plus the number of shares of Company Common Stock issuable upon exercise of the Vested Company Options outstanding as of immediately prior to the Closing.

“Employment Agreements” means, collectively, the employment and non-compete agreements in the form of Exhibits A and B attached hereto.

“Environmental Requirements” means all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law, in each case concerning public health and safety, worker health and safety, exposure to hazardous substances or materials, pollution or protection of the environment, each as now in effect.

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“Escrow Agent” has the meaning given to such term in the Escrow Agreement.

“Escrow Agreement” means the escrow agreement in the form of Exhibit C attached hereto.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Estimated Aggregate Common Purchase Price” means $ 98,629,509.28, which represents the Final Aggregate Common Purchase Price as estimated by the parties immediately prior to Closing.

“Estimated Per Share Common Price” means $7.05, which represents the Final Per Share Common Price as estimated by the parties immediately prior to Closing.

“Executives” means each of Jeffrey B. Baker and Edward J. Nimmo.

“Final Determination Date” means the date the Closing Statement becomes final and binding on the parties hereto in accordance with Section 5.3(a) hereof.

“Fundamental Representations” means the representations and warranties set forth in Section 8.2 (Capital Stock and Related Matters); the first two sentences of Section 8.3 (Authorization; No Breach); Section 8.4 (Subsidiaries); Section 8.17(b)(ix) (Tax Matters); and Section 8.18 (Brokerage).

“GAAP” means United States generally accepted accounting principles, as in effect from time to time.

“Guaranty” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable for the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the ordinary course of collection), or guaranties of the payment of dividends or other distributions upon the shares of any other Person.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Indebtedness” means, with respect to any Person at any date, without duplication:  (i) all obligations of such Person for borrowed money or in respect of loans or advances, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or debt securities, (iii) all obligations in respect of letters of credit and bankers’ acceptances issued for the account of such Person, (iv) all obligations arising from bank overdrafts, (v) all obligations arising from deferred compensation arrangements and all obligations under severance plans or arrangements, bonus plans or similar arrangements payable as a result of the consummation of the transactions contemplated hereby (excluding any unpaid portion of the “Transaction Bonuses” described in Sections 8.6 and 8.8 of the Company Disclosure Schedules, it being understood that any such unpaid amounts shall constitute current liabilities for purposes of determining Net Working Capital and Closing Working Capital), (vi) all obligations of such Person secured by a Lien, (vii) all Guaranties of such Person in connection with any of the foregoing, (viii) all capital lease obligations, (ix) all deferred rent, (x) all indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables incurred in the ordinary course of business which are not more than 30 days past due based on the due date specified in the invoice thereof, or if no due date is specified in the invoice or no invoice exists, then based on past custom and practice), (xi) all other liabilities classified as non-current liabilities in accordance with GAAP as of the date of determination of such Indebtedness (other than any deferred Taxes), and (xii) all accrued interest, prepayment premiums or penalties related to any of the foregoing.  For the avoidance of doubt, Indebtedness shall not include any deferred gain recorded in connection with the sale and leaseback of the Company’s corporate headquarters in September 2003.

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“Indemnity Escrow Account” means the indemnity escrow account established pursuant to the terms of the Escrow Agreement.

“Indemnity Escrow Amount” means an amount equal to $10,000,000.00.

“Indemnity Escrow Release Date” means the date that is 18 months after the Closing Date.

“Intellectual Property Rights” means any and all intellectual and industrial proprietary rights of every kind and description, including (i) patents, patent applications, inventions (whether patentable or unpatentable and whether or not reduced to practice), discoveries, improvements, ideas and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (ii) trademarks, service marks, trade dress, trade names, logos, corporate names, and rights in vanity telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all registrations and applications for registration thereof and including all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works, and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) Internet domain names (and all associated content), Internet Web sites and registrations or applications for registration thereof, (vi) computer software (including source code, executable code, data, databases and documentation), (vi) trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, technical data, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), and (viii) claims or causes of action arising out of or related to infringement or misappropriation of any of the foregoing.

“Investment” as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interest (including limited liability company interests, partnership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

“Knowledge” means, when referring to the “Knowledge” of the Company, or any similar phrase or qualification based on knowledge or awareness with respect to the Company, (i) the actual knowledge of any of Jeff Baker, Edward Nimmo or Paul Meade, and (ii) the knowledge that any such Person referenced in (i) above, as a prudent business person, would have obtained in the conduct of his or her business.

“Lien” means any mortgage, pledge, hypothecation, lien (statutory or otherwise), preference, priority, security interest, community property interest, security agreement, easement, covenant, restriction or other encumbrance of any kind or nature whatsoever.

“Management Agreements” means that certain Transaction and Management Services Agreement, dated as of March 2, 2001, by and between Shawmut Capital Partners, Inc. and Poorman-Douglas Corporation, as amended, and that certain Transaction and Management Services Agreement, dated as of March 2, 2001, by and between Endeavour Capital, LLC and Poorman-Douglas Corporation, as amended.

“Material Adverse Effect” means any material adverse effect or development on the business, operations, assets, liabilities, financial condition, operating results or cash flow of the Company and its Subsidiaries taken as a whole; provided, however, that changes in GAAP and changes in general economic conditions in the United States shall not be considered in determining whether a Material Adverse Effect has occurred.

“Net Working Capital” means, as of any date of determination, the amount by which the Company’s and its Subsidiaries’ total current assets (excluding Cash on Hand and any current deferred Tax assets) on a consolidated basis as of such date exceeds the Company’s and its Subsidiaries’ total current liabilities (including, for the avoidance of doubt, any unpaid portion of the “Transaction Bonuses” described in

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Sections 8.6 and 8.8 of the Company Disclosure Schedules, and excluding the current portion of any Indebtedness, the current portion of any deferred gain recorded in connection with the sale and leaseback of the Company’s corporate headquarters in September 2003, and any current deferred Tax liabilities) on a consolidated basis as of such date, determined in accordance with GAAP on a basis consistent with the methodologies, practices and principles used in the preparation of the Audited September 2003 Financial Statements (except as otherwise provided in this definition and without regard to any purchase accounting adjustments arising out of the transactions contemplated hereby); provided that, for purposes of calculating Net Working Capital, the amount of any current asset or current liability with respect to Taxes shall be determined by (x) excluding (except as provided in clause (y) below) any item of deduction or loss arising in connection with or as a result of the transactions contemplated hereby (including any items arising in connection with or as a result of payments with respect to (i) shares of Company Common Stock that have become or will become vested upon or in connection with the consummation of the transactions contemplated hereby, or (ii) Vested Company Options), and (y) including (1) any item of deduction or loss arising in connection with or as a result of the payment of the Tax Bonus Payment, and (2) items of deduction or loss (if any) arising in connection with or as a result of the payment by the Company of no more than $150,000 for insurance premiums with respect to an errors and omissions insurance policy.

“OBCA” means the Oregon Business Corporation Act, as amended from time to time.

“Per Share Escrow Amount” means $0.836, which represents an amount equal to the quotient determined by dividing (i) the sum of (x) the Indemnity Escrow Amount, (y) the Purchase Price Escrow Amount, and (z) the Shareholder Representative Escrow Amount, by (ii) the Deemed Number of Shares Outstanding.

“Permitted Liens” means (i) Liens that are set forth on the Permitted Liens Schedule attached hereto, (ii) Liens for Taxes not delinquent or the validity of which are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established on the Company’s financial statements in accordance with GAAP consistently applied, and (iii) statutory landlord’s, carrier’s, workmen’s, repairmen’s or other similar Liens arising or incurred in the ordinary course of business.

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, entity or governmental entity (whether foreign, federal, state, county, city or otherwise and including any instrumentality, division, agency or department thereof).

“Pro Rata Share” means, with respect to a Company Shareholder, the number of shares of Company Common Stock held by such Company Shareholder immediately prior to the Closing, divided by the Deemed Number of Shares Outstanding.

“Purchase Price Escrow Account” means the purchase price escrow account established pursuant to the terms of the Escrow Agreement.

“Purchase Price Escrow Amount” means $1,500,000.00.

“Realty Leases” means all leases, subleases, licenses, concessions and other agreements pursuant to which the Company or any of its Subsidiaries holds any Leased Realty, including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company or its Subsidiaries thereunder.

“Related Agreement” means that certain Agreement Related to Merger Agreement, dated as of the date hereof, by and among Parent, the Company and those Controlling Shareholders who have signed the signature pages thereto.

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“Series A Preferred Purchase Price” means the Original Series A Issue Price (as defined in the Company’s amended and restated articles of incorporation) of a share of Series A Preferred Stock, plus an amount equal to all dividends thereon which are accrued and unpaid as of the Closing.

“Series A Preferred Stock” means the Company’s Series A Preferred Stock, no par value per share.

“Shareholder Representative Escrow Account” means the Shareholder Representative escrow account established pursuant to the terms of the Escrow Agreement.

“Shareholder Representative Escrow Amount” means $200,000 deposited with the Escrow Agent pursuant to the Escrow Agreement to satisfy the expenses of the Shareholder Representative.

“Software” means the software used, relied upon, developed or created by the Company or its Subsidiaries, or any version, improvement, modification, enhancement or derivative thereof, and all software necessary for their respective operations, includingall programmer and other documentation, source code, object code and libraries, and all embodiments thereof (whether or not in commercial use), and all Intellectual Property Rights embodied in the foregoing.

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which (i) if a corporation, at least 50% of the total voting power of shares of stock entitled (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association, joint venture or other business entity, at least a majority of the partnership, joint venture or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof.

“Surviving Corporation Common Stock” means the Surviving Corporation’s Common Stock, no par value per share.

“Tax” means any (i) federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing; (ii) liability for the payment of any amounts of the type described in clause (i) above arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any Tax Return relating thereto); and (iii) liability for the payment of any amounts of the type described in clause (i) above as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person.

“Tax Bonus Payment” means the collective payments made by the Company and its Subsidiaries prior to the Closing to the persons identified on the Tax Bonus Payment Schedule attached hereto in an aggregate amount equal to $5,550,384.11 (which collective payments and aggregate amount reflect reductions (if any) required pursuant to waivers, which reductions became effective upon the failure (if any) to obtain the shareholder approval required by Section 280G of the Code).

“Tax Returns” means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to

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be filed in connection with the determination, assessment or collection of any Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

“Vested Company Options” means the outstanding options to purchase shares of Company Common Stock, which by their terms have become vested or will become vested upon consummation of the transactions contemplated hereby, which vested options will be cancelled for the consideration specified in Section 5.2(c) and which options are more fully set forth on the Company Options Schedule attached hereto.

1.2Other Definitions.  For purposes of this Agreement, the following terms not defined in Section 1.1 are defined in the following Sections of this Agreement: 

Accounting Firm	5.3(a)
Accounts Receivable Shortfall Amount	11.8(a)
Agreement	Recitals
Arbitration Service	12.11(a)
Articles of Merger	2.2
Buyer Parties	11.2(a)
Closing	2.4
Closing Accounts Receivable	11.8(a)
Closing Cash Balance	5.1
Closing Date	2.4
Closing Indebtedness	5.1
Closing Statement	5.3(a)
Closing Working Capital	5.1
Company	Recitals
Company Common Stock	Recitals
Company Expenses	11.4
Company Intellectual Property Rights	8.11(a)
Controlling Shareholders	Recitals
Deductible Amount	11.2(a)(i)
Disputes	12.11(a)
Disputing Person	12.11(b)
Dissenting Shares	4.2(a)
Effective Time	2.2
Final Aggregate Common Purchase Price	5.1
Final Determination	12.11(d)
Final Per Share Common Price	5.1
Final Receivables Settlement Date	11.8(b)
Fleet	11.6(g)
Fleet Purchase Agreement	11.6(g)
Governmental Approvals	6.1(c)
Indemnitee	11.2(d)
Indemnitor	11.2(d)
Initial Statement	5.3(e)
Last Audited Balance Sheet	8.5(a)(i)
Latest Balance Sheet	8.5(a)(iii)
Leased Realty	8.9(b)
Losses	11.2(a)
Material Contracts	8.10(b)
Material Customer	8.21
Material Supplier	8.21
Merger Sub Common Stock	Recitals
Merger Sub	Recitals

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Merger	2.1
Notice of Arbitration	12.11(b)
Notice of Disagreement	5.3(a)
Other Plans	8.16(e)
Parent	Recitals
Permits	8.13
Plans	8.16(g)
Pre-Closing Tax Period	11.6(a)
Profit Sharing Plans	8.16(d)
Related Representations	11.1(a)
Rules	12.11(a)
Seller Parties	11.2(b)
Shareholders’ Representative	11.7(a)
Straddle Period	11.6(b)
Subsequent Collection Period	11.8(b)
Surviving Corporation	2.1
Third-Party Approvals	6.1(b)
Welfare Plans	8.16(b)

ARTICLE II

THE TRANSACTIONS

2.1The Merger.  On and subject to the terms and conditions set forth herein, at the Effective Time, Merger Sub shall be merged with and into the Company (the “Merger”), and the separate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving corporation in the Merger (the “Surviving Corporation”).

2.2Effective Time of the Merger.  The Merger shall become effective as of the time and date of the filing of Articles of Merger meeting the requirements of the OBCA (the “Articles of Merger”) with the Secretary of State of the State of Oregon in accordance with the provisions of the OBCA.  The Articles of Merger shall be filed on the Closing Date.  The date and time when the Merger shall become effective is referred to herein as the “Effective Time.” 

2.3Effect of Merger.  At the Effective Time, the Surviving Corporation shall have, without other transfer, all of the rights and properties of the Company and Merger Sub and shall be subject to all the debts and liabilities of the Company and Merger Sub in the same manner as if the Surviving Corporation had itself incurred them.  The Merger shall otherwise have the effect described in the OBCA.

2.4Closing.  The closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Kirkland & Ellis LLP, 200 E. Randolph Drive, Chicago, Illinois, 60601, or at such other place as may be mutually agreeable to Merger Sub and the Company, at 10:00 a.m., local time, on the date hereof (the “Closing Date”).  At the Closing, the parties shall deliver the documents and other items identified in Article VI hereof.

ARTICLE III

THE SURVIVING CORPORATION

3.1Articles of Incorporation.  The articles of incorporation of Merger Sub, as in effect at the Effective Time, shall be the articles of incorporation of the Surviving Corporation immediately after the consummation of the Merger and until duly amended in accordance with applicable law.

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3.2By-Laws.  The by-laws of Merger Sub, as in effect at the Effective Time, shall be the by-laws of the Surviving Corporation immediately after the consummation of the Merger.

3.3Directors.  The directors of Merger Sub, as in effect at the Effective Time, shall be the initial directors of the Surviving Corporation immediately after the consummation of the Merger.

3.4Officers.  The officers of Merger Sub, as in effect at the Effective Time, shall be the initial officers of the Surviving Corporation immediately after the Effective Time.  The officers of the Surviving Corporation from and after immediately after the Effective Time shall be as designated from time to time by the directors of the Surviving Corporation.

ARTICLE IV

CONVERSION OF SHARES

4.1Conversion of Shares.  As of the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company or the holders of any of the shares or other equity interests thereof:

(a)Each issued and outstanding share of Merger Sub Common Stock shall be converted into one share of Surviving Corporation Common Stock.

(b)Each issued and outstanding share of Series A Preferred Stock shall be converted into the right to receive from the Surviving Corporation an amount equal to the Series A Preferred Purchase Price, which amount shall be payable in accordance with Article V hereof.  All such shares of Series A Preferred Stock, when converted as provided in this Section 4.1(b), shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each certificate previously evidencing such share shall thereafter represent only the right to receive the Series A Preferred Purchase Price, multiplied by the number of shares evidenced by such certificate.

(c)Each issued and outstanding share of Company Common Stock shall be converted into the right to receive from the Surviving Corporation an amount equal to the Final Per Share Common Price, which amount shall be payable in accordance with Article V hereof.  All such shares of Company Common Stock, when converted as provided in this Section 4.1(c), shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each certificate previously evidencing such share shall thereafter represent only the right to receive the Final Per Share Common Price, multiplied by the number of shares evidenced by such certificate.

4.2Dissenters’ Rights.

(a)Notwithstanding any provision of this Agreement to the contrary, shares of Company Common Stock outstanding immediately prior to the Effective Time which are held by Company Shareholders who shall have neither voted in favor of the Merger or this Agreement, nor consented thereto in writing, and who shall have demanded properly in writing the exercise of dissenters’ rights for such outstanding shares of Company Common Stock in accordance with the OBCA (collectively, the “Dissenting Shares”) shall not be converted into, or represent the right to receive, the consideration described herein.  Such shareholders shall be entitled to receive payment of the value of such shares of Company Common Stock held by them immediately prior to the Effective Time in accordance with the OBCA, except that all Dissenting Shares held by such shareholders who shall have failed to perfect or who effectively shall have withdrawn or lost their dissenters’ rights to such shares of Company Common Stock shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the consideration specified herein, without any interest thereon, upon surrender, in the manner provided in Section 5.2 of this Agreement, of the certificate or certificates that formerly evidenced such shares of Company Common Stock.

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(b)The Company shall give Parent and Merger Sub (i) prompt notice of any demands for the exercise of dissenters’ rights received by the Company, withdrawals of such demands, and any other instruments served pursuant to the OBCA and received by the Company, and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for the exercise of dissenters’ rights under the OBCA.  The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for the exercise of dissenters’ rights or offer to settle or settle any such demands.

ARTICLE V

PAYMENT OF MERGER CONSIDERATION

5.1Merger Consideration.  The “Final Per Share Common Price” shall be the quotient determined by dividing (a) an amount equal to (i) the Aggregate Base Purchase Price, minus (ii) the Aggregate Series A Preferred Purchase Price, minus (iii) the aggregate amount of the Tax Bonus Payment that has not been paid by the Company or its Subsidiaries to the recipients thereof prior to Closing (it being understood that the amount of any checks written to recipients of the Tax Bonus Payment but not otherwise delivered to the recipients thereof, or otherwise cleared, as of the Closing shall be deemed paid by the Company or its Subsidiaries to the recipients thereof prior to Closing for purposes of this Section 5.1(a)(iii)), plus (iv) the amount of Cash on Hand as of the Closing (the “Closing Cash Balance”), minus (v) the aggregate amount of Indebtedness of the Company and its Subsidiaries as of the Closing (the “Closing Indebtedness”), plus (or minus) (vi) the amount (if any) by which Net Working Capital as of the close of business on the Closing Date (the “Closing Working Capital”) is greater than (or less than) $10,000,000.00, and plus (vii) the Aggregate Deemed Option Exercise Proceeds, by (b) the Deemed Number of Shares Outstanding.  The amount calculated pursuant to clause (a) of this Section 5.1 is referred to herein as the “Final Aggregate Common Purchase Price.”

5.2Initial Payment.

(a)At the Closing, each holder of a share of Series A Preferred Stock shall receive payment from the Surviving Corporation of an amount equal to the product of (x) the Series A Preferred Purchase Price, multiplied by (y) the number of shares of Series A Preferred Stock held by such holder as of the Closing.  Payments contemplated by this Section 5.2(a) shall be made by the Surviving Corporation to each holder of a share of Series A Preferred Stock on the Closing Date, by wire transfer of funds to an account specified by each such holder to Parent at least three business days prior to the Closing, or if no such specification is timely given or in the case of any payment of less than $500,000, by check; provided that each such holder has delivered to the Surviving Corporation the certificates representing such holder’s shares of Series A Preferred Stock (duly endorsed in blank or accompanied by duly executed stock powers with appropriate transfer stamps (if any) affixed thereto).

(b)At the Closing, each holder of shares of Company Common Stock shall receive payment from the Surviving Corporation of an amount equal to the product of (x) the Estimated Per Share Common Price, less the Per Share Escrow Amount, multiplied by (y) the number of shares of Company Common Stock held by such holder as of the Closing.  Payments contemplated by this Section 5.2(b) shall be made by the Surviving Corporation to each holder of shares of Company Common Stock on the Closing Date, by wire transfer of funds to an account specified by each such holder to Parent at least three business days prior to the Closing, or if no such specification is given or in the case of any payment of less than $500,000, by check; provided that each such holder has delivered to the Surviving Corporation the certificates representing such holder’s shares of Company Common Stock (duly endorsed in blank or accompanied by duly executed stock powers with appropriate transfer stamps (if any) affixed thereto).

(c)Following the Closing, each holder of a Vested Company Option shall receive payment from the Surviving Corporation of an amount equal to (i) the Estimated Per Share Common Price, less the Per Share Escrow Amount, multiplied by the number of shares of Company Common Stock into which such Vested Company Options are exercisable as of the Closing, less (ii) the aggregate exercise price of such

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Vested Company Options held by such holder.  Payments contemplated by this Section 5.2(c) shall be made by the Surviving Corporation to each holder of Vested Company Options no later than the Surviving Corporation’s first ordinary payroll date after the Closing in accordance with its ordinary and customary payroll practices; provided that such holder has delivered to the Surviving Corporation evidence of the cancellation of such Vested Company Options in exchange for the consideration specified in this Section 5.2(c).

(d)On the Closing Date, Parent shall deliver (or cause to be delivered) the Purchase Price Escrow Amount, the Shareholder Representative Escrow Amount and the Indemnity Escrow Amount to the Escrow Agent for deposit into the Purchase Price Escrow Account, the Shareholder Representative Escrow Account and the Indemnity Escrow Account, respectively, to be established pursuant to the terms of the Escrow Agreement.  Funds held in the Indemnity Escrow Account shall be available on a non-exclusive basis to satisfy amounts owing to the Buyer Parties pursuant to (but without limiting the provisions of) Sections 5.3(d), 5.3(f), 11.2, 11.6 and 11.8 hereof and shall be distributed as provided in the Escrow Agreement.  Funds held in the Shareholder Representative Escrow Account shall be available to satisfy expenses of the Shareholder Representative and shall be distributed as provided in the Escrow Agreement.  Funds held in the Purchase Price Escrow Account shall be distributed as provided in Section 5.3.

(e)The Surviving Corporation shall be entitled to deduct and withhold from any amounts payable under this Section 5.2 all such amounts as the Surviving Corporation may be required to deduct and withhold with respect to the making of any such payments under the Code, the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law.

5.3Post-Closing Adjustment.

(a)Within 60 days following the Closing Date, the Surviving Corporation shall, in good faith, prepare and deliver to the Shareholders’ Representative a statement (in its final and binding form as determined below, the “Closing Statement”) setting forth the Final Per Share Common Price and Final Aggregate Common Purchase Price (and each component thereof).  During the 30-day period immediately following Shareholders’ Representative’s receipt of the Closing Statement, Shareholders’ Representative and its representatives and agents shall be permitted to review the Surviving Corporation’s and its representatives’ working papers related to the preparation of the Closing Statement and determination of the Final Per Share Common Price and Final Aggregate Common Purchase Price (and each component thereof).  The Closing Statement shall become final and binding upon the parties 30 days following Shareholders’ Representative’s receipt thereof, unless Shareholders’ Representative shall give written notice of its disagreement (a “Notice of Disagreement”) to the Surviving Corporation prior to such date.  Any Notice of Disagreement shall specify in reasonable detail the nature and dollar amount of any disagreement so asserted and the Shareholders’ Representative’s calculation of the Final Per Share Common Price and Final Aggregate Common Purchase Price (and each component thereof).  If a timely Notice of Disagreement is received by the Surviving Corporation, then the Closing Statement (as revised in accordance with clause (x) or (y) below) shall become final and binding upon the parties on the earliest of (x) the date the parties resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement, or (y) the date all matters in dispute are finally resolved in writing by the Accounting Firm.  During the 20 days following delivery of a Notice of Disagreement, the Surviving Corporation and Shareholders’ Representative shall seek in good faith to resolve in writing any differences which they may have with respect to the matters specified in the Notice of Disagreement.  Following delivery of a Notice of Disagreement, the Surviving Corporation and its agents and representatives shall be permitted to review Shareholders’ Representative’s and its representatives’ working papers relating to the Notice of Disagreement.  If, at the end of the 20-day period referred to above, the matters in dispute have not been resolved, then the parties shall submit to a mutually satisfactory independent “big-four” accounting firm (the “Accounting Firm”) for review and resolution of all matters (but only such matters) which remain in dispute, and the Accounting Firm shall make a final determination of the Final Per Share Common Price and Final Aggregate Common Purchase Price to the extent such amounts are in dispute, in accordance with the guidelines and procedures set forth in this Agreement.  If the parties are unable to mutually agree on an Accounting Firm, the Surviving Corporation and Shareholders’ Representative shall select a “big-four” Accounting Firm by lot (after excluding Deloitte & Touche LLP).  The

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parties will cooperate with the Accounting Firm during the term of its engagement.  The Closing Statement and the determination of the Final Per Share Common Price and Final Aggregate Common Purchase Price (and each component thereof) shall become final and binding on the parties on the date the Accounting Firm delivers its final resolution in writing to the parties (which the Accounting Firm shall be instructed to deliver not more than 45 days following submission of such disputed matters).  The fees and expenses of the Accounting Firm shall be allocated by the Accounting Firm between the Surviving Corporation and Shareholders’ Representative based on the merits of such party’s claim with respect to such dispute.

(b)If, on the Final Determination Date, the Closing Statement provides that the Final Aggregate Common Purchase Price is equal to or greater than the Estimated Aggregate Common Purchase Price, then (i) Parent and the Shareholders’ Representative shall no later than three business days after the Final Determination Date, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to the Company Shareholders, in accordance with the Shareholder Distribution Schedule attached hereto, all amounts then held in the Purchase Price Escrow Account, and (ii) Parent or the Surviving Corporation shall pay to the Company Shareholders, in accordance with the Shareholder Distribution Schedule attached hereto, no later than three business days after the Final Determination Date, in immediately available funds, an amount equal to the sum of (x) the amount (if any) by which the Final Aggregate Common Purchase Price exceeds the Estimated Aggregate Common Purchase Price, and (y) interest on any such excess amount computed at the Applicable Rate in effect from time to time for the period from the Closing Date to the date of such payment.

(c)If, on the Final Determination Date, the Closing Statement provides that the Final Aggregate Common Purchase Price is less than the Estimated Aggregate Common Purchase Price by an amount which is less than the Purchase Price Escrow Amount, then Parent and Shareholders’ Representative shall, no later than three business days after the Final Determination Date, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to (i) Parent, in immediately available funds from the Purchase Price Escrow Account, an aggregate amount equal to the sum of (x) the amount by which the Estimated Aggregate Common Purchase Price exceeds the Final Aggregate Common Purchase Price, and (y) all income earned in the Purchase Price Escrow Account with respect to such excess, and (ii) the Company Shareholders, in accordance with the Shareholder Distribution Schedule attached hereto, in immediately available funds from the Purchase Price Escrow Account, all amounts remaining in the Purchase Price Escrow Account after payment to Parent of the amount described in Section 5.3(c)(i) above.

(d)If, on the Final Determination Date, the Final Closing Statement provides that the Final Aggregate Common Purchase Price is less than the Estimated Aggregate Common Purchase Price by an amount which is greater than the Purchase Price Escrow Amount, then (i) Parent and Shareholders’ Representative shall, no later than three business days after the Final Determination Date, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to Parent all amounts then held in the Purchase Price Escrow Account, and (ii) the Company Shareholders shall, in accordance with their Pro Rata Share and within three business days after the Final Determination Date, pay to Parent, in immediately available funds, an aggregate amount equal to the sum of (x) the amount by which the Estimated Aggregate Common Purchase Price exceeds the sum of (aa) Final Aggregate Common Purchase Price and (bb) the Purchase Price Escrow Amount, and (y) interest on such excess computed at the Applicable Rate in effect from time to time for the period from the Closing Date to the date of such payment.  Notwithstanding the foregoing, Parent may, but shall not be obligated to, at any time elect to collect any amounts owing to it pursuant to clause (ii) of this Section 5.3(d) from the Indemnity Escrow Account, and if Parent so elects, Parent and Shareholders’ Representative shall, no later than three business days after Parent delivers notice of such election to the Shareholders’ Representative, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to Parent from the Indemnity Escrow Account the amount Parent elected to collect therefrom (not to exceed the amount owing to Parent pursuant to clause (ii) of this Section 5.3(d)).

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(e)Notwithstanding any other provision of this Section 5.3 to the contrary, if the Closing Statement delivered to the Shareholder’s Representative by the Surviving Corporation pursuant to the first sentence of Section 5.3(a) above (the “Initial Statement”) provides that the Company Shareholders will be entitled to receive funds from the Purchase Price Escrow Account in accordance with the provisions of Sections 5.3(b) or (c) above in an aggregate amount equal to or greater than $500,000, then Parent and Shareholders’ Representative shall, no later than five business days after the Surviving Corporation’s delivery of the Initial Statement, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to the Company Shareholders, in accordance with the Shareholder Distribution Schedule attached hereto, in immediately available funds from the Purchase Price Escrow Account, the amount the Company Shareholders would be entitled to receive from the Purchase Price Escrow Account determined with reference to the Initial Statement.  Additionally, if the Initial Statement provides that the Company Shareholders will be entitled to receive funds from Parent or the Surviving Corporation pursuant to Section 5.3(b) above, then Parent or the Surviving Corporation shall, no later than five business days after the Surviving Corporation’s delivery of the Initial Statement, pay to the Company Shareholders, in accordance with the Shareholder Distribution Schedule attached hereto, the amount the Company Shareholders would be entitled to receive from Parent or the Surviving Corporation pursuant to Section 5.3(b) above determined with reference to the Initial Statement.  If any payments are made pursuant to this Section 5.3(e), then all payments made pursuant to Sections 5.3(b) and 5.3(c) at the times specified therein shall be appropriately adjusted to reflect the payments made pursuant to this Section 5.3(e).

(f)Notwithstanding any other provision of this Section 5.3 to the contrary, if a Notice of Disagreement delivered to the Surviving Corporation by the Shareholders’ Representative pursuant to Section 5.3(a) above provides that Parent will be entitled to receive funds from the Purchase Price Escrow Account in accordance with the provisions of Sections 5.3(c) or (d) above in an aggregate amount equal to or greater than $500,000, then Parent and Shareholders’ Representative shall, no later than five business days after the delivery of the Notice of Disagreement, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to Parent, in immediately available funds from the Purchase Price Escrow Account, the amount Parent would be entitled to receive from the Purchase Price Escrow Account determined with reference to the Notice of Disagreement.  Additionally, if the Notice of Disagreement provides that Parent will be entitled to receive funds from the Company Shareholders pursuant to Section 5.3(d) above, then the Company Shareholders shall, in accordance with their Pro Rata Share and within three business days after the date of the delivery of the Notice of Disagreement, pay to Parent, in immediately available funds, an aggregate amount equal to the amount Parent would be entitled to receive from the Company Shareholders pursuant to Section 5.3(d) above determined with reference to the Notice of Disagreement.  Notwithstanding the foregoing, Parent may, but shall not be obligated to, at any time elect to collect any amounts owing to it pursuant to the immediately preceding sentence from the Indemnity Escrow Account, and if Parent so elects, Parent and Shareholders’ Representative shall, no later than three business days after Parent delivers notice of such election to the Shareholders’ Representative, take such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to Parent from the Indemnity Escrow Account the amount Parent elected to collect therefrom (not to exceed the amount owing to Parent pursuant to the immediately preceding sentence).  If any payments are made pursuant to this Section 5.3(f), then all payments made pursuant to Sections 5.3(c) and 5.3(d) at the times specified therein shall be appropriately adjusted to reflect the payments made pursuant to this Section 5.3(f).

(g)Any amounts payable under this Section 5.3 shall be subject to all applicable withholding obligations.  The amount of Tax withholding at Closing with regard to shares of restricted Company Common Stock that will vest for Tax purposes at Closing and the amount of Tax withholding at the time of payment set forth in Section 5.2(c) with regard to Vested Company Options has been determined by taking into account the full Estimated Per Share Common Price, notwithstanding that a portion of that Estimated Per Share Common Price will be placed in escrow.

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ARTICLE VI

CONDITIONS TO CLOSING

6.1Conditions to Parent’s and Merger Sub’s Obligations.  The obligations of Parent and Merger Sub to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date:

(a)Parent, Merger Sub and the Company shall have received or otherwise obtained all third party consents and approvals that are identified with an asterisk (*) on the attached Restrictions Schedule (collectively, the “Third-Party Approvals”);

(b)Parent, Merger Sub and the Company shall have received or obtained all governmental and regulatory consents, approvals, licenses and authorizations that are necessary for the consummation of the transactions contemplated hereby or for Parent and Surviving Corporation to own the assets and operate the businesses of the Company and its Subsidiaries following the Closing, and the waiting period under the HSR Act shall have expired or been terminated (collectively, the “Governmental Approvals”);

(c)No suit, action or other proceeding shall be pending or, to the Knowledge of the Company, threatened before any court or governmental or regulatory official, body or authority or any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent the performance of this Agreement or the consummation of any of the transactions contemplated hereby or declare unlawful any of the transactions contemplated hereby, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (iii) affect adversely the right of the Surviving Corporation to own the assets and operate the businesses of the Company and its Subsidiaries following the Closing, or (iv) affect adversely the right of any of the Company or any of its Subsidiaries to own its assets or control its businesses following the Closing, and no such injunction, judgment, order, decree, ruling or charge shall have been entered or be in effect;

(d)The Controlling Shareholders and the Company shall have entered into the Related Agreement, and the Related Agreement shall be in full force and effect as of the Closing and shall not have been amended or modified;

(e)The Shareholders’ Representative and the Escrow Agent shall have entered into the Escrow Agreement, and the Escrow Agreement shall be in full force and effect as of the Closing and shall not have been amended or modified;

(f)Each of the Executives shall have entered into their respective Employment Agreements, and the Employment Agreements shall be in full force and effect as of the Closing and shall not have been amended or modified;

(g)Parent and Merger Sub shall have received from Stoel Rives LLP, special counsel for the Company and the Controlling Shareholders, a customary legal opinion with respect to the matters set forth on Exhibit D attached hereto, which shall be addressed to Parent, Merger Sub and their lender(s) and dated as of the Closing Date;

(h)All agreements regarding voting, transfer or other arrangements related to the capital stock of the Company that are in effect prior to the Closing shall have been terminated and be of no further force and effect;

(i)The Company shall have obtained releases of all Liens (other than any Permitted Liens) relating to the assets and properties of the Company and its Subsidiaries, and the Company shall have

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obtained and delivered to Parent and Merger Sub and its lender(s) payoff letters with respect to all Indebtedness for borrowed money outstanding as of the Closing;

(j)The Company shall have duly filed the Articles of Merger in accordance with the OBCA;

(k)The number of Dissenting Shares shall not exceed 3.00% of the number of outstanding shares of Company Common Stock;

(l)The Company shall have made the aggregate Tax Bonus Payment to the recipients thereof, and the Company shall have delivered evidence thereof to Parent;

(m)None of the payments that Parent, Merger Sub, the Surviving Corporation, the Company, the Company Shareholders or any of their respective Affiliates has made or is obligated to make to a “disqualified individual” (within the meaning of Section 280G(c) of the Code) with respect to the Company and its Subsidiaries pursuant to any agreement, plan understanding or other arrangement (including the vesting of any securities or other property) shall constitute a “parachute payment” within the meaning of Section 280G(b) of the Code, and the Company shall have delivered evidence thereof to Parent; and

(n)At the Closing, the Company shall have delivered to Parent and Merger Sub (i) a certificate signed by the Company in the form of Exhibit E attached hereto, dated the date of the Closing, stating that the conditions specified in subsections (a) through (c) and (h) through (m) have been satisfied as of the Closing; (ii) copies of all Third Party Approvals and Governmental Approvals; (iii) certified copies of the resolutions duly adopted by the Company’s board of directors authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby; (iv) good standing (or substantially equivalent) certificates for each of the Company and its Subsidiaries from their respective jurisdictions of incorporation and each jurisdiction in which each of the Company and its Subsidiaries is qualified to do business as a foreign corporation, in each case dated as of a recent date prior to the Closing Date; (v) evidence of the cancellation of the Vested Company Options; (vi) evidence of the termination of the Management Agreements and payment of all amounts due thereunder; (vii) an affidavit stating that the Company is not and has not been a United States real property holding corporation, and (viii) such other documents or instruments as are required to be delivered by the Company Shareholders or the Company at the Closing pursuant to the terms hereof.

6.2Conditions to the Company’s Obligations.  The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date:

(a)Parent, Merger Sub and the Company shall have received or obtained all of the Governmental Approvals;

(b)No suit, action or other proceeding shall be pending before any court or governmental or regulatory official, body or authority wherein an unfavorable injunction, judgment, order, decree or ruling would (i) prevent consummation of the transactions contemplated by this Agreement or (ii) cause the transactions contemplated by this Agreement to be rescinded following consummation, and no such injunction, judgment, order, decree or ruling shall be in effect;

(c)Parent and the Escrow Agent shall have entered into the Escrow Agreement, and the Escrow Agreement shall be in full force and effect as of the Closing;

(d)Merger Sub shall have duly filed the Articles of Merger in accordance with the OBCA; and

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(e)At the Closing, Parent or Merger Sub shall have delivered to the Shareholders’ Representative (i) a certificate signed by Parent and Merger Sub in the form of Exhibit F attached hereto, dated the date of the Closing, stating that the condition specified in subsection (a) above has been satisfied as of the Closing, (ii) certified copies of the resolutions duly adopted by Parent’s and Merger Sub’s board of directors authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby, and (iii) such other documents or instruments as are required to be delivered by Parent or Merger Sub at the Closing pursuant to the terms hereof.

ARTICLE VII

RESERVED

Article VII Intentionally Left Blank.

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

As a material inducement to Merger Sub to enter into this Agreement and consummate the transactions contemplated hereby, except as set forth on the attached Company Disclosure Schedules which are more specifically described below (but without limiting Section 12.9), the Company hereby represents and warrants to Parent and Merger Sub as follows:

8.1Organization; Corporate Power.  The Company is a corporation duly organized and validly existing under the laws of the State of Oregon and is qualified to do business and is in good standing in every jurisdiction in which its ownership of property or conduct of business requires it to qualify, except where the failure to so qualify would not have a Material Adverse Effect.  The Company possesses all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and to perform its obligations under this Agreement.  The copies of the Company’s amended and restated articles of incorporation and by-laws which have been furnished to Merger Sub’s special counsel reflect all amendments made thereto at any time prior to the date of this Agreement.  The attached Officers and Directors Schedule sets forth a list all of the officers and directors of the Company and its Subsidiaries.

8.2Capital Stock and Related Matters.  The attached Capitalization Schedule accurately sets forth the authorized and issued outstanding capital stock of the Company and the name of the record holders of any outstanding equity securities of the Company.  Except as set forth on the attached Capitalization Schedule, each Person listed on the attached Capitalization Schedule is the record and beneficial owner of the shares of the Company Common Stock and the Series A Preferred Stock set forth opposite his or its name, free and clear of all Liens, voting agreements, proxies, pledges, transfer restrictions and other arrangements of any kind.  Except as set forth on the attached Capitalization Schedule, the Company does not have outstanding any shares of capital stock, or securities convertible or exchangeable or exercisable for any shares of its capital stock or containing any profit participation features, nor any rights or options or warrants to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its capital stock or any stock appreciation rights or phantom stock plan.  Except as set forth on the attached Capitalization Schedule, the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock.  All of the outstanding shares of the Company’s capital stock have been validly issued and are fully paid and nonassessable.  There are no agreements between the Company’s shareholders with respect to the voting or transfer of the Company’s capital stock or with respect to any other aspect of the Company’s affairs, except as set forth on the attached Capitalization Schedule.

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8.3Authorization; No Breach.  The execution, delivery and performance of this Agreement have been duly authorized by the Company, and no other corporate act or proceeding on the part of the Company is necessary to authorize the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws relating to or affecting the rights and remedies or creditors generally.  Except as set forth on the attached Restrictions Schedule, the execution and delivery by the Company of this Agreement and the fulfillment of and compliance with the respective terms hereof by the Company do not and will not (a) conflict with or result in a breach of the terms, conditions or provisions of, (b) constitute a default under (whether with or without the passage of time, the giving of notice or both), (c) result in the creation of any Lien upon the Company’s or any of its Subsidiaries’ capital stock or assets pursuant to, (d) give any third party the right to modify, terminate or accelerate any obligation under, (e) result in a violation of, or (f) require any authorization, consent, approval, exemption or other action of or by or notice or declaration to, or filing with, any third party or any court or administrative or governmental body or agency pursuant to, the Company’s or any of its Subsidiaries’ certificate or articles of incorporation or bylaws or other constituent documents, or any law, statute, rule or regulation to which the Company or any of its Subsidiaries or any of the Company Shareholders is subject, or any agreement, instrument, license, permit, order, judgment or decree to which the Company or any of its Subsidiaries or any of the Company Shareholders is subject.

8.4Subsidiaries.  The attached Subsidiary Schedule correctly sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation and the Persons owning the outstanding capital stock of such Subsidiary.  Each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, possesses all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own its properties and to carry on its businesses as now being conducted and is qualified to do business and is in good standing in every jurisdiction in which its ownership of property or the conduct of business requires it to qualify, except where the failure to so qualify would not have a Material Adverse Effect.  All of the outstanding shares of capital stock or other equity interests of each Subsidiary are duly authorized validly issued, and (if applicable) fully paid and nonassessable, and all such shares are owned by the Company free and clear of all Liens and are not subject to any option or right to purchase any such shares.

8.5Financial Statements; Accounts Receivable.

(a)Attached hereto as the Financial Statements Schedule are true and correct copies of the following financial statements:

(i)the audited consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2003 (the “Last Audited Balance Sheet”), and September 30, 2002, and the related consolidated statements of income, consolidated statements of changes in stockholders’ equity and consolidated statements of cash flows (and the accompanying notes thereto) for the fiscal years then ended;

(ii)the audited consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2001, and the related consolidated statement of income, consolidated statement of changes in stockholders’ equity and consolidated statement of cash flows (and the accompanying notes thereto) for the period from March 2, 2001, through September 30, 2001; and

(iii)the unaudited consolidated balance sheet of the Company and its Subsidiaries as of November 30, 2003 (the “Latest Balance Sheet”), and the related consolidated statements of operations and cash flows for the two-month period then ended.

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Each of the foregoing financial statements (including in all cases the notes thereto, if any) is accurate and complete in all material respects, is consistent with the books and records of the Company and its Subsidiaries (which, in turn, are accurate and complete in all material respects) and fairly presents, in all material respects, the financial condition and operating results and cash flows of the Company and its Subsidiaries.  Each of the foregoing financial statements (including in all cases the notes thereto, if any) (x) has been prepared in accordance with GAAP consistently applied throughout the periods covered thereby, subject in the case of the unaudited financial statements to the absence of note disclosures (none of which note disclosures would, alone or in the aggregate, if made in accordance with GAAP be materially adverse to the financial condition, results of operations or cash flow of the Company and its Subsidiaries taken as a whole), and (y) in the case of the financial statements described in Section 8.5(a)(i) above, has been prepared in accordance with the requirements of Regulation S-X of the Securities Act of 1933, as amended.

(b)All accounts receivable reflected on the Latest Balance Sheet represent bona fide sales arising in the ordinary course of business.

8.6Absence of Undisclosed Liabilities.  Except as set forth on the attached Liabilities Schedule, neither the Company nor any of its Subsidiaries has or will have any obligation or liability arising out of any transaction entered into at or prior to the date hereof, or any action or inaction at or prior to the date hereof, or any state of facts existing at or prior to the date hereof, other than: (a) liabilities reflected on the Last Audited Balance Sheet (including any notes thereto), (b) liabilities and obligations which have arisen after the date of the Last Audited Balance Sheet in the ordinary course of business consistent with past practice (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement, violation of law, claim or lawsuit), (c) material obligations under contracts and commitments described on the attached Contracts Schedule or under contracts and commitments entered into in the ordinary course of business consistent with past practice which are not required to be disclosed on such Schedule pursuant to Section 8.10 below (but not liabilities for any breach of any such contract or commitment occurring on or prior to the Closing Date), and (d) other liabilities and obligations expressly disclosed in the other Schedules referred to in this Article VIII.

8.7No Material Adverse Effect.  Except as set forth on the attached Schedule 8.7, since September 30, 2003, there has occurred no fact, event or circumstance which has had or would reasonably be expected to have a Material Adverse Effect.

8.8Absence of Certain Developments.  Except as set forth on the attached Developments Schedule or as specifically contemplated by this Agreement, since September 30, 2003, neither the Company nor any of its Subsidiaries has:

(a)incurred any Indebtedness or other liabilities outside the ordinary course of business consistent with past practice;

(b)declared, set aside or made any payment or distribution of cash or other property to any of its shareholders with respect to such shareholder’s capital stock, or purchased, redeemed or otherwise acquired any shares of its capital stock or other equity securities;

(c)made or granted any bonus or any wage or salary increase to any employee or group of employees (except as required by pre-existing contracts described on the attached Contracts Schedule and except for any bonus or wage increases granted to employees in the ordinary course of business consistent with past practice);

(d)made any commitments for capital expenditures that aggregate in excess of $50,000;

(e)amended its articles of incorporation or by-laws (or similar governing documents);

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(f)entered into any material contract other than in the ordinary course of business consistent with past practice, entered into any other material transaction, whether or not in the ordinary course of business or consistent with past practice, or materially changed any business or accounting practice; or

(g)agreed, whether orally or in writing, to do any of the foregoing.

8.9Assets.

(a)Except as set forth on the attached Assets Schedule, the Company or one of its Subsidiaries has good and valid title to, or a valid leasehold interest in, all properties and assets used by it, located on its premises or shown on the Latest Balance Sheet or acquired after the date thereof, free and clear of all Liens (other than properties and assets disposed of for fair consideration in the ordinary course of business since the date of the Latest Balance Sheet and except for Liens disclosed on the Latest Balance Sheet (including any notes thereto) and Permitted Liens).  The Company and each of its Subsidiaries owns or leases or has the valid and enforceable right to use all assets, tangible or intangible, necessary for the conduct of its business as presently conducted.

(b)Neither the Company nor any of its Subsidiaries owns any real property.  The Leased Real Property Schedule attached hereto contains a complete list of all of the Realty Leases for the real property leased, subleased, licensed or otherwise occupied by the Company or any of its Subsidiaries (collectively, the “Leased Realty”).  The Company or one of its Subsidiaries has a valid leasehold interest in each Leased Realty.  Except as set forth on the attached Leased Real Property Schedule, with respect to each Realty Lease:  (i) the Realty Lease is legal, valid, binding, enforceable and in full force and effect; (ii) neither the Company nor any of its Subsidiaries, nor any other party to the Realty Lease is in breach or default, and no event has occurred which, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under the Realty Lease; (iii) there are no disputes, oral agreements or forbearance programs in effect as to the Realty Lease; (iv) neither the Company nor any of its Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the Realty Lease; (v) each of the Company and its Subsidiaries has delivered to Parent or Merger Sub a true and complete copy of each such Realty Lease document, and in the case of any oral Lease, a written summary of the material terms of such Realty Lease, (vi) no security deposit or portion thereof deposited with respect to such Realty Lease has been applied in respect of a breach or default under such Realty Lease which has not been re-deposited in full; and (vii) none of the Company or its Subsidiaries has subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Realty or any portion thereof.

8.10Contracts and Commitments. 

(a)Except as expressly contemplated by this Agreement or as set forth on the attached Contracts Schedule, neither the Company nor any of its Subsidiaries is a party to or bound by any written or oral:

(i)pension, profit sharing, stock option, employee stock purchase or other plan or arrangement providing for deferred or other compensation to employees, former employees or consultants, or any other employee benefit plan or arrangement, or any collective bargaining agreement or any other contract with any labor union, or severance agreements, programs, policies or arrangements;

(ii)contract for the employment of any officer or other employee on a full-time, part-time, consulting or other basis or contract relating to loans to officers, directors or Affiliates or contract or arrangement with any Affiliate;

(iii)contract under which the Company or any of its Subsidiaries has advanced or loaned any other Person amounts in the aggregate exceeding $50,000;

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(iv)agreement or indenture relating to borrowed money or other Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any material asset or material group of assets of the Company or any of its Subsidiaries;

(v)Guaranty;

(vi)lease or agreement under which the Company or any of its Subsidiaries is lessee of or holds or operates any property, real or personal, owned by any other party, except for any lease of real or personal property under which the aggregate annual rental payments do not exceed $50,000;

(vii)lease or agreement under which the Company or any of its Subsidiaries is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by the Company or any of its Subsidiaries;

(viii)contract or group of related contracts with the same party or group of affiliated parties, the performance of which involves consideration in excess of $50,000 in the Company’s fiscal year ended September 30, 2003, or in the Company’s current fiscal year to date, other than purchase and sales orders incurred in the ordinary course of business;

(ix)assignment, license, indemnification or agreement with respect to any intangible property (including any Intellectual Property Rights) which involves consideration in excess of $50,000 in the Company’s fiscal year ended September 30, 2003, or in the Company’s current fiscal year to date;

(x)agreement with a term of more than six months which is not terminable by the Company or any of its Subsidiaries upon less than 30 days’ notice without penalty and which involves consideration in excess of $50,000 in the Company’s fiscal year ended September 30, 2003, or in the Company’s current fiscal year to date;

(xi)contract regarding voting, transfer or other arrangements related to the Company’s capital stock or warrants, options or other rights to acquire any of the Company’s capital stock;

(xii)contract or agreement prohibiting it from freely engaging in any business or competing anywhere in the world; or

(xiii)any other agreement which involves consideration in excess of $50,000 in the Company’s fiscal year ended September 30, 2003, or in the Company’s current fiscal year to date.

(b)All of the contracts, leases, agreements and instruments set forth or required to be set forth on the Contracts Schedule (the “Material Contracts”) are valid, binding and enforceable against the Company and, to the Company’s Knowledge, against all other parties thereto in accordance with their respective terms and, to the Company’s Knowledge, shall be in full force and effect without penalty in accordance with their terms upon consummation of the transactions contemplated hereby.  Except as set forth on the Contracts Schedule, (i) each of the Company and its Subsidiaries has performed all material obligations required to be performed by it and is not in material default under or in breach of nor in receipt of any written claim of default or breach under any Material Contract; (ii) no event has occurred which with the passage of time or the giving of notice or both would result in a default, breach or event of noncompliance by the Company or any of its Subsidiaries under any Material Contract; (iii) neither the Company nor any of its Subsidiaries has any present expectation or intention of not fully performing all such obligations under Material Contracts; and (iv) the Company has no Knowledge of any breach or anticipated breach by the other parties to any Material Contract.

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8.11Intellectual Property Rights. 

(a)The attached Intellectual Property Schedule contains a complete and accurate list of all (i) patented or registered Intellectual Property Rights owned or used by the Company or any of its Subsidiaries, (ii) pending patent applications and applications for other registrations of Intellectual Property Rights filed by or on behalf of the Company or any of its Subsidiaries, and (iii) material unregistered Intellectual Property Rights owned or used by the Company or any of its Subsidiaries.  The Intellectual Property Schedule generally describes the four material proprietary Software platforms and lists material third-party licensed Software used by the Company and its Subsidiaries.  The Company or one of its Subsidiaries owns and possesses all right, title and interest to, or has the right to use pursuant to a valid and enforceable license, all Intellectual Property Rights and Software identified on the Intellectual Property Schedule and all other Intellectual Property Rights and Software necessary for the operation of the businesses of the Company and its Subsidiaries as presently conducted (collectively the “Company Intellectual Property Rights”).  The Company Intellectual Property Rights are not subject to any Liens, and are not subject to any restrictions or limitations regarding use or disclosure other than pursuant to a written license agreement set forth in the Contracts Schedule or described generally in the Intellectual Property Schedule.

(b)Except as set forth on the attached Intellectual Property Schedule, (i) there have been no written claims made against the Company or any of its Subsidiaries asserting the invalidity, misuse or unenforceability of any of the Company Intellectual Property Rights and, to the Company’s Knowledge, there is no valid basis for any such claim, (ii) neither the Company nor any of its Subsidiaries has received any notices of, and the Company has no Knowledge of, any facts which indicate a likelihood of, any infringement or misappropriation by, or conflict with, any third party with respect to any Intellectual Property Rights, (iii) the conduct of the Company’s and its Subsidiaries’ businesses has not infringed, misappropriated or conflicted with and does not infringe, misappropriate or conflict with any Intellectual Property Rights of other Persons, and (iv) to the Company’s Knowledge, the Company Intellectual Property Rights have not been infringed, misappropriated or conflicted by other Persons.  The Company has no patents and no trademarks or service marks are registered to the Company or any of its Subsidiaries.  The transactions contemplated by this Agreement will not have a Material Adverse Effect on the Company’s or any of its Subsidiaries’ right, title or interest in and to the Company Intellectual Property Rights, and all Company Intellectual Property Rights shall be owned or available for use by the Company and its Subsidiaries on substantially similar terms and conditions immediately after the Closing.

(c)The Company has taken all commercially reasonable measures to maintain and protect all of the Company Intellectual Property Rights so as not to adversely affect the validity or enforceability thereof, and there are no registered Company Intellectual Property Rights.

(d)The Company has taken commercially reasonable measures, consistent with industry standards, to maintain the source code and related documentation and information, and confidentiality of the processes and formulae, research and development results and other information, know-how or trade secrets of the Company and its Subsidiaries, the value of which to the Company and its Subsidiaries is contingent upon maintenance of the confidentiality thereof.

(e)All of the computer firmware, computer hardware, and computer software (whether general or special purpose) and other similar or related items of automated, computerized, and/or software system(s), networks, interfaces, platforms or application used or relied upon by the Company and its Subsidiaries is sufficient for the conduct of the businesses of the Company and its Subsidiaries as they are now operated.

(f)Except as disclosed on the Intellectual Property Schedule, the Company has entered into valid and enforceable written confidentiality agreements with all of its current employees and valid and enforceable written proprietary rights and confidentiality agreements with all of its current independent contractors who have developed, modified, improved, enhanced or had access to the Company Intellectual

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Property Rights, and has entered into valid and enforceable written confidentiality agreements with all of its former employees and valid and enforceable written proprietary rights and confidentiality agreements with all of its former independent contractors who, since January 2001, have developed, modified, improved, enhanced or had access to any material Company Intellectual Property Rights, (i) assigning ownership to the Company or its Subsidiaries of all Intellectual Property Rights created or developed by (a) its or their employees within the scope of their employment (whether through assignment agreements or otherwise) or related to the business or research or development of the Company, or (b) independent contractors engaged by the Company or its Subsidiaries within the scope of their contract; and (ii) requiring such employees and independent contractors to maintain the confidentiality of all Company Intellectual Property Rights.  Other than to its employees and independent contractors, and only under the conditions described in the foregoing sentence, the Company and its Subsidiaries have not disclosed to any third party any source code related to any Company Intellectual Property Rights.

(g)Except as set forth on the Intellectual Property Schedule, no former or present employees, officers or directors of the Company or any of its Subsidiaries, hold any right, title or interest directly or indirectly, in whole or in part, in or to any Company Intellectual Property Rights.

8.12Litigation.  Except as set forth on the attached Litigation Schedule, there are no (and, during the three years preceding the date hereof, there have not been any) actions, suits, proceedings (including any arbitration proceedings), orders, investigations or claims pending or, to the Company’s Knowledge, threatened against or affecting the Company or any of its Subsidiaries (or to the Company’s Knowledge, pending or threatened against or affecting any of the officers, directors or key employees of the Company or any of its Subsidiaries with respect to the business or proposed business activities of the Company or any of its Subsidiaries), or pending or threatened by the Company or any of its Subsidiaries against any Person, at law or in equity, or before or by any governmental department, commission, board, bureau, agency or instrumentality.  Neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree of any court or other governmental agency.

8.13Compliance with Laws.  Except as set forth on the attached Compliance Schedule:  Each of the Company and its Subsidiaries has, during the past five years, materially complied and is in material compliance with all applicable laws, ordinances, codes, rules, requirements and regulations of foreign, federal, state and local governments and all agencies thereof relating to the operation of its business and the maintenance and operation of its properties and assets, including all Environmental Requirements.  No written notices have been received by, and no claims have been filed against, the Company or any of its Subsidiaries alleging a violation of any such laws, ordinances, codes, rules, requirements or regulations.  Each of the Company and its Subsidiaries holds and is in material compliance with all material permits, licenses, bonds, approvals, certificates, registrations, accreditations and other authorizations of all foreign, federal, state and local governmental agencies required for the conduct of its business as currently conducted and the ownership of its properties (collectively, “Permits”), and the attached Permits Schedule sets forth a list of all of such material Permits.  No notices have been received by the Company or any of its Subsidiaries alleging the failure to hold any of the foregoing.  Except as set forth on the attached Permits Schedule, all of such permits, licenses, bonds, approvals, accreditations, certificates, registrations and authorizations will be available for use by the Surviving Corporation and its Subsidiaries immediately after the Closing.

8.14Environmental Matters.  Except as set forth on the attached Environmental Schedule:

(a)Neither the Company nor any of its Subsidiaries have received any written notice, written report or written information regarding any actual or alleged violation of Environmental Requirements or any liabilities or potential liabilities relating to its or its predecessors’ facilities or operations arising under Environmental Requirements.

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(b)Neither this Agreement nor the consummation of the transactions contemplated hereby will result in any obligations for site investigation or cleanup, or notification to or consent of any government agencies or third parties under any Environmental Requirements.

(c)To the Company’s Knowledge, none of the following exists at any property or facility occupied or operated by the Company or any of its Subsidiaries: (i) underground storage tanks; (ii) asbestos-containing material in any form or condition; (iii) materials or equipment containing polychlorinated biphenyls; or (iv) landfills, surface impoundments or other disposal areas.

(d)Neither the Company nor any of its Subsidiaries, predecessors or Affiliates has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled or released any substance or owned, occupied or operated any facility or property (and no such property or facility is contaminated by any such substance) so as to give rise to any current or future liabilities (including any liability for response costs, corrective action costs, personal injury, natural resource damages, property damage or attorneys fees or any investigative, corrective or remedial obligations) pursuant to any Environmental Requirements.

(e)Neither the Company nor any of its Subsidiaries has, either expressly or by operation of law, assumed or undertaken any liability or corrective, investigatory or remedial obligation of any other Person relating to any Environmental Requirements.

(f)The Company has furnished to Parent all environmental audits, reports and other material environmental documents relating to the Company’s or its Subsidiaries, Affiliates’ or predecessors’ past or current properties, facilities or operations which are in their possession or under their reasonable control.

(g)None of the Company or any of its Subsidiaries, predecessors or Affiliates is subject to any liabilities arising from, relating to, or based on the presence or alleged presence of asbestos or asbestos-containing materials in any product or item manufactured, sold, marketed, installed, stored, transported, handled or distributed at any time by the Company or any of its Subsidiaries, predecessors or Affiliates, or otherwise based on the presence or alleged presence of asbestos or asbestos-containing materials at any property or facility, including any liabilities arising from, relating to or based on any personal or bodily injury or illness.

8.15Employees.  The attached Employees Schedule sets forth the name and current annual salary of each of the Company’s and any of its Subsidiaries’ employees.  Except as set forth on the attached Employees Schedule, to the Company’s Knowledge, no executive or key employee of the Company or any of its Subsidiaries or any group of employees of the Company or any of its Subsidiaries have any plans to terminate employment with the Company or any of its Subsidiaries.

8.16Employee Benefit Plans. 

(a)The Company does not contribute to or have any obligation to contribute to (or any other liability, including current or potential withdrawal liability, with respect to) any “multiemployer plan” (as defined in Section 3(37) of ERISA).

(b)Except as set forth on the attached Employee Benefits Schedule under the heading “Welfare Plans” (the “Welfare Plans”), the Company does not maintain or have any obligation to contribute to (or any other material liability with respect to) any plan or arrangement, whether or not terminated, which provides medical, health, life insurance or other welfare-type benefits including “employee welfare benefit plans” (as defined in Section 3(1) of ERISA).  No Welfare Plan provides medical or life insurance benefits to current or future retired or terminated employees (except for limited continued medical benefit coverage required to be provided under Section 4980B of the Code or as required under applicable state law).

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(c)The Company does not maintain, contribute to or have any liability or potential liability under (or with respect to) any employee benefit plan which is a “defined benefit plan” (as defined in Section 3(35) of ERISA), whether or not terminated.

(d)Except as set forth on the Employee Benefits Schedule under the heading “Profit Sharing Plans” (the “Profit Sharing Plans”), the Company does not maintain, contribute to or have any liability or potential liability under (or with respect to) any employee benefit plan which is a “defined contribution plan” (as defined in Section 3(34) of ERISA), whether or not terminated.

(e)Except as set forth on the Employee Benefits Schedule under the heading “Other Plans” (the “Other Plans”), the Company does not maintain, contribute to or have any material liability or potential liability under (or with respect to) any plan, program or arrangement providing benefits to current or former employees, including any bonus plan, plan for deferred compensation, retirement, severance, sick leave, employee health or other welfare benefit plans, programs or other arrangements, whether or not terminated.

(f)For purposes of this Section 8.16, the term “Company” includes all entities treated as a single employer with the Company pursuant to Section 414 of the Code.

(g)With respect to the Welfare Plans, the Profit Sharing Plans and the Other Plans set forth on the Employee Benefits Schedule (collectively, the “Plans”), all required payments, premiums, contributions, reimbursements or accruals required for all periods ending prior to or as of the Closing shall have been timely made or properly accrued on the Latest Balance Sheet.  None of the Plans has any unfunded liabilities which are not reflected on the Latest Balance Sheet.

(h)The Plans and all related trusts, insurance contracts and funds have been maintained, funded and administered in compliance in all material respects with their terms and with the applicable provisions of ERISA, the Code and other applicable laws.  Neither the Company nor, to the Company’s Knowledge, any trustee or administrator of any Plan, has engaged in any transaction with respect to the Plans which would subject the Company or any trustee or administrator of the Plans, or any party dealing with any such Plan, nor do the transactions contemplated by this Agreement constitute transactions which would subject any such party, to either a civil penalty assessed pursuant to Section 502(i) of ERISA or the tax or penalty on prohibited transactions imposed by Section 4975 of the Code.  No actions, suits or claims with respect to the assets of the Plans (other than routine claims for benefits) are pending or, to the Company’s Knowledge, threatened which could result in or subject the Company to any material liability, and there are no circumstances which would give rise to or be expected to give rise to any such actions, suits or claims.

(i)Each of the Plans which is intended to be qualified under Section 401(a) of the Code has received a favorable determination from the Internal Revenue Service that such plan is qualified under Code Section 401(a), and nothing has occurred since the date of such determination that could adversely affect the qualified status of any such Plan.

8.17Tax Matters.

(a)Except as set forth on the attached Taxes Schedule, the Company and each Subsidiary has timely filed all Tax Returns required to be filed by it, and each such Tax Return has been prepared in material compliance with all applicable laws and regulations.  Except as set forth on the attached Taxes Schedule, all Taxes due and payable by the Company and its Subsidiaries have been paid, and the Company and its Subsidiaries have withheld and paid over to the appropriate taxing authority all Taxes which they are required to withhold from amounts paid or owing to any employee, stockholder, creditor or other third party.

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(b)Except as set forth on the attached Taxes Schedule: (i) neither the Company nor any of its Subsidiaries has requested or been granted an extension of the time for filing any Tax Return which has not yet been filed; (ii) neither the Company nor any of its Subsidiaries has consented to extend to a date later than the date hereof the time in which any Tax may be assessed or collected by any taxing authority; (iii) no deficiency or proposed adjustment which has not been settled or otherwise resolved for any amount of Tax has been proposed, asserted or assessed by any taxing authority against the Company or any Subsidiary; (iv) the Company and its Subsidiaries have filed all required Tax Returns in all jurisdictions in which the Company or any Subsidiary is subject to Tax; (v) there are no Liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company or any of its Subsidiaries; (vi) neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) “closing agreement” as described in Code §7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions occurring at or prior to the Closing or any excess loss account in existence at Closing described in Treasury Regulations under Code §1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date; (vii) neither the Company nor any of its Subsidiaries has been a member of an Affiliated Group other than one of which the Company was the common parent, or filed or been included in a combined, consolidated or unitary income Tax Return, other than one filed by the Company; (viii) neither the Company nor any of its Subsidiaries is a party to or bound by any Tax allocation or Tax sharing agreement; and (ix) neither any of the Company Shareholders nor the Company or any of its Subsidiaries (or any of their employees) is a party to any agreement, contract, plan or other arrangement that has resulted or would result, separately or in the aggregate, in the payment of any “parachute payments” within the meaning of Section 280G of the Code (as a result of the consummation of the transactions contemplated hereby or otherwise).

(c)The unpaid Taxes of the Company and its Subsidiaries (A) did not, as of the date of the Last Audited Balance Sheet, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Last Audited Balance Sheet (rather than in any notes thereto), and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in filing their Tax Returns.  Since the date of the Last Audited Balance Sheet, neither the Company nor any Subsidiary has incurred any liability for Taxes outside the ordinary course of business, other than that created by the transactions contemplated hereby.

8.18Brokerage.  Except as set forth on the attached Brokerage Schedule, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement binding upon any of the Company Shareholders, the Company or any of its Subsidiaries.

8.19Bank Accounts.  The Bank Account Schedule attached hereto lists all of the Company’s and its Subsidiaries’ bank accounts (designating each authorized signatory and the level of each signatory’s authorization).

8.20Affiliate Transactions.  Except as set forth on the attached Affiliated Transactions Schedule, no officer, director, shareholder or Affiliate of the Company or any of its Subsidiaries or, to the Company’s Knowledge, any individual related by blood, marriage or adoption to any such individual or any employee or any Person in which any such Person owns any beneficial interest, is a party to any agreement, contract, commitment or transaction with the Company or any of its Subsidiaries or has any interest in any property used by the Company or any of its Subsidiaries.

8.21Customers and Suppliers.  The Customers and Suppliers Schedule attached hereto sets forth (a) a list of the top ten customers of the Company and its Subsidiaries (on a consolidated basis) by dollar

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volume of products and services provided to such customers (each, a “Material Customer”), and (b) a list of the top ten suppliers of the Company and its Subsidiaries (on a consolidated basis) by dollar volume of purchases from such suppliers (each, a “Material Supplier”), in each case for the fiscal year ended September 30, 2003. Neither the Company nor any of its Subsidiaries has received any written indication from any Material Customer to the effect that such customer will materially change the terms of its relationship with the Company or any of its Subsidiaries.  Neither the Company nor any of its Subsidiaries has received any written indication from any Material Supplier to the effect that such supplier will materially change the terms of its relationship with the Company or any of its Subsidiaries.  None of the Company’s or its Subsidiaries referral sources (including law firms) have indicated in writing to the Company or its Subsidiaries that it is not satisfied with the Company’s and its Subsidiaries’ legal or presentment services or relationships with the Company’s and its Subsidiaries’ customers or that such referral sources will suggest or otherwise counsel that their customers and clients engage the Company’s and its Subsidiaries’ competitors rather than the Company and its Subsidiaries.

8.22Accuracy of Written Due Diligence Materials.  Neither this Article VIII nor the Company Disclosure Schedules, taken as a whole, contain any untrue statement of a material fact or omits any material fact required to be stated therein or necessary, in the context in which made, to make the statements herein or therein not materially false or misleading.

ARTICLE IX

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

As an inducement to the Company to enter into this Agreement and consummate the transactions contemplated hereby, Parent and Merger Sub hereby represent and warrant to the Company as follows:

9.1Organization and Power.  Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri.  Merger Sub is a corporation duly organized and validly existing under the laws of the State of Oregon.  Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The copies of Parent’s articles of incorporation and by-laws which have been furnished to the Company’s special counsel reflect all amendments made thereto at any time prior to the date of this Agreement.  The copies of Merger Sub’s articles of incorporation and by-laws which have been furnished to the Company’s special counsel reflect all amendments made thereto at any time prior to the date of this Agreement.

9.2Authorization.  The execution, delivery and performance of this Agreement by Parent and its consummation of the transactions contemplated hereby have been duly and validly authorized by Parent, and no other corporate act or proceeding on the part of Parent is necessary to authorize the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Merger Sub and its consummation of the transactions contemplated hereby have been duly and validly authorized by Merger Sub, and no other corporate act or proceeding on the part of Merger Sub or its sole shareholder is necessary to authorize the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by each of Parent and Merger Sub, and this Agreement constitutes a valid and binding obligation of Parent and Merger Sub, enforceable against each in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws relating to or affecting the rights and remedies or creditors generally.

9.3No Violation.  Neither Parent nor Merger Sub is subject to or obligated under its articles of incorporation or by-laws, or any applicable law, rule or regulation of any governmental authority, or any agreement, instrument, license or permit, or is subject to any order, writ, injunction or decree, which would be

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breached or violated by its execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby.

9.4Governmental Authorities and Consents.  No permit, consent, approval or authorization of, or declaration to or filing with, any governmental or regulatory authority or any other Person is required in connection with the execution, delivery or performance of this Agreement by Parent or Merger Sub or the consummation by Parent or Merger Sub of the transactions contemplated hereby.

9.5Litigation.  There are no actions, suits, proceedings, orders or investigations pending or, to Parent’s knowledge, threatened against or affecting Parent or Merger Sub, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would materially and adversely affect Parent’s or Merger Sub’s performance under this Agreement or the consummation of the transactions contemplated hereby.

9.6Conduct of Business; Liabilities.  Except in connection with the transactions contemplated hereby, Merger Sub has not conducted any business, incurred any expenses, obligations or liabilities or entered into any contracts or agreements.

ARTICLE X

RESERVED

Article X intentionally left blank.

ARTICLE XI

ADDITIONAL AGREEMENTS

11.1Survival.  The representations and warranties in this Agreement, the Related Agreement or in any writing delivered by any party to another party in connection with this Agreement shall survive the Closing as follows:

(a)the Fundamental Representations, the representations and warranties in Section 11 of the Related Agreement (the “Related Representations”), the representations and warranties in Section 8.1 (Organization; Corporate Power) and Section 8.17 (Tax Matters), and the representations and warranties in Section 9.1 (Organization and Power) and Section 9.2 (Authorization), shall terminate when the applicable statutes of limitations with respect to the liabilities in question expire (after giving effect to any extensions or waivers thereof), plus ninety (90) days;

(b)the representations and warranties in Section 8.13 (Compliance with Laws) and Section 8.14 (Environmental Matters) shall terminate on the date that is the three year anniversary of the Closing Date; and

(c)all other representations and warranties in this Agreement or in any writing delivered by any party to another party in connection with this Agreement shall terminate on the Indemnity Escrow Release Date;

provided that any representation or warranty in respect of which indemnity may be sought under Section 11.2 below, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 11.1 if written notice of the inaccuracy or breach thereof giving rise to such right of indemnity (including a reasonable estimate of the amount of Losses which the notifying party may suffer, sustain or become subject to, as a result of, in connection with or by virtue of such breach, or if the notifying party is unable to determine a reasonable estimate thereof, a statement to such effect) shall have been given in

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good faith to the party against whom such indemnity may be sought prior to such time (regardless of when the Losses in respect thereof may actually be incurred).

11.2Indemnification.

(a)Each Company Shareholder, severally in proportion to its Pro Rata Share and not jointly, agrees to and shall indemnify Parent, the Surviving Corporation and their respective Affiliates, stockholders, officers, directors, employees, agents, successors and assigns (collectively, the “Buyer Parties”) and save and hold each of them harmless against any loss, liability, claim, damage or expense (including interest, penalties, reasonable attorneys’ fees and expenses and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing) (collectively, “Losses”), which any such Buyer Party may suffer, sustain or become subject to, as a result of, in connection with or by virtue of: (1) any breach by the Company of any representation or warranty made by the Company in this Agreement or in any of the certificates or other instruments or documents furnished by the Company pursuant to this Agreement (including the certificate contemplated by Section 6.1(n)(i) hereof); (2) any non-fulfillment or breach by the Company of any covenant or agreement required to be performed by the Company under this Agreement; (3) any Distribution Errors; or (4) any of the matters set forth on the Indemnification Schedule attached hereto; provided that:

(i)the Company Shareholders shall not have any liability under clause (1) of this Section 11.2(a) (other than with respect to the Fundamental Representations) unless the aggregate of all Losses relating thereto for which the Company Shareholders would, but for this proviso, be liable exceeds on a cumulative basis an amount equal to $850,000.00 (the “Deductible Amount”), and then the Company Shareholders shall only be liable for all such Losses in excess of the Deductible Amount; provided that no claim for indemnification by any Buyer Party arising under Section 11.2(a)(1) (other than with respect to the Fundamental Representations) shall be asserted where the amount that would otherwise be payable by the Company Shareholders hereunder relating to such claim is less than $10,000;

(ii)the Company Shareholders’ aggregate liability under clause (1) of this Section 11.2(a) (other than with respect to the Fundamental Representations or in connection with any action or claim based upon fraud) shall in no event exceed $10,000,000.00 (with it being understood, however, that notwithstanding anything to the contrary in this Agreement, the maximum aggregate liability of any Company Shareholder for any Losses arising under this Agreement or the Related Agreement (including, for the avoidance of doubt, any Losses arising with respect to any breach of any Related Representation) shall be the amount of the aggregate proceeds actually received by such Company Shareholder in connection herewith); and

(iii)the Company Shareholders shall not have any liability under clause (3) of this Section 11.2(a) unless written notice of the events giving rise to such right of indemnity (including a reasonable estimate of the amount of Losses which the notifying party may suffer, sustain or become subject to, as a result of, in connection with or by virtue of such breach, or if the notifying party is unable to determine a reasonable estimate thereof, a statement to such effect) is given in good faith to the Shareholders’ Representative prior to the Indemnity Escrow Release Date.

Each Company Shareholder (for itself and not for any other Company Shareholder) agrees to and shall indemnify the Buyer Parties and save and hold each of them harmless against any Losses which any such Buyer Party may suffer, sustain or become subject to, as a result of, in connection with or by virtue of: (1) any breach by such Company Shareholder of any Related Representation; or (2) any non-fulfillment or breach by such Company Shareholder of any covenant or agreement required to be performed by him or it under this Agreement or the Related Agreement.

(b)Parent and the Surviving Corporation agree to and shall indemnify the Company Shareholders and their respective Affiliates, stockholders, officers, directors, employees, agents, successors

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and assigns (collectively, the “Seller Parties”) and hold them harmless against any Losses which the Seller Parties may suffer, sustain or become subject to, as a result of, in connection with or by virtue of: (1) any breach by Parent or Merger Sub of any representation or warranty made by Parent or Merger Sub in this Agreement or in any of the certificates or other instruments or documents furnished by Parent or Merger Sub pursuant to this Agreement (including the certificate contemplated by Section 6.2(f)(i) hereof); or (2) any non-fulfillment or breach by Parent or Merger Sub of any covenant or agreement required to be performed by Parent or Merger Sub under this Agreement.

(c)Any indemnification of the Buyer Parties or the Seller Parties pursuant to this Section 11.2 shall be effected by wire transfer of immediately available funds from one or more of the indemnifying parties to an account designated by the applicable Buyer Party or Seller Party, as the case may be, within ten days after the determination thereof.  Any such indemnification payments shall include interest at the Applicable Rate calculated on the basis of the actual number of days elapsed over 365, from the date any such Loss is suffered or sustained to the date of payment.  Any amounts owing from any Company Shareholder(s) pursuant to this Section 11.2 (including, for the avoidance of doubt, any amounts owing with respect to Losses related to any breach of any Related Representation) or Section 11.6 shall first be made to the extent possible from the Indemnity Escrow Account (but not the Purchase Price Escrow Account) and thereafter shall be made directly by the Company Shareholder(s) in accordance with the terms of this Section 11.2(c). All indemnification payments made pursuant to this Section 11.2 shall be deemed adjustments to the purchase price.

(d)Any Person making a claim for indemnification under this Section 11.2 (an “Indemnitee”) shall notify the indemnifying party (an “Indemnitor”) of the claim in writing within fifteen (15) business days after receiving written notice of any action, lawsuit, proceeding, investigation or other claim against it (if by a third party), describing the claim, the amount thereof (if known and quantifiable) and the basis thereof; provided that the failure to so notify an Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent that such failure shall have caused the damages for which the Indemnitor is obligated to be greater than such damages would have been had the Indemnitee given the Indemnitor prompt notice hereunder.  Any Indemnitor shall be entitled to participate in the defense of such action, lawsuit, proceeding, investigation or other claim giving rise to an Indemnitee’s claim for indemnification at such Indemnitor’s expense, and at its option (subject to the limitations set forth below) shall be entitled to assume the defense thereof by appointing counsel reasonably acceptable to the Indemnitee to be the lead counsel in connection with such defense; provided that, prior to the Indemnitor assuming control of such defense it shall first verify to the Indemnitee in writing that such Indemnitor shall be responsible (with no reservation of any rights) for all liabilities and obligations relating to such claim for indemnification (subject to the dollar limitations otherwise set forth in Section 11.2(a)(i) and Section 11.2(a)(ii) herein) and that it shall provide indemnification (subject to the dollar limitations otherwise set forth in Section 11.2(a)(i) and Section 11.2(a)(ii) herein) to the Indemnitee with respect to such action, lawsuit, proceeding, investigation or other claim giving rise to such claim for indemnification hereunder; and provided further, that:

(A)the Indemnitee shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose; provided that the fees and expenses of such separate counsel shall be borne by the Indemnitee (other than any reasonable fees and expenses of such separate counsel that are incurred prior to the date the Indemnitor effectively assumes control of such defense which, notwithstanding the foregoing, shall be borne by the Indemnitor, and except that the Indemnitor shall pay all of the reasonable fees and expenses of such separate counsel if the Indemnitee has been reasonably advised by its counsel that a reasonable likelihood exists of a conflict of interest between the Indemnitor and the Indemnitee);

(B)the Indemnitor shall not be entitled to assume control of such defense and shall pay the reasonable fees and expenses of counsel retained by the Indemnitee if (1) the claim for indemnification relates to or arises in connection with any criminal or quasi-criminal proceeding, action, indictment, allegation or investigation; (2) the claim primarily seeks an injunction

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or equitable relief against the Indemnitee; (3) the Indemnitee has been reasonably advised by its counsel in writing that a reasonable likelihood exists of a conflict of interest between the Indemnitor and the Indemnitee; or (4) upon petition by the Indemnitee, the appropriate court rules that the Indemnitor failed or is failing to vigorously prosecute or defend such claim; and

(C)if the Indemnitor shall control the defense of any such claim, the Indemnitor shall obtain the prior written consent of the Indemnitee before entering into any settlement of a claim or ceasing to defend such claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief will be imposed against the Indemnitee or if such settlement does not expressly and unconditionally release the Indemnitee from all liabilities and obligations with respect to such claim, without prejudice.

(e)The amount of damages for which any Person may be liable under this Section 11.2 shall be the net amount of the damages suffered by the Buyer Parties or the Seller Parties, as the case may be, after deducting (i) all insurance proceeds, if any, actually received by the applicable Buyer Party or Seller Party, as the case may be, less any increase in the annual premiums to such Person as a result of such claim for insurance proceeds in the immediately succeeding year, and (ii) any net Tax benefits actually received by the Indemnitee with respect to Loss being indemnified.

(f)Notwithstanding anything to the contrary in this Agreement, for purposes of the indemnification provisions in this Section 11.2, the determination of (i) whether any representation or warranty has been breached, and (ii) the amount of any Losses with respect to any such breach, shall be made without giving effect to any “Material Adverse Effect” qualification or any materiality qualification contained in the representations or warranties herein, except for the representations and warranties set forth in Section 8.5 (Financial Statements; Accounts Receivable), Section 8.7 (No Material Adverse Effect) and Section 8.22 (Accuracy of Written Due Diligence Materials) for which such qualifications shall be given effect.

(g)Subject to the terms of Section 12.11(e), except for claims of fraud, the indemnities provided in this Section 11.2 shall be the exclusive remedy of the parties (including the Buyer Parties and the Seller Parties) in respect of the matters covered by this Agreement and the Related Agreement.

(h)The Company Shareholders and their Affiliates will have no claims or rights to contribution or indemnity from the Surviving Corporation with respect to any claims made by the Buyer Parties or amounts paid by any of the Company Shareholders or their Affiliates pursuant to this Section 11.2 of the Merger Agreement.  The Company Shareholders and their Affiliates will have no claims or rights to contribution or indemnity from the officers or directors of the Surviving Corporation with respect to any amounts paid by any of them pursuant to this Section 11.2 if such claims or rights would require the Surviving Corporation to indemnify the directors or officers.

11.3Press Release and Announcements.  After the Closing, the Surviving Corporation may issue any press releases, announcements to the employees, customers or suppliers of the Company or any of its Subsidiaries or other releases of information related to this Agreement or the transactions contemplated hereby as it may deem appropriate without the consent of any other party hereto.

11.4Expenses.  Except as otherwise provided herein, Parent and Merger Sub shall pay all of their own fees, costs and expenses incurred in connection with the negotiation of this Agreement, the performance of their obligations hereunder and the consummation of the transactions contemplated hereby (it being understood, however, that one-half of all filing and notification fees in connection with the HSR Act have been paid by Parent, and one-half of all filing and notification fees in connection with the HSR Act have been paid by the Company).  The Company Shareholders shall pay all of their own, and (severally in proportion to their Pro Rata Share and not jointly) all of the Company’s and its Subsidiaries’ fees, costs and expenses incurred in connection with the negotiation of this Agreement, the performance of their obligations hereunder and the consummation of the transactions contemplated hereby (collectively, “Company Expenses”).  Any Company

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Expenses which are in fact paid by Parent or its Subsidiaries (including the Surviving Corporation) from and after the Closing shall, without duplication, be included in current liabilities for purposes of the calculation of Net Working Capital.

11.5Further Assurances.  Each of the Surviving Corporation, the Company Shareholders, Parent and Merger Sub shall, and shall cause their Affiliates to, execute and deliver such further instruments of conveyance and transfer and take such additional action as the Surviving Corporation may reasonably request to effect, consummate, confirm or evidence the Merger.

11.6Certain Tax Matters.  The following provisions shall govern the allocation of responsibility as between Parent and the Surviving Corporation, on the one hand, and the Company Shareholders, on the other, for certain Tax matters following the Closing:

(a)The Company Shareholders, severally in proportion to their Pro Rata Share and not jointly, shall indemnify each Buyer Party and save and hold each of them harmless against (i) all Taxes (or the non-payment thereof) of the Company and its Subsidiaries for all Taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any Taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”), (ii) any and all Taxes of any member of an Affiliated Group of which the Company or any of its Subsidiaries is or was a member on or before the Closing Date, including pursuant to Treasury Regulation §1.1502-6 or any analogous or similar state, local, or foreign law or regulation, and (iii) any and all Taxes of any Person (other than the Company and its Subsidiaries) imposed on the Company or any of its Subsidiaries as a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction occurring before the Closing; provided, however, that in the case of clauses (i), (ii) and (iii) above, the Company Shareholders shall be liable only to the extent that such Taxes are in excess of the amount, if any, reserved for such Taxes (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) on the face of the Closing Statement and taken into account in determining the final purchase price.  Subject to the penultimate sentence of Section 11.2(c) hereof, the Company Shareholders shall reimburse Parent for any Taxes which are the responsibility of the Company Shareholders pursuant to this Section 11.6(a) within ten (10) business days after payment of such Taxes by Parent or the Surviving Corporation.

(b)In the case of any Taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by income or receipts for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date, and the amount of other Taxes for a Straddle Period which relate to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire Taxable period multiplied by a fraction, the numerator of which is the number of days in the Taxable period ending on the Closing Date, and the denominator of which is the number of days in such Straddle Period.

(c)The Surviving Corporation shall prepare or cause to be prepared and file or caused to be filed all Tax Returns for Pre-Closing Tax Periods for the Company and its Subsidiaries which are filed after the Closing Date.  The Surviving Corporation shall permit Shareholders’ Representative a reasonable opportunity to review and comment on each such Tax Return (including any amended Tax Return) prior to filing and shall make such reasonable revisions to such Tax Returns as are reasonably requested by Shareholders’ Representative.

(d)The Surviving Corporation and the Shareholders’ Representative (on behalf of the Company Shareholders) shall cooperate with each other in connection with the filing of any Tax Returns (including any amended Tax Return) and any audit, litigation or other proceeding with respect to Taxes.

(e)All Tax-sharing agreements or similar agreements with respect to or involving the Company and any of its Subsidiaries shall be terminated as of the Closing Date and, after the Closing Date,

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neither Parent, the Surviving Corporation nor any of their Subsidiaries shall be bound thereby or have any liability thereunder.

(f)All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid by the Company Shareholders when due, and the Company Shareholders shall, at their own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable law, the Surviving Corporation will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation.

(g)Notwithstanding any other provision hereof to the contrary, if (x) the Company Shareholders provide indemnification under this Section 11.6 in accordance with the provisions of Section 11.2(c), and (y) Fleet National Bank, a national banking association (“Fleet”), may (in the good faith judgment of the Shareholders’ Representative) be liable or responsible for such Tax liability(ies) pursuant to Article IX of the Stock Purchase Agreement, dated as of February 8, 2001, between Fleet and the Company, and joined in for limited purposes, by Endeavour Capital Fund III, L.P., Endeavour Associates Fund III, L.P., and Shawmut Equity Partners, L.P, as amended (the “Fleet Purchase Agreement”), then Parent shall take all such actions as are reasonably necessary to permit the Shareholders’ Representative to (at its option and at the sole expense of the Company Shareholders) pursue, by, on behalf of and in the name of the Surviving Corporation but for the benefit of the Company Shareholders, any claim or remedy that is or may be available to the Surviving Corporation under the 2001 Agreement.

(h)The parties hereto agree that a Tax deduction should arise from the accelerated vesting or disposition of capital stock of the Company and Vested Company Options held by the Persons identified on Schedule 11.6(h) in connection with the transactions contemplated hereby; provided, however, that neither the Company nor the Company Shareholders are providing any representation, warranty or indemnification (including pursuant to Section 8.17, Section 11.2, this Section 11.6 or the Related Agreement) with respect to the availability or timing of any such deduction (including the failure (i) of the Company or the Surviving Corporation to claim any such deduction at any time, or (ii) of the Company to withhold any Taxes required to be withheld with respect to income upon vesting or disposition at any time prior to (1) consummation of the transactions contemplated hereby, or (2) the accelerated vesting or disposition of the capital stock of the Company and Vested Company Options in connection with the consummation of the transactions contemplated hereby).

11.7Appointment of Shareholders’ Representative.

(a)Each of the Company Shareholders and the Company (on behalf of the Company Shareholders) hereby designates Endeavour Capital Fund III, L.P., a Delaware limited partnership, as the exclusive representative and agent of the Company Shareholders (“Shareholders’ Representative”) to execute any and all instruments or other documents on behalf of the Company Shareholders, and to do any and all other acts or things on behalf of the Company Shareholders, which Shareholders’ Representative may deem necessary or advisable, or which may be required pursuant to this Agreement, the Related Agreement, the Escrow Agreement or otherwise, in connection with the consummation of the transactions contemplated hereby.  Each of the Company Shareholders and the Company (on behalf of the Company Shareholders) hereby irrevocably appoints, and consents to the designation of Endeavour Capital Fund III, L.P., a Delaware limited partnership, its successor or its designee, to act as such Company Shareholder’s exclusive attorney-in-fact and agent, with full power of substitution, to act in the name, place and stead of such Person with respect to the matters identified herein or arising hereunder, including the power (i) to act for such Person with regard to matters pertaining to indemnification referred to in this Agreement; (ii) to execute and deliver on behalf of such Person all ancillary agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents Shareholders’ Representative deems appropriate in connection with responding to, compromising or settling any claims made pursuant to this Agreement, the Escrow Agreement and the Related Agreement; (iii) to give and receive all notices and communications to be

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given or received under this Agreement, the Escrow Agreement and the Related Agreement and to receive service of process in connection with any claims under this Agreement, the Escrow Agreement and the Related Agreement; and (iv) to take all other actions which under this Agreement, the Escrow Agreement and the Related Agreement may be taken by Shareholders’ Representative and to do or refrain from doing any further act or deed on behalf of such Person which Shareholders’ Representative deems necessary or appropriate in its sole discretion relating to the subject matter of this Agreement, the Escrow Agreement and the Related Agreement as fully and completely as such Person could do if personally present.  The death or incapacity of any such Person shall not terminate the agency and power granted hereby to Shareholders’ Representative.

(b)Parent shall be entitled to deal exclusively with the Shareholders’ Representative on all Company Shareholder matters relating to this Agreement.  A decision, act, consent or instruction of the Shareholders’ Representative constitutes a decision of all the Company Shareholders.  Such decision, act, consent or instruction is final, binding and conclusive upon each Company Shareholder, and Parent may rely upon such decision of the Shareholders’ Representative.

(c)The Shareholders’ Representative shall act for the Company Shareholders hereunder in the manner the Shareholders’ Representative believes to be in the best interest of the Company Shareholders and consistent with its obligations hereunder, but shall have no duties or obligations to the Company Shareholders except as specifically set forth herein.  In acting as representative of the Company Shareholders, the Shareholders’ Representative may rely upon, and shall be protected in acting or refraining from acting upon, an opinion or advice of counsel, certificate of auditors or other certificate, statement, instrument, opinion, report, notice, request, consent, order, arbitrator’s award, appraisal, bond or other paper or documents reasonably believed by the Shareholders’ Representative to be genuine and to have been signed or presented by the proper party or parties.  The Shareholders’ Representative shall not be personally liable to the Company Shareholders for any act done or omitted hereunder as Shareholders’ Representative except in the event of intentional wrongdoing for personal benefit.  The Shareholders’ Representative may consult with counsel and any advice of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered or omitted by it in such capacity in good faith and in accordance with such opinion of counsel.  The Shareholders’ Representative may perform its duties as Shareholders’ Representative either directly or by or through its agents or attorneys, and the Shareholders’ Representative shall not be responsible to the Company Shareholders for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

(d)The Shareholders’ Representative shall be entitled to reimbursement from the Shareholder Representative Escrow Account for its expenses incurred in connection with its duties as Shareholders’ Representative.  The Company Shareholders (severally in proportion to their Pro Rata Share and not jointly) shall indemnify, hold harmless and defend the Shareholders’ Representative from and against, and reimburse the Shareholders’ Representative with respect to, any and all Losses reasonably incurred by the Shareholders’ Representative as a result of such Person acting as the Shareholders’ Representative under this Agreement or in connection with such Person’s duties hereunder, provided that the Shareholders’ Representative’s initial recourse for all such claims shall be to the Shareholder Representative Escrow Amount for so long as any of the Shareholder Representative Escrow Amount remains in the Shareholder Representative Escrow Account.

11.8Collection of Accounts Receivable. 

(a)After the Closing and until the Final Receivables Settlement Date (as defined below), the Surviving Corporation shall in good faith use commercially reasonable efforts to collect the accounts receivable which are reflected in Closing Working Capital on the Closing Statement (net of any allowance for doubtful accounts reflected in Closing Working Capital on the Closing Statement, the “Closing Accounts Receivable”).  Without limiting the foregoing, the Surviving Corporation shall not be deemed to be in good faith using commercially reasonable efforts to collect the Closing Accounts Receivable if it shall forgive, discharge or compromise, in whole or in part, any receivable reflected in Closing Working Capital on the

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Closing Statement and the primary purpose for such forgiveness, discharge or compromise, in whole or in part, was not to resolve a bona fide customer dispute with respect to or otherwise resulting from any act or omission by the Company or any of its Subsidiaries prior to the Closing.  If the Surviving Corporation has not collected an amount of receivables in an amount at least equal to the Closing Accounts Receivable by the date that is five business days before the Indemnity Escrow Release Date, then (without regard to whether such non-collection constitutes a breach of a representation or warranty hereunder) Parent and Shareholders’ Representative shall take all such actions as are necessary under the Escrow Agreement to cause the Escrow Agent to release to the Surviving Corporation, in immediately available funds from the Indemnity Escrow Account on or prior to the Indemnity Escrow Release Date, an aggregate amount equal to (the “Accounts Receivable Shortfall Amount”) the amount by which the Closing Accounts Receivable exceeds the amount collected by the Surviving Corporation pursuant to this Section 11.8(a) during the period from the Closing Date through the date that is five business days before the Indemnity Escrow Release Date.  For the avoidance of doubt, any collection of a receivable that was a doubtful account on the Closing Statement or had been written off prior to the Closing will be considered an amount collected by the Surviving Corporation for the purposes of the preceding sentence.  Notwithstanding anything to the contrary in this Section 11.8, in the event that the Surviving Corporation desires to forgive, discharge or compromise, in whole or in part, a receivable reflected in Closing Working Capital on the Closing Statement and, pursuant to the second sentence of this Section 11.8(a), such forgiveness, discharge or compromise would not constitute the good faith use of commercially reasonable efforts to collect the Closing Accounts Receivable, the Surviving Corporation may nonetheless effect such forgiveness, discharge or compromise, in whole or in part, so long as the Surviving Corporation provides the Shareholders’ Representative with prior written notice of such forgiveness, discharge or compromise, which notice shall contain the Surviving Corporation’s written agreement that the amount so forgiven, discharged or compromised shall be considered an amount collected by the Surviving Corporation for the purposes of the third sentence of this Section 11.8(a) (or, with respect to any forgiveness, discharge or compromise occurring during the Subsequent Collection Period (as defined below), an amount collected by the Surviving Corporation for the purposes of Section 11.8(b) below).

(b)If the Accounts Receivable Shortfall Amount is paid to the Surviving Corporation from the Indemnity Escrow Account as contemplated by Section 11.8(a) above, and if the Accounts Receivable Shortfall Amount paid to the Surviving Corporation from the Indemnity Escrow Account is greater than $200,000, then if, during the period (the “Subsequent Collection Period”) beginning on the date that is four business days before the Indemnity Escrow Release Date and ending on the date that is the three year anniversary of the Closing Date (the “Final Receivables Settlement Date”), the Surviving Corporation collects an amount of Closing Accounts Receivable in excess of $200,000, then the Surviving Corporation, no later than the date that is ten business days after the Final Receivables Settlement Date, shall pay to the Shareholders’ Representative (on behalf of the Company Shareholders other than the holders of Vested Company Options in accordance with the Shareholder Distribution Schedule attached hereto) and to the holders of Vested Company Options (subject to applicable withholding laws and obligations), by wire transfer of immediately available funds, an aggregate amount equal to the amount collected by the Surviving Corporation during the Subsequent Collection Period.

(c)Within ten days after the last day of each calendar month, beginning with the first full calendar month following the Closing and ending with the last full calendar month prior to the Indemnity Escrow Release Date, the Surviving Corporation shall provide to the Shareholders’ Representative an accurate and complete aging report identifying all receivables that were reflected in Closing Working Capital on the Closing Statement and that are unpaid as of the last day of such calendar month.

11.9Payment of Tax Bonus Payment.  After the Closing (and notwithstanding the provisions of Section 6.1(l)), the Surviving Corporation will pay (or cause to be paid) any portion of the aggregate amount of the Tax Bonus Payment that was not paid to the recipients thereof prior to the Closing.

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ARTICLE XII

MISCELLANEOUS

12.1Amendment and Waiver.  This Agreement may be amended, and any provision of this Agreement may be waived; provided that any such amendment or waiver will be binding on (x) the Company Shareholders only if such amendment or waiver is set forth in a writing executed by the Shareholders’ Representative, and (y) Parent, Merger Sub and the Surviving Corporation only if such amendment or waiver is set forth in a writing executed by Parent, Merger Sub or the Surviving Corporation, as the case may be.  No course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver.

12.2Notices.  All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when personally delivered or sent by telecopy (with hard copy to follow), (ii) one business day after being sent by reputable overnight express courier (charges prepaid), or (iii) five days following mailing by certified or registered mail, postage prepaid and return receipt requested.  Unless another single address is specified in writing, notices, demands and communications to (x) the Company Shareholders shall be sent to the address indicated for the Shareholders’ Representative (and notices, demands and communications to or from the Shareholders’ Representative will constitute notice to or from the Company Shareholders), and (y) Parent, the Surviving Corporation and the Shareholders’ Representative (in its capacity as Shareholders’ Representative) shall be sent to the addresses indicated below:

Notices to Parent or the Surviving Corporation:

EPIQ Systems, Inc.

501 Kansas Avenue

Kansas City, KS 66105

Attn: President

Telephone: (913) 621-9500

Telecopy: (913) 621-7281

with a copy to (which shall not constitute notice):

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

Attn:  Richard W. Porter, P.C.

Telephone:(312) 861-2000

Telecopy:(312) 861-2200

Notices to the Shareholders’ Representative:

Endeavour Capital Fund III, L.P.

920 SW Sixth Ave.

Portland, OR 97204

Attn: Leland M. Jones

Telephone: (503) 223-2721

Telecopy: (503) 223-1384

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with a copy to (which shall not constitute notice):

Stoel Rives LLP

900 SW Fifth Ave, Suite 2600

Portland, Oregon 97204-1268

Attn: Richard C. Josephson

Telephone: (503) 294-9537

Telecopy: (503) 220-2280

and

Shawmut Equity Partners, L.P.

75 Federal Street, 18^th Floor

Boston, MA  02110

Attn: Daniel K. Doyle

Telephone: (617) 368-4900

Telecopy: (617) 368-4910

12.3Assignment.  Except as set forth below, this Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party hereto without the prior written consent of the other parties hereto. Notwithstanding anything to the contrary in the immediately preceding sentence, each of Parent and the Surviving Corporation may assign its rights and obligations hereunder, in whole or in part, to any of its Affiliates without the consent of any of the other parties hereto.  In addition, each of Parent and the Surviving Corporation may assign its rights and obligations pursuant to this Agreement in whole or in part, in connection with any disposition or transfer of all or any portion of Parent’s, the Surviving Corporation’s or any of their respective Subsidiaries’ or their respective businesses in any form of transaction without the consent of any of the other parties hereto.  Each of Parent, the Surviving Corporation and their Subsidiaries may assign any or all of its rights pursuant to this Agreement, including its rights to indemnification, to any of their lenders as collateral security.

12.4Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

12.5Interpretation.  The headings and captions used in this Agreement, in any Schedule or Exhibit hereto, in the table of contents or in any index hereto are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement or any Schedule or Exhibit hereto, and all provisions of this Agreement and the Schedules and Exhibits hereto shall be enforced and construed as if no caption or heading had been used herein or therein.  Any capitalized terms used in any Schedule or Exhibit attached hereto and not otherwise defined therein shall have the meanings set forth in this Agreement.  Each defined term used in this Agreement shall have a comparable meaning when used in its plural or singular form.  The use of the word “including” herein shall mean “including without limitation.”  The parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

12.6Complete Agreement.  This Agreement (including all of the Schedules and Exhibits attached hereto), the Related Agreement, the Escrow Agreement and each of the Employment Agreements (including Section 7 of each of the Employment Agreements) contain the entire agreement and understanding between the

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

12.7Counterparts.  This Agreement may be executed in one or more counterparts (including by means of telecopied signature pages), all of which taken together shall constitute one and the same instrument. 

12.8Governing Law.  Except as provided in Section 12.11 below, all questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal law of the State of Oregon, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Oregon or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Oregon.

12.9Schedules.  Information set forth in any schedule of the Company Disclosure Schedules shall be deemed to have been disclosed only with respect to (a) any representation, warranty or statement in the Agreement qualified by reference to the schedule in question; and (b) any representation, warranty or statement in the Agreement qualified by reference to any other schedule where the information set forth on the face of the schedule in question is set forth with such specificity that a reasonable person would know that such disclosure was applicable to such other schedule.  The fact that any matter or event is disclosed in the Company Disclosure Schedules shall not constitute an admission that such item is required to be so disclosed, nor shall the fact that any matter or event is disclosed in the Company Disclosure Schedules necessarily mean that it is material, whether considered individually or in combination with other matters or events disclosed therein.  No information contained in the Company Disclosure Schedules shall be deemed to be an admission by any party to the Agreement or to any third party of any matter whatsoever, including, without limitation, any violation of law or breach of any agreement.  Except as otherwise limited herein or in the Agreement, all disclosures contained in these Schedules are made as of the date of the Agreement.  Capitalized terms used but not otherwise defined in the Company Disclosure Schedules shall have the meanings set forth in the Agreement.

12.10No Third Party Beneficiaries.  Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person other than the parties hereto and their respective permitted successors and assigns any rights or remedies under or by reason of this Agreement.  Notwithstanding the foregoing, certain provisions of this Agreement are intended for the benefit of the Company Shareholders and such provisions may only be enforced by the Shareholders’ Representative (on behalf of the Company Shareholders).

12.11Dispute Resolution.

(a)Except as otherwise expressly provided in this Agreement, the parties agree that the arbitration procedure set forth below shall be the sole and exclusive method for resolving and remedying any and all disputes, controversies or claims that arise out of or in connection with, or relate in any manner to, the rights and liabilities of the parties hereunder or any provision of this Agreement or the Related Agreement or the interpretation, enforceability, performance, breach, termination or validity hereof or thereof, including this Section 12.11 relating to the resolution of disputes (the “Disputes”) and questions concerning arbitrability; provided that nothing in this Section 12.11 shall prohibit a party hereto from instituting litigation to enforce any Final Determination (as defined below).  The parties hereby acknowledge and agree that, except as otherwise provided in this Section 12.11 or in the applicable rules for arbitration of business disputes (the “Rules”) promulgated by the Arbitration Service of Portland, Inc. (the “Arbitration Service”) as in effect from time to time, the arbitration procedures and any Final Determination hereunder shall be governed by, and shall be enforced pursuant to, the United States Arbitration Act, 9 U.S.C. §1 et. seq.

(b)Except as provided elsewhere herein, in the event that any party asserts that there exists a Dispute, such party shall deliver a written notice to each other party involved therein specifying the nature of the asserted Dispute and requesting a meeting to attempt to resolve the same.  If no such resolution is reached within ten business days after the delivery of such notice, the party delivering such notice of Dispute (the “Disputing Person”) may thereafter commence arbitration hereunder by delivering to each other party

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involved therein a notice of arbitration (a “Notice of Arbitration”).  Such Notice of Arbitration shall specify the nature of any Dispute and any other matters required by the Rules as in effect from time to time to be included therein.  The Arbitrator shall permit and facilitate such discovery as the parties shall reasonably request.  Parent and Shareholders’ Representative shall mutually agree upon one arbitrator to resolve any Dispute pursuant to the procedures set forth in this Section 12.11 and the Rules.  If Parent and Shareholders’ Representative cannot mutually agree to an arbitrator within 15 days from receipt of the notice of arbitration, the arbitrator shall be appointed by the Arbitration Service within 15 days of being notified in writing of the Arbitration Service’s need to make such appointment or as soon thereafter as may be practicable.

(c)The fees and expenses of the Arbitration Service and the arbitrator selected pursuant to Section 12.11(b) shall be shared equally by Parent and the Company Shareholders (severally in proportion to their Pro Rata Share and not jointly) and advanced by them from time to time as required; provided that at the conclusion of the arbitration, the arbitrator shall award reasonable costs and expenses (including the costs of the arbitration previously advanced and the reasonable fees and expenses of attorneys, accountants and other experts) and interest at the Applicable Rate to the prevailing party.

(d)The arbitration shall be conducted in Portland, Oregonunder the Rules as in effect from time to time.  The parties shall use their reasonable best efforts to cause the arbitrator to conduct the arbitration so that a final result, determination, finding, judgment and/or award (the “Final Determination”) is made or rendered as soon as practicable, but in no event later than 90 business days after the delivery of the Notice of Arbitration nor later than 30 days following completion of the arbitration.  Notwithstanding any Oregon law to the contrary, the Final Determination shall be final and binding on all parties and there shall be no appeal from or reexamination of the Final Determination, except for fraud, perjury, evident partiality or misconduct by an arbitrator prejudicing the rights of any party and to correct manifest clerical errors.

(e)Notwithstanding anything in this Agreement or the Related Agreement to the contrary, nothing in this Section 12.11 shall be construed to impair the right of any Person to seek injunctive or other equitable relief.

*   *   *   *   *

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Merger on the date first written above.

P-D HOLDING CORP.
By:		/s/  Jeffrey B. Baker
Name:					Jeffrey B. Baker
Title:					Chief Executive Officer and Secretary
EPIQ SYSTEMS, INC.
By:	/s/   Christopher E. Olofson
Name:				Christopher E. Olfson
				President and Chief Operating Officer
P-D MERGER CORP.
By:		/s/   Christopher E. Olofson
Name:				Christopher E. Olofson
Title:				President and Chief Operating Officer
ENDEAVOUR CAPITAL FUND III, L.P., IN ITS CAPACITY AS SHAREHOLDERS’ REPRESENTATIVE
By: ENDEAVOUR CAPITAL, LLC Its: General Partner
By:	/s/   John von Schlegell
Name:			John von Schlegell
Title:			Member

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EX-10.2

Exhibit 10.2

AGREEMENT RELATED TO MERGER AGREEMENT

THIS AGREEMENT RELATED TO MERGER AGREEMENT (“this Related Agreement”) is entered into effective as of January 30, 2004 by and among EPIQ Systems, Inc., a Missouri corporation (“Purchaser”), P-D Holding Corp., an Oregon corporation (the “Company”), the shareholders of the Company identified on the signature pages hereto (the “Party Shareholders”), and the Shareholders’ Representative (solely in its capacity as the Shareholders’ Representative).  The parties to this Related Agreement are sometimes referred to herein collectively as the “Parties” and individually as a “Party.”  The Party Shareholders other than Jeffrey B. Baker and Edward J. Nimmo are sometimes referred to herein collectively as the “Investor Party Shareholders” and individually as an “Investor Party Shareholder.”

Concurrently with the execution hereof, the Company, Purchaser and P-D Merger Corp., an Oregon corporation and wholly-owned subsidiary of Purchaser (“Merger Sub”), are entering into that certain Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of Merger Sub with and into the Company, with the result that the Company will be the surviving corporation (the “Surviving Corporation”) in the merger and continue as a wholly-owned subsidiary of Purchaser.  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Merger Agreement.  A copy of the Merger Agreement is attached hereto as Exhibit A.

The Party Shareholders, who collectively hold 92.37% of the shares of the Company’s common stock outstanding as of the date hereof, have agreed to execute this Related Agreement in order to induce Purchaser and Merger Sub to enter into the Merger Agreement.  Each Party Shareholder is a “Company Shareholder” as such term is defined in the Merger Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.Section 5.3 (Post-Closing Adjustment) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of subsections (d) and (f) of Section 5.3 (Post-Closing Adjustment) of the Merger Agreement as a “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions (including, for the avoidance of doubt, the terms and conditions that limit the extent of the payment obligations of each Company Shareholder).

2.Section 11.2 (Indemnification) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 11.2 (Indemnification) of the Merger Agreement as a “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions (including, for the avoidance of doubt, the terms and conditions that limit the extent of the indemnification obligations of each Company Shareholder).  For the avoidance of doubt and without limiting the provisions of the Merger Agreement (including the proviso in Section 11.1 thereof), the Parties acknowledge and agree that each representation or warranty in the Merger Agreement or this Related Agreement in respect of which indemnification may be sought under such Section 11.2 (Indemnification), and the indemnification with respect thereto, shall terminate at the applicable time provided for in Section 11.1 (Survival) of the Merger Agreement.

3.Section 11.4 (Expenses) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 11.4 (Expenses) of the Merger Agreement as a “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger

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Agreement and been a party thereto, subject to the terms and conditions of such provisions (including, for the avoidance of doubt, the terms and conditions that limit the extent of the payment obligations of each Company Shareholder).

4.Section 11.5 (Further Assurances) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 11.5 (Further Assurances) of the Merger Agreement as a “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions.

5.Section 11.6 (Certain Tax Matters) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 11.6 (Certain Tax Matters) of the Merger Agreement as a “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions (including, for the avoidance of doubt, the terms and conditions that limit the extent of the indemnification obligations of each Company Shareholder).

6.Section 11.7 (Appointment of Shareholders’ Representative) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) hereby designates Endeavour Capital Fund III, L.P., a Delaware limited partnership (i.e., the Shareholders’ Representative) as his or its exclusive representative and agent to execute any and all instruments or other documents on behalf of the Company Shareholders, and to do any and all other acts or things on behalf of the Company Shareholders, which Shareholders’ Representative may deem necessary or advisable, or which may be required pursuant to the Merger Agreement, this Related Agreement, the Escrow Agreement or otherwise, in connection with the consummation of the transactions contemplated by the Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) hereby irrevocably appoints, and consents to the designation of Endeavour Capital Fund III, L.P., a Delaware limited partnership (i.e., the Shareholders’ Representative), its successor or its designee, to act as such Party Shareholder’s exclusive attorney-in-fact and agent, with full power of substitution, to act in his or its name, place and stead with respect to the matters identified in the Merger Agreement, this Related Agreement and the Escrow Agreement or arising hereunder or thereunder, including the power (i) to act for him or it with regard to matters pertaining to indemnification referred to in the Merger Agreement; (ii) to execute and deliver on his or its behalf all ancillary agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents the Shareholders’ Representative deems appropriate in connection with responding to, compromising or settling any claims made pursuant to the Merger Agreement, this Related Agreement or the Escrow Agreement; (iii) to give and receive all notices and communications to be given or received under the Merger Agreement, this Related Agreement or the Escrow Agreement and to receive service of process in connection with any claims under the Merger Agreement, this Related Agreement or the Escrow Agreement; and (iv) to take all other actions which under the Merger Agreement, this Related Agreement or the Escrow Agreement may be taken by Shareholders’ Representative and to do or refrain from doing any further act or deed on his or its behalf which the Shareholders’ Representative deems necessary or appropriate in its sole discretion relating to the subject matter of the Merger Agreement, this Related Agreement or the Escrow Agreement as fully and completely as he or it could do if personally present.  The death or incapacity of any Party Shareholder shall not terminate the agency and power granted to Shareholders’ Representative hereunder or under the Merger Agreement.

Nothing in the foregoing paragraph shall be deemed to limit or otherwise modify the provisions of Section 11.7 (Appointment of Shareholders’ Representative) of the Merger Agreement (including, for the avoidance of doubt, the provisions of Section 11.7(c) thereof) or the power or authority of the Shareholders’ Representative under the Merger Agreement, and each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 11.7 (Appointment of Shareholders’ Representative) of the Merger Agreement as a “Company Shareholder” under such provisions to

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the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions.

7.Section 12.10 (No Third Party Beneficiaries) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 12.10 (No Third Party Beneficiaries) of the Merger Agreement as a “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions.  For the avoidance of doubt and without limiting the foregoing, each Party Shareholder (for itself and not for any other Company Shareholder) agrees that the provisions of the Merger Agreement which are intended for the benefit of the Company Shareholders may only be enforced by the Shareholders’ Representative (on behalf of the Company Shareholders).

8.Section 12.11 (Dispute Resolution) of Merger Agreement.  Each Party Shareholder (for itself and not for any other Company Shareholder) agrees to be bound by and comply with the provisions of Section 12.11 (Dispute Resolution) of the Merger Agreement as a “party” or “Company Shareholder” under such provisions to the same extent as if such Party Shareholder had been specifically identified as a “party” or “Company Shareholder” in the Merger Agreement and been a party thereto, subject to the terms and conditions of such provisions (including, for the avoidance of doubt, the terms and conditions that limit the extent of the payment obligations of each Company Shareholder under subsection (c) of Section 12.11 (Dispute Resolution) of the Merger Agreement).   The Parties acknowledge and agree that any Disputes (including Disputes concerning Sections 5.3 (Post-Closing Adjustment), 11.2 (Indemnification),  11.4 (Expenses), 11.5 (Further Assurances), 11.6 (Certain Tax Matters), 11.7 (Appointment of Shareholders’ Representative), 12.10 (No Third Party Beneficiaries) and 12.11 (Dispute Resolution) of the Merger Agreement and Disputes concerning the provisions of this Related Agreement, including this Section 8) shall be addressed as provided for in Section 12.11 (Dispute Resolution) of the Merger Agreement.

9.Books and Records with Respect to Tax Matters.  Each Party Shareholder (for itself and not for any other Party Shareholder and only to the extent that such Party Shareholder has in its possession immediately after the Closing any books and records with respect to Tax matters pertinent to the Surviving Corporation) agrees, and the Surviving Corporation agrees, (A) to retain all books and records with respect to Tax matters pertinent to the Surviving Corporation relating to any Taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Party Shareholders or the Surviving Corporation, any extensions thereof) of the respective Taxable periods, and to abide by all record retention agreements entered into with any Taxing authority, and (B) to give the other Parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if any of the other Parties so requests, the Party Shareholders or the Surviving Corporation, as the case may be, shall allow the other Party to take possession of such books and records.

10.Confidentiality.  Each Investor Party Shareholder (for itself and not for any other Investor Party Shareholder) agrees not to disclose or use at any time any Confidential Information (as defined below).  Each Investor Party Shareholder (for itself and not for any other Investor Party Shareholder) agrees to take all commercially reasonable steps to safeguard such Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft.  In the event any Investor Party Shareholder is required by law to disclose any Confidential Information, such Investor Party Shareholder (for itself and not for any other Investor Party Shareholder) agrees that it shall promptly notify Purchaser in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure, and such Investor Party Shareholder (for itself and not for any other Investor Party Shareholder) agrees that it shall cooperate with Purchaser to preserve the confidentiality of such information consistent with applicable law.  For purposes of this Related Agreement, “Confidential Information” means all information of a confidential and proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates to the business, products, services or research or development of the Company or its Subsidiaries or their respective suppliers, distributors, customers, referral sources, independent contractors or other business relations.

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11.Representations and Warranties.  Each Party Shareholder (for itself and not for any other Company Shareholder) represents and warrants that:

(a)it or he is the record and beneficial owner of the shares of the Company Common stock and the shares of the Series A Preferred Stock set forth opposite his or its name on the Capitalization Schedule attached to the Merger Agreement, free and clear of all Liens, voting agreements, proxies, pledges, transfer restrictions and other arrangements of any kind;

(b)if such Party Shareholder is an Investor Party Shareholder, the execution, delivery and performance of this Related Agreement have been duly authorized by such Investor Party Shareholder, and no other corporate, partnership, limited liability company or other similar act or proceeding, as applicable, on the part of such Investor Party Shareholder is necessary to authorize the execution, delivery or performance of this Related Agreement or the consummation of the transactions contemplated hereby;

(c)this Related Agreement has been duly executed and delivered by such Party Shareholder and constitutes a valid and binding obligation of such Party Shareholder, enforceable against such Party Shareholder in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws relating to or affecting the rights and remedies or creditors generally; and

(d)the execution and delivery by such Party Shareholder of this Related Agreement and the fulfillment of, and compliance with, the respective terms hereof by such Party Shareholder do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action of or by or notice or declaration to, or filing with, any third party or any court or administrative or governmental body or agency pursuant to, such Party Shareholder’s certificate of formation, operating agreement, partnership agreement, certificate or articles of incorporation or bylaws or other organizational or constituent documents of such Party Shareholder, as applicable, or any law, statute, rule or regulation to which such Party Shareholder is subject, or any agreement, instrument, license, permit, order, judgment or decree to which such Party Shareholder is a party or by which it or he is bound.

12.Notices.  All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Related Agreement shall be in writing and shall be deemed to have been given (i) when personally delivered or sent by telecopy (with hard copy to follow), (ii) one business day after being sent by reputable overnight express courier (charges prepaid), or (iii) five days following mailing by certified or registered mail, postage prepaid and return receipt requested.  Unless a Party gives to the other Parties written notification of another address, notices, demands and other communications shall be sent to the Party to be notified at the address indicated for such Party on the signature pages hereto.  The Parties acknowledge and agree that the provisions of Section 12.2 (Notices) of the Merger Agreement, and not the foregoing provisions of this Section 12, shall apply to all notices, demands and other communications to be given or delivered under or by reason of the provisions of the Merger Agreement, including the provisions of Sections 5.3 (Post-Closing Adjustment), 11.2 (Indemnification), 11.4 (Expenses), 11.5 (Further Assurances), 11.6 (Certain Tax Matters), 12.10 (No Third Party Beneficiaries) and 12.11 (Dispute Resolution) of the Merger Agreement.

13.No Third-Party Beneficiaries.  Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person other than the Parties and their respective permitted successors and assigns any rights or remedies under or by reason of this Related Agreement.  The provisions of this Agreement which are intended for the benefit of the Party Shareholders may only be enforced by the Shareholders’ Representative (on behalf of the Party Shareholders).

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14.Assignment.  Except as otherwise provided in this Section 14, this Related Agreement and the rights and obligations hereunder shall not be assignable or transferable by any Party without the prior written consent of the other Parties.  Notwithstanding anything to the contrary in the immediately preceding sentence, each of Purchaser and the Surviving Corporation may assign its rights and obligations hereunder, in whole or in part, to any of its Affiliates without the consent of any of the other Parties.  In addition, each of Purchaser and the Surviving Corporation may assign its rights and obligations pursuant to this Related Agreement, in whole or in part, in connection with any disposition or transfer of all or any portion of Parent’s, the Surviving Corporation’s or any of their respective Subsidiaries’ or their respective businesses in any form of transaction without the consent of any of the other Parties.  Each of Purchaser, the Surviving Corporation and their Subsidiaries may assign any or all of its rights pursuant to this Related Agreement to any of their lenders as collateral security.

15.Severability.  Whenever possible, each provision of this Related Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Related Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Related Agreement.

16.Interpretation.

(a)The headings and captions used in this Related Agreement are for convenience of reference only and do not constitute a part of this Related Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Related Agreement and all provisions of this Related Agreement shall be enforced and construed as if no caption or heading had been used herein or therein.  Each defined term used in this Related Agreement shall have a comparable meaning when used in its plural or singular form.  The use of the word “including” herein shall mean “including without limitation.”  The Parties have participated jointly in the negotiation and drafting of this Related Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Related Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Related Agreement.  Unless the context otherwise requires, reference to an agreement or instrument is a reference to that agreement or instrument as originally executed, and as modified, amended, supplemented and restated from time to time, and to all exhibits and/or schedules thereto.

(b)For the avoidance of doubt, each Party Shareholder (for itself and not for any other Company Shareholder) agrees that such Party Shareholder is not executing this Related Agreement in the capacity of a surety or a guarantor of any obligation(s) of a Company Shareholder under the Merger Agreement, but rather is executing this Related Agreement as a primary obligor of all such obligations of such Company Shareholder under the Merger Agreement (subject to, for the avoidance of doubt, the terms and conditions of the Merger Agreement that limit the obligations of each Company Shareholder, including the terms and conditions of Section 11.2 (Indemnification) of the Merger Agreement that provide that a Company Shareholder’s indemnification obligations shall be in proportion to such Company Shareholder’s Pro Rata Share), to the same extent as if such Party Shareholder had been specifically identified as a “Company Shareholder” in the Merger Agreement and been a party thereto.

17.Governing Law.  Except as provided in Section 12.11 (Dispute Resolution) of the Merger Agreement (which Section governs Disputes with respect to the Related Agreement, as well as with respect to the Merger Agreement), all questions concerning the construction, validity, enforcement and interpretation of this Related Agreement shall be governed by the internal law of the State of Oregon, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Oregon or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Oregon.

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18.Counterparts.  This Related Agreement may be executed in one or more counterparts (including by means of telecopied signature pages), all of which taken together shall constitute one and the same instrument.

19.Complete Agreement.  This Related Agreement, the Merger Agreement (including all of the Schedules and Exhibits attached thereto), the Escrow Agreement and the Employment Agreements (including Section 7  of the Employment Agreements) contain the entire agreement and understanding between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, whether written or oral, relating to such subject matter in any way.

20.Amendment and Waiver.  This Related Agreement may be amended, and any provision of this Related Agreement may be waived; provided that any such amendment or waiver will be binding on (x) the Party Shareholders only if such amendment or waiver is set forth in a writing executed by the Shareholders’ Representative, and (y) Purchaser or the Surviving Corporation only if such amendment or waiver is set forth in a writing executed by Purchaser or the Surviving Corporation, as the case may be.  No course of dealing between or among any Persons having any interest in this Related Agreement will be deemed effective to modify, amend or discharge any part of this Related Agreement or any rights or obligations of any Person under or by reason of this Related Agreement.  No waiver of any of the provisions of this Related Agreement shall be deemed or shall constitute a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver.  The Parties acknowledge and agree that the provisions of Section 12.1 (Amendment and Waiver) of the Merger Agreement, and not the foregoing provisions of this Section 20, shall apply to any amendments to the Merger Agreement and any waivers of any provisions of the Merger Agreement, including any amendments to or waivers of the provisions of Sections 5.3 (Post-Closing Adjustment), 11.2 (Indemnification),  11.4 (Expenses), 11.5 (Further Assurances), 11.6 (Certain Tax Matters), 11.7 (Appointment of Shareholders’ Representative), 12.10 (No Third Party Beneficiaries) and 12.11 (Dispute Resolution) of the Merger Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Related Agreement, effective as of the date first written above.

EPIQ SYSTEMS, INC.
By:	/s/   Christopher E. Olofson
Its:		President and Chief Operating Officer
Address:
501 Kansas Avenue
Kansas City, KS 66105-1309
P-D HOLDING CORP.
By:	/s/   Jeffrey B. Baker
Its:		Chief Executive Officer and Secretary
Address:
10300 SW Allen Boulevard
Portland, OR  97005

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ENDEAVOUR ASSOCIATES FUND III, L.P., a Delaware limited partnership
By:	Endeavour Capital, LLC
Its:	General Partner
	By:	/s/   John von Schlegell
	Its:	Member
Address:
920 SW Sixth Ave., Ste. 1400
Portland, OR  97204
Attention:
ENDEAVOUR CAPITAL FUND III, L.P., a Delaware limited partnership
By:	Endeavour Capital, LLC
Its:	General Partner
	By:	/s/   John von Schlegell
	Its:	Member
Address:
920 SW Sixth Ave., Ste. 1400
Portland, OR  97204
Attention: Leland M. Jones

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SHAWMUT EQUITY PARTNERS, L.P., a Delaware limited partnership
By:	Shawmut Capital Partners, L.L.C.
Its:	General Partner
	By:	/s/   Daniel K. Doyle
		Daniel K. Doyle, Managing Director
Address:
75 Federal Street, 18th Floor
Boston, MA  02110
Attention: Daniel K. Doyle
/s/   Jeffrey B. Baker
Jeffrey B. Baker
Address:
402 Ashdown Circle
West Linn, OR 97068
/s/   Edward J. Nimmo
Edward J. Nimmo
Address:
8805 SW Woodside Drive
Portland, OR 97225
ENDEAVOUR CAPITAL FUND III, L.P., a Delaware limited partnership, in its capacity as Shareholders’ Representative
By:	Endeavour Capital, LLC
Its:	General Partner
	By:	/s/   John von Schlegell
	Its:	Member

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EX-10.3

Exhibit 10.3

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”) is made as of January 30, 2004, between Poorman-Douglas Corporation, a Rhode Island corporation (the “Company”), and Jeffrey B. Baker (“Executive”).

WHEREAS, this Agreement is being entered into in connection with the merger (the “Merger”) of PD Merger Corp. (“Merger Sub”), an Oregon corporation and wholly-owned subsidiary of EPIQ Systems, Inc. (“Parent”), with and into P-D Holding Corp., an Oregon corporation (“Emerald”), pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Parent, Merger Sub, Emerald and each of the Party Shareholders named therein (the “Merger Agreement”); and

WHEREAS, the Company and Executive desire to enter into this Agreement providing for Executive’s initial employment by the Company on the terms and conditions provided herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, as well as for the mutual covenants set forth in the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Employment.  The Company shall employ Executive, and Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in Section 4  hereof (the “Employment Period”).  Although Executive’s principal location for employment shall be Beaverton, Oregon, Executive agrees that he will travel as business conditions warrant and as reasonably requested by the Board of Directors of the Company (the “Board”) and the president of Parent.

2.Position and Duties.

(a)During the Employment Period, Executive shall serve as the chief executive officer of the Company and shall have the normal duties, responsibilities, functions and authority of the chief executive officer of the Company, subject to the power and authority of each of the Board and the president of Parent to expand or limit such duties, responsibilities, functions and authority, to overrule actions of officers of the Company and to alter Executive’s title.  During the Employment Period, Executive shall render such administrative, financial and other executive and managerial services to the Company and its Subsidiaries as the president of Parent or the Board may from time to time lawfully and reasonably direct, including, without limitation, integrating the Company’s and its Subsidiaries’ business into Parent’s business.

(b)During the Employment Period, Executive shall report to Parent’s president and shall devote his best efforts and his full business time and attention (except for permitted vacation periods and periods of illness or other incapacity) to the business and affairs of the Company and its Subsidiaries.  Executive shall perform his duties, responsibilities and functions to the Company and its Subsidiaries hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply with the Company’s and its Subsidiaries’ policies and procedures in all material respects.

(c)For purposes of this Agreement, “Subsidiaries” shall mean any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by the Company, directly or through one of more Subsidiaries.

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3.Compensation and Benefits.

(a)During the Employment Period, Executive’s base salary shall be not less than $300,000 per annum (the “Minimum Salary Level” and, as adjusted from time to time, the “Base Salary”), which salary shall be payable by the Company in regular installments in accordance with the Company’s general payroll practices (as such practices may be in effect from time to time).  During the Employment Period, Executive shall be eligible to participate in the Company’s “Pay for Performance” and other bonus programs (as they may be modified, replaced or eliminated from time to time).  The Company’s “Pay for Performance” program, as in effect on the date hereof, is attached hereto as Exhibit A.

(b)During the Employment Period and until such time as the Company’s employee benefit programs are consolidated with those of Parent, Executive shall be entitled to participate in all of the employee benefit programs of the Company for which senior executive employees of the Company are generally eligible, as such programs may be modified, replaced or eliminated from time to time.  After such time as the Company’s employee benefit programs are consolidated with those of Parent, Executive shall be entitled to participate in all of the employee benefit programs of Parent and its Subsidiaries for which senior executive employees of Parent are generally eligible, as such programs may be modified, replaced or eliminated from time to time.  Any payment which Executive is required to make pursuant to such employee benefit programs may be adjusted or implemented from time to time consistent with changes affecting the participants generally in such programs.  In addition, during the Employment Period, Executive shall be entitled to receive the benefits set forth on Exhibit B attached hereto.

(c)During the Employment Period, Executive shall be entitled to up to five (5) weeks of paid vacation per calendar year, which amount shall be pro rated for any partial calendar year of employment during the Employment Period; provided, however, that Executive shall schedule such vacation time in a manner consistent with the business needs of Parent, the Company and their Subsidiaries.  Executive’s unused vacation time shall not be carried forward to any subsequent calendar year, and no compensation shall be payable in lieu thereof.

(d)During the Employment Period, the Company shall reimburse Executive for all reasonable and appropriate expenses actually incurred by Executive in the course of performing Executive’s duties and responsibilities under this Agreement, consistent with the Company’s policies in effect from time to time with respect to such expenses, upon presentation of expense statements, vouchers or other supporting information as may be required under the Company’s policies in effect from time to time.

(e)All amounts payable to Executive as compensation hereunder (including Section 4 hereof) shall be subject to all required and customary withholding by the Company.

4.Term.

(a)The Employment Period shall end on January 30, 2008 (the “Termination Date”); provided that (i) the Employment Period shall terminate prior to the Termination Date immediately upon Executive’s resignation or retirement (with or without Good Reason), death or Disability, and (ii) the Employment Period may be terminated by the Company at any time prior to Termination Date for Cause (as defined below) or without Cause.  Except as otherwise provided herein, any termination of the Employment Period by the Company shall be effective as specified in a written notice from the Company to Executive.

(b)If the Employment Period is terminated by the Company without Cause prior to the Termination Date, Executive shall be entitled to continue to receive his Base Salary, payable in regular installments from the date of termination through the Termination Date (the “Severance Period”).  In addition, for the year in which Executive’s employment was terminated without Cause only, Executive shall be entitled to receive, in accordance with the Company’s then standard payroll practices, a pro rated portion of any bonus Executive was eligible to receive had Executive’s employment not been terminated.  Notwithstanding the

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foregoing, Executive shall not be entitled to receive any amounts pursuant to this Section 4(b) unless (x) Executive has executed and delivered to the Company a customary release providing for the release of all claims (if any) Executive may have against Parent or any of its Subsidiaries, employees or directors (other than claims for severance due hereunder) (the “Release”), and (y) the Release has become fully effective in all respects, and Executive has not breached the provisions of the Release or breached the provisions of Sections 5, 6 or 7 hereof.  In the case of Executive’s termination without Cause, Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in this Section 4(b) or as otherwise required by applicable law.

(c)If, prior to the Termination Date, (i) Executive terminates the Employment Period for Good Reason (as defined below), or (ii) the Employment Period terminates due to Executive’s death, Executive shall be entitled to continue to receive his Base Salary, payable in regular installments in accordance with the Company’s then standard payroll practices from the date of termination until the Termination Date, plus, for the year in which the Employment Period was terminated, Executive shall be entitled to receive, in accordance with the Company’s then standard payroll practices, a pro rated portion of any bonus Executive was eligible to receive had Executive’s employment not been terminated.  Executive will be eligible for the payments described in the foregoing sentence if, and only if, (x) Executive (or his estate, as the case may be) has executed and delivered to the Company the Release, and (y) the Release has become fully effective in all respects, and Executive has not breached the provisions of the Release or breached the provisions of Sections 5, 6 or 7 hereof.  In the case of Executive’s termination pursuant to this Section 4(c), Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in this Section 4(c) or as otherwise required by applicable law.

(d)If, prior to the Termination Date, the Employment Period terminates due to Executive’s Disability, Executive shall be entitled to continue to receive an amount equal to the amount (if any) by which Executive’s gross Base Salary exceeds any disability insurance proceeds to be received by Executive in connection with or as a result of his Disability, payable in regular installments in accordance with the Company’s then standard payroll practices from the date of termination until the Termination Date, plus, for the year in which the Employment Period was terminated due to Executive’s Disability, Executive shall be entitled to receive, in accordance with the Company’s then standard payroll practices, a pro rated portion of any bonus Executive was eligible to receive had Executive’s employment not been terminated.  Executive will be eligible for the payments described in the foregoing sentence if, and only if, (x) Executive has executed and delivered to the Company the Release, and (y) the Release has become fully effective in all respects, and Executive has not breached the provisions of the Release or breached the provisions of Sections 5, 6 or 7 hereof.  In the case of Executive’s termination pursuant to this Section 4(d), Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in this Section 4(d) or as otherwise required by applicable law.

(e)If the Employment Period is terminated at any time for any reason other than as described in Section 4(a), 4(b) or 4(c) above, Executive shall only be entitled to receive his Base Salary through the date of termination and shall not be entitled to any other salary, compensation or benefits from the Company or its Subsidiaries thereafter, except as required by applicable law.

(f)Except as otherwise expressly provided herein, all of Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Employment Period shall cease upon such termination or expiration, other than those expressly required under applicable law.

(g)For purposes of this Agreement, “Cause” shall mean with respect to Executive one or more of the following: (i) the conviction, plea of guilty or plea of nolo contendre with respect to (x) a felony of any nature, or (y) any crime involving fraud with respect to Parent or any of its Subsidiaries or any of their customers, suppliers or other business relations, (ii) repeated conduct causing Parent or any of its Subsidiaries substantial public disgrace or disrepute or substantial economic harm, (iii) the continued failure, as determined

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in the good faith reasonable judgment of the Board, to perform his duties under this Agreement as reasonably directed by the Board or Parent’s president, which failure is not cured, if curable, within ten (10) business days after delivery of written notice thereof to Executive, (iv) any act or omission aiding or abetting a competitor, supplier or customer of Parent or any of its Subsidiaries to the material disadvantage or detriment of Parent or any of its Subsidiaries, (v) gross negligence or willful misconduct with respect to Parent or any of its Subsidiaries or (vi) any material breach of this Agreement which, if curable, is not cured within ten (10) business days after delivery of written notice thereof to Executive.

(h)For purposes of this Agreement, “Good Reason” shall mean if Executive resigns from employment with the Company prior to the end of the Employment Period as a result of one or more of the following reasons: (i) the Company reduces the amount of the Base Salary below the Minimum Salary Level, (ii) the Company reduces Executive’s responsibilities to a level which is materially inconsistent with the position of chief executive officer of the Company, (iii) the Company fails to pay the Base Salary or other benefits required to be provided by the Company to Executive hereunder, (iv) the Company materially reduces the overall compensation or benefits required to be provided by the Company to Executive hereunder, or (v) any change of Executive’s principal office location to a location more distant than fifty (50) miles from Beaverton, Oregon; provided that written notice of Executive’s resignation for Good Reason must be delivered to the Company within 60 days after the occurrence of any such event in order for Executive’s resignation with Good Reason to be effective hereunder; provided further that, in order for Executive’s resignation for Good Reason to be effective hereunder, the Company must not have cured such event (if curable) within 20 days after receiving written notice thereof.

(i)For the purposes of this Agreement, “Disability” shall mean the Executive’s inability to perform the essential duties, responsibilities and functions of his position with the Company and its Subsidiaries as a result of any mental or physical impairment or incapacity even with reasonable accommodations of such disability or incapacity provided by the Company and its Subsidiaries or if providing such accommodations would be unreasonable, all as determined by the Board in its reasonable good faith judgment.  Executive shall cooperate in all respects with the Company if a question arises as to whether he has become disabled.

5.Confidential Information.

(a)Executive acknowledges that the information, observations and data (including trade secrets) obtained by him while employed by the Company and its Subsidiaries (including those obtained by him while employed by Emerald and its Subsidiaries prior to the date of this Agreement and the Merger) concerning the business or affairs of Parent, Emerald, the Company, or any other Subsidiary of Parent (“Confidential Information”) are the property of Parent, Emerald, the Company, or such Subsidiary.  Therefore, Executive agrees that he shall not disclose to any person or entity or use for his own purposes any Confidential Information or any confidential or proprietary information of other persons or entities in the possession of Parent and its Subsidiaries (“Third Party Information”), without the prior written consent of Parent’s president or the Board, unless and to the extent that the Confidential Information or Third Party Information becomes generally known to and available for use by the public other than as a result of Executive’s acts or omissions.  Executive shall deliver to the Company at the termination or expiration of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer files, disks and tapes, printouts and software and other documents and data (and copies thereof) embodying or relating to Third Party Information, Confidential Information, Work Product (as defined below) or the business of Parent, the Company or any other Subsidiaries which Executive may then possess or have under his control.

(b)Executive shall be prohibited from using or disclosing any confidential information or trade secrets that Executive may have learned through any prior employment; provided it is understood that Executive shall be allowed to use the confidential information and trade secrets of Emerald and its Subsidiaries in connection with Executive’s duties hereunder.  If at any time during his employment with the Company or

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any of its Subsidiaries, Executive believes he is being asked to engage in work that will, or will be likely to, jeopardize any confidentiality or other obligations Executive may have to former employers, Executive shall immediately advise the president of Parent so that Executive’s duties can be modified appropriately.  Executive represents and warrants to the Company that Executive took nothing with him which belonged to any former employer when Executive left his prior position and that Executive has nothing that contains any information which belongs to any former employer.  If at any time Executive discovers this is incorrect, Executive shall promptly return any such materials to Executive’s former employer.  The Company does not want any such materials, and Executive shall not be permitted to use or refer to any such materials in the performance of Executive’s duties hereunder.

6.Intellectual Property, Inventions and Patents.  Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not including any confidential information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) which relate to Parent’s or any of its Subsidiaries’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Executive (whether alone or jointly with others) while employed by the Company or its predecessor and its Subsidiaries, whether before or after the date of this Agreement (“Work Product”), belong to Parent or such Subsidiary.  Executive shall promptly disclose such Work Product to the president of Parent and, at the Company’s expense, perform all actions reasonably requested by the president of Parent or the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).  Executive acknowledges that all Work Product shall be deemed to constitute “works made for hire” under the U.S. Copyright Act of 1976, as amended.

7.Non-Compete and Non-Solicitation.

(a)Executive acknowledges that during the course of his employment with the Company and its Subsidiaries he shall become familiar with Parent’s and the Company’s trade secrets and with other Confidential Information concerning the Parent, the Company and their Subsidiaries and that Executive’s services shall be of special, unique and extraordinary value to Parent, the Company and its Subsidiaries.  Therefore, in consideration of the consummation of the transactions contemplated by the Merger Agreement, the Company’s agreement to employ Executive and the compensation to be paid to Executive hereunder and under the Merger Agreement, Executive agrees that, until the later of (i) the date that is five years after the date hereof and (ii) the date that is two (2) years after the date of termination of the Employment Period (the “Noncompete Period”), Executive shall not, anywhere in North America, directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, be employed in an executive, managerial or administrative capacity by, or in any manner engage in any business competing with the businesses of Parent or any of its Subsidiaries, as such businesses exist or are in process during the Employment Period or on the date of the termination or expiration of the Employment Period.  Nothing herein shall prohibit Executive from being a passive owner of not more than 4.9% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

(b)During the Noncompete Period, Executive shall not directly or indirectly through another person or entity (i) induce or attempt to induce any employee of Parent or any of its Subsidiaries to leave the employ of Parent or such Subsidiary, or in any way interfere with the relationship between Parent or any of its Subsidiaries and any employee thereof, (ii) hire any person who was an employee of Parent or any of its Subsidiaries at any time during the Employment Period or (iii) induce or attempt to induce any customer, referral source, supplier, licensee, licensor, franchisee or other business relation of Parent or any of its Subsidiaries to cease doing business with Parent or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and Parent or any of its Subsidiaries.

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8.Enforcement.  If, at the time of enforcement of Sections 5, 6 or 7 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.  Because Executive’s services are unique and because Executive has access to Confidential Information and Work Product, the parties hereto agree that Parent and the Company would suffer irreparable harm from a breach of Sections 5, 6 or 7 by Executive and that money damages would not be an adequate remedy for any such breach of this Agreement.  Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).  Executive acknowledges (i) that the restrictions contained in Section 7 are reasonable, (ii) that Executive has reviewed the provisions of this Agreement with his legal counsel and (iii) that Executive is entering into this Agreement upon Executive’s initial employment of the Executive with the Company and its Subsidiaries.

9.Executive’s Representations.  Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

10.Survival.  Sections 4 through 22, inclusive, shall survive and continue in full force in accordance with their terms notwithstanding the expiration or termination of the Employment Period.

11.Notices.  Any notice or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when personally delivered or sent by telecopy (with hard copy to follow), (ii) one business day after being sent by reputable overnight express courier (charges prepaid), or (iii) five days following mailing by certified or registered mail, postage prepaid and return receipt requested.  Unless another address is specified in writing, notices and communications to Executive and the Company shall be sent to the addresses indicated below:

Notices to Executive:

Jeffrey B. Baker
402 Ashdown Circle
West Linn, OR 97068

With a copy to:

Kurt W. Ruttum
Tonkon Torp LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204
Fax No. (503) 972-3743

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Notices to the Company:

Poorman-Douglas Corporation
Attention: Board of Directors
10300 SW Allen Blvd.
Beaverton, OR 97005

With a copy to:

EPIQ Systems, Inc.
Attention: Chief Financial Officer
501 Kansas Avenue
Kansas City, KS 66105

12.Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

13.Complete Agreement.  This Agreement, the Merger Agreement, those documents expressly referred to herein or in the Merger Agreement and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, (x) the Executive Compensation, Benefits and Contingent Severance Agreement between Jeffrey B. Baker and Poorman-Douglas Corporation, dated March 1, 2001, and (y) the Employee Nondisclosure, Developments and Nonsolicitation Agreement between Jeffrey B. Baker and Poorman-Douglas Corporation, dated March 1, 2001, each of which shall be terminated and of no further force or effect as of the date of the execution and delivery of this Agreement), but excluding any breaches thereof by either party prior to the date hereof).

14.No Strict Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

15.Counterparts.  This Agreement may be executed in separate counterparts (including by means of telecopier signature pages), each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

16.Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.

17.Choice of Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Oregon, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Oregon or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Oregon.

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18.Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company’s right to terminate the Employment Period for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

19.Insurance.  The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable.  Executive agrees to cooperate in any medical or other examination, supply any information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.  Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.

20.Indemnification and Reimbursement of Payments on Behalf of Executive.  The Company and its Subsidiaries shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Subsidiaries to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to Executive’s compensation or other payments from the Company or any of its Subsidiaries or Executive’s ownership interest in the Company (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity).  In the event the Company or any of its Subsidiaries does not make such deductions or withholdings, Executive shall indemnify the Company and its Subsidiaries for any amounts paid by the Company with respect to any such Taxes.

21.Dispute Resolution.

(a)Except as otherwise expressly provided in this Agreement, the parties agree that the arbitration procedure set forth below shall be the sole and exclusive method for resolving and remedying any and all disputes, controversies or claims that arise out of or in connection with, or relate in any manner to, the rights and liabilities of the parties hereunder or any provision of this Agreement or the interpretation, enforceability, performance, breach, termination or validity hereof, including this Section 21 relating to the resolution of disputes (the “Disputes”) and questions concerning arbitrability and including any claim under any state or federal statute or common law theory governing or relating to the employment relationship (except claims for workers compensation or unemployment benefits); provided that nothing in this Section 21 shall prohibit a party hereto from instituting litigation to enforce any Final Determination (as defined below).  The parties hereby acknowledge and agree that, except as otherwise provided in this Section 21 or in the applicable rules for arbitration of business disputes (the “Rules”) promulgated by the Arbitration Service of Portland, Inc. (the “Arbitration Service”) as in effect from time to time, the arbitration procedures and any Final Determination hereunder shall be governed by, and shall be enforced pursuant to, the United States Arbitration Act, 9 U.S.C. §1 et. seq.

(b)Except as provided elsewhere herein, in the event that any party asserts that there exists a Dispute, such party shall deliver a written notice to each other party involved therein specifying the nature of the asserted Dispute and requesting a meeting to attempt to resolve the same.  If no such resolution is reached within ten business days after the delivery of such notice, the party delivering such notice of Dispute (the “Disputing Person”) may thereafter commence arbitration hereunder by delivering to each other party involved therein a notice of arbitration (a “Notice of Arbitration”).  Such Notice of Arbitration shall specify the nature of any Dispute and any other matters required by the Rules as in effect from time to time to be included therein.  The Arbitrator shall permit and facilitate such discovery as the parties shall reasonably request.  The Company and Executive shall mutually agree upon one arbitrator to resolve any Dispute pursuant to the procedures set forth in this Section 21 and the Rules.  If the Company and Executive cannot mutually agree to an arbitrator within 15 days from receipt of the Notice of Arbitration, the arbitrator shall be appointed by the

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Arbitration Service within 15 days of being notified in writing of the Arbitration Service’s need to make such appointment or as soon thereafter as may be practicable.

(c)Except as otherwise provided by applicable law, the Company will pay all costs of the Arbitration Service and the arbitrator, less those amounts Executive would otherwise be required to pay if the claims were litigated in a court of law; provided that at the conclusion of the arbitration, the arbitrator shall award costs and expenses (including the costs of the arbitration previously advanced and the fees and expenses of attorneys, accountants and other experts) and reasonable interest to the prevailing party.

(d)The arbitration shall be conducted in Portland, Oregon under the Rules as in effect from time to time.  The parties shall use their reasonable best efforts to cause the arbitrator to conduct the arbitration so that a final result, determination, finding, judgment and/or award (the “Final Determination”) is made or rendered as soon as practicable, but in no event later than 90 business days after the delivery of the Notice of Arbitration nor later than 30 days following completion of the arbitration.  Notwithstanding any Oregon law to the contrary, the Final Determination shall be final and binding on all parties and there shall be no appeal from or reexamination of the Final Determination, except for fraud, perjury, evident partiality or misconduct by an arbitrator prejudicing the rights of any party and to correct manifest clerical errors.

(e)Notwithstanding anything to the contrary, nothing in this Section 21 shall be construed to impair the right of any person or entity to seek injunctive or other equitable relief in any court of competent jurisdiction.

22.Executive’s Cooperation.  During the Employment Period and thereafter, Executive shall cooperate with Parent and its Subsidiaries in any internal investigation, any administrative, regulatory or judicial proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into Executive’s possession, all at times and on schedules that are reasonably consistent with Executive’s other activities and commitments). In the event the Company requires Executive’s cooperation in accordance with this Section 22, the Company shall (i) reimburse Executive solely for reasonable travel expenses (including lodging and meals) upon submission of receipts; and (ii) if Executive is no longer employed by the Company, pay Executive a per diem consulting charge of $750.00 and pay the reasonable fees and expenses of attorneys, accountants and other professionals retained by Employee with respect to such matter or matters.

*   *   *   *   *

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IN WITNESS WHEREOF, the parties hereto have executed this Employment and Non-Competition Agreement as of the date first written above.

POORMAN-DOUGLAS CORPORATION
By:	/s/   Elizabeth Braham
Name:	Elizabeth M. Braham
Its:	Chief Financial Officer, Secretary and Treasurer
/s/   Jeffrey B. Baker
Jeffrey B. Baker

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EX-10.4

Exhibit 10.4

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”) is made as of January 30, 2004, between Poorman-Douglas Corporation, a Rhode Island corporation (the “Company”), and Edward J. Nimmo (“Executive”).

WHEREAS, this Agreement is being entered into in connection with the merger (the “Merger”) of PD Merger Corp. (“Merger Sub”), an Oregon corporation and wholly-owned subsidiary of EPIQ Systems, Inc. (“Parent”), with and into P-D Holding Corp., an Oregon corporation (“Emerald”), pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Parent, Merger Sub, Emerald and each of the Party Shareholders named therein (the “Merger Agreement”); and

WHEREAS, the Company and Executive desire to enter into this Agreement providing for Executive’s initial employment by the Company on the terms and conditions provided herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, as well as for the mutual covenants set forth in the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Employment.  The Company shall employ Executive, and Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in Section 4 hereof (the “Employment Period”).  Although Executive’s principal location for employment shall be Beaverton, Oregon, Executive agrees that he will travel as business conditions warrant and as reasonably requested by the Board of Directors of the Company (the “Board”) and the chief executive officer of the Company.

2.Position and Duties.

(a)During the Employment Period, Executive shall serve as the president of the Company and shall have the normal duties, responsibilities, functions and authority of the president of the Company, subject to the power and authority of each of the Board and the chief executive officer of the Company to expand or limit such duties, responsibilities, functions and authority, to overrule actions of officers of the Company and to alter Executive’s title.  During the Employment Period, Executive shall render such administrative, financial and other executive and managerial services to the Company and its Subsidiaries as the chief executive officer of the Company or the Board may from time to time lawfully and reasonably direct, including, without limitation, integrating the Company’s and its Subsidiaries’ business into Parent’s business.

(b)During the Employment Period, Executive shall report to the Company’s chief executive officer and shall devote his best efforts and his full business time and attention (except for permitted vacation periods and periods of illness or other incapacity) to the business and affairs of the Company and its Subsidiaries.  Executive shall perform his duties, responsibilities and functions to the Company and its Subsidiaries hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply with the Company’s and its Subsidiaries’ policies and procedures in all material respects.

(c)           For purposes of this Agreement, “Subsidiaries” shall mean any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by the Company, directly or through one of more Subsidiaries.

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3.Compensation and Benefits.

(a)During the Employment Period, Executive’s base salary shall be not less than $220,000 per annum (the “Minimum Salary Level” and, as adjusted from time to time, the “Base Salary”), which salary shall be payable by the Company in regular installments in accordance with the Company’s general payroll practices (as such practices may be in effect from time to time).  During the Employment Period, Executive shall be eligible to participate in the Company’s “Pay for Performance” and other bonus programs (as they may be modified, replaced or eliminated from time to time).  The Company’s “Pay for Performance” program, as in effect on the date hereof, is attached hereto as Exhibit A.

(b)During the Employment Period and until such time as the Company’s employee benefit programs are consolidated with those of Parent, Executive shall be entitled to participate in all of the employee benefit programs of the Company for which senior executive employees of the Company are generally eligible, as such programs may be modified, replaced or eliminated from time to time.  After such time as the Company’s employee benefit programs are consolidated with those of Parent, Executive shall be entitled to participate in all of the employee benefit programs of Parent and its Subsidiaries for which senior executive employees of Parent are generally eligible, as such programs may be modified, replaced or eliminated from time to time.  Any payment which Executive is required to make pursuant to such employee benefit programs may be adjusted or implemented from time to time consistent with changes affecting the participants generally in such programs.  In addition, during the Employment Period, Executive shall be entitled to receive the benefits set forth on Exhibit B attached hereto.

(c)           During the Employment Period, Executive shall be entitled to up to five (5) weeks of paid vacation per calendar year, which amount shall be pro rated for any partial calendar year of employment during the Employment Period; provided, however, that Executive shall schedule such vacation time in a manner consistent with the business needs of Parent, the Company and their Subsidiaries.  Executive’s unused vacation time shall not be carried forward to any subsequent calendar year, and no compensation shall be payable in lieu thereof.

(d)           During the Employment Period, the Company shall reimburse Executive for all reasonable and appropriate expenses actually incurred by Executive in the course of performing Executive’s duties and responsibilities under this Agreement, consistent with the Company’s policies in effect from time to time with respect to such expenses, upon presentation of expense statements, vouchers or other supporting information as may be required under the Company’s policies in effect from time to time.

(e)           All amounts payable to Executive as compensation hereunder (including Section 4 hereof) shall be subject to all required and customary withholding by the Company.

4.             Term.

(a)           The Employment Period shall end on January 30, 2008 (the “Termination Date”); provided that (i) the Employment Period shall terminate prior to the Termination Date immediately upon Executive’s resignation or retirement (with or without Good Reason), death or Disability, and (ii) the Employment Period may be terminated by the Company at any time prior to Termination Date for Cause (as defined below) or without Cause.  Except as otherwise provided herein, any termination of the Employment Period by the Company shall be effective as specified in a written notice from the Company to Executive.

(b)           If the Employment Period is terminated by the Company without Cause prior to the Termination Date, Executive shall be entitled to continue to receive his Base Salary, payable in regular installments from the date of termination through the Termination Date (the “Severance Period”).  In addition, for the year in which Executive’s employment was terminated without Cause only, Executive shall be entitled to receive, in accordance with the Company’s then standard payroll practices, a pro rated portion of any bonus Executive was eligible to receive had Executive’s employment not been terminated.  Notwithstanding the

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foregoing, Executive shall not be entitled to receive any amounts pursuant to this Section 4(b) unless (x) Executive has executed and delivered to the Company a customary release providing for the release of all claims (if any) Executive may have against Parent or any of its Subsidiaries, employees or directors (other than claims for severance due hereunder) (the “Release”), and (y) the Release has become fully effective in all respects, and Executive has not breached the provisions of the Release or breached the provisions of Sections 5, 6 or 7 hereof.  In the case of Executive’s termination without Cause, Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in this Section 4(b) or as otherwise required by applicable law.

(c)           If, prior to the Termination Date, (i) Executive terminates the Employment Period for Good Reason (as defined below), or (ii) the Employment Period terminates due to Executive’s death, Executive shall be entitled to continue to receive his Base Salary, payable in regular installments in accordance with the Company’s then standard payroll practices from the date of termination until the Termination Date, plus, for the year in which the Employment Period was terminated, Executive shall be entitled to receive, in accordance with the Company’s then standard payroll practices, a pro rated portion of any bonus Executive was eligible to receive had Executive’s employment not been terminated.  Executive will be eligible for the payments described in the foregoing sentence if, and only if, (x) Executive (or his estate, as the case may be) has executed and delivered to the Company the Release, and (y) the Release has become fully effective in all respects, and Executive has not breached the provisions of the Release or breached the provisions of Sections 5, 6 or 7 hereof.  In the case of Executive’s termination pursuant to this Section 4(c), Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in this Section 4(c) or as otherwise required by applicable law.

(d)           If, prior to the Termination Date, the Employment Period terminates due to Executive’s Disability, Executive shall be entitled to continue to receive an amount equal to the amount (if any) by which Executive’s gross Base Salary exceeds any disability insurance proceeds to be received by Executive in connection with or as a result of his Disability, payable in regular installments in accordance with the Company’s then standard payroll practices from the date of termination until the Termination Date, plus, for the year in which the Employment Period was terminated due to Executive’s Disability, Executive shall be entitled to receive, in accordance with the Company’s then standard payroll practices, a pro rated portion of any bonus Executive was eligible to receive had Executive’s employment not been terminated.  Executive will be eligible for the payments described in the foregoing sentence if, and only if, (x) Executive has executed and delivered to the Company the Release, and (y) the Release has become fully effective in all respects, and Executive has not breached the provisions of the Release or breached the provisions of Sections 5, 6 or 7 hereof.  In the case of Executive’s termination pursuant to this Section 4(d), Executive shall not be entitled to any other salary, compensation or benefits after termination of the Employment Period, except as specifically provided for in this Section 4(d) or as otherwise required by applicable law.

(e)           If the Employment Period is terminated at any time for any reason other than as described in Section 4(a), 4(b) or 4(c) above, Executive shall only be entitled to receive his Base Salary through the date of termination and shall not be entitled to any other salary, compensation or benefits from the Company or its Subsidiaries thereafter, except as required by applicable law.

(f)            Except as otherwise expressly provided herein, all of Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Employment Period shall cease upon such termination or expiration, other than those expressly required under applicable law.

(g)           For purposes of this Agreement, “Cause” shall mean with respect to Executive one or more of the following: (i) the conviction, plea of guilty or plea of nolo contendre with respect to (x) a felony of any nature, or (y) any crime involving fraud with respect to Parent or any of its Subsidiaries or any of their customers, suppliers or other business relations, (ii) repeated conduct causing Parent or any of its Subsidiaries substantial public disgrace or disrepute or substantial economic harm, (iii) the continued failure, as determined

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in the good faith reasonable judgment of the Board, to perform his duties under this Agreement as reasonably directed by the Board or the chief executive officer of the Company, which failure is not cured, if curable, within ten (10) business days after delivery of written notice thereof to Executive, (iv) any act or omission aiding or abetting a competitor, supplier or customer of Parent or any of its Subsidiaries to the material disadvantage or detriment of Parent or any of its Subsidiaries, (v) gross negligence or willful misconduct with respect to Parent or any of its Subsidiaries or (vi) any material breach of this Agreement which, if curable, is not cured within ten (10) business days after delivery of written notice thereof to Executive.

(h)           For purposes of this Agreement, “Good Reason” shall mean if Executive resigns from employment with the Company prior to the end of the Employment Period as a result of one or more of the following reasons: (i) the Company reduces the amount of the Base Salary below the Minimum Salary Level, (ii) the Company reduces Executive’s responsibilities to a level which is materially inconsistent with the position of president of the Company, (iii) the Company fails to pay the Base Salary or other benefits required to be provided by the Company to Executive hereunder, (iv) the Company materially reduces the overall compensation or benefits required to be provided by the Company to Executive hereunder, or (v) any change of Executive’s principal office location to a location more distant than fifty (50) miles from Beaverton, Oregon; provided that written notice of Executive’s resignation for Good Reason must be delivered to the Company within 60 days after the occurrence of any such event in order for Executive’s resignation with Good Reason to be effective hereunder; provided further that, in order for Executive’s resignation for Good Reason to be effective hereunder, the Company must not have cured such event (if curable) within 20 days after receiving written notice thereof.

(i)            For the purposes of this Agreement, “Disability” shall mean the Executive’s inability to perform the essential duties, responsibilities and functions of his position with the Company and its Subsidiaries as a result of any mental or physical impairment or incapacity even with reasonable accommodations of such disability or incapacity provided by the Company and its Subsidiaries or if providing such accommodations would be unreasonable, all as determined by the Board in its reasonable good faith judgment.  Executive shall cooperate in all respects with the Company if a question arises as to whether he has become disabled.

5.Confidential Information.

(a)           Executive acknowledges that the information, observations and data (including trade secrets) obtained by him while employed by the Company and its Subsidiaries (including those obtained by him while employed by Emerald and its Subsidiaries prior to the date of this Agreement and the Merger) concerning the business or affairs of Parent, Emerald, the Company, or any other Subsidiary of Parent (“Confidential Information”) are the property of Parent, Emerald, the Company, or such Subsidiary.  Therefore, Executive agrees that he shall not disclose to any person or entity or use for his own purposes any Confidential Information or any confidential or proprietary information of other persons or entities in the possession of Parent and its Subsidiaries (“Third Party Information”), without the prior written consent of the chief executive officer of the Company or the Board, unless and to the extent that the Confidential Information or Third Party Information becomes generally known to and available for use by the public other than as a result of Executive’s acts or omissions.  Executive shall deliver to the Company at the termination or expiration of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer files, disks and tapes, printouts and software and other documents and data (and copies thereof) embodying or relating to Third Party Information, Confidential Information, Work Product (as defined below) or the business of Parent, the Company or any other Subsidiaries which Executive may then possess or have under his control.

(b)           Executive shall be prohibited from using or disclosing any confidential information or trade secrets that Executive may have learned through any prior employment; provided it is understood that Executive shall be allowed to use the confidential information and trade secrets of Emerald and its Subsidiaries in connection with Executive’s duties hereunder.  If at any time during his employment with the Company or

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any of its Subsidiaries, Executive believes he is being asked to engage in work that will, or will be likely to, jeopardize any confidentiality or other obligations Executive may have to former employers, Executive shall immediately advise the chief executive officer of the Company so that Executive’s duties can be modified appropriately.  Executive represents and warrants to the Company that Executive took nothing with him which belonged to any former employer when Executive left his prior position and that Executive has nothing that contains any information which belongs to any former employer.  If at any time Executive discovers this is incorrect, Executive shall promptly return any such materials to Executive’s former employer.  The Company does not want any such materials, and Executive shall not be permitted to use or refer to any such materials in the performance of Executive’s duties hereunder.

6.             Intellectual Property, Inventions and Patents.  Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not including any confidential information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) which relate to Parent’s or any of its Subsidiaries’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Executive (whether alone or jointly with others) while employed by the Company or its predecessor and its Subsidiaries, whether before or after the date of this Agreement (“Work Product”), belong to Parent or such Subsidiary.  Executive shall promptly disclose such Work Product to the chief executive officer of the Company and, at the Company’s expense, perform all actions reasonably requested by the chief executive officer of the Company or the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).  Executive acknowledges that all Work Product shall be deemed to constitute “works made for hire” under the U.S. Copyright Act of 1976, as amended.

7.             Non-Compete and Non-Solicitation.

(a)Executive acknowledges that during the course of his employment with the Company and its Subsidiaries he shall become familiar with Parent’s and the Company’s trade secrets and with other Confidential Information concerning the Parent, the Company and their Subsidiaries and that Executive’s services shall be of special, unique and extraordinary value to Parent, the Company and its Subsidiaries.  Therefore, in consideration of the consummation of the transactions contemplated by the Merger Agreement, the Company’s agreement to employ Executive and the compensation to be paid to Executive hereunder and under the Merger Agreement, Executive agrees that, until the later of (i) the date that is five years after the date hereof and (ii) the date that is two (2) years after the date of termination of the Employment Period (the “Noncompete Period”), Executive shall not, anywhere in North America, directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, be employed in an executive, managerial or administrative capacity by, or in any manner engage in any business competing with the businesses of Parent or any of its Subsidiaries, as such businesses exist or are in process during the Employment Period or on the date of the termination or expiration of the Employment Period.  Nothing herein shall prohibit Executive from being a passive owner of not more than 4.9% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

(b)           During the Noncompete Period, Executive shall not directly or indirectly through another person or entity (i) induce or attempt to induce any employee of Parent or any of its Subsidiaries to leave the employ of Parent or such Subsidiary, or in any way interfere with the relationship between Parent or any of its Subsidiaries and any employee thereof, (ii) hire any person who was an employee of Parent or any of its Subsidiaries at any time during the Employment Period or (iii) induce or attempt to induce any customer, referral source, supplier, licensee, licensor, franchisee or other business relation of Parent or any of its Subsidiaries to cease doing business with Parent or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and Parent or any of its Subsidiaries.

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8.Enforcement.  If, at the time of enforcement of Sections 5, 6 or 7 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.  Because Executive’s services are unique and because Executive has access to Confidential Information and Work Product, the parties hereto agree that Parent and the Company would suffer irreparable harm from a breach of Sections 5, 6 or 7 by Executive and that money damages would not be an adequate remedy for any such breach of this Agreement.  Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).  Executive acknowledges (i) that the restrictions contained in Section 7 are reasonable, (ii) that Executive has reviewed the provisions of this Agreement with his legal counsel and (iii) that Executive is entering into this Agreement upon Executive’s initial employment of the Executive with the Company and its Subsidiaries.

9.             Executive’s Representations.  Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

10.           Survival.  Sections 4 through 22, inclusive, shall survive and continue in full force in accordance with their terms notwithstanding the expiration or termination of the Employment Period.

11.           Notices.  Any notice or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when personally delivered or sent by telecopy (with hard copy to follow), (ii) one business day after being sent by reputable overnight express courier (charges prepaid), or (iii) five days following mailing by certified or registered mail, postage prepaid and return receipt requested.  Unless another address is specified in writing, notices and communications to Executive and the Company shall be sent to the addresses indicated below:

Notices to Executive:

Edward J. Nimmo
8805 SW Woodside Drive
Portland, OR 97225

With a copy to:

Kurt W. Ruttum
Tonkon Torp LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204
Fax No. (503) 972-3743

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Notices to the Company:

Poorman-Douglas Corporation
Attention: Board of Directors
10300 SW Allen Blvd.
Beaverton, OR 97005

With a copy to:

EPIQ Systems, Inc.
Attention: Chief Financial Officer
501 Kansas Avenue
Kansas City, KS 66105

12.Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

13.           Complete Agreement.  This Agreement, the Merger Agreement, those documents expressly referred to herein or in the Merger Agreement and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, (x) the Executive Compensation, Benefits and Contingent Severance Agreement between Edward J. Nimmo and Poorman-Douglas Corporation, dated March 1, 2001, and (y) the Employee Nondisclosure, Developments and Nonsolicitation Agreement between Edward J. Nimmo and Poorman-Douglas Corporation, dated March 1, 2001, each of which shall be terminated and of no further force or effect as of the date of the execution and delivery of this Agreement), but excluding any breaches thereof by either party prior to the date hereof).

14.No Strict Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

15.           Counterparts.  This Agreement may be executed in separate counterparts (including by means of telecopier signature pages), each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

16.           Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign his rights or delegate his duties or obligations hereunder without the prior written consent of the Company.

17.           Choice of Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Oregon, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Oregon or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Oregon.

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18.Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company’s right to terminate the Employment Period for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

19.           Insurance.  The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable.  Executive agrees to cooperate in any medical or other examination, supply any information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance.  Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.

20.           Indemnification and Reimbursement of Payments on Behalf of Executive.  The Company and its Subsidiaries shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Subsidiaries to Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes (“Taxes”) imposed with respect to Executive’s compensation or other payments from the Company or any of its Subsidiaries or Executive’s ownership interest in the Company (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity).  In the event the Company or any of its Subsidiaries does not make such deductions or withholdings, Executive shall indemnify the Company and its Subsidiaries for any amounts paid by the Company with respect to any such Taxes.

21.           Dispute Resolution.

(a)           Except as otherwise expressly provided in this Agreement, the parties agree that the arbitration procedure set forth below shall be the sole and exclusive method for resolving and remedying any and all disputes, controversies or claims that arise out of or in connection with, or relate in any manner to, the rights and liabilities of the parties hereunder or any provision of this Agreement or the interpretation, enforceability, performance, breach, termination or validity hereof, including this Section 21 relating to the resolution of disputes (the “Disputes”) and questions concerning arbitrability and including any claim under any state or federal statute or common law theory governing or relating to the employment relationship (except claims for workers compensation or unemployment benefits); provided that nothing in this Section 21 shall prohibit a party hereto from instituting litigation to enforce any Final Determination (as defined below).  The parties hereby acknowledge and agree that, except as otherwise provided in this Section 21 or in the applicable rules for arbitration of business disputes (the “Rules”) promulgated by the Arbitration Service of Portland, Inc. (the “Arbitration Service”) as in effect from time to time, the arbitration procedures and any Final Determination hereunder shall be governed by, and shall be enforced pursuant to, the United States Arbitration Act, 9 U.S.C. §1 et. seq.

(b)           Except as provided elsewhere herein, in the event that any party asserts that there exists a Dispute, such party shall deliver a written notice to each other party involved therein specifying the nature of the asserted Dispute and requesting a meeting to attempt to resolve the same.  If no such resolution is reached within ten business days after the delivery of such notice, the party delivering such notice of Dispute (the “Disputing Person”) may thereafter commence arbitration hereunder by delivering to each other party involved therein a notice of arbitration (a “Notice of Arbitration”).  Such Notice of Arbitration shall specify the nature of any Dispute and any other matters required by the Rules as in effect from time to time to be included therein.  The Arbitrator shall permit and facilitate such discovery as the parties shall reasonably request.  The Company and Executive shall mutually agree upon one arbitrator to resolve any Dispute pursuant to the procedures set forth in this Section 21 and the Rules.  If the Company and Executive cannot mutually agree to an arbitrator within 15 days from receipt of the Notice of Arbitration, the arbitrator shall be appointed by the

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Arbitration Service within 15 days of being notified in writing of the Arbitration Service’s need to make such appointment or as soon thereafter as may be practicable.

(c)Except as otherwise provided by applicable law, the Company will pay all costs of the Arbitration Service and the arbitrator, less those amounts Executive would otherwise be required to pay if the claims were litigated in a court of law; provided that at the conclusion of the arbitration, the arbitrator shall award costs and expenses (including the costs of the arbitration previously advanced and the fees and expenses of attorneys, accountants and other experts) and reasonable interest to the prevailing party.

(d)           The arbitration shall be conducted in Portland, Oregon under the Rules as in effect from time to time.  The parties shall use their reasonable best efforts to cause the arbitrator to conduct the arbitration so that a final result, determination, finding, judgment and/or award (the “Final Determination”) is made or rendered as soon as practicable, but in no event later than 90 business days after the delivery of the Notice of Arbitration nor later than 30 days following completion of the arbitration.  Notwithstanding any Oregon law to the contrary, the Final Determination shall be final and binding on all parties and there shall be no appeal from or reexamination of the Final Determination, except for fraud, perjury, evident partiality or misconduct by an arbitrator prejudicing the rights of any party and to correct manifest clerical errors.

(e)           Notwithstanding anything to the contrary, nothing in this Section 21 shall be construed to impair the right of any person or entity to seek injunctive or other equitable relief in any court of competent jurisdiction.

21.           Executive’s Cooperation.  During the Employment Period and thereafter, Executive shall cooperate with Parent and its Subsidiaries in any internal investigation, any administrative, regulatory or judicial proceeding or any dispute with a third party as reasonably requested by the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company all relevant documents which are or may come into Executive’s possession, all at times and on schedules that are reasonably consistent with Executive’s other activities and commitments). In the event the Company requires Executive’s cooperation in accordance with this Section 22, the Company shall (i) reimburse Executive solely for reasonable travel expenses (including lodging and meals) upon submission of receipts; and (ii) if Executive is no longer employed by the Company, pay Executive a per diem consulting charge of $750.00 and pay the reasonable fees and expenses of attorneys, accountants and other professionals retained by Employee with respect to such matter or matters.

*   *   *   *   *

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IN WITNESS WHEREOF, the parties hereto have executed this Employment and Non-Competition Agreement as of the date first written above.

POORMAN-DOUGLAS CORPORATION
By:	/s/   Elizabeth Braham
Name:	Elizabeth M. Braham
Its:	Chief Financial Officer, Secretary and Treasurer
/s/   Edward J. Nimmo
Edward J. Nimmo

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EX-10.5

Exhibit 10.5

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (“Agreement”) is made as of this 30^th day ofJanuary, 2004, by and between EPIQ Systems, Inc.a Missouri corporation (the “Company”) and Jeffrey B. Baker (the “Employee”).

WITNESSETH:

WHEREAS, Poorman-Douglas Corporation (the “Employer”) is a corporation which is wholly-owned by P-D Holding Corp. which is a wholly-owned subsidiary of the Company;

WHEREAS, as of January 30, 2004, the Employee has executed an employment and non-competition agreement by and between the Employee and the Employer (the “Employment Agreement”) pursuant to which the Employee will be employed by the Employer;

WHEREAS, as an inducement for the Employee to enter into the Employment Agreement, the Company has agreed to grant to the Employee the right and option to purchase up to Two Hundred Thousand (200,000) shares of common stock, one cent ($.01) par value of the Company (the “Stock”); and

WHEREAS, the Employee desires to accept the aforementioned option to purchase the Stock in accordance with the provisions of the terms and conditions of this Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows:

SECTION 1.  GRANT OF OPTION

The Company hereby grants as of the date hereof (the “Grant Date”) to the Employee the right and option (the “Option”) to purchase all or any part of an aggregate of Two Hundred Thousand (200,000) shares of the Stock (the “Option Shares”) (such number being subject to adjustment as provided in Section 11 hereof) on the terms and conditions set forth herein.  The parties acknowledge and agree that this Option is intended to qualify as a nonstatutory or nonqualified stock option (“NSO”) and not as an incentive stock option under Section 422 of Internal Revenue Code of 1986, as amended (the “Code”).

SECTION 2.  PURCHASE PRICE

The per share purchase or exercise price of the Option Shares shall be $18.20, which is the closing bid price of one (1) share of Stock as reported on the NASDAQ National Market as of the close of trading on the Grant Date.  The purchase price is subject to adjustment as provided in Section 11 hereof.

SECTION 3.  MEDIUM OF PAYMENT

The parties agree that full payment of the purchase price for the Option Shares shall be payable in either (a) United States Dollars by cash, certified or cashier’s check, personal check, money order or wire transfer; or (b) in any combination of cash or check as described in subsection (a).

SECTION 4.  OPTION TERM AND TERMINATION

(a)No part of the Option shall be exercised after ten (10) years after the date hereof.

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(b)All rights to exercise the Option hereunder shall be terminated in accordance with the following provisions:

(i)If the Employee is no longer employed by the Employer or an Affiliate of the Employer for any reason other than death, Disability (as defined in the Employment Agreement), or for Cause (as defined in the Employment Agreement), the Employee shall be entitled to exercise the Option, to the extent it is exercisable, in whole or in part, within three (3) months after the date Employee’s employment terminates, but in no event later than the date on which the Option would have expired if Employee’s employment had not terminated.

(ii)If the Employee is no longer employed by the Employer or an Affiliate of the Employer on account of Disability, the Employee may exercise the Option, to the extent it is exercisable, in whole or in part, within one (1) year after the date on which the Employee’s employment terminates on account of Disability, but in no event later than the date on which the Option would have expired if the Employee had not become Disabled.

(iii)If the Employee is no longer employed by the Employer or an Affiliate of the Employer on account of Employee’s death, the estate of the Employee or any person who acquires the right to exercise the Option by will or the laws of descent or distribution or by reason of the Employee’s death may exercise the Option, to the extent it is exercisable, in whole or in part, within one (1) year after the Employee’s date of death, but in no event later than the date on which the Option would have expired if the Employee had not died.

(iv)If the Employee is no longer employed by the Employer or an Affiliate of the Employer on account of Employee’s termination for Cause, he shall forfeit any and all outstanding rights under the Option and such rights shall be deemed to have lapsed for purposes hereof as of the date of such termination of employment for Cause.

(c)For purposes of this Agreement, an “Affiliate of the Employer” shall mean any business entity directly or indirectly controlling, controlled by or under common control with the Employer.  For purposes of this definition, “controlling”, “controlled by” or “under common control with” means a more than fifty percent (50%) voting, equity and profits interest.

(d)For purposes of this Agreement, Employee’s employment with the Employer will not be deemed terminated if Employee goes on a military leave, a sick leave, or any other bona fide leave of absence that is approved by the Employer (or an Affiliate of Employer) in accordance with the usual procedures of the Employer (or its Affiliate) and if continued crediting of employment service is required by the terms of the leave or applicable law.

SECTION 5.  TIME OF EXERCISE

(a)The Option shall become vested in accordance with the following schedule, if as of each such date Employee is employed by Employer or an Affiliate of the Company:

Date	Cumulative Percentage of Option Vested
First anniversary of the Grant Date	20%
Second anniversary of the Grant Date	40%
Third anniversary of the Grant Date	60%
Fourth anniversary of the Grant Date	80%
Fifth anniversary of the Grant Date	100%

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(b)The Option or any installment of the Option that has become exercisable in accordance with Section 5(a) above, may be exercised at any time and from time to time (so long as the term of the Option or such installment thereof has not expired), as to all or any part of any installment thereof; provided, that the Option may not be exercised for a fractional share of Stock.

(c)If, at any time after the date hereof, the Company (through action of the board of directors of the Company or any committee thereof) executes, amends or otherwise modifies any option or similar agreement or arrangement with any executive officer of the Company such that all or any portion of an option to purchase shares of Stock held by such executive officer of the Company shall become exercisable on an accelerated basis upon the occurrence of a Change of Control of the Company (as such term is then defined by the board of directors of the Company or any committee thereof), then any installment of the Option hereunder that has not become exercisable shall automatically become exercisable in accordance with the schedule and terms approved by the board of directors of the Company or any committee thereof for such other executive officer(s) of the Company; provided that such accelerated vesting shall not become effective hereunder until approved by the stockholders of the Company to the extent required by applicable law.

SECTION 6.  METHOD OF EXERCISE AND ISSUANCE OF SHARES

(a)Each exercise of the Option, or all or any portion of an installment thereof, in accordance with the provision of Section 5 of this Agreement, shall be in compliance with any Company policy regarding insider trading and shall be by written notice of exercise delivered to the Chief Executive Officer or Chief Financial Officer of the Company at the Company’s principal place of business specifying the number of shares of Stock to be purchased and accompanied by payment in the manner elected in Section 3 hereof.

(b)As soon as practicable after any such exercise in accordance with the foregoing provisions, the Company shall deliver certificate(s) to the Employee representing the Stock which relates to such exercise.

SECTION 7.  NONTRANSFERABILITY

The Option, and all rights and privileges hereunder, shall be nonassignable and nontransferable by the Employee, either voluntarily or by operation of law (except by will or by operation of the laws of descent and distribution), nor shall they be pledged or hypothecated in any way, and shall be exercisable only by the Employee during his lifetime, except as provided in Section 4(b)(iii) of this Agreement.

SECTION 8.  SHARE AUTHORIZATIONS, CONSENTS, ETC.

The Company, during the term of the Option, will have a sufficient number of shares of Stock authorized to satisfy this Option.  The Company will seek to obtain from each regulatory commission or agency having jurisdiction, such authority as may be required to issue and sell Stock to satisfy the Option.  The inability of the Company to obtain from any such regulatory commission or agency authority, which counsel for the Company deems necessary for the lawful issuance and sale of the Stock to satisfy the Option, shall relieve the Company from any liability for failure to issue and sell Stock to satisfy the Option until such time as such authority is obtained.

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SECTION 9.  INVESTMENT REPRESENTATIONS

The Employee may be required, if it is deemed necessary in the opinion of counsel of the Company, to represent to the Company at the time of exercise that it is Employee’s intention to acquire the Stock for Employee’s private investment only and not for resale or distribution to the public.  The Company may stamp any certificate representing such Stock with a legend to the effect that such Stock has not been registered under the Securities Act of 1933, as amended, and that it may not be sold or transferred until so registered, or until an opinion of counsel satisfactory to the Company is received to the effect that such registration is not necessary.  In the event any Stock issued pursuant to this Agreement is registered under the Securities Act of 1933, as amended, then the investment representations and restrictions imposed pursuant to federal securities law shall automatically be inoperative with respect to the registered shares of Stock.  Nothing herein shall be deemed to obligate the Company to so register any of such Stock.  Whenever the Company next files a registration statement on Form S-8 (it being understood that the Company shall file a registration statement on Form S-8 within two years after the date hereof), the Company will include in that registration statement the unexercised Option Shares to the extent permitted by law.  The Company will maintain the effectiveness of such registration statement on Form S-8 for all unexercised Option Shares, to the extent permitted by law, until all such Option Shares become exercised.

SECTION 10.  RIGHTS AS SHAREHOLDER

The Employee shall have no rights as a shareholder with respect to any Stock issuable pursuant to this Option until the certificate(s) representing such Stock shall have been issued and delivered to Employee.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Stock certificate(s) is delivered to the Employee.

SECTION 11.  CHANGES IN CAPITAL STRUCTURE

(a)The Option granted hereunder shall be subject to adjustment by the Board of Directors of the Company as to the number and price of shares subject to such Option in the event of changes in the outstanding shares of Stock by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Grant Date of the Option.  In the event of any such change in the outstanding shares of Stock, the aggregate number of Option Shares, which remain outstanding, and the exercise price thereof, under this Agreement shall be adjusted by the Board of Directors of the Company, whose determination shall be conclusive.

(b)Except as otherwise expressly provided herein, the issuance by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of options, rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of the Option Shares which remain outstanding.

(c)Without limiting the generality of the foregoing, the Option granted hereunder shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities, or preferred or preference stock that would rank above the shares of Stock subject to Option; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceedings, whether of a similar character or otherwise.

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SECTION 12.  CONTINUATION OF EMPLOYMENT

Nothing herein shall confer upon the Employee any right to continued employment, or interfere with the right of the Employer, the Company or an Affiliate of the Company, whichever is serving as the employer of the Employee, to terminate his employment at any time, for any reason (subject to the terms of the Employment Agreement).

SECTION 13.  TAX TREATMENT AND WITHHOLDING TAXES

The Company intends that the Option will be considered a nonstatutory or nonqualified stock option under the Code.  The Employee, the Company or an Affiliate of the Company, whichever is serving as the employer of the Employee, has the right to require the Employee or Employee’s permitted successor in interest to pay to the Employer, the Company or an Affiliate of the Company, whichever is serving as the employer of the Employee, the amount of any taxes which said employer may be required to withhold with respect to such Option Shares.  If permitted by law, the Company has the right to issue or transfer Option Shares net of the number of shares of Stock sufficient to satisfy tax withholding requirements.  For withholding tax purposes, the Option Shares to be withheld shall be the fair market value on the date of the withholding obligation.

The foregoing is not intended as tax advice to Employee.  Furthermore, neither the Company nor the Employer make any representation or warranty concerning the tax consequences to the Employee upon grant or exercise of the Option, the receipt of the Option Shares upon the exercise in whole or in part of the Option, or the subsequent sale of the Option Shares acquired pursuant to the exercise, in whole or in part, of the Option.  The Employee should consult his or her own tax advisor.

SECTION 14.  FAIR MARKET VALUE

As used herein, except with respect to the exercise price set forth in Section 2, the fair market value shall be the closing price at which the Stock is traded on the applicable date.  For this purpose, the closing price of the Stock on any business day shall be (i) if such Stock is listed or admitted for trading on any United States national securities exchange, or if actual transactions are otherwise reported on a consolidated transaction reporting system, the last reported sale price of the Stock on such exchange or reporting system, as reported in any newspaper of general circulation, (ii) if the Stock is quoted on the National Association of Securities Dealers Automated Quotations System (“NASDAQ”), or any similar system of automated dissemination of quotations of securities prices in common use, the closing bid quotation for such day of the Stock on such system, or (iii) if neither clause (i) or (ii) is applicable, the mean between the high bid and low ask quotations for the Stock as reported by the National Quotation Bureau, Incorporated if at least two securities dealers have inserted both bid and ask quotations for the Stock on at least 5 of the 10 preceding days.

SECTION 15.  GOVERNING LAW

This Agreement shall be subject to, and governed by, the Laws of the State of Missouri irrespective of the fact that one or more of the parties now is, or may become, a resident of a different state.

SECTION 16.  MISCELLANEOUS

The Option shall be administered by the Board of Directors of the Company or a Committee of the Board of Directors of the Company (the Board of Directors or Committee of the Board of Directors shall hereinafter be referred to as the “Administrator”).  The parties hereby acknowledge and agree that the Administrator shall have the authority, consistent with this Agreement, to interpret this Agreement, to promulgate such rules, policies and procedures to administer the Option and the exercise thereof, to delegate ministerial responsibilities relating to the Option to appropriate persons and to make all other determinations necessary or desirable for the administration of this Agreement.  All decisions, determinations and interpretations of the Administrator shall be binding on the parties.  Neither the Company, the Employer, nor

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any Affiliate of the Company is under any obligation to repurchase the Option Shares acquired pursuant to the exercise of the Option.  The proceeds received by the Company from the exercise of this Option shall be used for any purposes as the Company shall determine in its sole and absolute discretion.  If any provision of this Agreement shall be held to be invalid, unenforceable or illegal for any reason, such a determination shall not affect the validity, enforceability, or legality of the remaining provisions hereof.  In the event that any provision of this Agreement is determined to be vague or ambiguous, the parties agree that such provision should not be disregarded or eliminated, but construed in accordance with the intent of the parties.  To the extent applicable and without limiting the generality of the foregoing, the transactions contemplated under this Agreement are intended to comply with all applicable conditions of Rule 16b-3 or its successors promulgated under the Securities Exchange Act of 1934, as amended, and to the extent any provision of this Agreement or action by any party hereunder is inconsistent with the foregoing requirements, it shall be deemed null and void, to the extent required by law  The failure of any party to enforce any of the provisions of this Agreement in any single instance, shall not prevent the enforcement thereof in any other instance, and no provision of this Agreement shall be deemed to have been waived or modified unless such waiver or modification shall be in writing and signed by the parties hereto.  This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the matters contained herein and supersedes all prior agreements and understandings, whether or not in writing, between the parties with respect to these matters.  This Agreement may be amended or modified only by the written agreement of the parties hereto.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, executors, administrators, successors and assigns.

IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to be duly executed by its duly authorized officer, and the Employee has executed this instrument, all as of the day and year first above written.

EPIQ SYSTEMS, INC.			JEFFREY B. BAKER
“Company”			“Employee”
By:	/s/   Christopher E. Olofson		/s/   Jeffrey B. Baker
Name:		Christopher E. Olofson	Jeffrey B. Baker
Title:		President and Chief Operating Officer

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EX-10.6

Exhibit 10.6

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (“Agreement”) is made as of this 30^th day ofJanuary, 2004, by and between EPIQ Systems, Inc.a Missouri corporation (the “Company”) and Edward J. Nimmo (the “Employee”).

WITNESSETH:

WHEREAS, Poorman-Douglas Corporation (the “Employer”) is a corporation which is wholly-owned by P-D Holding Corp. which is a wholly-owned subsidiary of the Company;

WHEREAS, as of January 30, 2004, the Employee has executed an employment and non-competition agreement by and between the Employee and the Employer (the “Employment Agreement”) pursuant to which the Employee will be employed by the Employer;

WHEREAS, as an inducement for the Employee to enter into the Employment Agreement, the Company has agreed to grant to the Employee the right and option to purchase up to One Hundred Thousand (100,000) shares of common stock, one cent ($.01) par value of the Company (the “Stock”); and

WHEREAS, the Employee desires to accept the aforementioned option to purchase the Stock in accordance with the provisions of the terms and conditions of this Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows:

SECTION 1.  GRANT OF OPTION

The Company hereby grants as of the date hereof (the “Grant Date”) to the Employee the right and option (the “Option”) to purchase all or any part of an aggregate of One Hundred Thousand (100,000) shares of the Stock (the “Option Shares”) (such number being subject to adjustment as provided in Section 11 hereof) on the terms and conditions set forth herein.  The parties acknowledge and agree that this Option is intended to qualify as a nonstatutory or nonqualified stock option (“NSO”) and not as an incentive stock option under Section 422 of Internal Revenue Code of 1986, as amended (the “Code”).

SECTION 2.  PURCHASE PRICE

The per share purchase or exercise price of the Option Shares shall be $18.20, which is the closing bid price of one (1) share of Stock as reported on the NASDAQ National Market as of the close of trading on the Grant Date.  The purchase price is subject to adjustment as provided in Section 11 hereof.

SECTION 3.  MEDIUM OF PAYMENT

The parties agree that full payment of the purchase price for the Option Shares shall be payable in either (a) United States Dollars by cash, certified or cashier’s check, personal check, money order or wire transfer; or (b) in any combination of cash or check as described in subsection (a).

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SECTION 4.  OPTION TERM AND TERMINATION

(a)No part of the Option shall be exercised after ten (10) years after the date hereof.

(b)All rights to exercise the Option hereunder shall be terminated in accordance with the following provisions:

(i) If the Employee is no longer employed by the Employer or an Affiliate of the Employer for any reason other than death, Disability (as defined in the Employment Agreement), or for Cause (as defined in the Employment Agreement), the Employee shall be entitled to exercise the Option, to the extent it is exercisable, in whole or in part, within three (3) months after the date Employee’s employment terminates, but in no event later than the date on which the Option would have expired if Employee’s employment had not terminated.

(ii)If the Employee is no longer employed by the Employer or an Affiliate of the Employer on account of Disability, the Employee may exercise the Option, to the extent it is exercisable, in whole or in part, within one (1) year after the date on which the Employee’s employment terminates on account of Disability, but in no event later than the date on which the Option would have expired if the Employee had not become Disabled.

(iii)If the Employee is no longer employed by the Employer or an Affiliate of the Employer on account of Employee’s death, the estate of the Employee or any person who acquires the right to exercise the Option by will or the laws of descent or distribution or by reason of the Employee’s death may exercise the Option, to the extent it is exercisable, in whole or in part, within one (1) year after the Employee’s date of death, but in no event later than the date on which the Option would have expired if the Employee had not died.

(iv)If the Employee is no longer employed by the Employer or an Affiliate of the Employer on account of Employee’s termination for Cause, he shall forfeit any and all outstanding rights under the Option and such rights shall be deemed to have lapsed for purposes hereof as of the date of such termination of employment for Cause.

(c)For purposes of this Agreement, an “Affiliate of the Employer” shall mean any business entity directly or indirectly controlling, controlled by or under common control with the Employer.  For purposes of this definition, “controlling”, “controlled by” or “under common control with” means a more than fifty percent (50%) voting, equity and profits interest.

(d)For purposes of this Agreement, Employee’s employment with the Employer will not be deemed terminated if Employee goes on a military leave, a sick leave, or any other bona fide leave of absence that is approved by the Employer (or an Affiliate of Employer) in accordance with the usual procedures of the Employer (or its Affiliate) and if continued crediting of employment service is required by the terms of the leave or applicable law.

SECTION 5.  TIME OF EXERCISE

(a)The Option shall become vested in accordance with the following schedule, if as of each such date Employee is employed by Employer or an Affiliate of the Company:

Date	Cumulative Percentage of Option Vested
First anniversary of the Grant Date	20%
Second anniversary of the Grant Date	40%
Third anniversary of the Grant Date	60%
Fourth anniversary of the Grant Date	80%
Fifth anniversary of the Grant Date	100%

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(b)The Option or any installment of the Option that has become exercisable in accordance with Section 5(a) above, may be exercised at any time and from time to time (so long as the term of the Option or such installment thereof has not expired), as to all or any part of any installment thereof; provided, that the Option may not be exercised for a fractional share of Stock.

(c)If, at any time after the date hereof, the Company (through action of the board of directors of the Company or any committee thereof) executes, amends or otherwise modifies any option or similar agreement or arrangement with any executive officer of the Company such that all or any portion of an option to purchase shares of Stock held by such executive officer of the Company shall become exercisable on an accelerated basis upon the occurrence of a Change of Control of the Company (as such term is then defined by the board of directors of the Company or any committee thereof), then any installment of the Option hereunder that has not become exercisable shall automatically become exercisable in accordance with the schedule and terms approved by the board of directors of the Company or any committee thereof for such other executive officer(s) of the Company; provided that such accelerated vesting shall not become effective hereunder until approved by the stockholders of the Company to the extent required by applicable law.

SECTION 6.  METHOD OF EXERCISE AND ISSUANCE OF SHARES

(a)Each exercise of the Option, or all or any portion of an installment thereof, in accordance with the provision of Section 5 of this Agreement, shall be in compliance with any Company policy regarding insider trading and shall be by written notice of exercise delivered to the Chief Executive Officer or Chief Financial Officer of the Company at the Company’s principal place of business specifying the number of shares of Stock to be purchased and accompanied by payment in the manner elected in Section 3 hereof.

(b)As soon as practicable after any such exercise in accordance with the foregoing provisions, the Company shall deliver certificate(s) to the Employee representing the Stock which relates to such exercise.

SECTION 7.  NONTRANSFERABILITY

The Option, and all rights and privileges hereunder, shall be nonassignable and nontransferable by the Employee, either voluntarily or by operation of law (except by will or by operation of the laws of descent and distribution), nor shall they be pledged or hypothecated in any way, and shall be exercisable only by the Employee during his lifetime, except as provided in Section 4(b)(iii) of this Agreement.

SECTION 8.  SHARE AUTHORIZATIONS, CONSENTS, ETC.

The Company, during the term of the Option, will have a sufficient number of shares of Stock authorized to satisfy this Option.  The Company will seek to obtain from each regulatory commission or agency having jurisdiction, such authority as may be required to issue and sell Stock to satisfy the Option.  The inability of the Company to obtain from any such regulatory commission or agency authority, which counsel for the Company deems necessary for the lawful issuance and sale of the Stock to satisfy the Option, shall relieve the Company from any liability for failure to issue and sell Stock to satisfy the Option until such time as such authority is obtained.

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SECTION 9.  INVESTMENT REPRESENTATIONS

The Employee may be required, if it is deemed necessary in the opinion of counsel of the Company, to represent to the Company at the time of exercise that it is Employee’s intention to acquire the Stock for Employee’s private investment only and not for resale or distribution to the public.  The Company may stamp any certificate representing such Stock with a legend to the effect that such Stock has not been registered under the Securities Act of 1933, as amended, and that it may not be sold or transferred until so registered, or until an opinion of counsel satisfactory to the Company is received to the effect that such registration is not necessary.  In the event any Stock issued pursuant to this Agreement is registered under the Securities Act of 1933, as amended, then the investment representations and restrictions imposed pursuant to federal securities law shall automatically be inoperative with respect to the registered shares of Stock.  Nothing herein shall be deemed to obligate the Company to so register any of such Stock.  Whenever the Company next files a registration statement on Form S-8 (it being understood that the Company shall file a registration statement on Form S-8 within two years after the date hereof), the Company will include in that registration statement the unexercised Option Shares to the extent permitted by law.  The Company will maintain the effectiveness of such registration statement on Form S-8 for all unexercised Option Shares, to the extent permitted by law, until all such Option Shares become exercised.

SECTION 10.  RIGHTS AS SHAREHOLDER

The Employee shall have no rights as a shareholder with respect to any Stock issuable pursuant to this Option until the certificate(s) representing such Stock shall have been issued and delivered to Employee.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Stock certificate(s) is delivered to the Employee.

SECTION 11.  CHANGES IN CAPITAL STRUCTURE

(a)The Option granted hereunder shall be subject to adjustment by the Board of Directors of the Company as to the number and price of shares subject to such Option in the event of changes in the outstanding shares of Stock by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Grant Date of the Option.  In the event of any such change in the outstanding shares of Stock, the aggregate number of Option Shares, which remain outstanding, and the exercise price thereof, under this Agreement shall be adjusted by the Board of Directors of the Company, whose determination shall be conclusive.

(b)Except as otherwise expressly provided herein, the issuance by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of options, rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of the Option Shares which remain outstanding.

(c)Without limiting the generality of the foregoing, the Option granted hereunder shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities, or preferred or preference stock that would rank above the shares of Stock subject to Option; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceedings, whether of a similar character or otherwise.

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SECTION 12.  CONTINUATION OF EMPLOYMENT

Nothing herein shall confer upon the Employee any right to continued employment, or interfere with the right of the Employer, the Company or an Affiliate of the Company, whichever is serving as the employer of the Employee, to terminate his employment at any time, for any reason (subject to the terms of the Employment Agreement).

SECTION 13.  TAX TREATMENT AND WITHHOLDING TAXES

The Company intends that the Option will be considered a nonstatutory or nonqualified stock option under the Code.  The Employee, the Company or an Affiliate of the Company, whichever is serving as the employer of the Employee, has the right to require the Employee or Employee’s permitted successor in interest to pay to the Employer, the Company or an Affiliate of the Company, whichever is serving as the employer of the Employee, the amount of any taxes which said employer may be required to withhold with respect to such Option Shares.  If permitted by law, the Company has the right to issue or transfer Option Shares net of the number of shares of Stock sufficient to satisfy tax withholding requirements.  For withholding tax purposes, the Option Shares to be withheld shall be the fair market value on the date of the withholding obligation.

The foregoing is not intended as tax advice to Employee.  Furthermore, neither the Company nor the Employer make any representation or warranty concerning the tax consequences to the Employee upon grant or exercise of the Option, the receipt of the Option Shares upon the exercise in whole or in part of the Option, or the subsequent sale of the Option Shares acquired pursuant to the exercise, in whole or in part, of the Option.  The Employee should consult his or her own tax advisor.

SECTION 14.  FAIR MARKET VALUE

As used herein, except with respect to the exercise price set forth in Section 2, the fair market value shall be the closing price at which the Stock is traded on the applicable date.  For this purpose, the closing price of the Stock on any business day shall be (i) if such Stock is listed or admitted for trading on any United States national securities exchange, or if actual transactions are otherwise reported on a consolidated transaction reporting system, the last reported sale price of the Stock on such exchange or reporting system, as reported in any newspaper of general circulation, (ii) if the Stock is quoted on the National Association of Securities Dealers Automated Quotations System (“NASDAQ”), or any similar system of automated dissemination of quotations of securities prices in common use, the closing bid quotation for such day of the Stock on such system, or (iii) if neither clause (i) or (ii) is applicable, the mean between the high bid and low ask quotations for the Stock as reported by the National Quotation Bureau, Incorporated if at least two securities dealers have inserted both bid and ask quotations for the Stock on at least 5 of the 10 preceding days.

SECTION 15.  GOVERNING LAW

This Agreement shall be subject to, and governed by, the Laws of the State of Missouri irrespective of the fact that one or more of the parties now is, or may become, a resident of a different state.

SECTION 16.  MISCELLANEOUS

The Option shall be administered by the Board of Directors of the Company or a Committee of the Board of Directors of the Company (the Board of Directors or Committee of the Board of Directors shall hereinafter be referred to as the “Administrator”).  The parties hereby acknowledge and agree that the Administrator shall have the authority, consistent with this Agreement, to interpret this Agreement, to promulgate such rules, policies and procedures to administer the Option and the exercise thereof, to delegate ministerial responsibilities relating to the Option to appropriate persons and to make all other determinations necessary or desirable for the administration of this Agreement.  All decisions, determinations and interpretations of the Administrator shall be binding on the parties.  Neither the Company, the Employer, nor

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any Affiliate of the Company is under any obligation to repurchase the Option Shares acquired pursuant to the exercise of the Option.  The proceeds received by the Company from the exercise of this Option shall be used for any purposes as the Company shall determine in its sole and absolute discretion.  If any provision of this Agreement shall be held to be invalid, unenforceable or illegal for any reason, such a determination shall not affect the validity, enforceability, or legality of the remaining provisions hereof.  In the event that any provision of this Agreement is determined to be vague or ambiguous, the parties agree that such provision should not be disregarded or eliminated, but construed in accordance with the intent of the parties.  To the extent applicable and without limiting the generality of the foregoing, the transactions contemplated under this Agreement are intended to comply with all applicable conditions of Rule 16b-3 or its successors promulgated under the Securities Exchange Act of 1934, as amended, and to the extent any provision of this Agreement or action by any party hereunder is inconsistent with the foregoing requirements, it shall be deemed null and void, to the extent required by law  The failure of any party to enforce any of the provisions of this Agreement in any single instance, shall not prevent the enforcement thereof in any other instance, and no provision of this Agreement shall be deemed to have been waived or modified unless such waiver or modification shall be in writing and signed by the parties hereto.  This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the matters contained herein and supersedes all prior agreements and understandings, whether or not in writing, between the parties with respect to these matters.  This Agreement may be amended or modified only by the written agreement of the parties hereto.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, executors, administrators, successors and assigns.

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IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to be duly executed by its duly authorized officer, and the Employee has executed this instrument, all as of the day and year first above written.

EPIQ SYSTEMS, INC.			EDWARD J. NIMMO
“Company”			“Employee”
By:	/s/   Christopher E. Olofson		/s/   Edward J. Nimmo
Name:		Christopher E. Olofson	Edward J. Nimmo
Title:		President and Chief Operating Officer

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EX-10.7

Exhibit 10.7

Execution Copy

CREDIT AGREEMENT

dated as of January 30, 2004

among

EPIQ SYSTEMS, INC.,
BANKRUPTCY SERVICES LLC
and
POORMAN-DOUGLAS CORPORATION,
as the Borrowers

THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders,

LASALLE BANK NATIONAL ASSOCIATION,
as Administrative Agent,

and

KEYBANK NATIONAL ASSOCIATION,
as Syndication Agent

LASALLE BANK NATIONAL ASSOCIATION,
as Arranger

CREDIT AGREEMENT

THIS CREDIT AGREEMENT dated as of January 30, 2004 (this “Agreement”) is entered into among EPIQ SYSTEMS, INC., a Missouri corporation(the “Company”), BANKRUPTCY SERVICES LLC, a New York limited liability company (“Bankruptcy Services”), POORMAN-DOUGLAS CORPORATION, a Rhode Island corporation (“Poorman”), (Bankruptcy Services, Poorman and each other Subsidiary of the Company that becomes a party hereto as a Borrower pursuant to a Joinder Agreement are collectively referred to herein as the “Borrower Subsidiaries”), the financial institutions that are or may from time to time become parties hereto (together with their respective successors and assigns, the “Lenders”), KEYBANK NATIONAL ASSOCIATION, as syndication agent, and LASALLE BANK NATIONAL ASSOCIATION (in its individual capacity, “LaSalle”), as administrative agent for the Lenders.

The Lenders have agreed to make available to the Company term loans and a revolving credit facility (which includes letters of credit) upon the terms and conditions set forth herein.

In consideration of the mutual agreements herein contained, the parties hereto agree as follows:

SECTION 1DEFINITIONS.

1.1Definitions.  When used herein the following terms shall have the following meanings:

Account Debtor is defined in the Guaranty and Collateral Agreement.

Account or Accounts is defined in the UCC.

Acquired Entity – see the definition of “Permitted Acquisition”.

Acquisition means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of in excess of 50% of the Capital Securities of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

Administrative Agent means LaSalle in its capacity as administrative agent for the Lenders hereunder and any successor thereto in such capacity.

Affected Loan - see Section 8.3.

Affiliate of any Person means (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any officer or director of such Person and (c) with respect to any Lender, any entity administered or managed by such Lender or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans.  A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.  Unless expressly stated otherwise herein, neither the Administrative Agent nor any Lender shall be deemed an Affiliate of any Loan Party.

Agreement - see the Preamble.

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Applicable Margin means, for any day, the rate per annum set forth below opposite the level (the “Level”) then in effect, it being understood that the Applicable Margin for (i) LIBOR Loans shall be the percentage set forth under the column “LIBOR Margin”, (ii) Base Rate Loans shall be the percentage set forth under the column “Base Rate Margin”, (iii) the Non-Use Fee Rate shall be the percentage set forth under the column “Non-Use Fee Rate” and (iv) the L/C Fee shall be the percentage set forth under the column “L/C Fee Rate”:

Level	Total Debt to EBITDA Ratio	LIBOR Margin		Base Rate Margin		Non-Use Fee Rate		L/C Fee Rate
I	Greater than or equal to 1.50:1	3.50	%	2.00	%	0.50	%	3.50	%
II	Greater than or equal to 1.00:1 but less than 1.50:1	3.25	%	1.75	%	0.50	%	3.25	%
III	Greater than or equal to 0.50:1 but less than 1.00:1	3.00	%	1.50	%	0.50	%	3.00	%
IV	Less than 0.50:1	2.75	%	1.25	%	0.50	%	2.75	%

The LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be adjusted, to the extent applicable, on the fifth (5th) Business Day after the Company provides or is required to provide the annual and quarterly financial statements and other information pursuant Section 10.1.1 or 10.1.2, as applicable, and the related Compliance Certificate, pursuant to Section 10.1.3.  Notwithstanding anything contained in this paragraph to the contrary, (a) if the Company fails to deliver the such financial statements and Compliance Certificate in accordance with the provisions of Section 10.1.1, 10.1.2 and 10.1.3, the LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be based upon Level I above beginning on the date such financial statements and Compliance Certificate were required to be delivered until the fifth (5th) Business Day after such financial statements and Compliance Certificate are actually delivered, whereupon the Applicable Margin shall be determined by the then current Level; (b) no reduction to any Applicable Margin shall become effective at any time when an Event of Default or Unmatured Event of Default has occurred and is continuing; and (c) the initial Applicable Margin on the Closing Date shall be based on Level I until the date on which the financial statements and Compliance Certificate are required to be delivered for the Fiscal Quarter ending June 30, 2004.

Asset Disposition means the sale, lease, assignment or other transfer for value (each, a “Disposition”) by any Loan Party to any Person (other than a Loan Party) of any asset or right of such Loan Party (including the loss, destruction or damage of any thereof or any condemnation, confiscation, requisition, seizure or taking thereof) other than (a) the Disposition of any asset which is to be replaced, and is in fact replaced, within 180 days with another asset performing the same or a similar function, (b) the sale or lease of inventory in the ordinary course of business and (c) other Dispositions in any Fiscal Year the Net Cash Proceeds of which do not in the aggregate exceed $325,000 in any Fiscal Year.

Assignee - see Section 16.6.1.

Assignment Agreement - see Section 16.6.1.

Attorney Costs means, with respect to any Person, all reasonable fees and charges of any counsel to such Person, the reasonable allocable cost of internal legal services of such Person to the extent not duplicative of work performed by external counsel, all reasonable disbursements of such internal counsel and all court costs and similar legal expenses.

Bank Product Agreements means those certain cash management service agreements entered into from time to time between any Loan Party and a Lender or its Affiliates in connection with any of the Bank Products.

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Bank Product Obligations means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Loan Parties to any Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that a Loan Party is obligated to reimburse to the Administrative Agent or any Lender as a result of the Administrative Agent or such Lender purchasing participations or executing indemnities or reimbursement obligations with respect to the Bank Products provided to the Loan Parties pursuant to the Bank Product Agreements.

Bank Products means any service or facility extended to any Loan Party by any Lender or the Administrative Agent or its Affiliates including:  (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) Hedging Agreements.

Bankruptcy Code means Title 11 of the United States Code (11 U.S.C. § 101 et. seq.) or any replacement or supplemental federal statute dealing with the bankruptcy of debtors.

Base Rate means at any time the greater of (a) the Federal Funds Rate plus 0.5% and (b) the Prime Rate.

Base Rate Loan means any Loan which bears interest at or by reference to the Base Rate.

Base Rate Margin - see the definition of Applicable Margin.

Borrower Subsidiary – see the Preamble.

Borrowers means, collectively, the Company, each Borrower Subsidiary and each other Person that from time to time becomes a Borrower under this Agreement pursuant to a Joinder Agreement, and “Borrower” means any of the Borrowers.

BSA - see Section 10.4.

Business Day means any day on which LaSalle is open for commercial banking business in Chicago, Illinois and, in the case of a Business Day which relates to a LIBOR Loan, on which dealings are carried on in the London interbank eurodollar market.

Capital Expenditures means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Company, including expenditures in respect of Capital Leases and expenditures with respect to internally developed capitalized software, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

Capital Lease means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.

Capital Securities means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the Closing Date, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership,

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interests in a trust, interests in other unincorporated organizations or any other equivalent of such ownership interest.

Cash and Cash Equivalents means cash and Cash Equivalent Investments held in accounts with the Administrative Agent pursuant to cash collateral or other arrangements satisfactory to the Administrative Agent.

Cash Collateralize means to deliver cash collateral to the Administrative Agent, to be held as cash collateral for outstanding Letters of Credit, pursuant to documentation in form and substance, and in an amount, reasonably satisfactory to the Administrative Agent.  Derivatives of such term have corresponding meanings.

Cash Equivalent Investment means, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by a Lender or its holding company) rated at least A-2 by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-2 by Moody’s Investors Service, Inc., (c) any certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal funds transaction that is issued or sold by any Lender or its holding company (or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $250,000,000), (d) any repurchase agreement entered into with any Lender (or commercial banking institution of the nature referred to in clause (c)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder and (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by the Administrative Agent.

Change of Control means the occurrence of any of the following events: (a) if any person (as such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect on the Closing Date) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) (other than Tom Olofson and Christopher Olofson) become the “beneficial owners” (as such term is used in Rule 13d-3 under the Exchange Act as in effect on the Closing Date), directly or indirectly, of more than 25% of the total voting power of all classes then outstanding of the Company’s Capital Securities, (b) the Company shall cease to, directly or indirectly, own and control 100% of each class of the outstanding Capital Securities of each Subsidiary or (c) either of Tom Olofson or Christopher Olofson ceases to be actively involved in the day-to-day management of the Company for any reason and a successor reasonably satisfactory to the Required Lenders does not assume such Person’s responsibilities and position within 180 days of such cessation.

Closing Date - see Section 12.1.

Code means the Internal Revenue Code of 1986.

Collateral means all assets of the Company and its Subsidiaries in which a Lien has been granted to the Administrative Agent for the benefit of the Lenders pursuant to the Collateral Documents to secure the payment and performance of the Obligations.

Collateral Access Agreement means an agreement in form and substance reasonably satisfactory to the Administrative Agent pursuant to which a mortgagee or lessor of real property on which collateral is stored or otherwise located, or a warehouseman, processor or other bailee of Inventory or other property owned by any Loan Party, acknowledges the Liens of the Administrative Agent and waives or subordinates (on terms satisfactory to the Administrative Agent) any Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permits the Administrative Agent reasonable access to and use

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of such real property following the occurrence and during the continuance of an Event of Default to assemble, complete and sell any collateral stored or otherwise located thereon.

Collateral Documents means, collectively, the Guaranty and Collateral Agreement, each Mortgage,each Collateral Access Agreement, each Pledge Agreement, each Perfection Certificate, each control agreement and any other agreement or instrument pursuant to which the Company, any Subsidiary or any other Person grants or purports to grant collateral to the Administrative Agent for the benefit of the Lenders to secure the performance of any Obligations or otherwise relates to any Collateral.

Commitment means, as to any Lender, such Lender’s commitment to make Loans, and to issue or participate in Letters of Credit, under this Agreement.  The initial amount of each Lender’s commitment to make Loans is set forth on Annex A.

Company - see the Preamble.

Company Property means all assets, property and property rights, of any kind or nature, tangible or intangible, now or hereafter existing, in which any Borrower or any Loan Party owns, asserts or maintains an interest.

Compliance Certificate means a Compliance Certificate in substantially the form of Exhibit B.

Computation Period means each period of four consecutive Fiscal Quarters ending on the last day of a Fiscal Quarter.

Consolidated Net Income means, with respect to any Person for any period, the net income (or loss) of such Person and its Subsidiaries for such period, excluding any gains (or losses) from Asset Dispositions, any extraordinary gains (or losses) and any gains (or losses) from discontinued operations as determined in accordance with GAAP.

Contingent Liability means, with respect to any Person, each obligation and liability of such Person and all such obligations and liabilities of such Person incurred pursuant to any agreement, undertaking or arrangement by which such Person:  (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (b) guarantees the payment of dividends or other distributions upon the Capital Securities of any other Person; (c) undertakes or agrees (whether contingently or otherwise):  (i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to make payment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) undertakes to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees otherwise to assure a creditor against loss.  The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby, unless such Contingent Liability is explicitly limited by contract to a stated amount or recourse against a specific asset, in which case, the amount of such Contingent Liability shall be deemed to be such stated amount or the fair market value of such asset, as applicable.

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Controlled Group means all members of a controlled group of corporations, all members of a controlled group of trades or businesses (whether or not incorporated) under common control and all members of an affiliated service group which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

Debt of any Person means, without duplication, (a) all borrowed money of such Person, whether or not evidenced by bonds, debentures, notes or similar instruments, (b) all obligations of such Person as lessee under Capital Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (c) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business and accrued expenses and the deferred purchase price of Acquisitions), (d) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person; provided that if such Person has not assumed or otherwise become liable for such indebtedness, such indebtedness shall be measured at the fair market value of such property securing such indebtedness at the time of determination, (e) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), (f) all Hedging Obligations of such Person, (g) all Contingent Liabilities of such Person where the underlying obligations would constitute Debt under this definition and (h) all Debt of any partnership of which such Person is a general partner.

Debt to be Repaid means Debt listed on Schedule 12.1.

Designated Proceeds - see Section 6.2.2(a).

Dollar and the sign “$” mean lawful money of the United States of America.

Earnout Obligations means all obligations incurred in connection with any Permitted Acquisition under non-compete agreements, consulting agreements, purchase agreements, earn-out agreements and similar deferred purchase arrangements.

EBITDA means, for any Person, for any period, Consolidated Net Income for such Person for such period plus, to the extent deducted in determining such Consolidated Net Income, (i) Interest Expense, income tax expense, depreciation, amortization and other non-cash charges, (ii) unamortized costs, fees and expenses incurred in connection with the transactions contemplated by this Agreement, the Related Transactions and any Permitted Acquisition and (iii) expenses and charges which will be indemnified or reimbursed to the extent such amounts are covered by funds in a valid escrow account or similar arrangement, in each case, for such period without duplication and all as determined on a Pro Forma Basis in accordance with GAAP; provided, however, that for purposes of calculating EBITDA for the Company and its Subsidiaries, (a) EBITDA for the three (3) month period ended March 31, 2003, shall be $8,238,000, (b) EBITDA for the three (3) month period ended June 30, 2003, shall be $11,848,000 and (c) EBITDA for the three (3) month period ended September 30, 2003, shall be $14,907,000; provided, further, that for purposes of making the calculations required by Section 12.1, EBITDA for the Company and its Subsidiaries for the three (3) month period ended December 31, 2003, shall be $12,800,000.

Environmental Claims means all claims, however asserted, by any governmental, regulatory or judicial authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment.

Environmental Laws means all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative or judicial orders, consent agreements, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to public health and safety, or pollution or protection of the environment or workplace, including any of the foregoing relating to the presence, use, production, generation,

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handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Substance.

EPIQ Acquisition means EPIQ Systems Acquisition, Inc., a New York corporation.

ERISA means the Employee Retirement Income Security Act of 1974.

Event of Default means any of the events described in Section 13.1.

Excess Cash Flow means, for any period, the remainder of (a) Unadjusted EBITDA for such period, minus (b) the sum, without duplication, of (i) scheduled repayments of principal of Term Loans made during such period, plus (ii) voluntary prepayments of the Term A Loans pursuant to Section 6.2.1 during such period, plus (iii) cash payments made in such period with respect to Capital Expenditures, plus (iv) all income taxes paid in cash by the Loan Parties during such period, plus (v) cash Interest Expense of the Loan Parties during such period.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Excluded Taxes means taxes based upon, or measured by, a Lender’s or the Administrative Agent’s (or a branch of a Lender’s or the Administrative Agent’s) overall net income, overall net receipts, or overall net profits (including franchise taxes imposed in lieu of such taxes), but only to the extent such taxes are imposed by the United States or a taxing authority (a) in a jurisdiction in which such Lender or the Administrative Agent is organized, (b) in a jurisdiction which such Lender’s or the Administrative Agent’s principal office is located, or (c) in a jurisdiction in which such Lender’s or the Administrative Agent’s lending office (or branch) in respect of which payments under this Agreement are made is located.

Federal Funds Rate means, for any day, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent.  The Administrative Agent’s determination of such rate shall be binding and conclusive absent manifest error.

Finally Paid or Final Payment, when used in connection with any Debt, means the full payment in cash of all of the obligations with respect to such Debt (other than contingent indemnity obligations not expected to be incurred) and the irrevocable termination of all commitments related thereto.

Fiscal Quarter means a fiscal quarter of a Fiscal Year.

Fiscal Year means the fiscal year of the Company and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year.  References to a Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal Year 2003”) refer to the Fiscal Year ending on December 31of such calendar year.

FRB means the Board of Governors of the Federal Reserve System or any successor thereto.

GAAP means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Research Board, the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies within the U.S. accounting profession with similar or delegated functions and recognized by the Financial Accounting Standards Board as having authority to issue such opinions,

7

statements or pronouncements) and the Securities and Exchange Commission, which are applicable to the circumstances as of the date of determination.

Group - see Section 2.2.1.

Guaranty and Collateral Agreement means the Guaranty and Collateral Agreement dated as of the date hereof executed and delivered by the Loan Parties, together with any joinders thereto and any other guaranty and collateral agreement executed by a Loan Party, in each case in form and substance satisfactory to the Administrative Agent and as amended, modified or supplemented from time to time.

Hazardous Substances means (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or release of which is prohibited, limited or regulated by, or for which any duty or standard of care is imposed pursuant to, any Environmental Law.

Hedging Agreement means any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.

Hedging Obligation means, with respect to any Person, any liability of such Person under any Hedging Agreement.  The amount of any Person’s obligation in respect of any Hedging Obligation shall be deemed to be the incremental obligation that would be reflected in the financial statements of such Person in accordance with GAAP.

Indemnified Liabilities - see Section 16.17.

Interest Charge Coverage Ratio means, for any Person, for any Computation Period, the ratio of (a) the total for such period of EBITDA for such Person minus the sum of income taxes paid in cash by the Loan Parties and all unfinanced Capital Expenditures (other than Capital Expenditures which are (A) Permitted Acquisitions or (B) expenditures to the extent that such expenditures are made (i) as a tenant in leasehold improvements to the extent reimbursable by the landlord or (ii) with the proceeds of Asset Dispositions) to (b) net cash Interest Expense for such period minus, to the extent included in net cash Interest Expense for such period, fees and expenses paid in connection with this Agreement (other than the fee referenced in Section 5.1).

Interest Expense means for any Person for any period the consolidated interest expense of such Person and its Subsidiaries for such period (including all imputed interest on Capital Leases).

Interest Period means, as to any LIBOR Loan, the period commencing on the date such Loan is borrowed or continued as, or converted into, a LIBOR Loan and ending on the date one, two, three or six months thereafter as selected by the Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided that:

(a)if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

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(b)any Interest Period that begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period;

(c)the Company may not select any Interest Period for a Revolving Loan which would extend beyond the scheduled Termination Date; and

(d)the Company may not select any Interest Period for a Term Loan if, after giving effect to such selection, the aggregate principal amount of all Term Loans having Interest Periods ending after any date on which an installment of the Term Loans is scheduled to be repaid would exceed the aggregate principal amount of the Term Loans scheduled to be outstanding after giving effect to such repayment.

Inventory is defined in the Guaranty and Collateral Agreement.

Investment means, with respect to any Person, any investment in another Person, whether by acquisition of any debt or Capital Security, by making any loan or advance, by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business) or by making an Acquisition.

Issuing Lender means LaSalle, in its capacity as the issuer of Letters of Credit hereunder, or any Affiliate of LaSalle that may from time to time issue Letters of Credit, and their successors and assigns in such capacity.

Joinder Agreement means a Joinder Agreement in the form annexed as Exhibit C, or in such other form that may be satisfactory in form and substance to the Administrative Agent.

Knowledge means, when referring to the “Knowledge” of any Person or any similar phrase or qualification based on knowledge or awareness with respect to such Person, (i) the actual knowledge of such Person, and (ii) the knowledge that any such Person, as a prudent business person, would have obtained in the conduct of his or her business.

LaSalle - see the Preamble.

L/C Application means, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by the Issuing Lender at the time of such request for the type of letter of credit requested.

L/C Fee Rate - see the definition of Applicable Margin.

Lender - see the Preamble.  References to the “Lenders” shall include the Issuing Lender; for purposes of clarification only, to the extent that LaSalle (or any successor Issuing Lender) may have any rights or obligations in addition to those of the other Lenders due to its status as Issuing Lender, its status as such will be specifically referenced.  In addition to the foregoing, for the purpose of identifying the Persons entitled to share in the Collateral and the proceeds thereof under, and in accordance with the provisions of, this Agreement and the Collateral Documents, the term “Lender” shall include Affiliates of a Lender providing a Bank Product.

Lender Party - see Section 16.17.

Letter of Credit - see Section 2.1.3.

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LIBOR Loan means any Loan which bears interest at a rate determined by reference to the LIBOR Rate.

LIBOR Margin - see the definition of Applicable Margin.

LIBOR Office means with respect to any Lender the office or offices of such Lender which shall be making or maintaining the LIBOR Loans of such Lender hereunder.  A LIBOR Office of any Lender may be, at the option of such Lender, either a domestic or foreign office.

LIBOR Rate means a rate of interest equal to (a) the per annum rate of interest at which United States dollar deposits in an amount comparable to the amount of the relevant LIBOR Loan and for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business Days prior to the commencement of such Interest Period (or three (3) Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by the Administrative Agent in its sole discretion) or, if the Bloomberg Financial Markets system or another authoritative source is not available, as the LIBOR Rate is otherwise determined by the Administrative Agent in its sole and absolute discretion, divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), such rate to remain fixed for such Interest Period.  The Administrative Agent’s determination of the LIBOR Rate shall be conclusive, absent manifest error.

Lien means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including an interest in respect of a Capital Lease) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.

Loan Documents means this Agreement, the Notes, the Letters of Credit, the Master Letter of Credit Agreement, the L/C Applications, the Collateral Documents and all documents, instruments and agreements delivered by a Loan Party in connection with the foregoing.

Loan Party means the Company, each Borrower Subsidiary and each other Subsidiary of the Company.

Loan or Loans means, as the context may require, Revolving Loans and/or Term Loans.

Major Contract means any contract of any Loan Party which accounts for 20% or more of the annual revenue of the Loan Parties taken as a whole.

Mandatory Prepayment Event - see Section 6.2.2(a).

Margin Stock means any “margin stock” as defined in Regulation U.

Master Letter of Credit Agreement means, at any time, with respect to the issuance of Letters of Credit, a master letter of credit agreement or reimbursement agreement in the form annexed as Exhibit G or in the form, if any, being used by the Issuing Lender at such time.

Material Adverse Effect means (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business, properties or prospects of the Loan Parties taken as a whole, (b) a material impairment of the ability of any Loan Party to perform any of the Obligations under the Loan

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Documents or (c) a material adverse effect upon any substantial portion of the collateral under the Collateral Documents or upon the legality, validity, binding effect or enforceability against any Loan Party of the Loan Documents.

Merger Agreement means that certain Agreement and Plan of Merger dated as of January 30, 2004 by and among P-D, Company and PD Merger Corp. and the Shareholders’ Representative identified therein.

Merger Side Letter means that certain Agreement Related to Merger Agreement dated as of January 30, 2004 by and among P-D, the Company and the shareholders of P-D named therein.

Mortgage means a mortgage, deed of trust or similar instrument granting the Administrative Agent a Lien on real property owned by any Loan Party.

Multiemployer Pension Plan means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any other member of the Controlled Group may have any liability.

Net Cash Proceeds means:  (a) with respect to any Asset Disposition, the aggregate cash proceeds (including cash proceeds received pursuant to policies of insurance or by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by any Loan Party pursuant to such Asset Disposition net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by the Company to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) amounts required to be applied to the repayment of any Debt secured by a Lien on the asset subject to such Asset Disposition (other than the Loans) and (iv) reserves required to be maintained in accordance with GAAP relating to such Asset Disposition; provided that once GAAP allows such reserves to be released, such reserves will be applied as would have been required had GAAP not required such reserves to be maintained;

(b)with respect to any issuance of Capital Securities, the aggregate cash proceeds received by any Loan Party pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriters’ commissions); and

(c)with respect to any issuance of Debt, the aggregate cash proceeds received by any Loan Party pursuant to such issuance, net of the direct costs of such issuance (including up-front, underwriters’ and placement fees).

Non-U.S. Participant - see Section 7.6(d).

Non-Use Fee Rate - see the definition of Applicable Margin.

Note means a promissory note substantially in the form of Exhibit A.

Notice of Borrowing - see Section 2.2.2.

Notice of Conversion/Continuation - see Section 2.2.3.

Obligations means all obligations (monetary (including post-petition interest, allowed or not) or otherwise) of any Loan Party under this Agreement and any other Loan Document including Attorney Costs and any reimbursement obligations of each Loan Party in respect of Letters of Credit and surety bonds, all Hedging Obligations permitted hereunder which are owed to any Lender or its Affiliate, and all Bank Products Obligations, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.

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Operating Lease means any lease of (or other agreement conveying the right to use) any real or personal property by any Loan Party, as lessee, other than any Capital Lease.

PBGC means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

P-D means P-D Holdings Corp.

Participant - see Section 16.6.2.

Pension Plan means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding standards of ERISA (other than a Multiemployer Pension Plan), and as to which the Company or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

Perfection Certificate means a perfection certificate executed and delivered to the Administrative Agent by a Loan Party.

Permitted Acquisition means any Acquisition by the Company or any other Borrower where each of the following conditions are met:

(a)the business or division acquired are for use, or the Person acquired is engaged (such acquired business, division or Person are referred to herein as the “Acquired Entity”) in the same or similar businesses engaged in by the Borrowers on the Closing Date;

(b)immediately before and after giving effect to such Acquisition, no Event of Default or Unmatured Event of Default shall exist;

(c) the Acquired Entity has a positive EBITDA for the twelve-month period most recently completed prior to such Acquisition;

(d) the consideration paid or provided or to be paid or provided by any Loan Party in connection with such Acquisition is solely cash, Subordinated Debt permitted by Section 11.1(m), Earnout Obligations and/or the deferred purchase price of such Acquisition (provided, that such Earnout Obligations and/or the deferred purchase price of such Acquisition in the aggregate do not exceed 20% of the purchase price of any Acquisition) and Capital Securities of a Loan Party;

(e)the aggregate consideration paid or provided or to be paid or provided in connection with (i) such Acquisition does not exceed (A) $10,000,000 in cash consideration and (B) $20,000,000 in overall consideration and assumed liabilities and (ii) all Acquisitions during the term of this Agreement does not exceed (A) $20,000,000 in cash consideration and (B) $60,000,000 in over all consideration and assumed liabilities;

(f)immediately after giving effect to such Acquisition, the Company is in pro forma compliance (as determined on a Pro Forma Basis) with all the financial ratios and restrictions set forth in Sections 11.13.1, 11.13.2 and 11.13.3 (provided that for purposes of calculating the Interest Charge Coverage Ratio, Capital Expenditures of the Acquired Entity shall not be included in such calculation) and the Company shall demonstrate such compliance in a certificate of a Senior Officer of the Company delivered to the Administrative Agent and the Lenders ten (10) Business Days in advance of such Acquisition;

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(g)in the case of the Acquisition of any Person, the Acquisition is on a “friendly basis” and the Board of Directors of such Person has approved such Acquisition;

(h)reasonably prior to such Acquisition, the Administrative Agent shall have received complete executed or conformed copies of each material document, instrument and agreement to be executed in connection with such Acquisition together with all lien search reports and lien release letters and other documents as the Administrative Agent may require to evidence the termination of Liens on the Acquired Entity;

(i)not less than ten (10) Business Days prior to such Acquisition, the Administrative Agent shall have received an acquisition summary with respect to the Acquired Entity to be acquired, such summary to include a reasonably detailed description thereof (including financial information) and operating results (including financial statements for the most recent twelve (12) month period for which they are available and as otherwise available), the terms and conditions, including economic terms, of the proposed Acquisition, and the Company’s calculation of pro forma EBITDA relating thereto (as determined on a Pro Forma Basis);

(j)consents have been obtained in favor of the Administrative Agent and the Lenders to the collateral assignment of rights and indemnities under the related acquisition documents;

(k)after giving effect to such Acquisition, the Revolving Loan Availability is equal to or more than $5,000,000; and

(l)the provisions of Section 10.10 have been satisfied.

Permitted Lien means a Lien expressly permitted hereunder pursuant to Section 11.2.

Person means any natural person, corporation, partnership, trust, limited liability company, association, governmental authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity.

Pledge Agreements means, collectively, each Pledge Agreement dated as of the date hereof and executed and delivered by one or more of the Loan Parties, together with any joinders thereto and any other Pledge Agreement executed by a Loan Party in each case in form and substance satisfactory to the Administrative Agent and as amended, modified or supplemented from time to time and “Pledge Agreement” shall mean any thereof.

Pledged Subsidiary shall mean P-D, Poorman, EPIQ Acquisition, Bankruptcy Services and each other Subsidiary of the Company the Capital Securities of which are required to be pledged as Collateral pursuant to Section 10.10.

Prime Rate means, for any day, the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its prime rate (whether or not such rate is actually charged by the Administrative Agent), which is not intended to be the Administrative Agent’s lowest or most favorable rate of interest at any one time.  Any change in the Prime Rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change; provided that the Administrative Agent shall not be obligated to give notice of any change in the Prime Rate.

Pro Forma Basis means with respect to any Acquisition, such Acquisition shall be deemed to have occurred as of the first day of the most recent Computation Period.  Further, for purposes of making calculations on a “Pro Forma Basis” hereunder, (a) income statement items (whether positive or negative) attributable to the property, entities or business units that are the subject of the applicable Acquisition shall be included to the extent relating to any period prior to the date thereof and (b) Debt incurred in connection with

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such Acquisition shall be deemed to have been incurred as of the first day of the applicable Computation Period, with related interest expense imputed for the applicable period assuming then-prevailing interest rates hereunder.

Pro Rata Share means:  (a)  with respect to a Lender’s obligation to make Revolving Loans, participate in Letters of Credit, reimburse the Issuing Lender, and receive payments of principal, interest, fees, costs, and expenses with respect thereto, (x) prior to the Revolving Commitment being terminated or reduced to zero, the percentage obtained by dividing (i) such Lender’s Revolving Commitment, by (ii) the aggregate Revolving Commitment of all Lenders and (y) from and after the time the Revolving Commitment has been terminated or reduced to zero, the percentage obtained by dividing (i) the aggregate unpaid principal amount of such Lender’s Revolving Outstandings by (ii) the aggregate unpaid principal amount of all Revolving Outstandings;

(b)with respect to a Lender’s obligation to make a Term A Loan and receive payments of interest, fees, and principal with respect thereto, (x) prior to the making of the Term A Loans, the percentage obtained by dividing (i) such Lender’s Term A Loan Commitment, by (ii) the aggregate amount of all Lenders’ Term A Loan Commitments, and (y) from and after the making of the Term A Loans, the percentage obtained by dividing (i) the principal amount of such Lender’s Term A Loan by (ii) the principal amount of all Term A Loans of all Lenders;

(c)with respect to a Lender’s obligation to make a Term B Loan and receive payments of interest, fees, and principal with respect thereto, (x) prior to the making of the Term B Loans, the percentage obtained by dividing (i) such Lender’s Term B Loan Commitment, by (ii) the aggregate amount of all Lenders’ Term B Loan Commitments, and (y) from and after the making of the Term B Loans, the percentage obtained by dividing (i) the principal amount of such Lender’s Term B Loan by (ii) the principal amount of all Term B Loans of all Lenders; and

(d)with respect to all other matters as to a particular Lender, (x) during any period when Revolving Commitments have not been terminated or Revolving Outstandings or the Term A Loan has not been Finally Paid, the percentage obtained by dividing (i) such Lender’s Revolving Commitment plus the aggregate outstanding principal amount of Term A Loans held by such Lender, by (ii) the aggregate amount of Revolving Commitment of all Lenders plus the aggregate outstanding principal amount of Term A Loans; provided that in the event the Commitments have been terminated or reduced to zero, Pro Rata Share shall be the percentage obtained by dividing (A) the principal amount of such Lender’s Revolving Outstandings plus the unpaid principal amount of such Lender’s Term A Loan by (B) the principal amount of all outstanding Revolving Outstandings plus the unpaid outstanding principal amount of all Term A Loans of all Lenders or (y) at any other time, the percentage obtained by dividing (i) the aggregate outstanding principal amount of Term B Loans held by such Lender, by (ii) the aggregate outstanding principal amount of the Term B Loan held of all Lenders.

Proceeding means any voluntary or involuntary proceeding commenced by or against any Borrower under any provision of the Bankruptcy Code, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with its creditors, or proceedings seeking dissolution, receivership, reorganization, arrangement, or other similar relief.

Regulation D means Regulation D of the FRB.

Regulation U means Regulation U of the FRB.

Related Agreements means the Merger Agreement and the Merger Side Letter.

Related Transactions means the transactions contemplated by the Related Agreements.

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Replacement Lender - see Section 8.7(b).

Reportable Event means a reportable event as defined in Section 4043 of ERISA and the regulations issued thereunder as to which the PBGC has not waived the notification requirement of Section 4043(a), or the failure of a Pension Plan to meet the minimum funding standards of Section 412 of the Code (without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of ERISA) or under Section 302 of ERISA.

Required Lenders means, at any time, Lenders whose Pro Rata Shares exceed 66²/₃% as determined pursuant to clause (d) of the definition of “Pro Rata Share”.

Required Term B Lenders means, at any time, Lenders holding at least 66²/₃% of the outstanding principal amount of the Term B Loans.

Restructure Securities means (a) any Capital Securities issued by a Borrower, and (b) any debt obligations that are in all respects subordinate and junior in right of payment, to at least the same extent as the Subordinated Indebtedness, to the Final Payment of all Senior Indebtedness.

Revolving Commitment means, in the aggregate, $25,000,000, as reduced from time to time pursuant to Section 6.1 and, with respect to any Lender, such Lenders Pro Rata Share of such amount as set forth on Annex A.

Revolving Loan - see Section 2.1.1.

Revolving Loan Availability means, at any time, the remainder of (a) the aggregate Revolving Commitments at such time minus the (b) aggregate Revolving Outstandings at such time.

Revolving Outstandings means, at any time, the sum of (a) the aggregate principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount of all Letters of Credit.

SEC means the Securities and Exchange Commission or any other governmental authority succeeding to any of the principal functions thereof.

Senior Agent means LaSalle Bank National Association, as Administrative Agent, or any other Person appointed by the holders of the Senior Indebtedness as administrative agent for purposes of this Agreement and the other Loan Documents, together with the successors and assigns of all of the foregoing.

Senior Covenant Default means any Event of Default with respect to the covenants contained in Section 11.13.

Senior Debt means all Debt for borrowed money of the Company and its Subsidiaries other than Subordinated Debt.

Senior Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio of (a) Senior Debt (less Cash and Cash Equivalents) as of such day to (b) EBITDA of the Company and its Subsidiaries for the Computation Period ending on such day.

Senior Indebtedness means all obligations, liabilities and indebtedness of every nature of any Borrower or any Loan Party from time to time owed to the Senior Agent or any Senior Lender under the Loan Documents (other than amounts constituting Subordinated Indebtedness), including the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all premium, fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding, including any Hedging Obligations

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and Bank Product Obligations at any time due and owing to any Senior Lender, together with any interest accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest is allowed in any Proceeding; provided that notwithstanding anything to the contrary above, in no event shall Senior Indebtedness include any obligation, liability or indebtedness related to the Term B Loan.  Senior Indebtedness shall be deemed to be outstanding until it is Finally Paid.

Senior Lender means each Lender hereunder in its capacity as a holder of Senior Indebtedness.

Senior Officer means, with respect to any Loan Party, any of the chief executive officer, the chief financial officer, the chief operating officer or the treasurer of such Loan Party.

Senior Payment Default means any Event of Default under the Loan Documents resulting from the failure to pay, by the time required therefor, any principal, interest, fees or other obligations under the Loan Documents with respect to Senior Indebtedness including any default in payment of any Senior Indebtedness after acceleration thereof.

Stated Amount means, with respect to any Letter of Credit at any date of determination, (a) the maximum aggregate amount available for drawing thereunder under any and all circumstances plus (b) the aggregate amount of all unreimbursed payments and disbursements under such Letter of Credit.

Subordinated Debt means (a) the Term B Loans and (b) any other unsecured Debt of the Company which has subordination terms, covenants, pricing and other terms which have been approved in writing by the Required Lenders.

Subordinated Indebtedness means all obligations, liabilities and indebtedness of every nature of any Borrower or any Loan Party from time to time owed to any Subordinated Lender under the Loan Documents relating to the Term B Loan, including the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all premium, fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding (including any amounts payable by any Borrower or any Loan Party in connection with put, redemption, repurchase or repurchase rights under any warrants or any other Capital Securities of any Borrower or any Loan Party held by any Subordinated Lender), together with any interest accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest is allowed in any Proceeding.

Subordinated Lender Remedies means any action to commence judicial enforcement of any rights or remedies for payment of any Subordinated Indebtedness (including, without limitation, the initiation of any insolvency, bankruptcy, liquidation, readjustment, reorganization or other similar proceedings relative to a Borrower).

Subordinated Lenders means each Lender hereunder in its capacity as a holder of Subordinated Indebtedness.

Subsidiary means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, such number of outstanding Capital Securities as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity.  Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company.

Taxes means any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing, but excluding Excluded Taxes.

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Term A Loan Commitment means, in the aggregate, $45,000,000 and, with respect to any Lender, such Lenders Pro Rata Share of such amount as set forth on Annex A

Term A Loan Termination Date means the earlier to occur of (a) July 31, 2006 or (b) such other date on the Term A Loans are repaid or are required to be paid pursuant to Section 6 or 13.

Term A Loans - see Section 2.1.2.

Term B Loan Commitment means, in the aggregate, $30,000,000 and, with respect to any Lender, such Lenders Pro Rata Share of such amount as set forth on Annex A.

Term B Loan Termination Date means the earlier to occur of (a) December 31, 2006 or (b) such other date on which the Term B Loans are repaid or are required to be paid pursuant to Section 6 or 13.

Term B Loans - see Section 2.1.2.

Term Loans means the Term A Loans and the Term B Loans.

Termination Date means, with respect to the Revolving Loans, the earlier to occur of (a) July 31, 2006 or (b) such other date on which the Commitments terminate pursuant to Section 6 or 13.

Termination Event means, with respect to a Pension Plan that is subject to Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Company or any other member of the Controlled Group from such Pension Plan during a plan year in which Company or any other member of the Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA, (c) the termination of such Pension Plan, the filing of a notice of intent to terminate such Pension Plan or the treatment of an amendment of such Pension Plan as a termination under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Pension Plan or (e) any event or condition that could constitute grounds under Section 4042 of ERISA for the termination of, or appointment of a trustee to administer, such Pension Plan.

Total Debt means all Debt of the Company and its Subsidiaries, determined on a consolidated basis, excluding (a) contingent obligations in respect of Contingent Liabilities (except to the extent (i) constituting Contingent Liabilities in respect of Debt of a Person other than any Loan Party and (ii) any undrawn Letters of Credit), (b) Hedging Obligations and (c) Debt of the Company to Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries.

Total Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio of (a) Total Debt (less Cash and Cash Equivalents) as of such day to (b) EBITDA of the Company and its Subsidiaries for the Computation Period ending on such day.

Total Plan Liability means, at any time, the present value of all vested and unvested accrued benefits under all Pension Plans, determined as of the then most recent valuation date for each Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.

type - see Section 2.2.1.

UCC is defined in the Guaranty and Collateral Agreement.

Unadjusted EBITDA means, for any period, Consolidated Net Income of the Company and its Subsidiaries for such period plus, to the extent deducted in determining such Consolidated Net Income, Interest Expense, income tax expense, depreciation, amortization and other non-cash charges, for such period without duplication and all as determined in accordance with GAAP.

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Unfunded Liability means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Pension Plans exceeds the fair market value of all assets allocable to those benefits, all determined as of the then most recent valuation date for each Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.

Unmatured Event of Default means any event that, if it continues uncured, will, with lapse of time or notice or both, constitute an Event of Default.

Withholding Certificate - see Section 7.6(d).

Wholly-Owned Subsidiary means, as to any Person, a Subsidiary all of the Capital Securities of which (except directors’ qualifying Capital Securities) are at the time directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such Person.

1.2Other Interpretive Provisions.  (a)  The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b)Section, Annex, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(c)The term “including” is not limiting and means “including without limitation.”

(d)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”

(e)Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation.

(f)This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.

(g)This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Administrative Agent, the Company, the Lenders and the other parties thereto and are the products of all parties.  Accordingly, they shall not be construed against the Administrative Agent or the Lenders merely because of the Administrative Agent’s or Lenders’ involvement in their preparation.

(h)Unless otherwise defined or specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for such changes approved by the Company’s independent public accountants) with the most recent audited consolidated financial statement of the Company delivered pursuant to Section 10.1.1.

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SECTION 2COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.

2.1Commitments.  On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make loans to, and to issue or participate in letters of credit for the account of, the Borrowers as follows:

2.1.1Revolving Commitment.  Each Lender with a Revolving Commitment agrees to make loans on a revolving basis (“Revolving Loans”) from time to time until the Termination Date in such Lender’s Pro Rata Share of such aggregate amounts as the Borrowers may request from all Lenders; provided that the Revolving Outstandings will not at any time exceed Revolving Commitment.  All Borrowers shall be jointly and severally liable for the Revolving Loans and all other Obligations.

2.1.2Term Loan Commitment.  Each Lender with a Term A Loan Commitment agrees to make a loan to the Borrowers (each such loan, a “Term A Loan”) on the Closing Date in such Lender’s Pro Rata Share of the Term A Loan Commitment.  Each Lender with a Term B Loan Commitment agrees to make a loan to the Borrowers (each such loan, a “Term B Loan”) on the Closing Date in such Lender’s Pro Rata Share of the Term B Loan Commitment.  The Commitments of the Lenders to make Term Loans shall expire concurrently with the making of the Term Loans on the Closing Date.  All Borrowers shall be jointly and severally liable for the Term Loans and all other Obligations.

2.1.3L/C Commitment.  Subject to Section 2.3.1, the Issuing Lender agrees to issue Letters of Credit, in each case containing such terms and conditions as are permitted by this Agreement and are reasonably satisfactory to the Issuing Lender (each, a “Letter of Credit”), at the request of and for the account of the Company from time to time before the scheduled Termination Date and, as more fully set forth in Section 2.3.2, each Lender agrees to purchase a participation in each such Letter of Credit; provided that (a) the aggregate Stated Amount of all Letters of Credit shall not at any time exceed $5,000,000 and (b) the Revolving Outstandings shall not at any time exceed Revolving Commitment.

2.2Loan Procedures.

2.2.1Various Types of Loans.  Each Revolving Loan shall be, and each Term A Loan may be divided into tranches which are either a Base Rate Loan or a LIBOR Loan (each a “type” of Loan), as the Borrowers shall specify in the related notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3.  Each Term B Loan shall only bear interest as set forth in the Term B Loan Note.  LIBOR Loans having the same Interest Period are sometimes called a “Group” or collectively “Groups”.  Base Rate Loans and LIBOR Loans may be outstanding at the same time, provided that not more than eight (8)different Groups of LIBOR Loans shall be outstanding at any one time.  All borrowings, conversions and repayments of Revolving Loans shall be effected so that each Lender will have a ratable share (according to its Pro Rata Share) of all types and Groups of Revolving Loans.  Notwithstanding the foregoing or any other provision of this Agreement, the Borrowers may not select any Interest Period for a LIBOR Loan which is longer than one month prior to the earlier of (x) ninety (90) days after the Closing Date and (y) the date that the Administrative Agent notifies the Borrowers that it has completed its primary syndication of the Loans and the Commitments.

2.2.2Borrowing Procedures.  The Borrowers shall give written notice (each such written notice, a “Notice of Borrowing”) substantially in the form of Exhibit E or telephonic notice (followed immediately by a Notice of Borrowing) to the Administrative Agent of each proposed borrowing not later than (a) in the case of a Base Rate borrowing, 11:00 A.M., Chicago time, on the proposed date of such borrowing, and (b) in the case of a LIBOR borrowing, 11:00 A.M., Chicago time, at least three Business Days prior to the proposed date of such borrowing.  Each such notice shall be effective upon receipt by the Administrative Agent, shall be irrevocable, and shall specify the date, amount and type of borrowing and, in the case of a LIBOR borrowing, the initial Interest Period therefor.  Promptly upon receipt of such notice, the Administrative Agent shall advise each Lender thereof.  Not later than 1:00 P.M., Chicago time, on the date of a proposed borrowing, each

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Lender shall provide the Administrative Agent at the office specified by the Administrative Agent with immediately available funds covering such Lender’s Pro Rata Share of such borrowing and, so long as the Administrative Agent has not received written notice that the conditions precedent set forth in Section 12 with respect to such borrowing have not been satisfied, the Administrative Agent shall pay over the funds received by the Administrative Agent to the Borrowers on the requested borrowing date.  Each borrowing shall be on a Business Day.  Each Base Rate borrowing shall be in an aggregate amount of at least $500,000 and an integral multiple of $500,000, and each LIBOR borrowing shall be in an aggregate amount of at least $500,000 and an integral multiple of at least $250,000.

2.2.3Conversion and Continuation Procedures.  (a)  Subject to Section 2.2.1, the Borrowers may, upon irrevocable written notice to the Administrative Agent in accordance with clause (b) below:

(A)elect, as of any Business Day, to convert any Revolving Loans or Term A Loans (or any part thereof in an aggregate amount not less than $500,000 a higher integral multiple of $250,000) into Revolving Loans or Term A Loans of the other type; or

(B)elect, as of the last day of the applicable Interest Period, to continue any Revolving Loans or Term A Loans that are then LIBOR Loans having Interest Periods expiring on such day (or any part thereof in an aggregate amount not less than $500,000 or a higher integral multiple of $250,000) for a new Interest Period;

provided that after giving effect to any prepayment, conversion or continuation, the aggregate principal amount of each Group of Revolving Loans or Term A Loans that are then LIBOR Loans shall be at least $500,000 and an integral multiple of $250,000.

(b)The Borrowers shall give written notice (each such written notice, a “Notice of Conversion/Continuation”) substantially in the form of Exhibit F or telephonic notice (followed immediately by a Notice of Conversion/Continuation) to the Administrative Agent of each proposed conversion or continuation not later than (i) in the case of conversion of Revolving Loans or Term A Loans into Base Rate Loans, 11:00 A.M., Chicago time, on the proposed date of such conversion and (ii) in the case of conversion into or continuation of Revolving Loans or Term A Loans that are then LIBOR Loans, 11:00 A.M., Chicago time, at least three (3) Business Days prior to the proposed date of such conversion or continuation, specifying in each case:

(A)the proposed date of conversion or continuation;

(B)the aggregate amount of such Revolving Loans or Term A Loans (as the case may be) to be converted or continued;

(C)the type of such Revolving Loans or Term A Loans (as the case may be) resulting from the proposed conversion or continuation; and

(D)in the case of conversion of such Revolving Loans or Term A Loans (as the case may be) into, or continuation of, LIBOR Loans, the duration of the requested Interest Period therefor.

(c)If upon the expiration of any Interest Period applicable to such Revolving Loans or Term A Loans (as the case may be) as LIBOR Loans, the Company has failed to select timely a new Interest Period to be applicable to such LIBOR Loans, the Company shall be deemed to have elected to convert such LIBOR Loans into Base Rate Loans effective on the last day of such Interest Period.

(d)The Administrative Agent will promptly notify each Lender of its receipt of a Notice of Conversion/Continuation pursuant to this Section 2.2.3 or, if no timely notice is provided by the Company, of the details of any automatic conversion.

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(e)Any conversion of any Revolving Loans or Term A Loans (as the case may be) to a LIBOR Loan on a day other than the last day of an Interest Period therefor shall be subject to Section 8.4.

2.3Letter of Credit Procedures.

2.3.1L/C Applications.  The Company shall execute and deliver to the Issuing Lender the Master Letter of Credit Agreement from time to time in effect.  The Company shall give notice to the Administrative Agent and the Issuing Lender of the proposed issuance of each Letter of Credit on a Business Day which is at least three Business Days (or such lesser number of days as the Administrative Agent and the Issuing Lender shall agree in any particular instance in their sole discretion) prior to the proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by an L/C Application, duly executed by the Company and in all respects satisfactory to the Administrative Agent and the Issuing Lender, together with such other documentation as the Administrative Agent or the Issuing Lender may request in support thereof, it being understood that each L/C Application shall specify, among other things, the date on which the proposed Letter of Credit is to be issued, the expiration date of such Letter of Credit (which shall not be later than the scheduled Termination Date (unless such Letter of Credit is Cash Collateralized)) and whether such Letter of Credit is to be transferable in whole or in part.  Any Letter of Credit outstanding after the scheduled Termination Date which is Cash Collateralized for the benefit of the Issuing Lender shall be the sole responsibility of the Issuing Lender.  So long as the Issuing Lender has not received written notice that the conditions precedent set forth in Section 12 with respect to the issuance of such Letter of Credit have not been satisfied, the Issuing Lender shall issue such Letter of Credit on the requested issuance date.  The Issuing Lender shall promptly advise the Administrative Agent of the issuance of each Letter of Credit and of any amendment thereto, extension thereof or event or circumstance changing the amount available for drawing thereunder.  In the event of any inconsistency between the terms of the Master Letter of Credit Agreement, any L/C Application and the terms of this Agreement, the terms of this Agreement shall control.

2.3.2Participations in Letters of Credit.  Concurrently with the issuance of each Letter of Credit, the Issuing Lender shall be deemed to have sold and transferred to each Lender with a Revolving Commitment, and each such Lender shall be deemed irrevocably and unconditionally to have purchased and received from the Issuing Lender, without recourse or warranty, an undivided interest and participation, to the extent of such Lender’s Pro Rata Share, in such Letter of Credit and the Company’s reimbursement obligations with respect thereto.  If the Company does not pay any reimbursement obligation when due, the Company shall be deemed to have immediately requested that the Lenders make a Revolving Loan which is a Base Rate Loan in a principal amount equal to such reimbursement obligations.  The Administrative Agent shall promptly notify such Lenders of such deemed request and, without the necessity of compliance with the requirements of Section 2.2.2, 12.2 or otherwise such Lender shall make available to the Administrative Agent its Pro Rata Share of such Loan.  The proceeds of such Loan shall be paid over by the Administrative Agent to the Issuing Lender for the account of the Company in satisfaction of such reimbursement obligations.  For the purposes of this Agreement, the unparticipated portion of each Letter of Credit shall be deemed to be the Issuing Lender’s “participation” therein.  The Issuing Lender hereby agrees, upon request of the Administrative Agent or any Lender, to deliver to the Administrative Agent or such Lender a list of all outstanding Letters of Credit issued by the Issuing Lender, together with such information related thereto as the Administrative Agent or such Lender may reasonably request.

2.3.3Reimbursement Obligations.  (a)  The Borrowers hereby jointly and severally and unconditionally and irrevocably agree to reimburse the Issuing Lender for each payment or disbursement made by the Issuing Lender under any Letter of Credit honoring any demand for payment made by the beneficiary thereunder, in each case on the date that such payment or disbursement is made subject to the terms of the Master Letter of Credit Agreement.  Any amount not reimbursed on the date of such payment or disbursement shall bear interest from the date of such payment or disbursement to the date that the Issuing Lender is reimbursed by the Borrowers therefor, payable on demand, at a rate per annum equal to the Base Rate from time to time in effect plus the Base Rate Margin from time to time in effect plus, beginning on the third Business Day after receipt of notice from the Issuing Lender of such payment or disbursement, 2%.  The

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Issuing Lender shall notify the Company and the Administrative Agent whenever any demand for payment is made under any Letter of Credit by the beneficiary thereunder; provided that the failure of the Issuing Lender to so notify the Company shall not affect the rights of the Issuing Lender or the Lenders in any manner whatsoever.

(b)The Borrowers’ joint and several reimbursement obligations hereunder shall be irrevocable and unconditional under all circumstances (other than as set forth in the Master Letter of Credit Agreement), including (i) any lack of validity or enforceability of any Letter of Credit, this Agreement or any other Loan Document, (ii) the existence of any claim, set-off, defense or other right which any Loan Party may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, the Issuing Lender, any Lender or any other Person, whether in connection with any Letter of Credit, this Agreement, any other Loan Document, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between any Loan Party and the beneficiary named in any Letter of Credit), (iii) the validity, sufficiency or genuineness of any document which the Issuing Lender has determined complies on its face with the terms of the applicable Letter of Credit, even if such document should later prove to have been forged, fraudulent, invalid or insufficient in any respect or any statement therein shall have been untrue or inaccurate in any respect, or (iv) the surrender or impairment of any security for the performance or observance of any of the terms hereof.  Without limiting the foregoing, no action or omission whatsoever by the Administrative Agent or any Lender (excluding any Lender in its capacity as the Issuing Lender) under or in connection with any Letter of Credit or any related matters shall result in any liability of the Administrative Agent or any Lender to the Borrowers, or relieve any Borrowers of any of their obligations hereunder to any such Person.

2.3.4Funding by Lenders to Issuing Lender.  If the Issuing Lender makes any payment or disbursement under any Letter of Credit and (a) the Borrowers have not reimbursed the Issuing Lender in full for such payment or disbursement by 11:00 A.M., Chicago time, on the date of such payment or disbursement, (b) a Revolving Loan may not be made in accordance with Section 2.3.2 or (c) any reimbursement received by the Issuing Lender from any Borrower is or must be returned or rescinded upon or during any bankruptcy or reorganization of any Borrower or otherwise, each other Lender with a Revolving Commitment shall be obligated to pay to the Administrative Agent for the account of the Issuing Lender, in full or partial payment of the purchase price of its participation in such Letter of Credit, its Pro Rata Share of such payment or disbursement (but no such payment shall diminish the obligations of the Borrowers under Section 2.3.3), and, upon notice from the Issuing Lender, the Administrative Agent shall promptly notify each other Lender thereof.  Each other Lender with a Revolving Commitment irrevocably and unconditionally agrees to so pay to the Administrative Agent in immediately available funds for the Issuing Lender’s account the amount of such other Lender’s Pro Rata Share of such payment or disbursement.  If and to the extent any such Lender shall not have made such amount available to the Administrative Agent by 2:00 P.M., Chicago time, on the Business Day on which such Lender receives notice from the Administrative Agent of such payment or disbursement (it being understood that any such notice received after noon, Chicago time, on any Business Day shall be deemed to have been received on the next following Business Day), such Lender agrees to pay interest on such amount to the Administrative Agent for the Issuing Lender’s account forthwith on demand, for each day from the date such amount was to have been delivered to the Administrative Agent to the date such amount is paid, at a rate per annum equal to (a) for the first three days after demand, the Federal Funds Rate from time to time in effect and (b) thereafter, the Base Rate from time to time in effect.  Any Lender’s failure to make available to the Administrative Agent its Pro Rata Share of any such payment or disbursement shall not relieve any other Lender with a Revolving Commitment of its obligation hereunder to make available to the Administrative Agent such other Lender’s Pro Rata Share of such payment, but no Lender shall be responsible for the failure of any other Lender to make available to the Administrative Agent such other Lender’s Pro Rata Share of any such payment or disbursement.

2.4Commitments Several.  The failure of any Lender to make a requested Loan on any date shall not relieve any other Lender of its obligation (if any) to make a Loan on such date, but no Lender shall be responsible for the failure of any other Lender to make any Loan to be made by such other Lender.

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2.5Certain Conditions.  Notwithstanding any other provision of this Agreement, no Lender shall have an obligation to make any Loan, or to permit the continuation of or any conversion into any LIBOR Loan, and the Issuing Lender shall not have any obligation to issue any Letter of Credit, if an Event of Default or Unmatured Event of Default exists.

2.6Joint and Several.  (a)  The obligations of each Borrower under this Agreement and the Loan Documents shall be joint and several and, to the fullest extent permitted by applicable law, shall not be affected by (i) the failure of Administrative Agent, any Lender, or any of their successors or assigns, or any holder of the Notes or any of the Obligations to assert any claim or demand or to exercise or enforce any right, power or remedy against any other Borrower or the Collateral or otherwise, (ii) any extension or renewal for any period (whether or not longer than the original period) or exchange of any of the Obligations or the release or compromise of any obligation of any nature of any Person with respect thereto, (iii) the surrender, release or exchange of all or any part of any property (including without limitation the Collateral) securing payment, performance and observance of any of the Obligations or the compromise or extension or renewal for any period (whether or not longer than the original period) of any obligations of any nature of any Person with respect to any such property, (iv) the invalidity or unenforceability of any of the Obligations as against any other Borrower, any other guarantor thereof or any other Person, and (v) any other act, matter or thing which would or might, in the absence of this provision, operate to release, discharge or otherwise prejudicially affect the obligations of Borrowers, other than Final Payment.

(b)To the fullest extent permitted by applicable law and except to the extent that any of the following are expressly required by the provisions of any of the Loan Documents, each Borrower hereby waives (i) presentment, demand for payment and protest of nonpayment of any of the Obligations, and notices of protest, dishonor or nonperformance, (ii) notice of any Event of Default or Unmatured Event of Default or Administrative Agent’s or any Lender’s inability to enforce performance of the other Borrowers’ obligations to any holder of Obligations, (iii) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies with respect to any security for the Obligations or against the other Borrowers or any other Loan Party or guarantor of, the Obligations pursuant to this Agreement or any other Loan Document or otherwise, and any requirements of diligence or promptness on the part of any Lender or any holder of the Obligations in connection therewith, (iv) any action or nonaction on the part of Administrative Agent or any Lender or any holder of Obligations which may impair or prejudice the rights of any Borrower, including without limitation subrogation rights or rights to obtain exoneration, contribution, indemnification or any other reimbursement or compensation from any other Borrower, any other guarantor or borrowers in respect of the Obligations or any other Person, (v) failure or delay to perfect or continue the perfection of any security interest in any Collateral, (vi) any action which harms or impairs the value of, or any failure to preserve or protect the value of, any Collateral, (vii) any defense based upon an election of remedies by Administrative Agent or any Lender or the holders of the Obligations, (viii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal, (ix) any and all demands and notices of every kind and description, including notice of the creation of any of the Obligations, with respect to the foregoing or which may be required to be given by any statute or rule of law and (x) all defenses (other than indefeasible payment in full) which any Borrower may now or hereafter have to the payment of the Obligations which could otherwise be asserted by such Borrower.  In addition to the defenses referred to above which have been expressly waived hereunder, each Borrower waives all other defenses (other than indefeasible payment in full) which it may now or hereafter have to the payment by it of the Obligations.  No delay or omission on the part of Administrative Agent or any Lender or any holder of any Obligation or with respect to the Collateral shall operate as a waiver or relinquishment of such right.  No action which Administrative Agent or any Lender, the holder of any Obligation, any Borrower or any other Loan Party may take or refrain from taking with respect to the Obligations, including any amendments thereto or modifications thereof or waivers with respect thereto, shall affect the provisions of this Agreement or the obligations of Borrowers hereunder.  None of the rights of Administrative Agent or any Lender or of any holder of any Obligation shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any of them or any Borrower or any other Loan Party, by any noncompliance by any Borrower with the terms, provisions and covenants of this

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Agreement, regardless of any knowledge thereof which Administrative Agent or any Lender or any holder of the Obligations may have or otherwise be charged with.  Each Borrower hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of, and does hereby covenant not to assert, any appraisement, valuation, stay, extension, redemption or similar laws, now or at any time hereafter in force, which might delay, prevent or otherwise impede the performance or enforcement of this Agreement or any other Loan Document or the Obligations.  Each Borrower’s obligations under this Section 2.6 shall not be affected by the invalidity or unenforceability of any of the Obligations as against the other Borrowers, any other guarantor thereof or any other Person.  For purposes of this Section 2.6, the Obligations shall be due and payable when and as the same shall be so due and payable under the terms of any Loan Document, notwithstanding the fact that the collection or enforcement thereof may be stayed or enjoined under Title 11 of the United States Code, as from time to time in effect, or other applicable law, regulation or order.

(c)To the fullest extent permitted by applicable law, each Borrower hereby grants to Administrative Agent full power in its uncontrolled discretion, without notice to such Borrower, such notice being hereby expressly waived, and without in any way affecting the joint and several liability of such Borrower under this Agreement:

(i)To waive compliance with, and any Event of Default or Unmatured Event of Default under, and to consent to any amendment to or modification of any term or provision of, or to give any waiver in respect of, any other Loan Document, the Collateral, the Obligations or any guarantee thereof (each as from time to time in effect);

(ii)To grant any one or more extensions or renewals of the Obligations (for any period, no matter how long), or any total or partial release (by operation of law or otherwise), discharge, compromise or settlement with respect to the obligations of any Borrower or any other Person in respect of the Obligations, whether or not rights against the other Borrowers under this Section 2.6 are reserved in connection therewith;

(iii)To take security in any form for the Obligations, and to the extent permitted in any security agreement to consent to (A) the addition to, (B) the substitution, exchange, surrender, release or other disposition of, or (C) deal in any other manner with, all or any part of any property contained in the Collateral whether or not the property, if any, received upon the exercise of such power shall be of a character or value the same as or different from the character or value of any property disposed of, and to obtain, modify or release any present or future guarantees of the Obligations and at any time after the occurrence and during the continuance of an Event of Default to proceed against any of the Collateral or such guarantees in any order;

(iv)To, at any time after the occurrence and during the continuance of an Event of Default, collect or liquidate any of the Obligations or the Collateral in any manner or to refrain from collecting or liquidating any of the Obligations or the Collateral; and

(v)To extend credit under this Agreement or any other Loan Document, or otherwise, in such amount as Administrative Agent or any Lender may determine, even though the condition of Borrowers (financial or otherwise on an individual or consolidated basis) may have deteriorated since the date hereof.

(d)Each Borrower acknowledges and agrees that it has made such investigation as it deems desirable of the risks undertaken by such Borrower in entering into this Agreement and is fully satisfied that it understands all such risks.  Each Borrower hereby waives any obligation which may now or hereafter exist on the part of Administrative Agent or any Lender or any holder of any Obligation to inform such Person of the risks being undertaken by entering into this Agreement or of any changes in such risks and, from and after the date hereof, each Borrower undertakes to keep itself informed of such risks and any changes therein.  Further,

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each Borrower hereby expressly waives any duty which may now or hereafter exist on the part of Administrative Agent or any Lender or any holder of any Obligation to disclose to such Borrower any matter related to the business, operations, character, collateral, credit or condition (financial or otherwise) of any Loan Party (including the other Borrowers) or Affiliates or its or their properties or management, whether now or hereafter known by any one or more of the Administrative Agent and Lenders or any holder of any Obligation.  Each Borrower represents, warrants and agrees that it assumes sole responsibility for obtaining from each other Borrower all information concerning this Agreement and all other Loan Documents and all other information as to any other Loan Party and Affiliates or their properties or management or anything relating to any of the above as such Borrower deems necessary or desirable.

(e)Each Borrower hereby covenants and agrees that (i) it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights with respect to the Obligations against any Person, including without limitation any other guarantor of the Obligations or the other Borrowers, prior to the payment in full of the Obligations and the termination of the Commitments hereunder, and (ii) all Debt, claims and Obligations now or hereafter owing by the other Borrowers to such Borrower are hereby subordinated to the prior payment in full of the Obligations and are so subordinated as a claim against the other Borrowers or any of their assets, whether such claim be in the ordinary course of business or in the event of voluntary or involuntary liquidation, dissolution, insolvency or bankruptcy, so that upon the occurrence and during the continuance of an Unmatured Event of Default or Event of Default no payment with respect to any such Debt, claim or liability will be made or received while any of the Obligations (including Obligations relating to Letters of Credit) are outstanding or prior to the termination of Lenders’ commitments hereunder.

SECTION 3EVIDENCING OF LOANS.

3.1Notes.  The Loans of each Lender shall be evidenced by a Note, with appropriate insertions, payable to the order of such Lender in a face principal amount equal to the sum of such Lender’s Revolving Commitment plus the principal amount of such Lender’s Term Loans.

3.2Recordkeeping.  The Administrative Agent, on behalf of each Lender, shall record in its records, the date and amount of each Loan made by each Lender, each repayment or conversion thereof and, in the case of each LIBOR Loan, the dates on which each Interest Period for such Loan shall begin and end.  The aggregate unpaid principal amount so recorded shall be rebuttably presumptive evidence of the principal amount of the Loans owing and unpaid.  The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the Obligations of the Borrowers hereunder or under any Note to repay the principal amount of the Loans hereunder, together with all interest accruing thereon.

SECTION 3INTEREST.

4.1Interest Rates.  The Borrowers jointly and severally promise to pay interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan until such Loan is paid in full as follows:

(a)at all times while a Revolving Loan or Term A Loan is a Base Rate Loan, at a rate per annum equal to the sum of the Base Rate from time to time in effect plus the Base Rate Margin from time to time in effect; and

(b)at all times while such Revolving Loan or Term A Loan is a LIBOR Loan, at a rate per annum equal to the sum of the LIBOR Rate applicable to each Interest Period for such Loan plus the LIBOR Margin from time to time in effect;

(c)with respect to the Term B Loan, as set forth in the Note(s) for the Term B Loan;

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provided that at any time an Event of Default exists, unless the Required Lenders otherwise consent, the interest rate applicable to each Loan shall be increased by 2% (and, in the case of Obligations not bearing interest, such Obligations shall bear interest at the Base Rate applicable to Revolving Loans plus 2%), provided further that such increase may thereafter be rescinded by the Required Lenders, notwithstanding Section 16.1.  Notwithstanding the foregoing, upon the occurrence of an Event of Default under Section 13.1.1 or 13.1.4, such increase shall occur automatically.

4.2Interest Payment Dates.  Except to the extent otherwise provided in the Note(s) for the Term B Loan, accrued interest on each Base Rate Loan shall be payable in arrears on the last day of each calendar month and at maturity.  Accrued interest on each LIBOR Loan shall be payable on the last day of each Interest Period relating to such Loan (and, in the case of a LIBOR Loan with an Interest Period in excess of three months, on the three-month anniversary of the first day of such Interest Period), upon a prepayment of such Loan, and at maturity.  After maturity, and at any time an Event of Default exists, accrued interest on all Loans shall be payable on demand.

4.3Setting and Notice of LIBOR Rates.  The applicable LIBOR Rate for each Interest Period shall be determined by the Administrative Agent, and notice thereof shall be given by the Administrative Agent promptly to the Company and each Lender.  Each determination of the applicable LIBOR Rate by the Administrative Agent shall be conclusive and binding upon the parties hereto, in the absence of demonstrable error.  The Administrative Agent shall, upon written request of the Company or any Lender, deliver to the Company or such Lender a statement showing the computations used by the Administrative Agent in determining any applicable LIBOR Rate hereunder.

4.4Computation of Interest.  Interest shall be computed for the actual number of days elapsed on the basis of a year of 360 days.  The applicable interest rate for each Base Rate Loan shall change simultaneously with each change in the Base Rate.

SECTION 5FEES.

5.1Non-Use Fee.  The Borrowers jointly and severally agree to pay to the Administrative Agent for the account of each Lender a non-use fee, for the period from the Closing Date to the Termination Date, at the Non-Use Fee Rate in effect from time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of the unused amount of the Revolving Commitment.  For purposes of calculating usage under this Section, the Revolving Commitment shall be deemed used to the extent of Revolving Outstandings.  Such non-use fee shall be payable in arrears on the last day of each Fiscal Quarter and on the Termination Date for any period then ending for which such non-use fee shall not have previously been paid.  The non-use fee shall be computed for the actual number of days elapsed on the basis of a year of 360 days.

5.2Letter of Credit Fees.  (a)  The Borrowers jointly and severally agree to pay to the Administrative Agent for the account of each Lender a letter of credit fee for each Letter of Credit equal to the L/C Fee Rate in effect from time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of the undrawn amount of such Letter of Credit (computed for the actual number of days elapsed on the basis of a year of 360 days); provided that, unless the Required Lenders otherwise consent, the rate applicable to each Letter of Credit shall be increased by 2% at any time that an Event of Default exists.  Such letter of credit fee shall be payable in arrears on the last day of each Fiscal Quarter and on the Termination Date (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which such Letter of Credit expired or was terminated.

(b)In addition, with respect to each Letter of Credit, the Company agrees to pay to the Issuing Lender, for its own account, (i) such fees and expenses as the Issuing Lender customarily requires in connection with the issuance, negotiation, processing and/or administration of letters of credit in similar

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situations and (ii) a letter of credit fronting fee in the amount and at the times agreed to by the Company and the Issuing Lender.

5.3Administrative Agent’s Fees.  The Borrowers jointly and severally agree to pay to the Administrative Agent such agent’s fees as are mutually agreed to from time to time by the Company and the Administrative Agent.

5.4Term B Loan Fees.  In the event that the Term B Loan is not Finally Paid (a) within 180 days of the Closing Date, a non-refundable fee in the amount of 1% of the aggregate principal amount of Term B Loan held by each Lender shall be payable to each such Lender and (b) within 365 days of the Closing Date, an additional non-refundable fee in the amount of 1.5% of the aggregate principal amount of Term B Loan held by each Lender shall be payable to each such Lender, the fees referenced in clauses (a) and (b) above shall be payable by the Borrowers on the earliest to occur of (i) the Term B Loan Termination Date or (ii) the Final Payment of the Term B Loan.

SECTION 6REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS.

6.1Reduction or Termination of the Revolving Commitment.

6.1.1Voluntary Reduction or Termination of the Revolving Commitment.  The Company may from time to time on at least five (5) Business Days’ prior written notice received by the Administrative Agent (which shall promptly advise each Lender thereof) permanently reduce the Revolving Commitment to an amount not less than the Revolving Outstandings.  Any such reduction shall be in an amount not less than $5,000,000 or a higher integral multiple of $1,000,000.  Concurrently with any reduction of the Revolving Commitment to zero (0), the Borrowers shall pay all interest on the Revolving Loans, all non-use fees and all letter of credit fees and shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit.

6.1.2All Reductions of the Revolving Commitment.  All reductions of the Revolving Commitment shall reduce the Revolving Commitment of each Lender with a Revolving Commitment ratably according to their respective Pro Rata Shares.

6.2Prepayments.

6.2.1Voluntary Prepayments.  (a) The Borrowers may from time to time prepay the Revolving Loans and the Term A Loans in whole or in part; provided that the Company shall give the Administrative Agent (which shall promptly advise each Lender) notice thereof not later than 11:00 A.M., Chicago time, on the day of such prepayment (which shall be a Business Day), specifying the Loans to be prepaid and the date and amount of prepayment.  Any such partial prepayment shall be in an amount equal to $500,000 or a higher integral multiple of $250,000.

(b)Until all Senior Debt has been Finally Paid, the Borrowers may not make any voluntary prepayment with respect to the Term B Loans and the Obligations related thereto.  From and after the date all Senior Debt has been Finally Paid, the Borrowers may from time to time prepay the Term B Loans in whole or in part; provided that the Company shall give the Administrative Agent (which shall promptly advise each affected Lender) notice thereof not later than 11:00 A.M., Chicago time, on the day of such prepayment (which shall be a Business Day), specifying the date and amount of prepayment.  Any such partial prepayment shall be in an amount equal to $500,000 or a higher integral multiple of $250,000.

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6.2.2Mandatory Prepayments.

(a)The Borrowers jointly and severally agree to make a prepayment of the Term Loans until paid in full upon the occurrence of any of the following (each a “Mandatory Prepayment Event”) at the following times and in the following amounts (such applicable amounts being referred to as “Designated Proceeds”):

(i)Concurrently with the receipt by any Loan Party of any Net Cash Proceeds from any Asset Disposition, in an amount equal to 100% of such Net Cash Proceeds shall be applied to Term A Loan.

(ii)Concurrently with the receipt by any Loan Party of any Net Cash Proceeds from any issuance of Capital Securities of any Loan Party (excluding (x) any issuance of Capital Securities pursuant to any employee or director option program, benefit plan or compensation program, (y) any issuance by a Subsidiary to the Company or another Subsidiary and (z) any issuance of Capital Securities as consideration for a Permitted Acquisition) in an amount equal to 100% of such Net Cash Proceeds (up to the amount required to pay the unpaid principal amount and all accrued and unpaid interest on the Term B Loan) to the Term B Loan.

(iii)Concurrently with the receipt by any Loan Party of any Net Cash Proceeds from any issuance of any Debt of any Loan Party (excluding Debt permitted byclauses (a) through (i) of Section 11.1), in an amount equal to 100% of such Net Cash Proceeds shall be applied to Term A Loan.

(iv)Concurrently with the receipt by any Loan Party of any Net Cash Proceeds from the issuance of the Subordinated Debt permitted by Section 11.1(g), in an amount equal to 100% of such Net Cash Proceeds shall be applied to Term B Loan until the Term B Loan is Finally Paid.

(v)From the Closing Date until (x) the Term B Loan is Finally Paid and (y) the Company has maintained a Senior Debt to EBITDA Ratio of less than or equal to 1.00 to 1.00 for two (2) consecutive Fiscal Quarters, within 105 days after the end of each Fiscal Year (commencing with Fiscal Year December 31, 2004), in an amount equal to 50% of Excess Cash Flow for such Fiscal Year shall be applied to Term A Loan.

6.3Manner of Prepayments.

6.3.1All Prepayments.  Each voluntary partial prepayment shall be in a principal amount of $500,000 or a higher integral multiple of $250,000.  Any partial prepayment of a Group of LIBOR Loans shall be subject to the proviso to Section 2.2.3(a).  Any prepayment of a LIBOR Loan on a day other than the last day of an Interest Period therefor shall include interest on the principal amount being repaid and shall be subject to Section 8.4.  Except as otherwise provided by this Agreement, all principal payments in respect of the Loans shall be applied first, to repay outstanding Base Rate Loans and then to repay outstanding LIBOR Rate Loans in direct order of Interest Period maturities.  All partial prepayments of Term A Loan shall be applied pro rata to reduce the payments required under Section 6.4.2 hereof.

6.4Repayments.

6.4.1Revolving Loans.  The Revolving Loans of each Lender shall be paid in full and the Revolving Commitment shall terminate on the Termination Date.

6.4.2Term A Loans.  The Term A Loan of each Lender shall be paid in installments equal to such Lender’s Pro Rata Share of the aggregate principal amount of the installments of the Term A Loan as follows:

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Payment Date	Amount
April 30, 2004	$	4,500,000
July 31, 2004	$	4,500,000
October 31, 2004	$	4,500,000
January 31, 2005	$	4,500,000
April 30, 2005	$	4,500,000
July 31, 2005	$	4,500,000
October 31, 2005	$	4,500,000
January 31, 2006	$	4,500,000
April 30, 2006	$	4,500,000
July 31, 2006	$	4,500,000

Unless sooner paid in full, the outstanding principal balance of the Term A Loan shall be paid in full on the Term A Loan Termination Date.

6.4.3Term B Loans.  Subject to Section 15 hereof, unless sooner paid in full, the outstanding principal balance of the Term B Loan shall be paid in full on the Term B Loan Termination Date.

SECTION 7MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

7.1Making of Payments.  All payments of principal of or interest on the Notes, and of all fees, shall be made by the Borrowers to the Administrative Agent in immediately available funds at the office specified by the Administrative Agent not later than noon, Chicago time, on the date due; and funds received after that hour shall be deemed to have been received by the Administrative Agent on the following Business Day.  The Administrative Agent shall promptly remit to each Lender its share of all such payments received in collected funds by the Administrative Agent for the account of such Lender.  All payments under Section 8.1 shall be made by the Borrowers directly to the Lender entitled thereto without setoff, counterclaim or other defense.

7.2Application of Certain Payments.  So long as no Event of Default has occurred and is continuing, (a) payments matching specific scheduled payments then due shall be applied to those scheduled payments and (b) voluntary and mandatory prepayments shall be applied as set forth in Sections 6.2 and 6.3.  After the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Administrative Agent or any Lender as proceeds from the sale of, or other realization upon, all or any part of the Collateral shall be applied as the Administrative Agent shall determine in its discretion or, in the absence of a specific determination by the Administrative Agent, as set forth in the Guaranty and Collateral Agreement.  Concurrently with each remittance to any Lender of its share of any such payment, the Administrative Agent shall advise such Lender as to the application of such payment.

7.3Due Date Extension.  If any payment of principal or interest with respect to any of the Loans, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day (unless, in the case of a LIBOR Loan, such immediately following Business Day is the first Business Day of a calendar month, in which case such due date shall be the immediately preceding Business Day) and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.

7.4Setoff.  Each Borrower agrees that the Administrative Agent and each Lender have all rights of set-off and bankers’ lien provided by applicable law, and in addition thereto, the each Borrower agrees that at any time any Event of Default exists, the Administrative Agent and each Lender may apply to the payment of any Obligations of the Borrowers hereunder, whether or not then due, any and all balances, credits, deposits, accounts or moneys of any Borrower then or thereafter with the Administrative Agent or such Lender.

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7.5Proration of Payments.  Subject to Section 15 hereof, if any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise, on account of (a) principal of or interest on any Loan, but excluding (i) any payment pursuant to Section 8.7 or 15.6 and (ii) payments of interest on any Affected Loan) or (b) its participation in any Letter of Credit) in excess of its applicable Pro Rata Share of payments and other recoveries obtained by all Lenders on account of principal of and interest on the Loans (or such participation) then held by them, then such Lender shall purchase from the other Lenders such participations in the Loans (or sub-participations in Letters of Credit) held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery.

7.6Taxes.

(a)All payments made by the Borrowers hereunder or under any Loan Documents shall be made without setoff, counterclaim, or other defense.  To the extent permitted by applicable law, all payments hereunder or under the Loan Documents (including any payment of principal, interest, or fees) to, or for the benefit, of any Person shall be made by the Borrowers free and clear of and without deduction or withholding for, or account of, any Taxes now or hereinafter imposed by any taxing authority.

(b)If any Borrower makes any payment hereunder or under any Loan Document in respect of which it is required by applicable law to deduct or withhold any Taxes, the Borrowers shall increase the payment hereunder or under any such Loan Document such that after the reduction for the amount of Taxes withheld (and any taxes withheld or imposed with respect to the additional payments required under this Section 7.6(b)), the amount paid to the Lenders or the Administrative Agent equals the amount that was payable hereunder or under any such Loan Document without regard to this Section 7.6(b).  To the extent any Borrower withholds any Taxes on payments hereunder or under any Loan Document, the Borrowers shall jointly and severally pay the full amount deducted to the relevant taxing authority within the time allowed for payment under applicable law and shall deliver to the Administrative Agent within thirty (30) days after it has made payment to such authority a receipt issued by such authority (or other evidence satisfactory to the Administrative Agent) evidencing the payment of all amounts so required to be deducted or withheld from such payment.

(c)If any Lender or the Administrative Agent is required by law to make any payments of any Taxes on or in relation to any amounts received or receivable hereunder or under any other Loan Document, or any Tax is assessed against a Lender or the Administrative Agent with respect to amounts received or receivable hereunder or under any other Loan Document, the Borrowers will jointly and severally indemnify such person against (i) such Tax (and any reasonable counsel fees and expenses associated with such Tax) and (ii) any taxes imposed as a result of the receipt of the payment under this Section 7.6(c); provided that if the Borrowers reasonably believe that such Taxes were not correctly or legally asserted and if the Borrowers paid such Taxes to the taxing authority or reimbursed the Administrative Agent or a Lender in the amount of such Taxes, the Administrative Agent or such Lender, as the case may be, will use reasonable efforts to cooperate with the Borrowers to obtain a refund of such Taxes so long as such efforts would not, in the sole determination of the Agent or such Lender, as the case may be, result in any additional costs, expenses or risks or be otherwise disadvantageous to it.  A certificate prepared in good faith as to the amount of such payment by such Lender or the Administrative Agent shall, absent manifest error, be final, conclusive, and binding on all parties.

(d)Each of the Administrative Agent and the Lenders agrees that if it subsequently recovers, or receives a permanent net tax benefit with respect to, any amount of Taxes (i) previously paid by it and as to which it has been indemnified by or on behalf of the Borrowers or (ii) previously deducted by the Borrowers (including, without limitation, any Taxes deducted from any additional sums payable under clause (i) of subsection (a) above), the Administrative Agent or such Lender, as the case may be, shall reimburse the

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Borrowers to the extent of the amount of any such recovery or permanent net tax benefit (but only to the extent of indemnity payments made, or additional amounts paid, by or on behalf of the Borrowers under this Section 7.6 with respect to the Taxes giving rise to such recovery or tax benefit less any Taxes paid by the Administrative Agent or the applicable Lender with respect to such indemnity payments or such additional amounts paid, by or on behalf of the Borrowers under this Section 7.6); provided, however, that the Borrowers, upon the request of the Administrative Agent or such Lender, agree to repay to the Administrative Agent or such Lender, as the case may be, the amount paid over to the Borrowers (together with any penalties, interest or other charges), in the event the Administrative Agent or such Lender is required to repay such amount to the relevant taxing authority.

(e)(i)To the extent permitted by applicable law, each Lender that is not a United States person within the meaning of Code section 7701(a)(30) (a “Non-U.S. Participant”) shall deliver to the Company and the Administrative Agent on or prior to the Closing Date (or in the case of a Lender that is an Assignee, on the date of such assignment to such Lender) two accurate and complete original signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form prescribed by the IRS) certifying to such Lender’s entitlement to a complete exemption from, or a reduced rate in, United States withholding tax on interest payments to be made hereunder or any Loan.  If a Lender that is a Non-U.S. Participant is claiming a complete exemption from withholding on interest pursuant to Sections 871(h) or 881(c) of the Code, the Lender shall deliver (along with two accurate and complete original signed copies of IRS Form W-8BEN) a certificate in form and substance reasonably acceptable to Administrative Agent (any such certificate, a “Withholding Certificate”).  In addition, each Lender that is a Non-U.S. Participant agrees that from time to time after the Closing Date, (or in the case of a Lender that is an Assignee, after the date of the assignment to such Lender), when a lapse in time (or change in circumstances occurs) renders the prior certificates hereunder obsolete or inaccurate in any material respect, such Lender shall, to the extent permitted under applicable law, deliver to the Company and the Administrative Agent two new and accurate and complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable forms prescribed by the IRS), and if applicable, a new Withholding Certificate, to confirm or establish the entitlement of such Lender or the Administrative Agent to an exemption from, or reduction in, United States withholding tax on interest payments to be made hereunder or on any Loan.

(ii)Each Lender that is not a Non-U.S. Participant (other than any such Lender which is taxed as a corporation for U.S. federal income tax purposes) shall provide two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form) to the Company and the Administrative Agent certifying that such Lender is exempt from United States backup withholding tax.  To the extent that a form provided pursuant to this Section 7.6(e)(ii) is rendered obsolete or inaccurate in any material respects as result of change in circumstances with respect to the status of a Lender, such Lender shall, to the extent permitted by applicable law, deliver to the Company and the Administrative Agent revised forms necessary to confirm or establish the entitlement to such Lender’s or Agent’s exemption from United States backup withholding tax.

(iii)The Borrowers shall not be required to pay additional amounts to a Lender, or indemnify any Lender, under this Section 7.6 to the extent that such obligations would not have arisen but for the failure of such Lender to comply with Section 7.6(e).  Each Non-U.S. Participant will promptly notify the Administrative Agent and the Borrowers of any changes in circumstances that would modify or render invalid any claimed exemption or reduction under this Section 7.6.

(iv)Each Lender agrees to indemnify the Administrative Agent and hold the Administrative Agent harmless for the full amount of any and all present or future Taxes and related liabilities (including penalties, interest, additions to tax and expenses, and any Taxes imposed by any jurisdiction on amounts payable to the Administrative Agent under this Section 7.6) which are imposed on or with respect to principal, interest or fees payable to such Lender hereunder and which are not paid by the Company pursuant to this Section 7.6, whether or not such Taxes or related liabilities were correctly or legally asserted.  This

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indemnification shall be made within thirty (30) days from the date the Administrative Agent makes written demand therefor.

SECTION 8INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

8.1Increased Costs.  (a)  If, after the date hereof, the adoption of, or any change in, any applicable law, rule or regulation, or any change in the interpretation or administration of any applicable law, rule or regulation by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:  (i) shall impose, modify or deem applicable any reserve (including any reserve imposed by the FRB, but excluding any reserve included in the determination of the LIBOR Rate pursuant to Section 4), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender; or (ii) shall impose on any Lender any other condition affecting its LIBOR Loans, its Note or its obligation to make LIBOR Loans; and the result of anything described in clauses (i) and (ii) above is to increase the cost to (or to impose a cost on) such Lender (or any LIBOR Office of such Lender) of making or maintaining any LIBOR Loan, or to reduce the amount of any sum received or receivable by such Lender (or its LIBOR Office) under this Agreement or under its Note(s) with respect thereto, within three (3) Business Days after receiving written demand from such Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to the Administrative Agent), the Borrowers jointly and severally agree to pay directly to such Lender such additional amount as will compensate such Lender for such increased cost or such reduction, so long as such amounts have accrued on or after the day which is 180 days prior to the date on which such Lender first made demand therefor.

(b)If any Lender shall reasonably determine that any change in, or the adoption or phase-in of, any applicable law, rule or regulation regarding capital adequacy, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or the compliance by any Lender or any Person controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s or such controlling Person’s capital as a consequence of such Lender’s obligations hereunder or under any Letter of Credit to a level below that which such Lender or such controlling Person could have achieved but for such change, adoption, phase-in or compliance (taking into consideration such Lender’s or such controlling Person’s policies with respect to capital adequacy) by an amount deemed by such Lender or such controlling Person to be material, then from time to time, within three (3) Business Days after receiving written demand from such Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to the Administrative Agent), the Borrowers jointly and severally agree to pay to such Lender such additional amount as will compensate such Lender or such controlling Person for such reduction so long as such amounts have accrued on or after the day which is 180 days prior to the date on which such Lender first made demand therefor.

8.2Basis for Determining Interest Rate Inadequate or Unfair.  If (a) the Administrative Agent reasonably determines in good faith (which determination shall be binding and conclusive on the Borrowers) that by reason of circumstances affecting the interbank LIBOR market adequate and reasonable means do not exist for ascertaining the applicable LIBOR Rate for any Interest Period; or

(a)the Required Lenders advise the Administrative Agent in good faith that the LIBOR Rate as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of maintaining or funding LIBOR Loans for such Interest Period (taking into account any amount to which such Lenders may be entitled under Section 8.1) or that the making or funding of LIBOR Loans has become

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impracticable as a result of an event occurring after the date of this Agreement which in the opinion of such Lenders materially affects such Loans;

then the Administrative Agent shall promptly notify the other parties thereof and, so long as such circumstances shall continue, (i) no Lender shall be under any obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii) on the last day of the current Interest Period for each LIBOR Loan, such Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

8.3Changes in Law Rendering LIBOR Loans Unlawful.  If any change in, or the adoption of any new, law or regulation, or any change in the interpretation of any applicable law or regulation by any governmental or other regulatory body charged with the administration thereof, should make it (or in the good faith judgment of any Lender cause a substantial question as to whether it is) unlawful for any Lender to make, maintain or fund LIBOR Loans, then such Lender shall promptly notify each of the other parties hereto and, so long as such circumstances shall continue, (a) such Lender shall have no obligation to make or convert any Base Rate Loan into a LIBOR Loan (but shall make Base Rate Loans concurrently with the making of or conversion of Base Rate Loans into LIBOR Loans by the Lenders which are not so affected, in each case in an amount equal to the amount of LIBOR Loans which would be made or converted into by such Lender at such time in the absence of such circumstances) and (b) on the last day of the current Interest Period for each LIBOR Loan of such Lender (or, in any event,  on such earlier date as may be required by the relevant law, regulation or interpretation), such LIBOR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender which, but for the circumstances described in the foregoing sentence, would be a LIBOR Loan (an “Affected Loan”) shall remain outstanding for the period corresponding to the Group of LIBOR Loans of which such Affected Loan would be a part absent such circumstances.

8.4Funding Losses.  The Borrowers hereby agree that within three (3) Business Days after receiving written demand from any Lender (which demand shall be accompanied by a statement setting forth the basis for the amount being claimed, a copy of which shall be furnished to the Administrative Agent), the Borrowers will jointly and severally indemnify such Lender against any net loss or expense which such Lender may sustain or incur (including any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain any LIBOR Loan), as reasonably determined by such Lender, as a result of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender on a date other than the last day of an Interest Period for such Loan (including any conversion pursuant to Section 8.3) or (b) any failure of the Borrowers to borrow, convert or continue any Loan on a date specified therefor in a Notice of Borrowing or a Notice of Conversion/Continuation pursuant to this Agreement.  For this purpose, all notices to the Administrative Agent pursuant to this Agreement shall be deemed to be irrevocable.

8.5Right of Lenders to Fund through Other Offices.  Each Lender may, if it so elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch or Affiliate of such Lender to make such Loan; provided that in such event for the purposes of this Agreement such Loan shall be deemed to have been made by such Lender and the joint and several obligations of the Borrowers to repay such Loan shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the account of such branch or Affiliate.

8.6Discretion of Lenders as to Manner of Funding.  Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained each LIBOR Loan during each Interest Period for such Loan through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest Period.

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8.7Mitigation of Circumstances; Replacement of Lenders.  (a)  Each Lender shall promptly notify the Company and the Administrative Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by the Borrowers to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstances described in Section 8.2 or 8.3 (and, if any Lender has given notice of any such event described in clause (i) or (ii) above and thereafter such event ceases to exist, such Lender shall promptly so notify the Company and the Administrative Agent).  Without limiting the foregoing, each Lender will provide to the Borrowers or file any document or instrument or designate a different funding office if such designation will avoid (or reduce the cost to the Borrowers of) any event described in clause (i) or (ii) above and providing or filing such document or instrument or making such designation will not, in such Lender’s sole judgment, be otherwise disadvantageous to such Lender.

(b)If the Borrowers become obligated to pay additional amounts to any Lender pursuant to Section 7.6 or 8.1, or any Lender gives notice of the occurrence of any circumstances described in Section 8.2 or 8.3, the Company may designate another bank which is acceptable to the Administrative Agent in its reasonable discretion (such other bank being called a “Replacement Lender”) to purchase the Loans of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment Agreement), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to the Borrowers hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.

8.8Conclusiveness of Statements; Survival of Provisions.  Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be conclusive absent demonstrable error.  Lenders may use reasonable averaging and attribution methods in determining compensation under Sections 8.1 and 8.4, and the provisions of such Sections shall survive repayment of the Obligations, cancellation of any Notes, expiration or termination of the Letters of Credit and termination of this Agreement.

SECTION 9REPRESENTATIONS AND WARRANTIES.

To induce the Administrative Agent and the Lenders to enter into this Agreement and to induce the Lenders to make Loans and issue and participate in Letters of Credit hereunder, each Borrower hereby jointly with the other Borrowers and severally represents and warrants to the Administrative Agent and the Lenders that, both before and after giving effect to the Related Transactions:

9.1Organization.  Each Loan Party is validly existing and in good standing under the laws of its jurisdiction of organization; and each Loan Party is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify could not reasonably be expected to result in a Material Adverse Effect.

9.2Authorization; No Conflict.  Each Loan Party is duly authorized to execute and deliver each Loan Document to which it is a party, each Borrower is duly authorized to borrow monies hereunder and each Loan Party is duly authorized to perform its Obligations under each Loan Document to which it is a party.  The execution, delivery and performance by each Loan Party of each Loan Document to which it is a party, and the borrowings by each Borrower hereunder, do not and will not (a) require any consent or approval of any governmental agency or authority (other than (i) any consent or approval which has been obtained and is in full force and effect, (ii) filings to release Liens and to perfect Liens, (iii) those required in the ordinary course of business, (iv) those required in connection with the exercise of remedies and (v) such others, the failure of which to obtain or make, could not reasonably be expected to result in a Material Adverse Effect), (b) conflict

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with (i) any provision of law, (ii) the charter, by-laws or other organizational documents of any Loan Party or (iii) any material agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon any Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of any Loan Party (other than Liens in favor of the Administrative Agent created pursuant to the Collateral Documents).

9.3Validity and Binding Nature.  Each of this Agreement and each other Loan Document to which any Loan Party is a party is the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.

9.4Financial Condition.  The audited consolidated financial statements of the Company and its Subsidiaries as at December 31, 2002 and the unaudited consolidated financial statements of the Company and the Subsidiaries as at March 31, 2003, June 30, 2003, and September 30, 2003, copies of each of which have been delivered to each Lender, were prepared in accordance with GAAP (subject, in the case of such unaudited statements, to the absence of footnotes and to normal year-end adjustments) and present fairly in all material respects the consolidated financial condition of the Company and its Subsidiaries as at such dates and the results of their operations for the periods then ended.

9.5No Material Adverse Change.  Since December 31, 2002 (but after giving effect to the Related Transactions on a Pro Forma Basis) there has been no material adverse change in the financial condition, operations, assets, business, properties or prospects of the Loan Parties taken as a whole.

9.6Litigation; Debt and Contingent Liabilities.  No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to the Knowledge of a Senior Officer, threatened against any Loan Party which might reasonably be expected to have a Material Adverse Effect, except as set forth in Schedule 9.6.  Other than any liability incident to such litigation or proceedings, no Loan Party has any material contingent liabilities not listed on Schedule 9.6 or permitted by Section 11.1.  Except as described therein, Schedule 11.1 sets forth a complete and correct list of all outstanding Debt in the aggregate principal amount of at least $50,000 of the Loan Parties as of the Closing Date since which date there has been no material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Loan Parties.  As of the date hereof, no Loan Party is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of any Loan Party the aggregate principal amount of which exceeds $50,000 and no event or condition exists with respect to any such Debt of a Loan Party that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

9.7Ownership of Properties; Liens.  Each Loan Party owns good and, in the case of real property, marketable title to all of its material properties and assets which it owns or purports to own, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and the like) except as permitted by Section 11.2.

9.8Equity Ownership; Subsidiaries.  (a) All issued and outstanding Capital Securities of each Loan Party are duly authorized and validly issued, fully paid, non-assessable, and free and clear of all Liens other than those in favor of the Administrative Agent and Permitted Liens, and such securities were issued in compliance with all applicable state and federal laws concerning the issuance of securities.  Schedule 9.8 sets forth the authorized Capital Securities of each Loan Party as of the Closing Date.  All of the issued and outstanding Capital Securities of the Company are owned as set forth on Schedule 9.8 as of the Closing Date, and all of the issued and outstanding Capital Securities of each Wholly-Owned Subsidiary is, directly or indirectly, owned by the Company.  As of the Closing Date, except as set forth on Schedule 9.8, there are no

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pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any Capital Securities of any Loan Party.

(b)Immediately after giving effect to the Related Transactions, (i) the Company shall own 100% of the issued and outstanding Capital Securities of P-D and (ii) P-D shall own 100% of the issued and outstanding Capital Securities of Poorman.

9.9Pension Plans.  (a) The Unfunded Liability of all Pension Plans does not in the aggregate exceed twenty percent of the Total Plan Liability for all such Pension Plans.  Each Pension Plan complies in all material respects with all applicable requirements of law and regulations.  No contribution failure under Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan has occurred with respect to any Pension Plan, sufficient to give rise to a Lien under Section 302(f) of ERISA, or otherwise to have a Material Adverse Effect.  There are no pending or, to the knowledge of Company, threatened, claims, actions, investigations or lawsuits against any Pension Plan, any fiduciary of any Pension Plan, or the Company or other any member of the Controlled Group with respect to a Pension Plan or a Multiemployer Pension Plan which could reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any other member of the Controlled Group has engaged in any prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Pension Plan or Multiemployer Pension Plan which would subject that Person to any material liability.  Within the past five years, neither the Company nor any other member of the Controlled Group has engaged in a transaction which resulted in a Pension Plan with an Unfunded Liability being transferred out of the Controlled Group, which could reasonably be expected to have a Material Adverse Effect.  No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan, which could reasonably be expected to have a Material Adverse Effect.

(b)All contributions (if any) have been made to any Multiemployer Pension Plan that are required to be made by the Company or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable law; neither the Company nor any other member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could result in a withdrawal or partial withdrawal from any such plan; and neither the Company nor any other member of the Controlled Group has received any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.

9.10Investment Company Act.  No Loan Party is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company,” within the meaning of the Investment Company Act of 1940.

9.11Public Utility Holding Company Act.  No Loan Party is a “holding company”, or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935.

9.12Regulation U.  The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.

9.13Taxes; Tax Shelter Registration.

(a)Each Loan Party has timely filed all tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges due and payable with respect to such return, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for

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which adequate reserves in accordance with GAAP shall have been set aside on its books.  The Loan Parties have made adequate reserves on their books and records in accordance with GAAP for all taxes that have accrued but which are not yet due and payable.  To the Knowledge of a Senior Officer of the Company, no Loan Party has participated in any transaction that relates to a year of the taxpayer (which is still open under the applicable statute of limitations) which is a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).

(b)No Loan Party intends to treat any of the transactions contemplated by any Loan Document as being a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4.

9.14Solvency, etc.  On the Closing Date, and immediately prior to and after giving effect to the issuance of each Letter of Credit and each borrowing hereunder and the use of the proceeds thereof, with respect to the Loan Parties taken as a whole, (a) the fair value of its assets on a going concern basis is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated, (b) the present fair saleable value of its assets on a going concern basis is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, (c) it is able to realize upon its assets and generally pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) it does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to generally pay as such debts and liabilities mature and (e) it is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute unreasonably small capital.

9.15Environmental Matters.  Except as disclosed on Schedule 9.15 hereto, the on-going operations of each Loan Party comply in all respects with all Environmental Laws, except such non-compliance which could not (if enforced in accordance with applicable law) reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.  Each Loan Party has obtained, and maintained in good standing, all licenses, permits, authorizations, registrations and other approvals required under any Environmental Law and required for their respective ordinary course operations, and for their reasonably anticipated future operations, and each Loan Party is in compliance with all terms and conditions thereof, except where the failure to do so could not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.  No Loan Party or any of its properties or operations is subject to, or reasonably anticipates the issuance of, any written order from or agreement with any Federal, state or local governmental authority, nor subject to any judicial or docketed administrative or other proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Substance the subject matter of which could reasonably be expected to result in a Material Adverse Effect.  There are no Hazardous Substances or other conditions or circumstances existing with respect to any property, arising from operations prior to the Closing Date, or relating to any waste disposal, of any Loan Party that could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.  No Loan Party has any underground storage tanks that are not properly registered or permitted under applicable Environmental Laws or that at any time have released, leaked, disposed of or otherwise discharged Hazardous Substances except, in either case, as could not reasonably be expected to result in a Material Adverse Effect.

9.16Insurance.  Set forth on Schedule 9.16 is a complete and accurate summary of the property and casualty insurance program of the Loan Parties as of the Closing Date (including the names of all insurers, policy numbers, expiration dates, amounts and types of coverage, annual premiums, exclusions, deductibles, self-insured retention, and a description in reasonable detail of any self-insurance program, retrospective rating plan, fronting arrangement or other risk assumption arrangement involving any Loan Party).  Each Loan Party and its properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Loan Parties, in such amounts, with such deductibles and covering such risks as are customarily carried by companies of a similar size engaged in similar businesses and owning similar properties in localities where such Loan Parties operate.

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9.17Real Property.  Set forth on Schedule 9.17 is a complete and accurate list, as of the Closing Date, of the address of all real property owned or leased by any Loan Party, together with, in the case of leased property, the name and mailing address of the lessor of such property.

9.18Information.  All information heretofore or contemporaneously herewith furnished in writing by any Loan Party to the Administrative Agent or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being recognized by the Administrative Agent and the Lenders that any projections and forecasts provided by the Company are based on good faith estimates and assumptions believed by the Company to be reasonable when made and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results).

9.19Intellectual Property.  Each Loan Party owns and possesses or has a license or other right to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights, trade secrets and other intellectual property rights as are necessary for the conduct of the businesses of the Loan Parties, without any infringement upon rights of others which could reasonably be expected to have a Material Adverse Effect.  A true, correct and complete list of all patents, patent applications, and registrations of, or applications for registration of, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights and copyrights as are necessary for the conduct of the businesses of the Loan Parties is set forth on Schedule 9.19 hereto.

9.20Burdensome Obligations.  No Loan Party is a party to any agreement or contract or subject to any restriction contained in its organizational documents which could reasonably be expected to have a Material Adverse Effect.

9.21Labor Matters.  Except as set forth on Schedule 9.21, no Loan Party is subject to any labor or collective bargaining agreement.  There are no existing or threatened strikes, lockouts or other labor disputes involving any Loan Party that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employees of the Loan Parties are not in violation of the Fair Labor Standards Act or any other applicable law, rule or regulation dealing with such matters.

9.22No Default.  No Event of Default or Unmatured Event of Default exists or would result from the incurrence by any Loan Party of any Debt hereunder or under any other Loan Document.

9.23Related Agreements, Related Transaction, etc.  (a)  The Company has heretofore furnished the Administrative Agent a true and correct copy of the Related Agreements and there have been no amendments to such Related Agreements from the copies so provided.

(b)Each Loan Party and, to the Knowledge of a Senior Officer of the Company, each other party to the Related Agreements, has duly taken all necessary corporate, partnership or other organizational action to authorize the execution, delivery and performance of the Related Agreements and the consummation of transactions contemplated thereby.

(c)The Related Transactions will comply with all applicable legal requirements, and all necessary governmental, regulatory, creditor, shareholder, partner and other material consents, approvals and exemptions required to be obtained by the Loan Parties and, to the Knowledge of a Senior Officer of the Company, each other party to the Related Agreements in connection with the Related Transactions will be, prior to consummation of the Related Transactions, duly obtained and will be in full force and effect.  As of the date of the Related Agreements, all applicable waiting periods with respect to the Related Transactions will

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have expired without any action being taken by any competent governmental authority which restrains, prevents or imposes material adverse conditions upon the consummation of the Related Transactions unless otherwise consented to by the Administrative Agent.

(d)The execution and delivery of the Related Agreements did not, and the consummation of the Related Transactions will not, violate any statute or regulation of the United States (including any securities law) or of any state or other applicable jurisdiction, or any order, judgment or decree of any court or governmental body binding on any Loan Party or, to the Knowledge of a Senior Officer of the Company, any other party to the Related Agreements, or result in a breach of, or constitute a default under, any material agreement, indenture, instrument or other document, or any judgment, order or decree, to which any Loan Party is a party or by which any Loan Party is bound or, to the Knowledge of a Senior Officer of the Company, to which any other party to the Related Agreements is a party or by which any such party is bound.

(e)No statement or representation made in the Related Agreements by any Loan Party or, to the Knowledge of any Senior Officer of the Company, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect.

(f)No material condition to the consummation of the Related Transaction has been waived (without the prior consent of the Administrative Agent).

(g)Immediately after giving effect to the Related Transaction, all Debt to be Repaid will be paid in full, and all agreements and instruments governing the Debt to be Repaid and all Liens securing such Debt to be Repaid will be terminated or released pursuant to a payoff letter.

9.24Subordinated Debt.  The subordination provisions set forth in Section 15 hereof, with respect to the Term B Loan, are enforceable against the holders of the Subordinated Debt by the Administrative Agent and the Lenders.  All Obligations with respect to Revolving Loans and Term A Loans constitute Senior Debt entitled to the benefits of such subordination provisions.  Each Borrower acknowledges that the Administrative Agent and each Lender is entering into this Agreement and are extending the Commitments and making the Revolving Loans and Term A Loans in reliance upon the such subordination provisions and this Section 9.24.

9.25Major Contracts.  There is no default by any Loan Party party to any Major Contract thereto or, to the Knowledge of the Senior Officers of the Company, any other party party thereto in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in such Major Contract which could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.

SECTION 10AFFIRMATIVE COVENANTS.

Until the expiration or termination of the Commitments and thereafter until all Obligations hereunder and under the other Loan Documents are Finally Paid and all Letters of Credit have been terminated, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:

10.1Reports, Certificates and Other Information.  Furnish to the Administrative Agent and each Lender:

10.1.1Annual Report.  Promptly when available and in any event within ninety (90) days after the close of each Fiscal Year: (a) a copy of the annual audit report of the Company and its Subsidiaries for such Fiscal Year, including therein consolidated balance sheets and statements of income, changes in stockholders’ equity and cash flows of the Company and its Subsidiaries as at the end of such Fiscal Year, certified without

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adverse reference to going concern value and without qualification by independent auditors of recognized standing selected by the Company and reasonably acceptable to the Administrative Agent, together with (i) if requested by the Administrative Agent in writing at least thirty (30) days prior to the date the audited financials are required to be delivered pursuant to this Section 10.1.1, a written statement from such accountants to the effect that in making the examination necessary for the signing of such annual audit report by such accountants, nothing came to their attention that caused them to believe that the Company was not in compliance with any provision of Section 11.1, 11.3 or 11.13 of this Agreement insofar as such provision relates to accounting matters or, if something has come to their attention that caused them to believe that the Company was not in compliance with any such provision, describing such non-compliance in reasonable detail and (ii) a comparison with the previous Fiscal Year; and (b) separate balance sheets for each Loan Party as of the end of such Fiscal Year and statements of income, changes in stockholders’ equity and cash flows for each Subsidiary of the Company for such Fiscal Year, certified by a Senior Officer of the Company.

10.1.2Quarterly Reports.  Promptly when available and in any event within forty-five (45) days after the end of each Fiscal Quarter (except the last Fiscal Quarter of each Fiscal Year), (a) consolidated balance sheets of the Company and its Subsidiaries as of the end of such Fiscal Quarter, together with consolidated statements of income, changes in stockholders’ equity and cash flows for such Fiscal Quarter and for the period beginning with the first day of such Fiscal Year and ending on the last day of such Fiscal Quarter, together with a comparison with the corresponding period of the previous Fiscal Year, certified by a Senior Officer of the Company; and (b) separate balance sheets of each Loan Party as of the end of such Fiscal Quarter, together with statements of income, changes in stockholders’ equity and cash flows for such Fiscal Quarter and for the period beginning with the first day of such Fiscal Year and ending on the last day of such Fiscal Quarter, together with a comparison with the corresponding period of the previous Fiscal Year, certified by a Senior Officer of the Company.

10.1.3Compliance Certificates.  Contemporaneously with the furnishing of a copy of each annual audit report pursuant to Section 10.1.1 and each set of statements pursuant to Section 10.1.2, a duly completed compliance certificate in the form of Exhibit B, with appropriate insertions, dated the date of such annual report or such quarterly statements and signed by a Senior Officer of the Company, containing (i) a computation of each of the financial ratios and restrictions set forth in Section 11.13 and to the effect that such officer has not become aware of any Event of Default or Unmatured Event of Default that has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it and (ii) a written statement of the Company’s management setting forth a discussion of the Company’s financial condition, changes in financial condition and results of operations.

10.1.4Reports to the SEC and to Shareholders.  Promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of any Loan Party filed with the SEC; copies of all registration statements of any Loan Party filed with the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to security holders generally.

10.1.5Notice of Default, Litigation and ERISA Matters.  Promptly upon a Senior Officer of a Loan Party obtaining Knowledge becoming aware of any of the following, written notice describing the same and the steps being taken by the Company or the Subsidiary affected thereby with respect thereto:

(a)the occurrence of an Event of Default or an Unmatured Event of Default;

(b)any litigation, arbitration or governmental investigation or proceeding not previously disclosed by the Company to the Lenders which has been instituted or, to the Knowledge of a Senior Officer of the Company, is threatened against any Loan Party or to which any of the properties of any thereof is subject which could reasonably be expected to have a Material Adverse Effect;

(c)the institution of any steps by any member of the Controlled Group or any other Person to terminate any Pension Plan, or the failure of any member of the Controlled Group to make a

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required contribution to any Pension Plan (if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the taking of any action with respect to a Pension Plan which could result in the requirement that the Company furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan or Multiemployer Pension Plan which could result in the incurrence by any member of the Controlled Group of any material liability, fine or penalty (including any claim or demand for withdrawal liability or partial withdrawal from any Multiemployer Pension Plan), or any material increase in the contingent liability of the Company with respect to any post-retirement welfare benefit plan or other employee benefit plan of the Company or another member of the Controlled Group, or any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of an excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent;

(d)any cancellation or material change in any insurance maintained by any Loan Party; or

(e)any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim or (ii) the enactment or effectiveness of any law, rule or regulation) which might reasonably be expected to have a Material Adverse Effect.

10.1.6Management Reports.  Promptly upon receipt thereof, copies of all detailed financial and management reports submitted to the Company by independent auditors in connection with each annual or interim audit made by such auditors of the books of the Company.

10.1.7Projections.  As soon as practicable, and in any event not later than thirty (30) days prior to the commencement of each Fiscal Year, financial projections for the Company and its Subsidiaries for such Fiscal Year (including quarterly operating and cash flow budgets) prepared in a manner consistent with the projections delivered by the Company to the Lenders prior to the Closing Date or otherwise in a manner reasonably satisfactory to the Administrative Agent, accompanied by a certificate of a Senior Officer of the Company on behalf of the Company to the effect that (a) such projections were prepared by the Company in good faith, (b) the Company had a reasonable basis for the assumptions contained in such projections when such projections were made and (c) such projections have been prepared in accordance with such assumptions.

10.1.8Subordinated Debt and Related Transaction Notices.  Promptly following receipt, copies of any material notices (including notices of default or acceleration) received from any holder or trustee of, under or with respect to any Subordinated Debt or in connection with the Related Transactions.

10.1.9Other Information.  Promptly from time to time, such other information concerning the Loan Parties as any Lender or the Administrative Agent may reasonably request.

10.2Books, Records and Inspections.  Keep, and cause each other Loan Party to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each other Loan Party to permit, any Lender or the Administrative Agent or any representative thereof to inspect the properties and operations of the Loan Parties; and permit, and cause each other Loan Party to permit, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), any Lender or the Administrative Agent or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors (and the Company hereby authorizes such independent auditors to discuss such financial matters with any Lender or the Administrative Agent or any representative thereof, provided that the Company is given an opportunity to be present at such discussion), and to examine (and, at the expense of the Loan Parties, photocopy extracts from) any of its books or other records; and permit, and cause each other Loan Party to permit, the Administrative Agent and its representatives to inspect the Inventory and other tangible

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assets of the Loan Parties, to perform appraisals of the equipment of the Loan Parties, and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to Inventory, Accounts and any other collateral.  All such inspections or audits by the Administrative Agent shall be at the Company’s expense, provided that so long as no Event of Default or Unmatured Event of Default exists, the Company shall not be required to reimburse the Administrative Agent for inspections or audits more frequently than once each Fiscal Year.

10.3Maintenance of Property; Insurance.  (a)  Keep, and cause each other Loan Party to keep, all property necessary in the business of the Company or such other Loan Party in good working order and condition, ordinary wear and tear, casualty and condemnation excepted.

(b)Maintain, and cause each other Loan Party to maintain, with responsible insurance companies, such insurance coverage as may be required by any law or governmental regulation or court decree or order applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated, but which shall insure against all risks and liabilities of the type identified on Schedule 9.16 and shall have insured amounts not materially less than, and deductibles not materially higher than, those set forth on such schedule; and, upon request of the Administrative Agent or any Lender, furnish to the Administrative Agent or such Lender a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Loan Parties.  The Company shall cause each issuer of an insurance policy to provide the Administrative Agent with an endorsement (i) showing the Administrative Agent as loss payee with respect to each policy of property or casualty insurance and naming the Administrative Agent and each Lender as an additional insured with respect to each policy of liability insurance, (ii) providing that thirty (30) days’ (or ten (10) days’ in the case of non-payment of premiums) notice will be given to the Administrative Agent prior to any cancellation of, material reduction or change in coverage provided by or other material modification to such policy and (iii) reasonably acceptable in all other respects to the Administrative Agent.  The Company shall execute and deliver to the Administrative Agent a collateral assignment, in form and substance satisfactory to the Administrative Agent, of each business interruption insurance policy maintained by the Company.

(c)UNLESS THE COMPANY PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, THE ADMINISTRATIVE AGENT MAY PURCHASE INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT THE ADMINISTRATIVE AGENT’S AND THE LENDERS’ INTERESTS IN THE COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S INTERESTS.  THE COVERAGE THAT THE ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST ANY LOAN PARTY IN CONNECTION WITH THE COLLATERAL.  THE COMPANY MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER PROVIDING THE ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT.  IF THE ADMINISTRATIVE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE.  THE COSTS OF THE INSURANCE MAY BE ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER.  THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE LOAN PARTIES MAY BE ABLE TO OBTAIN ON THEIR OWN.

10.4Compliance with Laws; Payment of Taxes and Liabilities.  (a)  Comply, and cause each other Loan Party to comply, in all material respects with all applicable laws, rules, regulations, decrees, orders, judgments, licenses and permits, except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, ensure, and cause each other Loan Party to ensure, that no person who owns a controlling interest in or otherwise controls a Loan Party is or shall be

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(i) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders, (c) without limiting clause (a) above, comply, and cause each other Loan Party to comply, with all applicable Bank Secrecy Act (“BSA”) and anti-money laundering laws and regulations and (d) pay, and cause each other Loan Party to pay, prior to delinquency, all material taxes and other governmental charges against it or any collateral, as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall not require any Loan Party to pay any such tax or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP and, in the case of a claim which could become a Lien on any collateral, such contest proceedings shall stay the foreclosure of such Lien or the sale of any portion of the collateral to satisfy such claim.

10.5Maintenance of Existence, etc.  Maintain and preserve, and (subject to Section 11.4) cause each other Loan Party to maintain and preserve, (a) its existence and good standing in the jurisdiction of its organization and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect).

10.6Use of Proceeds.  Use the proceeds of the Loans, and the Letters of Credit, solely to finance the Related Transactions, for working capital purposes, for Capital Expenditures and for other general business purposes; and not use or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of “purchasing or carrying” any Margin Stock.

10.7Employee Benefit Plans.

(a)Maintain, and cause each other member of the Controlled Group to maintain, each Pension Plan in substantial compliance with all applicable requirements of law and regulations.

(b)Make, and cause each other member of the Controlled Group to make, on a timely basis, all required contributions to any Multiemployer Pension Plan.

(c)Not, and not permit any other member of the Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take any other action with respect to any Pension Plan that would reasonably be expected to entitle the PBGC to terminate, impose liability in respect of, or cause a trustee to be appointed to administer, any Pension Plan, unless the actions or events described in clauses (a), (b) and (c) individually or in the aggregate would not have a Material Adverse Effect.

10.8Environmental Matters.  If any release or threatened release or other disposal of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of any Loan Party, the Company shall, or shall cause the applicable Loan Party to, cause the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as necessary to comply with all Environmental Laws, where the failure to do so could reasonably be expected to result in a Material Adverse Effect.  Without limiting the generality of the foregoing, the Company shall, and shall cause each other Loan Party to, comply with any Federal or state judicial or administrative order requiring the performance at any real property of any Loan Party of activities in response to the release or threatened release of a Hazardous Substance, where the failure to do so could reasonably be expected to result in a Material Adverse Effect.

10.9Tax Shelter Registration.  Notify the Administrative Agent of any action (or the intention to take an action) inconsistent with the representation in Section 9.13(b).  If the Company so notifies the Administrative Agent, the Company acknowledges and agrees that the Administrative Agent and the Lenders

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may treat the transactions contemplated hereby (or any single transaction contemplated hereby) as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and the Administrative Agent and such Lender, as applicable, may maintain the lists and other regulations required by such Treasury Regulation.  To the extent the Administrative Agent or a Lender determines to maintain such list, each Loan Party shall cooperate with the Administrative Agent and Lenders in obtaining the information required under such Treasury Regulation.  Within 10 days after notifying the Administrative Agent under this Section 10.9, the Company shall deliver to the Administrative Agent a duly completed copy of IRS Form 8886 or any successor form.

10.10Further Assurances.  (a)  Take, and cause each other Loan Party to take, such actions as are necessary or as the Administrative Agent or the Required Lenders may reasonably request from time to time to ensure that the Obligations of each Loan Party under the Loan Documents are secured by substantially all of the assets of the Company and each domestic Subsidiary (as well as all Capital Securities of each domestic Subsidiary and 65% of all Capital Securities of each direct foreign Subsidiary) and guaranteed by each domestic Subsidiary (including, upon the acquisition or creation thereof, any Subsidiary acquired or created after the Closing Date), in each case as the Administrative Agent may determine, including, without limitation, (i) the execution and delivery of guaranties, security agreements, pledge agreements, mortgages, deeds of trust, financing statements and other documents, and the filing or recording of any of the foregoing and opinions related thereto, (ii) the delivery of certificated securities and other collateral with respect to which perfection is obtained by possession and (iii) cause to be delivered to the Administrative Agent a current environmental site assessment report prepared in accordance with the Administrative Agent’s standard requirements for environmental assessments of real property.

(b)With respect to each parcel of real property owned by any Loan Party, within sixty (60) days of the Closing Date, cause a duly executed Mortgage providing for a fully perfected Lien, in favor of the Administrative Agent, in all right, title and interest of the Company or such Subsidiary in such real property, together with:

(i)an ALTA Loan Title Insurance Policy, issued by an insurer acceptable to the Administrative Agent, insuring the Administrative Agent’s Lien on such real property and containing such endorsements as the Administrative Agent may reasonably require (it being understood that the amount of coverage, exceptions to coverage and status of title set forth in such policy shall be acceptable to the Administrative Agent);

(ii)copies of all documents of record concerning such real property as shown on the commitment for the ALTA Loan Title Insurance Policy referred to above;

(iii)original or certified copies of all insurance policies required to be maintained with respect to such real property by this Agreement, the applicable Mortgage or any other Loan Document;

(iv)a survey certified to the Administrative Agent meeting such standards as the Administrative Agent may reasonably establish and otherwise reasonably satisfactory to the Administrative Agent;

(v)a flood insurance policy concerning such real property, if required by the Flood Disaster Protection Act of 1973; and

(vi)an appraisal, prepared by an independent appraiser engaged directly by the Administrative Agent, of such parcel of real property or interest in real property, which appraisal shall satisfy the requirements of the Financial Institutions Reform, Recovery and Enforcement Act, if applicable, and shall evidence compliance with the supervisory loan-to-value limits set forth in the Federal Deposit Insurance Corporation Improvement Act of 1991, if applicable.

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Additionally, within such time period, (A) in the case of any material leased real property, the Borrowers will use their commercially reasonable efforts to provide a Collateral Access Agreement from the landlord of such property waiving or subordinating any landlord’s Lien in respect of personal property kept at the premises subject to such lease and (B) in the case of any material mortgaged real property, the Borrowers will use their commercially reasonable efforts to provide a waiver from the mortgagee thereof waiving any Lien in respect of personal property kept at the premises subject to such Mortgage.

10.11Deposit Accounts.  Within ninety (90) days of the Closing Date, unless the Administrative Agent otherwise consents in writing, in order to facilitate the Administrative Agent’s and the Lenders’ maintenance and monitoring of their security interests in the collateral, maintain all of their principal operating deposit accounts and investment accounts with the Administrative Agent.

SECTION 11NEGATIVE COVENANTS.

Until the expiration or termination of the Commitments and thereafter until all Obligations hereunder and under the other Loan Documents are Finally Paid and all Letters of Credit have been terminated, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:

11.1Debt.  Not, and not permit any other Loan Party to, create, incur, assume or suffer to exist any Debt, except:

(a)Obligations under this Agreement and the other Loan Documents;

(b)Debt secured by Liens permitted by Section 11.2(d), and extensions, renewals and refinancings thereof; provided that the aggregate amount of all such Debt at any time outstanding shall not exceed $3,000,000;

(c)Debt of any Borrower to any other Borrower; provided that if such Debt is evidenced by a note, such note shall be pledged and delivered to the Administrative Agent pursuant to the Collateral Documents as additional collateral security for the Obligations, and the obligations under any demand note shall be subordinated to the Obligations of the applicable Borrower hereunder in a manner reasonably satisfactory to the Administrative Agent;

(d)Hedging Obligations approved by Administrative Agent and incurred in favor of a Lender or an Affiliate thereof for bona fide hedging purposes and not for speculation;

(e)Debt described on Schedule 11.1 and any extension, renewal or refinancing thereof so long as the principal amount thereof is not increased;

(f)the Debt to be Repaid (so long as such Debt is repaid on the Closing Date with the proceeds of the initial Loans hereunder);

(g)Subordinated Debt of the Company incurred to refinance the Term B Loans on terms and conditions in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, in an amount not to exceed the remainder of (x) $75,000,000 less (y) the amount of Subordinated Debt outstanding under clause (m) below, or, if less, such amount such that immediately after giving effect to the issuance and the application of proceeds thereof, the Total Debt to EBITDA Ratio is less than or equal to 3.00 to 1.00; provided, that (i) immediately before and after giving effect to the issuance of such Subordinated Debt (A) no Unmatured Event of Default or Event of Default has occurred and is continuing and (B) the Revolving Loan Availability is equal to or more than $5,000,000 and (ii) the proceeds of such Subordinated Debt are actually used to Finally Pay the Term B Loans and the remaining proceeds, if any, are deposited in an account maintained with the

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Administrative Agent which has been pledged as Collateral for the Obligations pursuant to cash collateral arrangements satisfactory to the Administrative Agent and thereafter, prior to the occurrence of an Event of Default, used to make Permitted Acquisitions or to prepay the Term A Loans or the Revolving Loan pursuant to Section 6.2.1;

(h)Earnout Obligations and/or the deferred purchase price incurred in connection with a Permitted Acquisition in an amount not to exceed 20% of the purchase price of such Permitted Acquisition;

(i)accretion and capitalization of interest on Debt otherwise permitted under this Agreement;

(j)Debt incurred in the ordinary course of business in connection with the financing of insurance premiums;

(k)Debt incurred in the ordinary course of business in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;

(l)Debt of an Acquired Entity acquired pursuant to a Permitted Acquisition outstanding at the time of such Permitted Acquisition, provided that such Debt shall not have been incurred in contemplation of such Permitted Acquisition;

(m)Subordinated Debt incurred in connection with Permitted Acquisitions in an amount not to exceed the remainder of (x) $75,000,000 less the amount of Subordinated Debt outstanding under clause (g) above; provided, that immediately before and after giving effect to the issuance of such Subordinated Debt no Unmatured Event of Default or Event of Default has occurred and is continuing; and

(n)other Debt, in addition to the Debt listed above, in an aggregate outstanding amount not at any time exceeding $500,000.

11.2Liens.  Not, and not permit any other Loan Party to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:

(a)Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves;

(b)Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics, bankers and materialmen and other similar Liens imposed by law and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves;

(c)Liens described on Schedule 11.2 as of the Closing Date;

(d)subject to the limitation set forth in Section 11.1(b), (i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), (ii) Liens existing on property at the time of the acquisition thereof by any Loan Party (and not created in contemplation of such

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acquisition) and (iii) Liens that constitute purchase money security interests on any property securing debt incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within sixty (60) days of the acquisition thereof and attaches solely to the property so acquired;

(e)attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $500,000 (exclusive of amounts covered by valid and collectible insurance other than self insurance in respect thereof by a Person that has acknowledged its obligation to make such payment) arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;

(f)easements, covenants, conditions, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of any Loan Party;

(g)Liens arising under the Loan Documents;

(h)the replacement, extension or renewal of any Lien permitted by clause (c) above upon or in the same property subject thereto arising out of the extension, renewal or replacement of the Debt secured thereby (without increase in the amount thereof);

(i)Liens which arise under Article 4 of the UCC on items in collection and documents and proceeds related thereto;

(j)Liens arising from precautionary UCC financing statements regarding leases and consignments;

(k)any interest or title of a licensor, sublicensor, lessor or sublessor under any lease or lease agreement to the extent limited to each item licensed or leased;

(l)Liens in connection with Hedging Agreements permitted pursuant to this Agreement;

(m)Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; and

(n)zoning, building codes and other land use laws regulating the use or occupancy of real property which do not interfere, in any material respect, with the ordinary conduct of the business of any Loan Party and any Liens, encumbrances and encroachments described in any title insurance policy or survey delivered to the Administrative Agent.

11.3Restricted Payments.  Not, and not permit any other Loan Party to, (a) make any distribution with respect to its Capital Securities (other than distributions in-kind), (b) purchase or redeem any of its Capital Securities, other than purchases from employees, officers and directors of the Loan Parties upon termination of their employment in an aggregate amount not to exceed $100,000 in any Fiscal Year, provided that both immediately before and after giving effect to any such purchase or redemption, no Unmatured Event of Default or Event of Default shall have occurred and be continuing, (c) pay any management fees or similar fees to any of its equityholders or any Affiliate thereof, (d) make any redemption, prepayment, defeasance, repurchase or any other payment in respect of any Subordinated Debt (other than the Term B Loans as set forth in Sections 6.2.2(a)(ii) and (iv)) or (e) set aside funds for any of the foregoing.  Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or make other distributions to the Company or to a domestic Wholly-Owned Subsidiary; and (ii) the Company may make regularly scheduled payments of interest in respect of Subordinated Debt to the extent permitted under the subordination provisions thereof.

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11.4Mergers, Consolidations, Sales.  Not, and not permit any other Loan Party to, (a) be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any Capital Securities of any class of, or any partnership or joint venture interest in, any other Person, (b) sell, transfer, convey or lease all or any substantial part of its assets (including Capital Securities of any Subsidiary) except for sales of inventory in the ordinary course of business, or (c) sell or assign with or without recourse any receivables, except for (i) any such merger, consolidation, sale, transfer, conveyance, lease or assignment of or by any Wholly-Owned Subsidiary into the Company or into any other domestic Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the Company or any domestic Wholly-Owned Subsidiary of the assets or Capital Securities of any Wholly-Owned Subsidiary; (iii) from and after the date the Term B Loan is Finally Paid, Permitted Acquisitions, (iv) transfers among Loan Parties, (v) sales and dispositions of assets (including the Capital Securities of Subsidiaries) for at least fair market value (as determined by the Board of Directors of the Company) so long as the net book value of all assets sold or otherwise disposed of in any Fiscal Year does not exceed $1,000,000 and (vi) the sale of the assets used in the Infrastructure Software business unit of Bankruptcy Services (which consist mainly of internally developed software); provided that the Net Cash Proceeds of such sale do not exceed $2,000,000.

11.5Modification of Organizational Documents.  Not permit the charter, by-laws or other organizational documents of any Loan Party to be amended or modified in any way which could reasonably be expected to materially adversely affect the interests of the Lenders.

11.6Transactions with Affiliates.  Except as set forth on Schedule 11.6, not, and not permit any other Loan Party to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of its other Affiliates (other than a Borrower) which is on terms which are less favorable than are obtainable from any Person which is not one of its Affiliates; provided that the foregoing shall not prohibit (a) reasonable compensation, expense reimbursement and indemnities provided to officers and directors in the ordinary course of business, (b) reasonable stock option plans, (c) reasonable employment contracts in the ordinary course of business, (d) stock repurchases from employees and officers to the extent permitted pursuant to by Section 11.3 and (e) advances to officers and employees permitted pursuant to Section 11.10.

11.7Unconditional Purchase Obligations.  Not, and not permit any other Loan Party to, enter into or be a party to any contract for the purchase of materials, supplies or other property or services if such contract requires that payment be made by it regardless of whether delivery is ever made of such materials, supplies or other property or services.

11.8Inconsistent Agreements.  Not, and not permit any other Loan Party to, enter into any agreement containing any provision which would (a) be violated or breached by any borrowing by the Company hereunder or by the performance by any Loan Party of any of its Obligations hereunder or under any other Loan Document, (b) prohibit any Loan Party from granting to the Administrative Agent and the Lenders, a Lien on any of its assets or (c) create or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make other distributions to the Company or any other Subsidiary, or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or advances to any Loan Party or (iii) transfer any of its assets or properties to any Loan Party, other than (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or conditions imposed by any agreement relating to purchase money Debt, Capital Leases and other secured Debt permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Debt and (C) customary provisions in leases and other contracts restricting the assignment thereof.

11.9Business Activities; Issuance of Equity.  (a)  (i) Not, and not permit any other Borrower to, engage in any line of business other than the businesses engaged in on the date hereof and businesses reasonably related thereto and (ii) not permit any other Loan Party to engage in any business other than that directly incidental to being a holding company without any independent operations.

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(b)Not permit any Loan Party which is not a Borrower to directly or indirectly make, create, incur, assume or suffer to exist any Debt or any Investment, other than such Person’s Investment in its Subsidiaries in existence on the Closing Date.

(c)Not, and not permit any other Loan Party to, issue any Capital Securities of a Subsidiary of the Company other than any issuance by a Subsidiary to the Company or another Subsidiary in accordance with Section 11.3.

11.10Investments.  Not permit any Loan Party other than a Borrower to make or permit to exist any Investment and not, and not permit any other Loan Party to, make or permit to exist any Investment in any other Person, except the following:

(a)contributions by the Company to the capital of any Wholly-Owned Subsidiary, or by any Subsidiary to the capital of any other domestic Wholly-Owned Subsidiary, so long as the recipient of any such capital contribution has guaranteed the Obligations and such guaranty is secured by a pledge of all of its Capital Securities and substantially all of its real and personal property, in each case in accordance with Section 10.10;

(b)Investments constituting Debt permitted by Section 11.1;

(c)Contingent Liabilities constituting Debt permitted by Section 11.1 or Liens permitted by Section 11.2;

(d)Cash Equivalent Investments;

(e)subject to Section 10.11, bank deposits in the ordinary course of business;

(f)Investments in securities of Account Debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such account debtors;

(g)Investments listed on Schedule 11.10 as of the Closing Date;

(h)Permitted Acquisitions;

(i)earnest money required in connection with Permitted Acquisitions;

(j)Investments consisting of notes received in connection with an Asset Disposition which have been pledged to the Administrative Agent as Collateral for the Obligations in an amount not to exceed 20% of the sales price of such Asset Disposition; and

(k)any Borrower may capitalize or forgive any Debt owed to it by another Loan Party in the ordinary course of business;

(l)loans to officers and employees of the Borrowers not to exceed $100,000 outstanding at any time;

(m)Investments consisting of guaranties of lease obligations of a Loan Party; and

(n)other Investments in an aggregate amount not to exceed $500,000 at any one time outstanding.

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provided that any Investment which when made complies with the requirements of the definition of the term “Cash Equivalent Investment” may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements.

11.11Restriction of Amendments to Certain Documents.  Not amend or otherwise modify in any manner materially adverse to the Lenders, or waive any material rights under, any Related Agreements or any Major Contract.

11.12Fiscal Year.  Not change its Fiscal Year.

11.13Financial Covenants.

11.13.1EBITDA.  Not permit EBITDA as of the last day of any Computation Period to be less than the applicable amount set forth below for such Computation Period:

Computation Period Ending	EBITDA
December 31, 2003	$	46,000,000
March 31, 2004	$	46,000,000
June 30, 2004	$	44,000,000
September 30, 2004	$	39,000,000
December 31, 2004	$	38,000,000
March 31, 2005	$	40,000,000
June 30, 2005	$	41,000,000
September 30, 2005	$	43,000,000
December 31, 2005	$	45,000,000
March 31, 2006	$	47,000,000
June 30, 2006	$	49,000,000
September 30, 2006	$	52,000,000
December 31, 2006	$	52,000,000

11.13.2Interest Charge Coverage Ratio.  Not permit the Interest Charge Coverage Ratio as of the last day of any period to be less than the applicable ratio set forth below for such period:

Period	Interest Charge Coverage Ratio
Three (3) month period ending March 31, 2004	3.00 to 1.00
Six (6) month period ending June 30, 2004	3.00 to 1.00
Nine (9) month period ending September 30, 2004	2.85 to 1.00
Computation Period ending December 31, 2004	2.85 to 1.00
Computation Period ending March 31, 2005	3.25 to 1.00
Computation Period ending June 30, 2005	3.50 to 1.00
Computation Period ending September 30, 2005	3.75 to 1.00
Computation Period ending December 31, 2005	4.00 to 1.00
Computation Period ending March 31, 2006	4.00 to 1.00
Computation Period ending June 30, 2006	4.00 to 1.00
Computation Period ending September 30, 2006	4.00 to 1.00
Computation Period ending December 31, 2006	4.00 to 1.00

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11.13.3Senior Debt to EBITDA Ratio.  Not permit the Senior Debt to EBITDA Ratio as of the last day of any Computation Period to exceed the applicable ratio set forth below for such Computation Period:

Computation Period Ending	Senior Debt to EBITDA Ratio
March 31, 2004	1.50 to 1.00
June 30, 2004	1.40 to 1.00
September 30, 2004	1.40 to 1.00
December 31, 2004	1.30 to 1.00
March 31, 2005	1.10 to 1.00
June 30, 2005	1.00 to 1.00
September 30, 2005	0.90 to 1.00
December 31, 2005	0.75 to 1.00
March 31, 2006	0.65 to 1.00
June 30, 2006	0.50 to 1.00
September 30, 2006	0.50 to 1.00
December 31, 2006	0.50 to 1.00

provided, however, that if the Term B Loan has been Finally Paid, the Company will not permit the Senior Debt to EBITDA Ratio as of the last day of each Computation Period (beginning with the Computation Period Ending March 31, 2005) to exceed 1.00 to 1.00.

11.13.4Capital Expenditures.  Not permit the aggregate amount of all Capital Expenditures made by the Loan Parties in Fiscal Year 2004 to exceed $13,000,000, in Fiscal Year 2005 to exceed $14,000,000 and in Fiscal Year 2006 to exceed $15,000,000.  If the Loan Parties do not utilize the entire amount of Capital Expenditures permitted in any Fiscal Year, the Loan Parties may carry forward, to the immediately succeeding Fiscal Year only, 50% of such unutilized amount (with Capital Expenditures made by the Loan Parties in such succeeding Fiscal Year applied last to such unutilized amount); provided that, Capital Expenditures shall not include (A) Permitted Acquisitions or (B) expenditures to the extent that such expenditures (i) are made as a tenant in leasehold improvements to the extent reimbursable by the landlord, (ii) the purchase price paid in connection with a Permitted Acquisition to the extent such purchase price would otherwise constitute a Capital Expenditure or (iii) are made with the proceeds of a Disposition of assets which are used to replace such disposed asset with another asset performing the same or a similar function within 180 days of such Disposition.

11.14Cancellation of Debt.  Not, and not permit any other Loan Party to, cancel any claim or debt owing to it (other than claims or debts owed by other Loan Parties permitted pursuant to Section 11.10), except for reasonable consideration or in the ordinary course of business, and except for the cancellation of debts or claims not to exceed $250,000 in the aggregate in any Fiscal Year.

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SECTION 12EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

The obligation of each Lender to make its Loans and of the Issuing Lender to issue Letters of Credit is subject to the following conditions precedent:

12.1Initial Credit Extension.  The obligation of the Lenders to make the initial Loans and the obligation of the Issuing Lender to issue its initial Letter of Credit (whichever first occurs) is, in addition to the conditions precedent specified in Section 12.2, subject to the conditions precedent that (a) all Debt to be Repaid has been (or concurrently with the initial borrowing will be) paid in full, and that all agreements and instruments governing the Debt to be Repaid and that all Liens securing such Debt to be Repaid have been (or concurrently with the initial borrowing will be) terminated or released pursuant to a payoff letter and (b) the Administrative Agent shall have received (i) evidence, reasonably satisfactory to the Administrative Agent, that the Company has completed, or concurrently with the initial credit extension hereunder will complete, the Related Transactions in accordance with the terms of the Related Agreements (without any material amendment thereto or waiver thereunder unless consented to by the Lenders); (ii) evidence reasonably satisfactory to it that (w) the sum of (A) the aggregate purchase price under the Related Transaction, plus (B) the amount required to refinance all existing Debt of the Loan Parties shall not exceed $115,000,000, (x) the aggregate fees and expenses payable by the Company with respect to the Related Transactions would not exceed $5,500,000, (y) after giving effect to the funding of the Term Loans and Revolving Loans on the Closing Date and the payment of all costs and expenses, (A) the Senior Debt to EBITDA Ratio would be equal to or less than 1.45 to 1.00 and (B) the Total Debt to EBITDA Ratio would be equal to or less than 2.10 to 1.00 and (z) there has been no Material Adverse Effect with respect to the Company since December 31, 2002 and with respect to P-D since September 30, 2003; and (iii) all of the following, each duly executed and dated the Closing Date (or such earlier date as shall be satisfactory to the Administrative Agent), in form and substance satisfactory to the Administrative Agent (and the date on which all such conditions precedent have been satisfied or waived in writing by the Administrative Agent and the Lenders is called the “Closing Date”):

12.1.1Notes.  A Revolving Note, Term A Loan Note and/or Term B Loan Note for each Lender.

12.1.2Authorization Documents.  For each Loan Party, such Person’s (a) charter (or similar formation document), certified by the appropriate governmental authority; (b) good standing certificates in its state of incorporation (or formation) and in each other state requested by the Administrative Agent; (c) bylaws (or similar governing document); (d) resolutions of its board of directors (or similar governing body) approving and authorizing such Person’s execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; and (e) signature and incumbency certificates of its officers executing any of the Loan Documents (it being understood that the Administrative Agent and each Lender may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein), all certified by its secretary or an assistant secretary (or similar officer) as being in full force and effect without modification.

12.1.3Related Transactions.  Evidence that the Related Transaction shall have been or shall concurrently be consummated in accordance with applicable law and on satisfactory terms.  The Related Agreements shall have satisfactory terms and conditions, and no material provision of such documentation shall have been waived, amended, supplemented or otherwise modified in any material respect unless consented to by the Administrative Agent.  The Loan Parties shall have no debt other than the Obligations under this Agreement and debt approved by the Administrative Agent.  The capitalization and structure of the Loan Parties after the Acquisition shall be reasonably satisfactory in all respects.  Copies of the Related Agreements certified by the secretary or assistant secretary (or similar officer) of the Company as being true, accurate and complete.

12.1.4Consents, etc.  Certified copies of all documents evidencing any necessary corporate or partnership action, consents and governmental approvals (if any) required for the execution, delivery and performance by the Loan Parties of the documents referred to in this Section 12.

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12.1.5Letter of Direction.  A letter of direction containing funds flow information with respect to the proceeds of the Loans on the Closing Date.

12.1.6Guaranty and Collateral Agreement.  A counterpart of the Guaranty and Collateral Agreement executed by each Loan Party, together with all instruments, transfer powers and other items required to be delivered in connection therewith.

12.1.7Perfection Certificate.  A Perfection Certificate completed and executed by each Loan Party.

12.1.8[Intentionally Omitted.]

12.1.9Opinions of Counsel.  Opinions of counsel for each Loan Party, including local counsel reasonably requested by the Administrative Agent, and all other opinions issued pursuant to the Related Transactions.

12.1.10Insurance.  Evidence of the existence of insurance required to be maintained pursuant to Section 10.3(b), together with evidence that the Administrative Agent has been named as a lender’s loss payee and an additional insured on all related insurance policies, as appropriate.

12.1.11Payment of Fees.  Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with all Attorney Costs of the Administrative Agent to the extent invoiced prior to the Closing Date, plus such additional amounts of Attorney Costs as shall constitute the Administrative Agent’s reasonable estimate of Attorney Costs incurred or to be incurred by the Administrative Agent through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between the Company and the Administrative Agent).

12.1.12Solvency Certificate.  A Solvency Certificate executed by a Senior Officer of the Company.

12.1.13Financial Statements.  Copies of (a) the audited consolidated financial statements for the Company and its Subsidiaries for Fiscal Years 2000, 2001 and 2002, (b) the audited consolidated financial statements for P-D and its subsidiaries for the fiscal years ending September 30, 2002 and 2003, (c) unaudited interim consolidated financial statements for the Company and its Subsidiaries for each fiscal month and quarterly period ended after December 31, 2002, (d) unaudited interim consolidated financial statements for P-D and its subsidiaries for each fiscal month and quarterly period ended after September 30, 2003 and (e) an accounting due diligence report prepared by CBIZ using agreed-upon procedures for P-D for the fiscal years ending September 30, 2002 and 2003.

12.1.14Pro Forma and Projected Financial Statements.  (a) A consolidated pro forma balance sheet of the Company as at the Closing Date, adjusted to give effect to the consummation of the Related Transactions and the financings contemplated hereby as if such transactions had occurred on such date, consistent in all material respects with the sources and uses of cash as previously described to the Lenders and the forecasts previously provided to the Lenders.

(b)Projected balance sheets, statements of income, changes in stockholders’ equity and cash flows prepared by the Company after giving effect to the consummation of the Related Transactions and the financings contemplated hereby and the use of the proceeds therefrom on a quarterly basis for Fiscal Year 2004 and on an annual basis for Fiscal Year 2005 and 2006.

12.1.15Search Results; Lien Terminations.  Certified copies of Uniform Commercial Code search reports dated a date reasonably near to the Closing Date, listing all effective financing statements which name any Loan Party (under their present names and any previous names) as debtors, together with (a) copies of such financing statements, (b) payoff letters evidencing repayment in full of all Debt to be Repaid, the

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termination of all agreements relating thereto and the release of all Liens granted in connection therewith, with Uniform Commercial Code or other appropriate termination statements and documents effective to evidence the foregoing (other than Liens permitted by Section 11.2) and (c) such other Uniform Commercial Code termination statements as the Administrative Agent may reasonably request.

12.1.16Filings, Registrations and Recordings.  The Administrative Agent shall have received each document (including Uniform Commercial Code financing statements) required by the Collateral Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the collateral described therein, prior to any other Liens (subject only to Liens permitted pursuant to Section 11.2), in proper form for filing, registration or recording.

12.1.17Closing Certificate, Consents and Permits.  A certificate executed by an officer of the Company on behalf of the Company certifying (a) the matters set forth in Section 12.2.1 as of the Closing Date and (b) the occurrence of the closing of the Related Transactions and that such closing has been consummated in accordance with the terms of the Related Agreements without waiver of any material condition thereof; together with evidence that (i) all necessary governmental, regulatory, creditor, shareholder, partner and other material consents, approvals and exemptions required to be obtained by the Company in connection with the Related Transactions have been duly obtained and are in full force and effect and (ii) all material permits necessary for the operation of any business(es) acquired in connection with the Related Transactions have been obtained.

12.1.18Other.  Such other documents as the Administrative Agent or any Lender may reasonably request.

12.2Conditions.  The obligation (a) of each Lender to make each Loan and (b) of the Issuing Lender to issue each Letter of Credit is subject to the following further conditions precedent that:

12.2.1Compliance with Warranties, No Default, etc.  Both before and after giving effect to any borrowing and the issuance of any Letter of Credit, the following statements shall be true and correct:

(a)the representations and warranties of each Loan Party set forth in this Agreement and the other Loan Documents shall be true and correct in all respects with the same effect as if then made (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); and

(b)no Event of Default or Unmatured Event of Default shall have then occurred and be continuing.

12.2.2Confirmatory Certificate.  If requested by the Administrative Agent or any Lender, the Administrative Agent shall have received (in sufficient counterparts to provide one to each Lender) a certificate dated the date of such requested Loan or Letter of Credit and signed by a duly authorized representative of the Company as to the matters set out in Section 12.2.1 (it being understood that each request by the Company for the making of a Loan or the issuance of a Letter of Credit shall be deemed to constitute a representation and warranty by the Company that the conditions precedent set forth in Section 12.2.1 will be satisfied at the time of the making of such Loan or the issuance of such Letter of Credit), together with such other documents as the Administrative Agent or any Lender may reasonably request in support thereof.

SECTION 13EVENTS OF DEFAULT AND THEIR EFFECT.

13.1Events of Default.  Each of the following shall constitute an Event of Default under this Agreement:

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13.1.1Non-Payment of the Loans, etc.  Default in the payment when due of the principal of any Loan; or default, and continuance thereof for three (3) Business Days, in the payment when due of any interest, fee, reimbursement obligation with respect to any Letter of Credit or other amount payable by the Company hereunder or under any other Loan Document.

13.1.2Non-Payment of Other Debt.  Any default shall occur under the terms applicable to any Debt of any Loan Party in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $500,000 beyond any period of grace provided with respect thereto and such default shall (a) consist of the failure to pay such Debt when due, whether by acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable (or require any Loan Party to purchase or redeem such Debt or post cash collateral in respect thereof) prior to its expressed maturity.

13.1.3Bankruptcy, Insolvency, etc.  Any Loan Party becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; or any Loan Party applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for such Loan Party or any property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for any Loan Party or for a substantial part of the property of any thereof and is not discharged within sixty (60) days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect of any Loan Party, and if such case or proceeding is not commenced by such Loan Party, it is consented to or acquiesced in by such Loan Party, or remains for sixty (60) days undismissed; or any Loan Party takes any action to authorize, or in furtherance of, any of the foregoing.

13.1.4Non-Compliance with Loan Documents.  (a) Failure by any Loan Party to comply with or to perform any covenant set forth in Section 10.1.5, 10.3(b), 10.5 or 10.9 or Section 11; or (b) failure by any Loan Party to comply with or to perform any other provision of this Agreement or any other Loan Document (and not constituting an Event of Default under any other provision of this Section 13) and continuance of such failure described in this clause (b) for thirty (30) days.

13.1.5Representations; Warranties.  Any representation or warranty made by any Loan Party herein or any other Loan Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing (other than projections and budgets) furnished by any Loan Party to the Administrative Agent or any Lender in connection herewith is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified.

13.1.6Pension Plans.  (a) Any Person institutes steps to terminate a Pension Plan if as a result of such termination the Company or any member of the Controlled Group could be required to make a contribution to such Pension Plan, or could incur a liability or obligation to such Pension Plan, in excess of $250,000; (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; (c) the Unfunded Liability exceeds twenty percent of the Total Plan Liability, or (d) there shall occur any withdrawal or partial withdrawal from a Multiemployer Pension Plan and the withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans as a result of such withdrawal (including any outstanding withdrawal liability that the Company or any member of the Controlled Group have incurred on the date of such withdrawal) exceeds $250,000.

13.1.7Judgments.  Final judgments which (exclusive of amounts covered by valid and collectible insurance other than self insurance in respect thereof by a Person that has acknowledged its obligation to make such payment) exceed an aggregate of $500,000 shall be rendered against any Loan Party and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal within forty-five (45) days after entry or filing of such judgments.

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13.1.8Invalidity of Collateral Documents, etc.  Any material Collateral Document shall cease to be in full force and effect; or any Loan Party (or any Person by, through or on behalf of any Loan Party) shall contest in any manner the validity, binding nature or enforceability of any Collateral Document.

13.1.9Invalidity of Subordination Provisions, etc.  Any subordination provision in any document or instrument governing Subordinated Debt, or any subordination provision in any guaranty by any Subsidiary of any Subordinated Debt, shall cease to be in full force and effect, or any Loan Party or any other Person (including the holder of any applicable Subordinated Debt, unless such Person is also a holder of Obligations which constitute Senior Debt) shall contest in any manner the validity, binding nature or enforceability of any such provision.

13.1.10Change of Control.  A Change of Control shall occur.

13.1.11Major Contracts.  (a) Any Person shall terminate, discontinue or revoke any of its material obligations under any Major Contract other than at the scheduled end of the term of such Major Contract; (b) any Major Contract is terminated by any Person other than at the scheduled end of the term of such Major Contract; or (c) any breach or violation of any term or provision of any Major Contract shall occur which could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect;

13.2Effect of Event of Default.  If any Event of Default described in Section 13.1.3 shall occur in respect of the Company, the Commitments shall immediately terminate and the Loans and all other Obligations hereunder shall become immediately due and payable and the Borrowers shall become immediately and jointly and severally obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, (a) the Administrative Agent may (and, upon the written request of the Required Lenders shall) declare the Commitments to be terminated in whole or in part and/or declare all or any part of the Loans and all other Obligations hereunder to be due and payable and/or demand that the Borrowers immediately Cash Collateralize all or any Letters of Credit, whereupon the Commitments shall immediately terminate (or be reduced, as applicable) and/or the Loans and other Obligations hereunder shall become immediately due and payable (in whole or in part, as applicable) and/or the Borrowers shall become immediately and jointly and severally obligated to Cash Collateralize the Letters of Credit (all or any, as applicable), and (b) the Required Term B Lenders may declare all or any part of the Term B Loans and all other Obligations hereunder relating thereto to be due and payable, all without presentment, demand, protest or notice of any kind.  The Administrative Agent or the Required Term B Lenders shall promptly advise the Company of any such declaration, but failure to do so shall not impair the effect of such declaration.  Any cash collateral delivered hereunder in connection with any Letter of Credit shall be held by the Administrative Agent (without liability for interest thereon) and applied to the Obligations arising in connection with any drawing under a Letter of Credit.  After the expiration or termination of all Letters of Credit, such cash collateral shall be applied by the Administrative Agent to any remaining Obligations hereunder and any excess shall be delivered to the Company or as a court of competent jurisdiction may elect.

Notwithstanding any other provisions of this Agreement, after the Commitments shall have terminated and the Loans (with accrued interest thereon) and all other Obligations hereunder and under the Loan Documents (including without limitation the maximum amount of all contingent liabilities under Letters of Credit) shall have become due and payable, all amounts collected or received by the Administrative Agent or any Lender on account of amounts outstanding under any of the Loan Documents or in respect of the Collateral shall be paid over or delivered as follows:

FIRST, to the payment of all fees, costs, expenses and indemnities of the Administrative Agent (in its capacity as such), including Attorney Costs, and any other Obligations owing to the Agent in respect of sums advanced by the Administrative Agent to preserve the Collateral or to preserve its security interest in the Collateral, until paid in full;

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SECOND, to the payment of all fees, costs, expenses and indemnities (including Attorney Costs) of the Lenders, pro-rata, until paid in full;

THIRD, to the payment of all of the Obligations (other than Term B Loans, Bank Product Obligations and Hedging Obligations) consisting of accrued and unpaid interest owing to any Lender, pro-rata, until paid in full;

FOURTH, to the payment of all of the Obligations (other than Term B Loans, Bank Product Obligations and Hedging Obligations) consisting of principal owing to any Lender, pro-rata, until paid in full;

FIFTH, to the payment of the Administrative Agent an amount equal to 110% of all Obligations in respect of outstanding Letters of Credit to be held as cash collateral in respect of such obligations;

SIXTH, to the payment of all of the Obligations regarding Term B Loans consisting of accrued and unpaid interest owing to any such Lender, pro-rata, until paid in full;

SEVENTH, to the payment of all of the Obligations regarding Term B Loans, consisting of principal owing to any such Lender, pro-rata, until paid in full;

EIGHTH, to the payment of all Bank Products Obligations and Hedging Obligations owing to any Lender or its Affiliates, pro-rata, until paid in full;

NINTH, to the payment of all other Obligations owing to each Lender, pro-rata, until paid in full; and

TENTH, to the payment of any remaining proceeds, if any, to whomever may be lawfully entitled to receive such amounts.

SECTION 14THE AGENT.

14.1Appointment and Authorization.  Each Lender hereby irrevocably (subject to Section 14.10) appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Administrative Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.  Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in other Loan Documents with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

14.2Issuing Lender.  The Issuing Lender shall act on behalf of the Lenders (according to their Pro Rata Shares) with respect to any Letters of Credit issued by it and the documents associated therewith.  The Issuing Lender shall have all of the benefits and immunities (a) provided to the Administrative Agent in this Section 14 with respect to any acts taken or omissions suffered by the Issuing Lender in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Administrative Agent”, as used in this Section 14,

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included the Issuing Lender with respect to such acts or omissions and (b) as additionally provided in this Agreement with respect to the Issuing Lender.

14.3Delegation of Duties.  The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

14.4Exculpation of Administrative Agent.  None of the Administrative Agent nor any of its directors, officers, employees or agents shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except to the extent resulting from its own gross negligence or willful misconduct in connection with its duties expressly set forth herein as determined by a final, nonappealable judgment by a court of competent jurisdiction), or (b) be responsible in any manner to any Lender or Participant for any recital, statement, representation or warranty made by any Loan Party or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (or the creation, perfection or priority of any Lien or security interest therein), or for any failure of the Borrowers or any other party to any Loan Document to perform their Obligations hereunder or thereunder.  The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Company or any of the Company’s Subsidiaries or Affiliates.

14.5Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, electronic mail message, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or all of the Lenders or any affected Lender if such action is required to be consented to by all of Lenders or any affected Lender pursuant to the terms of Section 16.1) as it deems appropriate and, if it so requests, confirmation from the Lenders of their obligation to indemnify the Administrative Agent against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon each Lender.  For purposes of determining compliance with the conditions specified in Section 12, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

14.6Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Company referring to this Agreement, describing such Event of Default or Unmatured Event of Default and stating that such notice is a “notice of default”.  The Administrative Agent will notify the Lenders of its receipt of any such

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notice.  The Administrative Agent shall take such action with respect to such Event of Default or Unmatured Event of Default as may be requested by the Required Lenders in accordance with Section 13; provided that unless and until the Administrative Agent has received any such request, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable or in the best interest of the Lenders so long as it is not in conflict with any express provision of this Agreement or any other Loan Document.

14.7Credit Decision.  Each Lender acknowledges that the Administrative Agent has not made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent and acceptance of any assignment or review of the affairs of the Loan Parties, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender as to any matter, including whether the Administrative Agent has disclosed material information in its possession.  Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder.  Each Lender also represents that it will, independently and without reliance upon the Administrative Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers.  Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Administrative Agent, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial or other condition or creditworthiness of the Borrowers which may come into the possession of the Administrative Agent.

14.8Indemnification.  Whether or not the transactions contemplated hereby are consummated, each Lender shall indemnify upon demand the Administrative Agent and its directors, officers, employees and agents (to the extent not reimbursed by or on behalf of the Borrowers and without limiting the obligation of the Borrowers to do so), according to its applicable Pro Rata Share, from and against any and all Indemnified Liabilities (as hereinafter defined); provided that no Lender shall be liable for any payment to any such Person of any portion of the Indemnified Liabilities to the extent determined by a final, nonappealable judgment by a court of competent jurisdiction to have resulted from the applicable Person’s own gross negligence or willful misconduct.  No action taken in accordance with the directions of the Required Lenders (or all of the Lenders or any affected Lender if such action is required to be consented to by all of Lenders or any affected Lender pursuant to the terms of Section 16.1) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section.  Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs and Taxes) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrowers.  The undertaking in this Section shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit, any foreclosure under, or modification, release or discharge of, any or all of the Collateral Documents, termination of this Agreement and the resignation or replacement of the Administrative Agent.

14.9Administrative Agent in Individual Capacity.  LaSalle and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Loan Parties and their Affiliates as though LaSalle were not the Administrative Agent hereunder and without notice to or consent of any Lender.  Each Lender acknowledges that, pursuant to such activities, LaSalle or its Affiliates may receive

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information regarding the Borrowers or their Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrowers or such Affiliates) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them.  With respect to their Loans (if any),  LaSalle and its Affiliates shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though LaSalle were not the Administrative Agent, and the terms “Lender” and “Lenders” include LaSalle and its Affiliates, to the extent applicable, in their individual capacities.

14.10Successor Administrative Agent.  The Administrative Agent may resign as Administrative Agent upon thirty (30) days’ notice to the Lenders.  If the Administrative Agent resigns under this Agreement, the Required Lenders shall, with (so long as no Event of Default exists) the consent of the Company (which shall not be unreasonably withheld or delayed), appoint from among the Lenders a successor agent for the Lenders.  If no successor agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Company, a successor agent from among the Lenders.  Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor agent, and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 14 and Sections 16.5 and 16.16 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.  If no successor agent has accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

14.11Collateral Matters.  The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, (a) to release any Lien granted to or held by the Administrative Agent under any Collateral Document (i) upon termination of the Commitments and payment in full of all Loans and all other obligations of the Borrowers hereunder and the expiration or termination of all Letters of Credit; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any Disposition permitted hereunder; or (iii) subject to Section 16.1, if approved, authorized or ratified in writing by the Required Lenders; or (b) to subordinate its interest in any Collateral to any holder of a Lien on such collateral which is permitted by Section 11.2(d)(i) or (d)(iii) (it being understood that the Administrative Agent may conclusively rely on a certificate from the Company in determining whether the Debt secured by any such Lien is permitted by Section 11.1(b)).  Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release, or subordinate its interest in, particular types or items of Collateral pursuant to this Section 14.8.  Each Lender hereby authorizes the Administrative Agent to give blockage notices in connection with any Subordinated Debt at the direction of Required Lenders and agrees that it will not act unilaterally to deliver such notices.

14.12Administrative Agent May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders

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and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 5, 16.5 and 16.16) allowed in such judicial proceedings; and

(b)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 5, 16.5 and 16.16.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

14.13Other Agents; Arrangers and Managers.  None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “syndication agent,” “documentation agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger”, if any, shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such.  Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

SECTION 15SUBORDINATION OF TERM LOAN B.

15.1Subordination of Subordinated Indebtedness to Senior Indebtedness.  Each Borrower covenants and agrees, and each Subordinated Lender by its acceptance of a Note evidencing a Term B Loan (whether upon original issue or upon transfer or assignment) likewise covenants and agrees, notwithstanding anything to the contrary contained herein or in any other Loan Documents, that the payment of any and all of the Subordinated Indebtedness shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the Final Payment of all Senior Indebtedness.  Each holder of Senior Indebtedness, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Indebtedness in reliance upon the provisions contained in this Section 15.

15.2Subordination of Liens.  Each Subordinated Lender hereby covenants and agrees that any Liens and rights of any kind such Subordinated Lender may now have or hereafter acquire (or be deemed to now have or hereafter acquire) whether pursuant to the Security Documents or otherwise against any Borrower or any Loan Party and/or any Company Property, if any, shall be subordinate and subject to the Liens and rights against any Borrower, any Loan Party and/or any Company Property of the Senior Lenders arising from or out of the Senior Indebtedness, regardless of the order, time or manner in which any Liens attach to or are perfected in any Company Property.

15.3Permitted Payments.

(a)Notwithstanding the terms of the Loan Documents, each Borrower hereby agrees that it shall not make (and will not permit any other Loan Party to make), and each Subordinated Lender hereby agrees that it will not accept, any payment or distribution with respect to the Subordinated Indebtedness including any payment or distribution received through the exercise of any right of setoff, counterclaim or crossclaim, until the Senior Indebtedness is Finally Paid; provided that any Borrower may make to the Subordinated Lenders

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and the Subordinated Lenders may accept (1) subject to the limitation set forth in clause (i) below, payments of principal of, interest on and other amounts payable with respect thereto from the proceeds of an issuance of Capital Securities and Subordinated Debt permitted by Section 11.1(g) and (2) subject to the following limitations, any scheduled payments in respect of interest on, and payments in respect of reasonable fees of professionals and expenses payable with respect to, the Subordinated Indebtedness, all on a non-accelerated basis and in accordance with the terms of the Loan Documents:

(i)If a Senior Payment Default has occurred, no payment or distribution shall be made by any Borrower (or any other Loan Party) or accepted by any Subordinated Lender on the Subordinated Indebtedness until the earlier to occur of (x) the date on which all Senior Payment Defaults have been cured or waived or (y) Final Payment of all the Senior Indebtedness.

(ii)If a Senior Covenant Default shall have occurred, no payment or distribution on the Subordinated Indebtedness shall be made by any Borrower (or any other Loan Party) or accepted by any Subordinated Lender on the Subordinated Indebtedness for a period (a “Blockage Period”) of time commencing upon delivery by the Senior Agent to any Borrower and Subordinated Lenders of written notice stating that a Senior Covenant Default exists or would be created by the making of such payment (the “Blockage Notice”) and continuing until the earlier to occur of (A) 90 days from the date of delivery of the Blockage Notice, or (B) the date on which all Senior Covenant Defaults have been cured or waived.

(iii)Upon the cure or waiver of any Senior Payment Default or the expiration of any Blockage Period, the Borrowers may make, and the Subordinated Lenders may receive, any payments of the Subordinated Indebtedness to the extent, if any, such payment would be permitted under this Section 15.3.

(b)No Senior Payment Default or Senior Covenant Default shall be deemed to have been waived for purposes of this Section 15.3 unless and until a Borrower shall have received a written waiver in accordance with this Agreement from the Senior Agent or the Senior Lenders.

(c)If any Subordinated Lender receives payment pursuant to clause (a) of this Section _15.3, such payment shall be deemed to constitute a representation by Company that no Event of Default exists or would result therefrom and that such payment is otherwise permitted by such clause (a).

(d)Notwithstanding any other provision of this Agreement or the other Loan Documents to the contrary, no more than one (1) blockage period under Section 15.3(a)(ii) may occur during the term of this Agreement.

(e)The failure of the Borrowers to make any payment with respect to the Subordinated Indebtedness by reason of the operation of this Section 15.3 shall not be construed as preventing the occurrence of an Event of Default under the Loan Documents.

(f)The Company shall not be prohibited from making, and the Subordinated Lenders shall not be prohibited from receiving, any payments in respect of the Subordinated Indebtedness in kind.

(g)The provisions of this Section 15.3 shall not be applicable to the extent that the provisions of Section 15.5 are applicable.

15.4Forbearance of Legal Remedies.

(a)Until the Senior Indebtedness is Finally Paid, the Subordinated Lenders shall not, without the prior written consent of the Senior Agent, exercise any Subordinated Lender Remedies, until the earliest to occur of the following:

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(i)acceleration of the Senior Indebtedness;

(ii)the passage of 60 days from the delivery to the Senior Agent of written notice from the Subordinated Lenders that a default under the Loan Documents has occurred and such default shall not have been cured or waived within such period;

(iii)the commencement or initiation of any Proceeding by a Person other than a Subordinated Lender or any Person on behalf of a Subordinated Lender.

(b)Notwithstanding anything contained herein to the contrary or any rights or remedies available to the Subordinated Lenders under any of the Loan Documents, applicable law or otherwise, prior to the time that the Senior Indebtedness has been Finally Paid, any payments, distributions or other proceeds obtained by any Subordinated Lender from the exercise of any Subordinated Lender Remedies shall in any event be held in trust by it for the benefit of the Senior Agent and the Senior Lenders and promptly paid or delivered to the Senior Agent for the benefit of the Senior Lenders in the form received.

15.5Dissolution, Liquidation, Reorganization or Bankruptcy.

(a)In the event of any Proceeding involving a Borrower:

(i)all Senior Indebtedness shall be Finally Paid before the Subordinated Lenders shall be entitled to receive any payment on account of any Subordinated Indebtedness (except (1) payment in the form of Restructure Securities, and (2) payments in respect of the Subordinated Indebtedness in kind); and

(ii)any payment or distribution of assets of such Person of any kind or character, whether in cash, property or securities, to which the Subordinated Lenders would be entitled except for these provisions, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the Senior Agent, to the extent necessary to make Final Payment of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness.  Each Subordinated Lender irrevocably authorizes, empowers and directs any debtor, debtor-in-possession, receiver, trustee or agent or other Person having authority, to pay or otherwise deliver all such payments or distributions to Senior Agent.

(b)Until the Senior Indebtedness has been Finally Paid, if a Proceeding shall occur and be continuing, the Subordinated Lenders shall file all claims they may have against a Borrower.  If the Subordinated Lenders fail to file such claims prior to ten (10) days before the expiration of time to do so, the Senior Agent may (but shall have no obligation to) file such claims in the Subordinated Lenders’ name on behalf of the Senior Lenders.

(c)Each Subordinated Lender shall, in connection with any such Proceeding, retain the right to vote and otherwise act in any such proceeding (including the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension).

(d)If any Subordinated Lender has or at any time acquires any Lien securing any Subordinated Indebtedness, such Subordinated Lender agrees not to (i) initiate any proceeding involving the marshalling of any of Company Property (whether in a Proceeding or otherwise) or (ii) assert any right it may have to “adequate protection” of its interest, if any, in such security in any Proceeding and agrees that it will not seek to have the automatic stay lifted with respect to such security, in each case without the prior written consent of the Senior Agent.

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15.6Obligation of Company Unconditional.  Nothing contained herein or in the Loan Documents is intended to or shall impair, as between the Borrowers and the Subordinated Lenders, the obligation of the Borrowers, which is absolute and unconditional, to pay to the Subordinated Lenders the Subordinated Indebtedness as and when the same shall become due and payable in accordance with its terms, or to affect the relative rights of the Subordinated Lenders and creditors of any Borrower other than the Senior Lenders.

15.7Subordination Rights Not Impaired by Acts or Omissions of any Borrower or Holders of Senior Indebtedness.  No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time or in any way be prejudiced or impaired by any failure to act on the part of the holders of any Senior Indebtedness or a Borrower or Loan Party, or by any noncompliance by a Borrower or Loan Party with the terms, provisions and covenants of this Section 15, regardless of any knowledge thereof that any such holder of Senior Indebtedness may have or be otherwise charged with, or any amendment or modification of or supplement to the Loan Documents (to the extent permitted pursuant to the terms hereof ) or any exercise or non-exercise of any right, power or remedy under or in respect of the Senior Indebtedness.

15.8Incorrect Payments.  If any Borrower or any Loan Party shall make or the Subordinated Lenders shall collect any payment on account of the principal of, premium or interest on or any other amounts due under the Subordinated Indebtedness in contravention of this Agreement, such payments shall be held in trust by the Subordinated Lenders and not commingled with any assets of any Subordinated Lender and shall be paid over and delivered to the Senior Agent, for the benefit of the Senior Lenders, promptly upon receipt thereof.

15.9Amendment of the Loan Documents and Loan Documents.

(a)Each Subordinated Lender agrees that it will not, without the prior written consent of the Senior Agent, agree to any amendment, modification or supplement to the Loan Documents the effect of which is to (i) increase the maximum principal amount of the Subordinated Indebtedness (except as may be due to the payment in kind of any obligations under the Loan Documents) or increase the rate of interest by more than 200 basis points (other than in connection with the imposition of default interest), increase the portion of the interest required to be paid in cash, or increase fees required to be paid with respect to the Subordinated Indebtedness, (ii) accelerate the dates upon which payments of principal or interest on the Subordinated Indebtedness are due, (iii) change or add any event of default or any covenant with respect to the Subordinated Indebtedness, if the resulting event of default or covenant would be more restrictive to any Borrower or any Loan Party, (iv) change any redemption or prepayment provisions of the Subordinated Indebtedness, (v) alter the subordination provisions with respect to the Subordinated Indebtedness, including subordinating the Subordinated Indebtedness to any other indebtedness, (vi) take any Liens in any assets of any Borrower or any Loan Party (other than Liens created pursuant to the Security Documents) or (vii) change or amend any other term of the Loan Documents if such change or amendment would result in a Senior Payment Default or Senior Covenant Default, increase the obligations of any Borrower or any Loan Party or confer additional material rights on any Subordinated Lender or any other holder of the Subordinated Indebtedness in a manner adverse to any Borrower, any Loan Party or the Senior Lenders.

(b)The Senior Indebtedness may at any time be amended, modified, restated, refinanced or waived without limitation and without notice to, or the consent of, the Subordinated Lenders; provided that the Senior Lenders shall not, without the prior written consent of holders of a majority of the outstanding principal amount of the Subordinated Indebtedness, agree to any amendment, modification or supplement to the Loan Documents the effect of which is to (i) increase the principal amount of the Senior Indebtedness in excess of $70,000,000, less the amount of any principal repayments and commitment reductions to the extent such payments and reductions cannot be reborrowed (specifically excluding any such repayments and commitment reductions in connection with a refinancing), (ii) shorten the amortization payments in respect of the Senior Indebtedness (other than in connection with exercise of remedies), or (iii) increase the interest rate margins by more than 200 basis points (other than in connection with the imposition of default interest).

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15.10Subrogation.  Subject to the Final Payment of all Senior Indebtedness, the Subordinated Lenders shall be subrogated to the rights of the Senior Lenders to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness to the extent that distributions otherwise payable to the Subordinated Lenders have been applied to the Senior Indebtedness, until all amounts payable under the Subordinated Indebtedness shall have been paid in full.  For purposes of such subrogation, no payments or distributions to the Senior Lenders of any cash, property or securities to which the Subordinated Lenders would be entitled except for the provisions of this Agreement, and no payment pursuant to the provisions of this Agreement to the Senior Lenders by the Subordinated Lenders shall, as among any Borrower and its creditors other than the Senior Lenders, be deemed to be a payment or distribution by such Borrower to or on account of the Senior Indebtedness.  If the Borrowers fail to make any payment on account of the Subordinated Indebtedness by reason of any provision contained herein, such failure shall, notwithstanding such provision contained herein, constitute an Event of Default with respect to the Subordinated Indebtedness if and to the extent such failure would otherwise constitute such an Event of Default in accordance with the terms of the Subordinated Indebtedness.

15.11Termination of Section.  This Section 15 shall continue and shall be irrevocable until the date all of the Senior Indebtedness has been Finally Paid or otherwise discharged and released in an express writing to such effect by the Senior Lenders.

15.12Reinstatement.  The obligations of the Subordinated Lenders under this Section 15 shall continue to be effective, or be reinstated, as the case may be, if at any time any payment in respect of any Senior Indebtedness is rescinded or must otherwise be restored or returned by any Senior Lender by reason of any bankruptcy, reorganization, arrangement, composition or similar proceeding or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower, any Loan Party or any substantial part of its property, or otherwise, all as though such payment had not been made.

15.13Defines Rights of Creditors.  The provisions of this Section 15 are solely for the purpose of defining the relative rights of the Senior Lenders and the Subordinated Lenders and shall not be deemed to create any rights or priorities in favor of any other Person, including any Borrower.

SECTION 16GENERAL.

16.1Waiver; Amendments.  No delay on the part of the Administrative Agent or any Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy.  Subject to Section 15.9, no amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by and consented to in writing by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that no waiver of an Unmatured Event of Default or Event of Default or amendment, modification, waiver or consent with respect to Section 11.13 will be effective with respect to the Term B Lenders without the written consent of the Required Term B Lenders.  Subject to Section 15.9, no amendment, modification, waiver or consent shall (a) extend or increase the Commitment of any Lender without the written consent of such Lender, (b) extend the date scheduled for payment of any principal (excluding mandatory prepayments) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected thereby, (c) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby (other than the waiver of the 2% increase in interest rate due to the occurrence of an Event of Default); or (d) release any party from its obligations under the Guaranty and Collateral Agreement or all or any substantial part of the Collateral granted under the Collateral Documents, change the definition of “Required Lenders”, any provision of this Section 16.1 or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case, the written consent of all Lenders.  No provision of Section 6.2.2 or Section 6.3 with respect to the timing or application of mandatory

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prepayments of the Loans shall be amended, modified or waived without the consent of Lenders having a majority of the aggregate Pro Rata Shares of the Term Loans affected thereby.  No provision of Section 14 or other provision of this Agreement affecting the Administrative Agent in its capacity as such shall be amended, modified or waived without the consent of the Administrative Agent.  No provision of this Agreement relating to the rights or duties of the Issuing Lender in its capacity as such shall be amended, modified or waived without the consent of the Issuing Lender.  No provision of this Agreement relating to the rights or duties of the Term B Loan Lenders in their capacity as such shall be amended, modified or waived without the consent of the majority of the Term B Loan Lenders, including, without limitation, the rights of Term B Loan Lenders pursuant to Section 6.2.

16.2Confirmations.  The Company and each holder of a Note agree from time to time, upon written request received by it from the other, to confirm to the other in writing (with a copy of each such confirmation to the Administrative Agent) the aggregate unpaid principal amount of the Loans then outstanding under such Note.

16.3Notices.  Except as otherwise provided in Sections 2.2.2 and 2.2.3, all notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at its address shown on Annex B or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose.  Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.  For purposes of Sections 2.2.2 and 2.2.3, the Administrative Agent shall be entitled to rely on telephonic instructions from any person that the Administrative Agent in good faith believes is an authorized officer or employee of the Company, and the Borrowers jointly and severally agree to hold the Administrative Agent and each other Lender harmless from any loss, cost or expense resulting from any such reliance.

16.4Computations.  Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with GAAP, consistently applied; provided that if the Company notifies the Administrative Agent that the Borrowers wish to amend any covenant in Section 11 (or any related definition) to eliminate or to take into account the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Lenders wish to amend Section 11 (or any related definition) for such purpose), then the Borrowers’ compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant (or related definition) is amended in a manner satisfactory to the Borrowers and the Required Lenders.

16.5Costs and Expenses.  The Borrowers agree, jointly and severally, to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent (including Attorney Costs) in connection with the preparation, execution, syndication, delivery and administration (including perfection and protection of any Collateral and the costs of Intralinks (or similar service), if applicable) of this Agreement, the other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including any amendment, supplement or waiver to any Loan Document), whether or not the transactions contemplated hereby or thereby shall be consummated, and all reasonable out-of-pocket costs and expenses (including Attorney Costs) incurred by the Administrative Agent and each Lender after an Event of Default in connection with the collection of the Obligations or the enforcement of this Agreement the other Loan Documents or any such other documents or during any workout, restructuring or negotiations in respect thereof.  In addition, the Borrowers agree, jointly and severally, to pay and to save the Administrative Agent and the Lenders harmless from all liability for, any fees of the Company’s auditors in connection with any reasonable exercise by the Administrative Agent and the Lenders of their rights pursuant to Section 10.2.

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All Obligations provided for in this Section 16.5 shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit and termination of this Agreement.

16.6Assignments; Participations.

16.6.1Assignments.  (a)  Any Lender may at any time assign to one or more Persons (any such Person, an “Assignee”) all or any portion of such Lender’s Loans and Commitments, with the prior written consent of the Administrative Agent, the Issuing Lender (for an assignment of the Revolving Loans and the Revolving Commitment) and, so long as no Event of Default exists, the Company (which consents shall not be unreasonably withheld or delayed and shall not be required for an assignment by a Lender to a Lender or an Affiliate of a Lender).  Except as the Administrative Agent and the Company may otherwise agree, any such assignment (i) shall be in a minimum aggregate amount equal to $5,000,000 or, if less, the remaining Commitment and Loans held by the assigning Lender and (ii) if such assignment is a partial assignment of a Lender’s Loans and Commitments, shall not cause there to be more than five (5) unaffiliated Lenders.  Each Borrower and the Administrative Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned to an Assignee until the Administrative Agent shall have received and accepted an effective assignment agreement in substantially the form of Exhibit D hereto (an “Assignment Agreement”) executed, delivered and fully completed by the applicable parties thereto and a processing fee of $3,500.  No assignment may be made to any Person if at the time of such assignment any Borrower would be obligated to pay any greater amount under Section 7.6 or 8 to the Assignee than such Borrower is then obligated to pay to the assigning Lender under such Sections (and if any assignment is made in violation of the foregoing, the Company will not be required to pay such greater amounts).  Any attempted assignment not made in accordance with this Section 16.6.1 shall be treated as the sale of a participation under Section 16.6.2.  Each Borrower shall be deemed to have granted its consent to any assignment requiring its consent hereunder unless the Company has expressly objected to such assignment within five (5) Business Days after notice thereof.

(b)From and after the date on which the conditions described above have been met, (i) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned to such Assignee pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (ii) the assigning Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, shall be released from its rights (other than its indemnification rights) and obligations hereunder.  Upon the request of the Assignee (and, as applicable, the assigning Lender) pursuant to an effective Assignment Agreement, the Borrowers shall execute and deliver to the Administrative Agent for delivery to the Assignee (and, as applicable, the assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata Share of the Revolving Commitment plus the principal amount of the Assignee’s Term Loans (and, as applicable, a Note in the principal amount of the Pro Rata Share of the Revolving Commitment retained by the assigning Lender plus the principal amount of the Term Loans retained by the assigning Lender).  Each such Note shall be dated the effective date of such assignment.  Upon receipt by the assigning Lender of such Note, the assigning Lender shall return to the Company any prior Note held by it.

(c)Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

16.6.2Participations.  Any Lender may at any time sell to one or more Persons participating interests in its Loans, Commitments or other interests hereunder (any such Person, a “Participant”); provided that in no event shall there be more than five (5) unaffiliated Participants at any time.  In the event of a sale by a Lender of a participating interest to a Participant, (a) such Lender’s obligations hereunder shall remain unchanged for all purposes, (b) the Borrowers and the Administrative Agent shall continue to deal solely and

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directly with such Lender in connection with such Lender’s rights and obligations hereunder, (c) all amounts payable by the Borrowers shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender and (d) for purposes of monitoring the number of Participants hereunder, such Lender shall promptly notify the Administrative Agent of such sale.  No Participant shall have any direct or indirect voting rights hereunder except with respect to any event described in Section 16.1 expressly requiring the unanimous vote of all Lenders or, as applicable, all affected Lenders.  Each Lender agrees to incorporate the requirements of the preceding sentence into each participation agreement which such Lender enters into with any Participant.  The Borrowers agree that if amounts outstanding under this Agreement are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and with respect to any Letter of Credit to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided that such right of set-off shall be subject to the obligation of each Participant to share with the Lenders, and the Lenders agree to share with each Participant, as provided in Section 7.5.  The Borrowers also agree that each Participant shall be entitled to the benefits of Section 7.6 or 8 as if it were a Lender (provided that on the date of the participation no Participant shall be entitled to any greater compensation pursuant to Section 7.6 or 8 than would have been paid to the participating Lender on such date if no participation had been sold and that each Participant complies with Section 7.6(d) as if it were an Assignee).

16.7Register.  The Administrative Agent shall maintain a copy of each Assignment Agreement delivered and accepted by it and register (the “Register”) for the recordation of names and addresses of the Lenders and the Commitment of each Lender from time to time and whether such Lender is the original Lender or the Assignee.  No assignment shall be effective unless and until the Assignment Agreement is accepted and registered in the Register.  All records of transfer of a Lender’s interest in the Register shall be conclusive, absent manifest error, as to the ownership of the interests in the Loans.  The Administrative Agent shall not incur any liability of any kind with respect to any Lender with respect to the maintenance of the Register.

16.8GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

16.9Confidentiality.  The Administrative Agent and each Lender agree to use commercially reasonable efforts (equivalent to the efforts the Administrative Agent or such Lender applies to maintain the confidentiality of its own confidential information) to maintain as confidential all information provided to them by any Loan Party and designated as confidential, except that the Administrative Agent and each Lender may disclose such information (a) to Persons employed or engaged by the Administrative Agent or such Lender in evaluating, approving, structuring or administering the Loans and the Commitments; (b) to any Assignee or Participant or potential Assignee or Participant that has agreed to comply with the covenant contained in this Section 16.9 (and any such Assignee or Participant or potential Assignee or Participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory authority or examiner, or any insurance industry association, or as reasonably believed by the Administrative Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of the Administrative Agent’s or such Lender’s counsel, is required by law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any litigation to which the Administrative Agent or such Lender is a party; (f) to any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender; (g) to any Affiliate of the Administrative Agent, the Issuing Lender or any other Lender who may provide Bank Products to the Loan Parties; or (h) that ceases to be confidential through no fault of the Administrative Agent or any Lender.  Notwithstanding the foregoing, the Borrowers hereby consent to the publication by the Administrative Agent or any Lender of a “tombstone” or similar advertising material relating to the financing transactions

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contemplated by this Agreement, and the Administrative Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

16.10Severability.  Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.  All obligations of the Borrowers and rights of the Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable law.

16.11Nature of Remedies.  All Obligations of the Borrowers and rights of the Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable law.  No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

16.12Entire Agreement.  This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof (except as relates to the fees described in Section 5.3) and any prior arrangements made with respect to the payment by the Company of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Administrative Agent or the Lenders.

16.13Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.  Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof.  Electronic records of executed Loan Documents maintained by the Lenders shall deemed to be originals.

16.14Successors and Assigns.  This Agreement shall be binding upon the Borrowers, the Lenders and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of the Borrowers, the Lenders and the Administrative Agent and the successors and assigns of the Lenders and the Administrative Agent.  No other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.  No Borrower may assign or transfer any of its rights or Obligations under this Agreement without the prior written consent of the Administrative Agent and each Lender.

16.15Captions.  Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement.

16.16Patriot Act Notification.  As required by federal law and LaSalle’s policies and practices, LaSalle may need to collect certain customer identification information and documentation in connection with opening or maintaining accounts, or establishing or continuing to provide services.

16.17INDEMNIFICATION BY THE BORROWERS.  IN CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT AND THE LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, EACH BORROWER HEREBY AGREES, JOINTLY AND SEVERALLY, TO INDEMNIFY, EXONERATE AND HOLD THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS OF THE

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ADMINISTRATIVE AGENT AND EACH LENDER (EACH A “LENDER PARTY”) FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS (COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF ASSETS (INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION.  IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, THE BORROWERS HEREBY AGREE TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 16.17 SHALL SURVIVE REPAYMENT OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF THE LETTERS OF CREDIT, ANY FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT.

16.18Nonliability of Lenders.  The relationship between the Borrowers on the one hand and the Lenders and the Administrative Agent on the other hand shall be solely that of borrower and lender.  Neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Loan Party arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Loan Parties, on the one hand, and the Administrative Agent and the Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor.  Neither the Administrative Agent nor any Lender undertakes any responsibility to any Loan Party to review or inform any Loan Party of any matter in connection with any phase of any Loan Party’s business or operations.  The Borrowers agree, on behalf of themselves and each other Loan Party, that neither the Administrative Agent nor any Lender shall have liability to any Loan Party (whether sounding in tort, contract or otherwise) for losses suffered by any Loan Party in connection with, arising out of, or in any way related to the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence, bad faith or willful misconduct of the party from which recovery is sought.  NO LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND EACH BORROWER ON BEHALF OF ITSELF AND EACH OTHER LOAN PARTY, HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION

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HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE).  Each Borrower acknowledges that it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party.  No joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Loan Parties and the Lenders

16.19FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.  EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.  EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

16.20WAIVER OF JURY TRIAL.  EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

[signature pages follow]

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The parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

EPIQ SYSTEMS, INC.
By:	/s/   Elizabeth M. Braham
Title:		Secretary
BANKRUPTCY SERVICES LLC
By:	/s/   Elizabeth M. Braham
Title:		Secretary
POORMAN-DOUGLAS CORPORATION
By:	/s/   Elizabeth M. Braham
Title:		Secretary
LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent, as Issuing Lender and as a Lender
By:	/s/   Keith Cable
Title:		Assistant Vice President
KEYBANK NATIONAL ASSOCIATION, as Syndication Agent and as a Lender
By:	/s/   Vijaya Kulkarni
Title:		Assistant Vice President

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ANNEX A

LENDERS AND PRO RATA SHARES

Lender	Revolving Commitment Amount		Pro Rata Share*/		Term A Loan Commitment		Pro Rata Share*/		Term B Loan Commitment		Pro Rata Share*/
LaSalle Bank National Association	$	12,500,000	50	%	$	22,500,000	50	%	$	30,000,000	100	%
KeyBank National Association	$	12,500,000	50	%	$	22,500,000	50	%	$	0	0	%
TOTALS	$	25,000,000	100	%	$	45,000,000	100	%	$	30,000,000	100	%

*/Carry out to nine decimal places.

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ANNEX B

ADDRESSES FOR NOTICES

EPIQ SYSTEMS, INC., BANKRUPTCY SERVICES LLC, POORMAN-DOUGLAS CORPORATION

c/o EPIQ Systems, Inc.

501 Kansas Avenue

Kansas City, Kansas 66104

Attention: Elizabeth Braham

Telephone: (913) 621-9983

Facsimile: (913) 621-7281

LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender and a Lender

Notices of Borrowing, Conversion, Continuation and Letter of Credit Issuance

135 South LaSalle Street

Chicago, Illinois 60603

Attention: Keith J. Cable

Telephone: (312) 904-7621

Facsimile:  (312) 904-6242

All Other Notices

135 South LaSalle Street

Chicago, Illinois 60603

Attention: Keith J. Cable

Telephone: (312) 904-7621

Facsimile:  (312) 904-6242

KEYBANK NATIONAL ASSOCIATION, as Syndication Agent and a Lender

127 Public Square

6th Floor

Cleveland, Ohio 44114

Attention: Vijaya Kulkarni

Telephone: 216-689-0238

Facsimile: 216-689-8329

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