8-K

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (date of earliest event reported):  November 27, 2001

BANCTEC, INC.(Exact name of registrant as specified in its charter)

Delaware	75-1559633
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

0-9859
(Commission File Number)

2701 E. Grauwyler Road Irving, Texas  75061(Address of principal executive offices, including zip code)

(972-579-6000)
(Registrant’s telephone number, including area code)

ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS

On November 27, 2002, BancTec, Inc. (“BTI”) completed the sale (the “Sale”) of its wholly owned subsidiary, BancTec Japan (“BTJ”), to JAFCO MBO Co., Ltd. (“JAFCO”) pursuant to a Stock Purchase Agreement dated as of November 27, 2002, between BTI and JAFCO (the “Stock Purchase Agreement”).  The Sale involved two separate transactions: (1) the purchase by JAFCO of 100% of the outstanding shares of BTJ for 6.5 billion Japanese Yen, and (2) a one-time, up-front payment by BTJ of 4.0 billion Japanese Yen under certain distribution and licensing agreements.  Under such agreements, BTJ will continue to supply BancTec products and services in its markets, and will continue to operate under the name “BancTec Japan”.  After foreign currency conversions and transaction costs, BTI received approximately $82.5 million in aggregate net proceeds.

The foregoing summary does not purport to be a complete statement of the terms of the Sale, and is qualified in its entirety by reference to the Stock Purchase Agreement, which has been filed as Exhibit 10.1 to this report and is incorporated herein by this reference.

ITEM 5.  OTHER EVENTS

BTI Holding Company Structure

Effective as of November 1, 2002, BTI and the owners of all the outstanding capital stock of BTI consummated a series of transactions in order to create a two-tier holding company structure above BTI.   As a consequence of the restructuring, all the outstanding capital stock of BTI and warrants to purchase capital stock of BTI (but not employee stock options) are currently held by BancTec Intermediate Holding, Inc., a Delaware corporation (“Intermediate Holding”).  In turn, all the outstanding capital stock of Intermediate Holding is currently held by BancTec Upper-Tier Holding, LLC, a Delaware limited liability company (“Upper-Tier Holding”), whose members consist of the prior owners of all the outstanding capital stock of BTI and senior management of BTI (or entities controlled by them).

As part of the restructuring, WCAS Capital Partners III, L.P. contributed to Upper-Tier Holding the Senior Subordinated Note Due 2009 originally issued to it by BTI, together with pay-in-kind interest thereon, in an aggregate principal amount of approximately $193.8 million (the “Sponsor Notes”).  In addition, senior management of BTI (or entities controlled by them) made an aggregate cash capital contribution of $100,000 to Upper-Tier Holding in exchange for capital interests and carried interests in Upper-Tier Holding.  Such cash was immediately contributed to Intermediate Holding, which, in turn, contributed such amount to BTI in exchange for 667 shares of Series A Preferred Stock of BTI.

Waivers, Consents and Amendments to Revolving Credit Facility

In connection with the holding company restructuring described above, BTI and Heller Financial, Inc. entered into a Waiver, Consent and Amendment, a copy of which has been filed with this

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report as Exhibit 10.2.  In addition, in connection with the sale of BTJ described in Item 2 above, BTI and Heller Financial, Inc. entered into a Fourth Amendment to Loan and Security Agreement dated as of November 27, 2002, a copy of which has been filed with this report as Exhibit 10.3.  Exhibits 10.2 and 10.3 are incorporated herein by this reference.

Partial Repayment of Sponsor Notes

On December 6, 2002, and December 9, 2002, BTI made aggregate payments of $90.0 million to repay a portion of the Sponsor Notes held by Upper-Tier Holding, thereby reducing the outstanding principal amount of the Sponsor Notes to approximately $103.8 million.

ITEM 7.FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

a)Not applicable.

b)Pro forma financial information.  (The Registrant intends to file such information on or before February 10, 2003.)

c)Exhibits

10.1Stock Purchase Agreement, dated as of November 27, 2002, between BancTec, Inc. and JAFCO MBO Co., Ltd.

10.2Loan and Security Agreement—Waiver, Consent and Amendment Relating to BancTec Restructuring, dated November 1, 2002

10.3Fourth Amendment to Loan and Security Agreement, dated November 27, 2002

99.1               Press Release dated December 2, 2003

ITEM 9.  REGULATION FD DISCLOSURE

On December 2, 2003, BTI issued a press release announcing the Sale of BTJ.  The text of the press release is attached to this report as Exhibit 99.1 and is incorporated herein by this reference.

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SIGNATURE

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.

		BANCTEC, INC.
Date:	December 12, 2002	By:	/s/ Brian R. Stone
			Brian R. Stone
			Senior Vice President and Chief Financial Officer

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EXHIBITS INDEX

Exhibit
Number	Description
10.1	Stock Purchase Agreement, dated as of November 27, 2002, between BancTec, Inc. and JAFCO MBO Co., Ltd.
10.2	Loan and Security Agreement—Waiver, Consent and Amendment Relating to BancTec Restructuring, dated November 1, 2002
10.3	Fourth Amendment to Loan and Security Agreement, dated November 27, 2002
99.1	Press Release dated December 2, 2003

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EX-10.12

EXHIBIT 10.12

STOCK PURCHASE AGREEMENT

dated as of

November 27, 2002

between

JAFCO MBO CO., LTD. as Buyer,

JAFCO CO., LTD. as Buyer Guarantor,

BTC INTERNATIONAL HOLDINGS, INC. as Seller

and

BANCTEC, INC. as Seller Guarantor

relating to the purchase and sale

of

100% of the Common Stock

of

BANCTEC JAPAN, INC.

TABLE OF CONTENTS

i

ii

iii

STOCK PURCHASE AGREEMENT

                AGREEMENT dated as of November 27, 2002 between JAFCO MBO Co., Ltd., a Japanese corporation (“Buyer”), JAFCO Co., Ltd., a Japanese corporation (“Buyer Guarantor”), BTC International Holdings, Inc., a Delaware corporation (“Seller”), and BancTec, Inc., a Delaware corporation (“Seller Guarantor”).

W  I  T  N  E  S  S  E  T  H :

                WHEREAS, Seller is the record and beneficial owner of the Shares (as defined below) and desires to sell the Shares to Buyer, Buyer desires to purchase the Shares from Seller, and Buyer Guarantor and Seller Guarantor wish to guarantee the obligations of Buyer and Seller, respectively, hereunder, in each case upon the terms and subject to the conditions hereinafter set forth;

                The parties hereto agree as follows:

ARTICLE 1
DEFINITIONS

Section 1.01.  Definitions.  (a) The following terms, as used herein, have the following meanings:

                “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; provided that the Company shall not be considered an Affiliate of Seller.

                “Ancillary Agreements” means the Master Know-How Agreement, the Trademark License Agreement, the Hardware License/Distribution Agreement, and the Software Reseller Agreement.

                “Balance Sheet” means the unaudited balance sheet of the Company as of the Balance Sheet Date.

                “Balance Sheet Date” means September 30, 2002.

                “BTI Limited Partnership” means BTI Technologies, L.P., a Texas limited partnership and an Affiliate of Seller.

                “Closing Date” means the date of the Closing.

                “Common Stock” means the common stock of the Company.

                “Company” means BancTec Japan, Inc., a Japanese corporation, with registered office at Arco Tower 8F, 8-1, Shimo-meguro 1-chome, Meguro-ku, Tokyo 153-0064.

                “Guarantor” means the Buyer Guarantor or the Seller Guarantor.

                “Hardware License/Distribution Agreement” means the Agreement for Purchase of Units and Spare Parts Products dated as of the date hereof between the Company and BTI Limited Partnership.

                “Intellectual Property Right” means any trademark, service mark, trade name, mask work, invention, patent, trade secret, copyright, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right.

                “Japanese Patent License Agreement” means the Japanese Patent License Agreement dated as of the date of the Closing between the Company and BTI Limited Partnership.

                “Knowledge of Seller”, “Seller’s knowledge” or any other similar knowledge qualification in this Agreement means to the actual knowledge of any of the following officers of Seller: Craig Crisman, Brian Stone, Weston Hebert, Mark Fairchild or Morten Jacobsen.

                “Lien” means, with respect to any property or asset, any mortgage (teitou-ken), lien, pledge (shichi-ken), charge (jouto-tanpo-ken), security interest or encumbrance in respect of such property or asset.

                “Master Know-How Agreement” means the Master Know-How Agreement dated as of the date hereof between the Company and BTI Limited Partnership.

                “Material Adverse Effect” means a material adverse effect on the business, assets or results of operations of the Company, except any such effect resulting from or arising in connection with (i) this Agreement or the transactions contemplated hereby, (ii) changes or conditions generally affecting companies engaged in similar businesses or (iii) changes in economic, regulatory or political conditions generally.

                “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

                “Shares” means the 203 shares of outstanding Common Stock that are owned by Seller.

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                 “Software Reseller Agreement” means the Software Reseller Agreement dated as of the date hereof between the Company and BTI Limited Partnership.

                “Trademark License Agreement” means the Trademark License Agreement dated as of the date hereof between the Company and BTI Limited Partnership.

                (b)           Each of the following terms is defined in the Section set forth opposite such term:

Term	Section
Buyer Obligations	11.01
Claim	9.03
Closing	2.02
Company Intellectual Property Rights	3.17
Company Securities	3.05
Damages	9.02
Indemnified Party	9.03
Indemnifying Party	9.03
Permitted Liens	3.16
Potential Contributor	9.05
Purchase Price	2.01
Seller Obligations	11.02
Third Party Claim	9.03
Warranty Breach	9.02

ARTICLE 2
PURCHASE AND SALE

Section 2.01.  Purchase and Sale.  Upon the terms and subject to the conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Shares at the Closing.  The purchase price for the Shares (the “Purchase Price”) is -6,500,000,000 in cash.  The Purchase Price shall be paid as provided in Section 2.02.

Section 2.02.  Closing.  The closing (the “Closing”) of the purchase and sale of the Shares hereunder shall take place at the offices of Baker & McKenzie, 410 Aoyama Building, 2-3, Kita Aoyama 1-chome, Minato-ku, Tokyo 100-8694, Japan, as soon as possible, after satisfaction of the conditions set forth in Article 8, or at such other time or place as Buyer and Seller may agree.  All actions to be taken at the Closing will be deemed to have taken place simultaneously, and no delivery or payment will be considered to have been made until all transactions to be taken at the Closing have been completed.  At the Closing:

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(a)        Buyer shall deliver to Seller the Purchase Price in immediately available funds by wire transfer to the following account: “Other Deposit/Non-Resident Account” account number 0042507-0040-JPY-001-TOK at Deutsche Bank, Tokyo Branch, for the further credit of BTC International Holdings, Inc., or such other account with a bank in Tokyo, Japan designated by Seller, by notice to Buyer, which notice shall be delivered not later than two business days prior to the Closing Date.

(b)        Seller shall deliver to Buyer certificates for the Shares.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

                Except as set forth in the disclosure schedules, Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date that:

Section 3.01.  Corporate Existence and Power.  Each of Seller and the Company is a corporation duly incorporated, validly existing and (in the case of Seller) in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not have a Material Adverse Effect.  The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

Section 3.02.  Corporate Authorization.  The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby are within Seller’s corporate powers and have been duly authorized by all necessary corporate action on the part of Seller.  This Agreement constitutes a valid and binding agreement of Seller.

Section 3.03.  Governmental Authorization.  The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency or official other than any such action or filing as to which the failure to make or obtain would not have a Material Adverse Effect.

Section 3.04.  Noncontravention.The execution, delivery and performance by Seller of this Agreement and the consummation of the

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transactions contemplated hereby do not and will not (i) violate the certificate of incorporation or bylaws of Seller or the articles of incorporation (teikan) of the Company, (ii) violate any applicable law, rule, regulation, judgment, injunction, order or decree, except for any such violations which would not reasonably be expected to have a Material Adverse Effect, (iii) except as disclosed in Schedule 3.04 or as to matters which would not reasonably be expected to have a Material Adverse Effect, require any consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of Seller or the Company or to a loss of any benefit to which Seller or the Company is entitled under any provision of any agreement or other instrument binding upon Seller or the Company or (iv) result in the creation or imposition of any Lien on any asset of the Company, except for any Permitted Liens.

Section 3.05.  Capitalization. (a)  The authorized capital stock of the Company consists of 800 shares of Common Stock.  As of the date hereof, there are outstanding 203 shares of Common Stock.

(b)           All outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable.  Except as set forth in this Section 3.05, there are no outstanding (i) shares of capital stock or voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (iii) options or other rights to acquire from the Company, or other obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses (i) through (iii) of this paragraph being referred to collectively as the “Company Securities”).  There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities.

Section 3.06.  Ownership of Shares.  Seller is the record and beneficial owner of the Shares, free and clear of any Lien (other than as disclosed on Schedule 3.06), and will transfer and deliver to Buyer at the Closing valid title to the Shares free and clear of any Lien.

Section 3.07.  Subsidiaries.  The Company has no subsidiaries.

Section 3.08.  Financial Statements.  The unaudited balance sheet as of December 31, 2001 and the related unaudited statements of income and cash flows for the year ended December 31, 2001 and the unaudited interim balance sheet as of September 30, 2002 and the related unaudited interim statements of income and cash flows for the nine months ended September 30, 2002 of the Company fairly present, in conformity with U.S. generally accepted accounting principles applied on a consistent basis (except as may be indicated in the notes thereto), the financial position of the Company as of the dates thereof and its

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results of operations and cash flows for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements).

Section 3.09.  Books and Records.  Except as disclosed on Schedule 3.09, the books of account, minute books and equity record books of the Company, all of which were made available to Buyer upon request, are complete and correct in all material respects, and have been maintained in accordance with sound business practices and applicable legal requirements.

Section 3.10.  Absence of Certain Changes.  Except as disclosed in Schedule 3.10 or as contemplated by this Agreement, since the Balance Sheet Date, the business of the Company has been conducted in the ordinary course consistent with past practices and there has not been:

(a)        any event, occurrence or development which has had a Material Adverse Effect;

(b)        any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of the Company;

(c)        any amendment of any material term of any outstanding security of the Company;

(d)        any incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money other than in the ordinary course of business consistent with past practices;

(e)        any making of any loan, advance or capital contributions to or investment in any Person other than loans, advances or capital contributions to or investments made in the ordinary course of business consistent with past practices;

(f)         any transaction or commitment made, or any contract or agreement entered into, by the Company relating to its assets or business, in either case, material to the Company, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement; or

(g)        any material change in any method of accounting or accounting practice by the Company except for any such change required by reason of a concurrent change in U.S. generally accepted accounting principles.

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Section 3.11.  No Undisclosed Material Liabilities.  There are no liabilities of the Company of any kind, other than:

(a)        liabilities provided for in the September 30, 2002 interim unaudited balance sheet of the Company or disclosed in the notes thereto or in the notes to the September 30, 2002 interim unaudited financial statements of the Company;

(b)        liabilities not required under generally accepted accounting principles to be shown on the September 30, 2002 interim unaudited balance sheet of the Company or in the notes to the September 30, 2002 interim unaudited financial statements of the Company for reasons other than the contingent nature thereof or the difficulty of determining the amount thereof;

(c)        liabilities disclosed on Schedule 3.11;

(d)        liabilities disclosed in, related to or arising under any agreements, instruments or other matters disclosed in this Agreement or any Schedule hereto;

(e)        liabilities incurred in the ordinary course of business since the Balance Sheet Date; or

(f)         other undisclosed liabilities which, individually or in the aggregate, are not material to the Company.

Section 3.12.  Intercompany Accounts.  Schedule 3.12 contains a complete list of all intercompany balances as of September 30, 2002 between Seller and its Affiliates, on the one hand, and the Company, on the other hand.  From September 30, 2002 to the date hereof there has not been any accrual of liability by the Company to Seller or any of its Affiliates or other transaction between the Company and Seller and any of its Affiliates, except in the ordinary course of business of the Company consistent with past practice or as disclosed in Schedule 3.12.

Section 3.13.  Material Contracts.  Except as disclosed in Schedule 3.13, the Company is not a party to or bound by:

(a)        any lease (whether of real or personal property) providing for annual rentals of -35,000,000 or more that cannot be terminated on not more than 60 days’ notice without payment by the Company of any material penalty;

(b)        any agreement for the purchase of materials, supplies, goods, services, equipment or other assets providing for either (i) annual payments by the Company of -35,000,000 or more or (ii) aggregate payments by the Company of -35,000,000 or more, in each case that cannot be terminated on not more than 60 days’ notice without payment by the Company of any material penalty;

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(c)        any sales, distribution or other similar agreement providing for the sale by the Company of materials, supplies, goods, services, equipment or other assets that provides for annual payments to the Company of -35,000,000 or more;

(d)        any material partnership, joint venture or other similar agreement or arrangement;

(e)        any agreement relating to the acquisition or disposition of any material business (whether by merger, sale of stock, sale of assets or otherwise);

(f)         any agreement relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset), except any such agreement (i) with an aggregate outstanding principal amount not exceeding -35,000,000 or (ii) entered into subsequent to the date of this Agreement as permitted by Section 3.10(d);

(g)        any material agreement that limits the freedom of the Company to compete in any line of business or with any Person or in any area;

(h)        any material agreement with Seller or any of its Affiliates or any director or officer of Seller or any of its Affiliates; or

(i)         any other agreement, commitment, arrangement or plan not made in the ordinary course of business that is material to the Company.

Section 3.14.  Litigation.  Except as set forth in Schedule 3.14, there is (i) no action, suit, investigation or proceeding pending against, or, to Seller’s knowledge, threatened against or affecting, Seller or any of its properties or (ii) to the best knowledge of Seller, no action, suit, investigation or proceeding pending against, or threatened against or affecting, the Company or any of its properties, in each case before any court or arbitrator or any governmental body, agency or official which is reasonably likely to have a Material Adverse Effect or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement.

Section 3.15.  Compliance with Laws and Court Orders.  Except as set forth in Schedule 3.15, to Seller’s knowledge the Company is not in violation of any applicable law, rule, regulation, judgment, injunction, order or decree, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.16.  Properties.  The Company has good title to, or in the case of leased property and assets has valid leasehold interests in, all property and assets (whether real, personal, tangible or intangible) reflected on the September 30, 2002 unaudited interim balance sheet of the Company or acquired after the

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Balance Sheet Date, except for properties and assets sold or disposed of since Balance Sheet Date in the ordinary course of business consistent with past practices or where the failure to have such good title or valid leasehold interests would not have a Material Adverse Effect.  None of such property or assets is subject to any Lien, except:

(a)        Liens disclosed on Schedule 3.16;

(b)        Liens disclosed on the September 30, 2002 unaudited interim balance sheet of the Company or notes thereto or securing liabilities reflected on the September 30, 2002 unaudited interim balance sheet of the Company or notes thereto;

(c)        Liens for taxes, assessments and similar charges that are not yet due or are being contested in good faith;

(d)        mechanic’s, materialman’s, carrier’s, repairer’s and other similar Liens arising or incurred in the ordinary course of business or that are not yet due and payable or are being contested in good faith;

(e)        Liens incurred in the ordinary course of business since the Balance Sheet Date; or

(f)         other Liens which would not have a Material Adverse Effect (paragraphs (a)-(f) of this Section 3.16 are, collectively, the “Permitted Liens”).

Section 3.17.  Intellectual Property.  (a)  Schedule 3.17 contains a list of all material Intellectual Property Rights owned or licensed and used or held for use by the Company (“Company Intellectual Property Rights”), specifying as to each, as applicable: (i) the nature of such Intellectual Property Right, (ii) the owner of such Intellectual Property Right, (iii) whether Company Intellectual Property Rights owned by Seller or the Company have been issued or registered in the United States, Japan, Korea, the People’s Republic of China or Taiwan, the Republic of China (or alternatively whether an application for such issuance or registration has been filed in any such jurisdictions), and the corresponding registration or application numbers and (iv) the termination or expiration dates.

(b)        To Seller’s knowledge, the Company Intellectual Property constitutes in all material respects all of the Intellectual Property Rights used in the business of the Company as presently conducted.  Except as disclosed on Schedule 3.17, no Company Intellectual Property Right is subject to any outstanding judgment, injunction, order, decree or agreement restricting the use thereof by the Company or restricting the licensing thereof by the Company to any Person, except for any judgment, injunction, order, decree or agreement which would not reasonably be expected to have a Material Adverse Effect. To

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Seller’s knowledge, no Intellectual Property Right of any other Person infringes any Company Intellectual Property Rights and no Company Intellectual Property Right infringes the Intellectual Property Right of any other Person, in each case except as would not be reasonably expected to have a Material Adverse Effect.

Section 3.18.  Customers And Suppliers.Schedule 3.18 sets forth a true and complete list of the names and addresses of the 20 largest customers and the 10 largest suppliers (measured in each case by yen volume of purchases or sales during the year ended December 31, 2001) of the Company, and the yen amount of purchases or sales which each such customer or supplier represented during the years ended December 31, 2000 and December 31, 2001, respectively.  Except as disclosed on Schedule 3.18, Seller has no knowledge of any actual or threatened termination, cancellation or material limitation of, or any material change in, the business relationship of the Company with any customer, supplier, group of customers or group of suppliers listed therein, except as would not be reasonably expected to have a Material Adverse Effect.  Except as disclosed on Schedule 3.18, to Seller’s knowledge no customer of the Company has any right to any credit or refund for products sold or services rendered or to be rendered by the Company pursuant to any contract, understanding or practice of the Company other than pursuant to the normal course return policy of the Company.

Section 3.19.  Taxes.To Seller’s knowledge and except as set forth in the September 30, 2002 unaudited interim financial statements of the Company (including the notes thereto) or on Schedule 3.19: (i) the Company has filed on a timely basis all material tax returns as required by applicable legal requirements; (ii) each such tax return is true, correct and complete in all material respects; (iii) all taxes shown as due and payable on all such tax returns have been paid; (iv) the Company has not requested an extension of time within which to file any material tax return in respect of any taxable year which has not since been filed;(v) the prepaid expenses, charges, accruals and reserves for taxes with respect to the Company reflected on the books of the Company are adequate to cover material tax liabilities accruing through the end of the last period for which the Company ordinarily records items on its books.

Section 3.20.  Insurance Coverage.  Seller has made available to Buyer a list of, and true and complete copies of, all insurance policies and fidelity bonds relating to the assets, business, operations, employees, officers or directors of the Company.  There are no material claims by the Company pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights.

Section 3.21.  Finders’ Fees.  Except for Deutsche Securities Limited, there is no investment banker, broker, finder or other intermediary which has been

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retained by or is authorized to act on behalf of Seller or the Company who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

Section 3.22.  Employee Benefit Plans.  The Company has made available to Buyer a list of and copies of each material employee benefit plan, each employment, severance or similar contract, plan arrangement or policy and each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) which is maintained, administered or contributed to by the Company and covers any employee or former employee of the plans (and, if applicable, related trust or funding agreements or insurance policies).

Section 3.23.  Employee Restrictions.To Seller’s knowledge, except as disclosed in Schedule 3.23, no employee or director of the Company is a party to, or is otherwise bound by, any contract, including any confidentiality, noncompetition or proprietary rights agreement, with any other Person that in any way adversely affects or will affect (x) the performance of his or her duties for the Company, (y) his or her ability to assign to the Company rights to any invention, improvement, discovery or information relating to the business of the Company, or (z) the ability of the Company to conduct its business, in each case except as would not be reasonably expected to have a Material Adverse Effect.  To Seller’s knowledge, as of the date of this Agreement no director, key employee or group of employees of the Company intends to terminate his or their employment with the Company within the next year except as disclosed in Schedule 3.23.

Section 3.24.  Labor Relations; Employment Law Compliance.To Seller’s knowledge, except as disclosed in Schedule 3.24:

(a)           The Company has complied in all material respects with all legal requirements relating to employment practices, terms and conditions of employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits and collective bargaining.  The Company is not liable for the payment of any material fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing legal requirements.

(b)           The Company has not been, nor is now, a party to any collective bargaining agreement or other labor contract.  The Company is not a party to any other material agreement, arrangement or understanding with any employee union, employee organization or trade union in respect of any employee.  No

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application or petition for an election of or for certification of a collective bargaining agent representing the Company’s employees is pending.

(c)           As of the date of this Agreement, there has not been at any time, there is not presently pending or existing, nor threatened, any strike, slowdown, picketing, work stoppage or material employee grievance process involving the Company, and no event has occurred or circumstance exists that may provide the basis for any work stoppage or other material labor dispute involving the Company that might have a Material Adverse Effect.

(d)           As of the date of this Agreement, there is not pending or threatened any material proceeding against or involving the Company relating to the alleged material violation of any legal requirement pertaining to labor relations or employment matters, nor any organizational activity or other labor dispute, labor grievance or arbitration proceeding against or involving the Company that might have a Material Adverse Effect.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

                Buyer represents and warrants to Seller as of the date hereof and as of the Closing Date that:

Section 4.01.  Corporate Existence and Power.  Buyer is a corporation duly incorporated and validly existing under the laws of Japan and has all corporate powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.

Section 4.02.  Corporate Authorization.  The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby are within the corporate powers of Buyer and have been duly authorized by all necessary corporate action on the part of Buyer.  This Agreement constitutes a valid and binding agreement of Buyer.

Section 4.03.  Governmental Authorization.  The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby require no material action by or in respect of, or material filing with, any governmental body, agency or official.

Section 4.04.  Noncontravention.The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) violate the articles of incorporation (teikan) of Buyer, (ii) violate any applicable law, rule, regulation,

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judgment, injunction, order or decree, (iii) require any consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of Buyer or to a loss of any benefit to which Buyer is entitled under any provision of any agreement or other instrument binding upon Buyer or (iv) result in the creation or imposition of any material Lien on any asset of Buyer.

Section 4.05.  Financing.  Buyer has, sufficient cash, available lines of credit or other sources of immediately available funds to enable it to make payment of the Purchase Price and any other amounts to be paid by it hereunder.

Section 4.06.  Purchase for Investment.  Buyer is purchasing the Shares for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof.  Buyer (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares and is capable of bearing the economic risks of such investment.

Section 4.07.  Litigation.  There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer before any court or arbitrator or any governmental body, agency or official which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement.

Section 4.08.  Finders’ Fees.  There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission from Seller or any of its Affiliates upon consummation of the transactions contemplated by this Agreement.

Section 4.09.  Inspections; No Other Representations.  Buyer is an informed and sophisticated purchaser, and has engaged expert advisors, experienced in the evaluation and purchase of companies such as the Company as contemplated hereunder.  Buyer has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement.  Buyer acknowledges that Seller has given Buyer complete and open access to the key employees, documents and facilities of the Company.  Buyer will undertake prior to Closing such further investigation and request such additional documents and information as it deems necessary.  Buyer agrees to accept the Shares and the Company in the condition they are in on the Closing Date based upon its own inspection, examination and determination with respect thereto as to all matters, and without reliance upon any express or implied representations or warranties of any nature made by or on behalf of or imputed to Seller, except as expressly set

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forth in this Agreement.  Without limiting the generality of the foregoing,  Buyer acknowledges that Seller makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered to or made available to Buyer of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company or the future business and operations of the Company or (ii) any other information or documents made available to Buyer or its counsel, accountants or advisors with respect to the Company or its businesses or operations, except as expressly set forth in this Agreement.

ARTICLE 5
COVENANTS OF SELLER

                Seller agrees that:

Section 5.01.  Conduct of the Company.  From the date hereof until the Closing Date, Seller shall cause the Company to conduct its business in the ordinary course consistent with past practice and to use its reasonable best efforts to preserve intact its business organizations and relationships with third parties and to keep available the services of its present directors and employees.  Without limiting the generality of the foregoing, from the date hereof until the Closing Date, except as disclosed on Schedule 5.01 Seller will not permit the Company to:

(a)        adopt or propose any change in its articles of incorporation (teikan);

(b)        merge or consolidate with any other Person or acquire a material amount of assets from any other Person;

(c)        sell, lease, license or otherwise dispose of any material assets or property except (i) pursuant to existing contracts or commitments or (ii) otherwise in the ordinary course consistent with past practice; or

(d)        agree or commit to do any of the foregoing.

Section 5.02.  Access To Information.(a)  From the date hereof until the Closing Date, Seller will (i) give, and will cause the Company to give, Buyer, its counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties, books and records of the Company and to the books and records of Seller relating to the Company, (ii) furnish, and will cause the Company to furnish, to Buyer, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Company as such Persons may reasonably request and (iii) instruct the employees, counsel and financial advisors of Seller or the Company to cooperate with Buyer in its investigation of the Company. Any

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investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of Seller or the Company.  Notwithstanding the foregoing, Buyer shall not have access to personnel records of the Company relating to individual performance or evaluation records, medical histories or other information which in Seller’s good faith opinion is sensitive or the disclosure of which could subject the Company to risk of liability.

(b)        On and after the Closing Date, Seller will afford promptly to Buyer and its agents reasonable access to its books of account, financial and other records (including, without limitation, accountant’s work papers), information, employees and auditors to the extent necessary or useful for Buyer in connection with any audit, investigation, dispute or litigation or any other reasonable business purpose relating to the Company; provided that any such access by Buyer shall not unreasonably interfere with the conduct of the business of Seller.

Section 5.03.  Notices of Certain Events.  Seller shall promptly notify Buyer upon becoming aware of:any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; and

(c)        any actions, suits, claims, investigations or proceedings commenced relating to Seller or the Company that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.14.

Section 5.04.  No Negotiation.  Other than discussions with Buyer regarding the transactions contemplated hereby, Seller shall not, from the date hereof until such time, if any, as this Agreement is terminated, directly or indirectly, make, solicit, initiate, encourage or entertain submission of any proposal or offer from any Person relating to any acquisition or purchase of all or a material portion of the Shares or the Company’s business.

Section 5.05.  Resignations.  Seller shall cause Mark Fairchild and Paul Weston Hebert to resign as director and statutory auditor, respectively, of the Company effective as of the Closing Date.

ARTICLE 6
COVENANTS OF BUYER

                Buyer agrees that:

Section 6.01.  Access.  Buyer will cause the Company, on and after the Closing Date, to afford promptly to Seller and its agents reasonable access to its

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properties, books, records, employees and auditors to the extent necessary or useful (i) to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date or (ii) for Seller in connection with any audit, investigation, dispute or litigation or any other reasonable business purpose relating to the Company; provided that any such access by Seller shall not unreasonably interfere with the conduct of the business of Buyer.

Section 6.02.  Trademarks; Tradenames.  Buyer shall not permit the Company to use any of the marks or names set forth on Schedule 6.02 other than as specifically permitted under the terms of the Trademark License Agreement.

Section 6.03.  Appointment of Replacement Statutory Auditor.  Promptly following the Closing, Buyer shall cause the Company to convene and hold an extraordinary general meeting and cause the appointment of a replacement statutory auditor to replace Paul Weston Hebert with immediate effect.

ARTICLE 7
COVENANTS OF BUYER AND SELLER

                Buyer and Seller agree that:

Section 7.01.  Reasonable Best Efforts; Further Assurances.  Subject to the terms and conditions of this Agreement, Buyer and Seller will use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement.  Seller and Buyer agree, and Seller, prior to the Closing, and Buyer, after the Closing, agree to cause the Company, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

Section 7.02.  Certain Filings.  Seller and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (ii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.

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Section 7.03.  Public Announcements.  The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press releases and public announcements the making of which may be required by applicable law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation.

Section 7.04.  Intercompany Accounts.  All intercompany accounts between the Seller or its Affiliates, on the one hand, and the Company, on the other hand, as of the Closing shall be settled (irrespective of the terms of payment of such intercompany accounts) in the manner provided in this Section.  At least two business days prior to the Closing, Seller shall prepare and deliver to Buyer a statement setting out in reasonable detail the calculation of all such intercompany account balances expected to be paid at Closing as provided in the following sentence based upon the latest available financial information as of such date and, to the extent requested by Buyer, provide Buyer with supporting documentation to verify the underlying intercompany charges and transactions.  All such intercompany account balances shall be paid in full in cash on or prior to the Closing, other than trade accounts payable in the ordinary course of business which have been outstanding 90 days or less, which shall be subject to settlement in accordance with the terms stipulated in relevant invoices, distributor agreements or other relevant documentation.

ARTICLE 8
CONDITIONS TO CLOSING

Section 8.01.  Conditions to Obligations of Buyer and Seller.  The obligations of Buyer and Seller to consummate the Closing are subject to the satisfaction of the following conditions:

(a)           No provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Closing.

(b)           All actions by or in respect of or filings with any governmental body, agency, official or authority required to permit the consummation of the Closing shall have been taken, made or obtained, except for any such actions or filings the failure to take, make or obtain would not reasonably be expected to have a Material Adverse Effect.

(c)           The Company and BTI Limited Partnership shall have entered into the Ancillary Agreements on or before the Closing Date.

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(d)           The Company and BTI Limited Partnership shall have entered into the Japanese Patent License Agreement on or before the Closing Date.

Section 8.02.  Conditions to Obligation of Buyer.  The obligation of Buyer to consummate the Closing is subject to the satisfaction of the following further conditions:

(a)           (i)  Seller shall have performed in all material respects all of its obligations hereunder required to be performed by it on or prior to the Closing Date, (ii) the representations and warranties of Seller and Seller Guarantor contained in this Agreement and in any certificate or other writing delivered by Seller pursuant hereto shall be true at and as of the Closing Date, as if made at and as of such date, with only such exceptions as would not in the aggregate reasonably be expected to have a Material Adverse Effect and (iii) Buyer shall have received certificates signed by respective executive officers of Seller, Seller Guarantor and, with respect to the Company, by the President of the Company to the foregoing effect.

(b)           Buyer shall have received all documents it may reasonably request relating to the existence of Seller, Seller Guarantor and the Company and the authority of Seller and Seller Guarantor for this Agreement, all in form and substance reasonably satisfactory to Buyer.

(c)           Mark Fairchild and Paul Weston Hebert shall have submitted signed resignations, effective as of the Closing, from their positions as director and statutory auditor, respectively, of the Company.

Section 8.03.  Conditions to Obligation of Seller.  The obligation of Seller to consummate the Closing is subject to the satisfaction of the following further conditions:

(a)           (i)  Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date, (ii) the representations and warranties of Buyer and Buyer Guarantor contained in this Agreement and in any certificate or other writing delivered by Buyer or Buyer Guarantor pursuant hereto shall be true in all material respects at and as of the Closing Date, as if made at and as of such date and (iii) Seller shall have received certificates signed by the respective executive officers of Buyer and Buyer Guarantor to the foregoing effect.

(b)           Seller shall have received all documents it may reasonably request relating to the existence of Buyer and Buyer Guarantor and the authority of Buyer and Buyer Guarantor for this Agreement, all in form and substance reasonably satisfactory to Seller.

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(c)           (i)  Buyer shall have paid the Purchase Price to Seller in cash and (ii) the Company shall have paid the up-front fees amounting to ¥4,000,000,000 in aggregate to BTI Limited Partnership in consideration for BTI Limited Partnership entering into the Ancillary Agreements.

ARTICLE 9
SURVIVAL; INDEMNIFICATION

Section 9.01.  Survival.  The covenants, agreements, representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing until eighteen (18) months following the Closing Date; provided that the covenants, agreements, representations and warranties contained in Sections 4.09, 6.01, 6.02, and Article 9 shall survive indefinitely.  Notwithstanding the preceding sentence, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.

Section 9.02.  Indemnification.  (a)  Seller hereby indemnifies Buyer and its Affiliates against and agrees to hold each of them harmless from any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys’ fees and expenses in connection with any action, suit or proceeding whether involving a third party claim or a claim solely between the parties hereto) (“Damages”) incurred or suffered by Buyer or any of its Affiliates arising out of any misrepresentation or breach of warranty (each such misrepresentation and breach of warranty a “Warranty Breach”) or breach of covenant or agreement made or to be performed by Seller pursuant to this Agreement; provided that with respect to indemnification by Seller for any Warranty Breach pursuant to this Section, (i) Seller shall not be liable unless the aggregate amount of Damages with respect to such Warranty Breaches exceeds -50 million and then only to the extent of such excess and (ii) Seller’s maximum liability for all such Warranty Breaches shall not exceed -1.2 billion.

(b)           Buyer hereby indemnifies Seller and its Affiliates against and agrees to hold each of them harmless from any and all Damages incurred or suffered by Seller or any of its Affiliates arising out of any Warranty Breach or breach of covenant or agreement made or to be performed by Buyer pursuant to this Agreement; provided that with respect to indemnification by Buyer for any Warranty Breach pursuant to this Section, (i) Buyer shall not be liable unless the

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aggregate amount of Damages with respect to such Warranty Breaches exceeds -50 million and then only to the extent of such excess and (ii) Buyer’s maximum liability for all such Warranty Breaches shall not exceed -1.2 billion.

Section 9.03.  Procedures.  (a)  The party seeking indemnification under Section 9.02 (the “Indemnified Party”) agrees to give prompt notice to the party against whom indemnity is sought (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any suit, action or proceeding (“Claim”) in respect of which indemnity may be sought under such Section and will provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have adversely prejudiced the Indemnifying Party.

(b)           The Indemnifying Party shall be entitled to participate in the defense of any Claim asserted by any third party (“Third Party Claim”) and, subject to the limitations set forth in this Section, shall be entitled to control and appoint lead counsel for such defense, in each case at its expense.

(c)           If the Indemnifying Party shall assume the control of the defense of any Third Party Claim in accordance with the provisions of this Section 9.03, (i) the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third Party Claim, if the settlement does not release the Indemnified Party from all liabilities and obligations with respect to such Third Party Claim or the settlement imposes injunctive or other equitable relief against the Indemnified Party, and (ii) the Indemnified Party shall be entitled to participate in the defense of such Third Party Claim and to employ separate counsel of its choice for such purpose.  The fees and expenses of such separate counsel shall be paid by the Indemnified Party.

(d)           Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.

(e)           Each Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Damages payable under Section 9.02.

Section 9.04.  Calculation of Damages.  (a)  The amount of Damages payable under Section 9.02 by the Indemnifying Party shall be net of any (i) amounts recovered or recoverable by the Indemnified Party under applicable

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insurance policies or from any other Person alleged to be responsible therefor, (ii) tax cost incurred by the Indemnified Party arising from the receipt of indemnity payments and (iii) tax benefit realized by the Indemnified Party arising from the incurrence or payment of any such Damages.  In computing the amount of any such tax cost or tax benefit, the Indemnified Party shall be deemed to fully utilize, at the highest marginal tax rate then in effect, all tax items arising from the receipt of any indemnity payment hereunder or the incurrence or payment of any indemnified Damages.  If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Damages, subsequent to an indemnification payment by the Indemnifying Party, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to the amount received by the Indemnified Party, net of any expenses incurred by such Indemnified Party in collecting such amount.

(b)           The Indemnifying Party shall not be liable under Section 9.02  for any (i) incidental, indirect, consequential, exemplary or punitive Damages or (ii) Damages for lost profits.

(c)           Notwithstanding any other provision of this Agreement to the contrary, if on the Closing Date the Indemnified Party knows of any information that would cause one or more of the representations and warranties made by the Indemnifying Party to be inaccurate as of the date made, the Indemnified Party shall have no right or remedy after the Closing with respect to such inaccuracy and shall be deemed to have waived its rights to indemnification in respect thereof.

Section 9.05.  Assignment of Claims.  If the Indemnified Party receives any payment from an Indemnifying Party in respect of any Damages pursuant to Section 9.02 and the Indemnified Party could have recovered all or a part of such Damages from a third party (a “Potential Contributor”) based on the underlying Claim asserted against the Indemnifying Party, the Indemnified Party shall assign such of its rights to proceed against the Potential Contributor as are necessary to permit the Indemnifying Party to recover from the Potential Contributor the amount of such payment.

Section 9.06.  Exclusivity.  Except as specifically set forth in this Agreement, effective as of the Closing Buyer waives any rights and claims Buyer may have against Seller, whether in law or in equity, relating to the Company or the Shares or the transactions contemplated hereby.  The rights and claims waived by Buyer include, without limitation, claims for contribution or other rights of recovery arising out of or relating to any, claims for breach of contract, breach of representation or warranty, negligent misrepresentation and all other claims for

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breach of duty.  After the Closing, Section 9.02 will provide the exclusive remedy for any misrepresentation, breach of warranty, covenant or other agreement (other than those contained in Sections 5.02(a), 6.01 and 6.02) or other claim arising out of this Agreement or the transactions contemplated hereby.

ARTICLE 10
TERMINATION

Section 10.01.  Grounds for Termination.  This Agreement may be terminated at any time prior to the Closing:

(a)           by mutual written agreement of Seller and Buyer;

(b)           by either Seller or Buyer if the Closing shall not have been consummated on or before December 15, 2002; or

(c)           by either Seller or Buyer if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction.

The party desiring to terminate this Agreement pursuant to clauses 10.01(b) or 10.01(c) shall give notice of such termination to the other party.

Section 10.02.  Effect of Termination.  If this Agreement is terminated as permitted by Section 10.01, such termination shall be without liability of either party (or any stockholder, director, officer, employee, agent, consultant or representative of such party) to the other party to this Agreement; provided that if such termination shall result from the willful (i) failure of either party to fulfill a condition to the performance of the obligations of the other party, (ii) failure to perform a covenant of this Agreement or (iii) breach by either party hereto of any representation or warranty or agreement contained herein, such party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of such failure or breach.  The provisions of Sections 12.03, 12.05 and 12.06 and of the confidentiality agreement referred to in Section 12.09  shall survive any termination hereof pursuant to Section 10.01.

ARTICLE 11
GUARANTEES

Section 11.01.  Buyer Guarantor.Buyer Guarantor hereby irrevocably and unconditionally guarantees to Seller the prompt and full discharge by Buyer of all of Buyer’s covenants, agreements, obligations and liabilities under this

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Agreement including, without limitation, the due and punctual payment of all amounts which are or may become due and payable by Buyer hereunder when and as the same shall become due and payable (collectively, the “Buyer Obligations”), in accordance with the terms hereof.  Buyer Guarantor acknowledges and agrees that, with respect to all Buyer Obligations to pay money, such guaranty shall be a guaranty of payment and performance and not of collection and shall not be conditioned or contingent upon the pursuit of any remedies against Buyer.  If Buyer shall default in the due and punctual performance of any Buyer Obligation, including the full and timely payment of any amount due and payable pursuant to any Buyer Obligation, Buyer Guarantor will forthwith perform or cause to be performed such Buyer Obligation and will forthwith make full payment of any amount due with respect thereto at its sole cost and expense.

Section 11.02.  Seller Guarantor.Seller Guarantor hereby irrevocably and unconditionally guarantees to Buyer the prompt and full discharge by Seller of all of Seller’s covenants, agreements, obligations and liabilities under this Agreement including, without limitation, the due and punctual payment of all amounts which are or may become due and payable by Seller hereunder, when and as the same shall become due and payable (collectively, the “Seller Obligations”), in accordance with the terms hereof.  Seller Guarantor acknowledges and agrees that, with respect to all Seller Obligations to pay money, such guaranty shall be a guaranty of payment and performance and not of collection and shall not be conditioned or contingent upon the pursuit of any remedies against Seller.  If Seller shall default in the due and punctual performance of any Seller Obligation, including the full and timely payment of any amount due and payable pursuant to any Seller Obligation, Seller Guarantor will forthwith perform or cause to be performed such Seller Obligation and will forthwith make full payment of any amount due with respect thereto at its sole cost and expense.

Section 11.03.  Guaranty Unconditional.The liabilities and obligations of each Guarantor pursuant to this Agreement are unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

(a)           any acceleration, extension, renewal, settlement, compromise, waiver or release in respect of any Buyer Obligation or Seller Obligation by operation of law or otherwise;

(b)           the invalidity or unenforceability, in whole or in part, of this Agreement;

(c)           any modification or amendment of or supplement to this Agreement;

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(d)           any change in the corporate existence, structure or ownership of Buyer, Buyer Guarantor, Seller or Seller Guarantor or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any of them or their assets; or

(e)           any other act, omission to act, delay of any kind by any party hereto or any other Person, or any other circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable discharge of the obligations of any Guarantor hereunder.

Section 11.04.  Waivers Of The Guarantors.Each Guarantor hereby waives any right, whether legal or equitable, statutory or non-statutory, to require Seller or Buyer to proceed against or take any action against or pursue any remedy with respect to Seller, Buyer or any other Person or make presentment or demand for performance or give any notice of nonperformance before Seller or Buyer may enforce its rights hereunder against such Guarantor.

Section 11.05.  Discharge Only Upon Performance In Full; Reinstatement In Certain Circumstances.Each Guarantor’s obligations hereunder shall remain in full force and effect until the Buyer Obligations and Seller Obligations shall have been performed in full.  If at any time any performance by any Person of any Buyer Obligation or Seller Obligation is rescinded or must be otherwise restored or returned, whether upon the insolvency, bankruptcy or reorganization of Seller or Buyer or otherwise, such Guarantor’s obligations hereunder with respect to such Buyer Obligation or Seller Obligation shall be reinstated at such time as though such Buyer Obligation or Seller Obligation had become due and had not been performed.

Section 11.06.  Subrogation.Upon performance by any Guarantor of any Buyer Obligation or Seller Obligation, such Guarantor shall be subrogated to the rights of Seller against Buyer or Buyer against Seller, as the case may be, with respect to such Buyer Obligation or Seller Obligation; provided that such Guarantor shall not enforce any Buyer Obligation by way of subrogation against Seller or Buyer while any Buyer Obligation or Seller Obligation is due and unperformed by Seller or Buyer.

Section 11.07.  Guarantor Representations And Warranties.Each Guarantor represents and warrants to each other party to this Agreement as of the date hereof and as of the Closing Date that:

(a)           Such Guarantor is a corporation duly incorporated, validly existing and (in the case of Seller Guarantor) in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all governmental licenses, authorizations, permits,

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consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not materially and adversely affect the ability of such Guarantor to perform its obligations under this Agreement.

(b)           The execution, delivery and performance by such Guarantor of this Agreement and the consummation of the transactions contemplated hereby are within such Guarantor’s corporate powers and have been duly authorized by all necessary corporate action on the part of such Guarantor.  This Agreement constitutes a valid and binding agreement of such Guarantor.

(c)           The execution, delivery and performance by such Guarantor of this Agreement and the consummation of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency or official; and any such action or filing as to which the failure to make or obtain would not materially and adversely affect the ability of such Guarantor to perform its obligations under this Agreement.

(d)           The execution, delivery and performance by such Guarantor of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) violate the certificate of incorporation, articles of incorporation, charter, bylaws or similar governing documents of such Guarantor, (ii) assuming compliance with the matters referred to in paragraph (c), violate any applicable law, rule, regulation, judgment, injunction, order or decree, except for any such violations which would not reasonably be expected to materially and adversely affect the ability of such Guarantor to perform its obligations under this Agreement, or (iii) except as to matters which would not reasonably be expected to materially and adversely affect the ability of such Guarantor to perform its obligations under this Agreement, require any consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of such Guarantor or to a loss of any benefit to which such Guarantor is entitled under any provision of any agreement or other instrument binding upon such Guarantor.

ARTICLE 12
MISCELLANEOUS

Section 12.01.  Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given,

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                if to Buyer, to:

JAFCO MBO Co., Ltd.

8-2, Marunouchi 1-chome

Chiyoda-ku, Tokyo

Japan

Attention: Tomoya Shiraishi

Fax: 813-5223-7093

with a copy to:

Tokyo Aoyama Aoki Law Office/Baker & McKenzie
The Prudential Tower 11F
13-10, Nagata-cho 2-chome
Chiyoda-ku, Tokyo 100-0014
Japan

Attention: Hiroshi Kondo

Fax: 813-5157-2900

                if to Buyer Guarantor, to:

JAFCO Co., Ltd.

8-2, Marunouchi 1-chome

Chiyoda-ku, Tokyo

Japan

Attention: Tomoya Shiraishi

Fax: 813-5223-7093

with a copy to:

Tokyo Aoyama Aoki Law Office/Baker & McKenzie
The Prudential Tower 11F
13-10, Nagata-cho 2-chome
Chiyoda-ku, Tokyo 100-0014
Japan

Attention: Hiroshi Kondo

Fax: 813-5157-2900

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                if to Seller, to:

BTC International Holdings, Inc.

2701 East Grauwyler Road

Building 3

Irving, Texas  75061

United States of America

Attention: Brian Stone, Chief Financial Officer

Fax:  1-972-579-6448

with a copy to:

James J. Slaby, Jr., Esq.

Sheppard, Mullin, Richter & Hampton LLC

333 South Hope Street Forty-Eighth Floor

Los Angeles, CA 90071

Phone: (213) 620-1780

Fax: (213) 620-1398

and an additional copy to:

Davis Polk & Wardwell

Akasaka Twin Tower East 11F

17-22, Akasaka 2-chome

Minato-ku, Tokyo  107-0052

Japan

Attention:  Theodore A. Paradise

Fax:  813-5561-4425

                if to Seller Guarantor, to:

BancTec, Inc.

2701 East Grauwyler Road

Building 3

Irving, Texas  75061

United States of America

Attention: Brian Stone, Chief Financial Officer

Fax:  1-972-579-6448

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with a copy to:

James J. Slaby, Jr., Esq.

Sheppard, Mullin, Richter & Hampton LLC

333 South Hope Street Forty-Eighth Floor

Los Angeles, CA 90071

Phone: (213) 620-1780

Fax: (213) 620-1398

and an additional copy to:

Davis Polk & Wardwell

Akasaka Twin Tower East 11F

17-22, Akasaka 2-chome

Minato-ku, Tokyo  107-0052

Japan

Attention:  Theodore A. Paradise

Fax:  813-5561-4425

                All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt.

Section 12.02.  Amendments and Waivers.  (a)  Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

                (b)           No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 12.03.  Expenses.  All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

Section 12.04.  Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto.

Section 12.05.  Governing Law.  This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state.

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Section 12.06.  Dispute Resolution.  In the event of any dispute, controversy, or claim arising out of or relating to this Agreement or the interpretation, enforceability, performance, breach, termination or validity hereof, the parties shall use their best efforts to settle the matter through mutual agreement.  If the parties are unable to reach an amicable resolution of such dispute, the matter shall be solely and finally settled by binding arbitration.  The arbitration proceedings shall be conducted in the English language and any judgment issued by an arbitrator shall be in English.  Any arbitration commenced by Buyer shall be conducted in New York, New York, in accordance with the International Arbitration Rules then prevailing of the American Arbitration Association.  Any arbitration commenced by Seller shall be conducted in Tokyo, Japan, in accordance with the Commercial Arbitration Rules then prevailing of the Japan Commercial Arbitration Association.  In any such proceeding, neither party shall be entitled under any circumstances to receive (i) incidental, indirect, consequential, exemplary or punitive Damages or (ii) Damages for lost profits.  Judgment of the arbitrator(s) shall be final and binding and may be entered in, and shall be fully enforceable by, a court of proper jurisdiction.  Notwithstanding the foregoing provisions, either party shall have the right to institute a legal action in a court of proper jurisdiction for injunctive relief and/or a decree for specific performance pending final settlement by arbitration.  In the event either party seeks injunctive relief of any provision of this Agreement, the party against whom such relief is sought agrees to waive and hereby does waive any requirement that the party seeking the injunctive relief post a bond or any other security.

Section 12.07.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.08.  Counterparts; Third Party Beneficiaries.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto.  No provision of this Agreement is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

Section 12.09.  Entire Agreement.  This Agreement, the Ancillary Agreements, the Japanese Patent License Agreement between BTI Limited Partnership and the Company dated as of the date hereof, the confidentiality agreement (Himitsu Hoji Keiyakusho) dated August 21, 2001 and the letter agreement dated September 20, 2002 between Buyer and Seller constitute the entire agreement between the parties with respect to the subject matter of

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this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement.

Section 12.10.  Captions.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

Section 12.11.  Disclosure Schedules.  (a)  Seller may revise the Schedules to this Agreement by delivering revised Schedules to Buyer at any time prior to the Closing.  Buyer shall have the right to review the revised Schedules for a period of five days after receipt thereof.  At any time within such five–day time period Buyer shall have the right to terminate this Agreement by delivery of a notice to Seller if the revised information would be reasonably likely to have a Material Adverse Effect.  This notice, if given, shall specify the information forming the basis for the decision to terminate.  Seller shall have five days after receipt of such notice to review with Buyer the information forming the basis for the decision to terminate and to attempt to agree on corrective measures, if any.  If the parties cannot agree on corrective measures within such five–day period, then this Agreement shall terminate.  If this Agreement is not terminated as permitted by this Section, Buyer shall be deemed to have accepted such revisions, and the Schedules attached to this Agreement as of the date hereof shall be deemed to be superseded by the revised Schedules.

                (b)           The parties acknowledge and agree that (i) the Schedules to this Agreement may include certain items and information solely for informational purposes for the convenience of Buyer and (ii) the disclosure by Seller of any matter in the Schedules shall not be deemed to constitute an acknowledgment by Seller that the matter is required to be disclosed by the terms of this Agreement or that the matter is material.

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                IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

JAFCO MBO CO., LTD.
By:
	Name:
	Title:

BTC INTERNATIONAL HOLDINGS, INC.
By:
	Name:
	Title:

JAFCO CO., LTD., as Buyer Guarantor
By:
	Name:
	Title:

BANCTEC, INC., as Seller Guarantor
By:
	Name:
	Title:

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EX-10.13

EXHIBIT 10.13

FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT

                THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into on November 27, 2002 (the “Effective Date”), by and among BancTec, Inc., a Delaware corporation (“BancTec”) (BancTec being hereinafter sometimes referred to as the “Original Borrower”), and BTI Technologies L.P., a Texas limited partnership (“BTI Tech”) (BTI Tech being hereinafter sometimes referred to as the “Additional Borrower,” and Original Borrower, together with Additional Borrower, being hereinafter sometimes individually and collectively referred to as the “Borrower”), as governed by the provisions of Section 10.19, Section 10.20 and Section 10.21 of the Loan Agreement (as hereinafter defined), Heller Financial, Inc., a Delaware corporation (in its individual capacity, “Heller”) and as the Agent (“Agent”), and the financial institution(s) listed on the signature pages hereof and their respective successors and Eligible Assignees (Heller and each such other financial institution being hereinafter referred to individually as a “Lender” and collectively as the “Lenders”).  Notwithstanding anything contained elsewhere in this Amendment, this Amendment shall be effective for any purpose only upon and subject to the completion of the BTJ Sale, as hereinafter defined.

RECITALS

A.            Original Borrower, Agent and the Lenders entered into that certain Loan and Security Agreement, dated May 30, 2001 (as amended from time to time, the “Loan Agreement”).

B.            Each Borrower has requested that the Agent and the Lenders consent to the consummation of the following activities (hereinafter, collectively the “Proposed Transaction”):

(i)            Organization by Original Borrower of a new Subsidiary, BTC Ventures, Inc.,a Delaware corporation (hereinafter, “Newco”), Newco to be a wholly-owned Subsidiary of Original Borrower, with the sole asset of Newco to be a limited partnership interest in Additional Borrower, which limited partnership interest shall constitute a 99.9% equity interest in Additional Borrower;

(ii)           Organization by Original Borrower of Additional Borrower, with Original Borrower to be the sole general partner of Additional Borrower and Newco to be the sole limited partner of Additional Borrower;

(iii)          The sale by BTC International Holdings, Inc. of all of its ownership interests in BancTec Japan, Inc., a Japanese entity (hereinafter, “BTJ”), pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of November 27, 2002, executed by BTC International Holdings, Inc., BTJ, et al. (the “Purchase Agreement”) for the cash price detailed in the Purchase Agreement (the “BTJ Sale”);

(iv)          Original Borrower may make an aggregate cash prepayment on the Senior Subordinated Notes not to exceed $90,000,000, and Original Borrower may use the proceeds of the BTJ Sale as part of such cash prepayment.

(v)           Transfer by Original Borrower to Additional Borrower of the assets of Original Borrower described in the agreements listed on Schedule I attached to this Amendment (as such agreements are in effect on the date hereof, the “Original Borrower Transfer Agreements”) (such transfer to be made specifically subject to the existing Lien therein of Agent) and the license by Original Borrower to Additional Borrower of such rights to use Intellectual Property and other assets of Original Borrower as is described in the Original Borrower Transfer Agreements (such license to be made specifically subject to the existing Lien of Agent in such Intellectual Property and other assets) (such assets and rights being hereinafter referred to as the “Additional Borrower Contribution Property”); and

(vi)          (a) Execution by Additional Borrower of those certain agreements listed on Schedule II attached to this Amendment (as such agreements are in effect on the date hereof, the “Additional Borrower Ancillary Agreements”) whereby, to the extent and in the manner described in the Additional Borrower Ancillary Agreements, Additional Borrower sub-licenses or otherwise transfers rights in the Additional Borrower Contribution Property to BTJ (such sub-licenses and transfers of rights to be made specifically subject to existing Lien of Agent in the Additional Borrower Contribution Property and in the Additional Borrower Ancillary Agreements) and (b) the performance by Additional Borrower of its obligations under the Additional Borrower Ancillary Agreements.

C.            Pursuant to the terms and subject to the conditions set forth in this Amendment, (i) Agent and the Lenders are willing to consent to the consummation of the Proposed Transaction, (ii) each Borrower, Agent and the Lenders are willing to amend the Loan Agreement to make Additional Borrower a party to the Loan Agreement and to make Additional Borrower a joint and several co-obligor for obligations and indebtedness incurred under the Loan Agreement, and (iii) each Borrower, Agent, and the Lenders are willing to further amend the Loan Agreement as hereinafter set forth.

                NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, subject to the terms and conditions set forth herein, the parties, intending to be legally bound, agree as follows:

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AGREEMENT

ARTICLE I.
DEFINITIONS

SECTION 1.02       Certain Defined Terms.  Capitalized terms used in this Amendment are used as defined in the Loan Agreement, as amended hereby, unless otherwise stated.

ARTICLE II.
AMENDMENT

SECTION 2.01       Amendment to the definition of “Borrowing Base” contained in Section 2.1(B) of the Loan Agreement.  Effective as of the Effective Date, the definition of “Borrowing Base” contained in Section 2.1(B) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“‘Borrowing Base’ means, as of any date of determination, an amount equal to the sum of (a) 85.00% of Eligible Accounts less Dilution Reserves, plus (b) 50.00% of Eligible Accrued Unbilled Accounts less Dilution Reserves; plus (c) the lesser of (i) $30,000,000, or (ii) 85.00% of the net orderly liquidation value of Eligible Inventory (net orderly liquidation value to be determined in a manner and pursuant to documentation satisfactory to Agent, in its reasonable credit judgment) or (iii) 50.00% of Eligible Inventory, plus (d) the lesser of (i) $40,000,000, or (ii) 100.00% of the fair market value of Eligible Cash Collateral, and less, in each case, such reserves as Agent in its reasonable credit judgment may elect to establish.  ‘Dilution Reserve’ means, as of any date of determination, a reserve for the amount by which the total dilution of Accounts exceeds five percent (5%); with dilution referring to all actual and potential offsets to an Account, including, without limitation, customer payment and/or volume discounts, write-offs, credit memoranda, returns and allowances, and billing errors.  The Dilution Reserve shall be adjusted after each field examination audit of the Collateral conducted by Agent or any authorized representative designated by Agent.”

SECTION 2.02       Deletion of the Definition of “Eligible Field Spare Parts” contained in Section 2.1(D) of the Loan Agreement.  Effective as of the Effective Date, the definition of “Eligible Field Spare Parts” contained in Section 2.1(D) of the Loan Agreement is hereby deleted in its entirety.

SECTION 2.03       Amendment to Section 2.1(H)(1) of the Loan Agreement.  Effective as of the Effective Date, the reference to “$20,000,000.00” contained in Section 2.1(H)(1) of the Loan Agreement is hereby deleted and “$30,000,000” is substituted in lieu thereof.

SECTION 2.04       Amendment to Section 2.3(B) of the Loan Agreement.  Effective as of the Effective Date, Section 2.3(B) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

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“(B)         Letter of Credit Fees.  Borrower shall pay to Agent a fee with respect to the Lender Letters of Credit (i) for the benefit of all Lenders with a Revolving Loan Commitment (based on their respective Pro Rata Share) (a) in the amount equal to (x) the portion of the average daily amount of Letter of Credit Liability outstanding during such month equal to or less than the average daily amount of Eligible Cash Collateral (valued at fair market value) during such month, multiplied by (y) one percent (1.00%) per annum, and (b) in the amount equal to (x) the portion of the average daily amount of Letter of Credit Liability outstanding during such month in excess of the average daily amount of Eligible Cash Collateral (valued at fair market value) during such month, multiplied by (y) the per annum percentage equal to the LIBOR Margin at such time in effect, and (ii) for the account of Agent a fronting fee for each Letter of Credit issued or obtained by Agent from the date of issuance to the date of termination equal to the average daily amount of Letter of Credit Liability with respect to such Letters of Credit outstanding during such month multiplied by twenty-five one hundredths of one percent (0.25%) per annum.  Such fees will be calculated on the basis of a three hundred sixty (360) day year for the actual number of days elapsed and will be payable monthly in arrears on the first (1^st) day of each month. Borrower shall also reimburse Agent for any and all fees and expenses, if any, paid by Agent or any Lender to the issuer of any Bank Letter of Credit.”

SECTION 2.05       References to “Borrower” in the Loan Agreement.  Effective as of the Effective Date, all references in the Loan Agreement to “Borrower” shall be deemed to include references to the Additional Borrower.

SECTION 2.06       Addition of Section 10.19 to the Loan Agreement; “Joint and Several Liability; Rights of Contribution”.  Effective as of the Effective Date, a new Section 10.19 is added to the Loan Agreement to read in its entirety as follows:

“10.19     Joint and Several Liability; Rights of Contribution.

(A)          Each Borrower states and acknowledges that:  (i) pursuant to this Agreement, Borrowers desire to utilize their borrowing potential on a consolidated basis to the same extent possible if they were merged into a single organizational entity and that this Agreement reflects the establishment of credit facilities which would not otherwise be available to such Borrower if each Borrower were not jointly and severally liable for payment of all of the Obligations; (ii) it has determined that it will benefit specifically and materially from the advances of credit contemplated by this Agreement; (iii) it is both a condition precedent to the obligations of Agent and Lenders hereunder and a desire of the Borrowers that each Borrower execute and deliver to Agent and the Lenders this Agreement; and (iv) Borrowers have requested and bargained for the structure and terms of and security for the advances contemplated by this Agreement.

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(B)           Each Borrower hereby irrevocably and unconditionally:   (i) agrees that it is jointly and severally liable to Agent and the Lenders for the full and prompt payment of the Obligations and the performance by each Borrower of its obligations hereunder in accordance with the terms hereof; (ii) agrees to fully and promptly perform all of its Obligations hereunder with respect to each advance of credit hereunder as if such advance had been made directly to it; and (iii) agrees as a primary obligation to indemnify Agent and the Lenders on demand for and against any loss incurred by Agent or the Lenders as a result of any of the obligations of any one or more of the Borrowers being or becoming void, voidable, unenforceable or ineffective for any reason whatsoever, whether or not known to Agent or the Lenders or any Person, the amount of such loss being the amount which Agent or the Lenders would otherwise have been entitled to recover from any one or more of the Borrowers.

(C)           It is the intent of each Borrower that the indebtedness, obligations and liability hereunder of either Borrower not be subject to challenge on any basis, including, without limitation, pursuant to any applicable fraudulent conveyance or fraudulent transfer laws. Accordingly, as of the date hereof, the liability of each Borrower under this Section 10.19, together with all of its other liabilities to all Persons as of the date hereof and as of any other date on which a transfer or conveyance is deemed to occur by virtue of this Agreement, calculated in amount sufficient to pay its probable net liabilities on its existing Indebtedness as the same become absolute and matured (‘Dated Liabilities’) is, and is to be, less than the amount of the aggregate of a fair valuation of its property as of such corresponding date (‘Dated Assets’).  To this end, each Borrower under this Section 10.19, (i) grants to and recognizes in each other Borrower, ratably, rights of subrogation and contribution in the amount, if any, by which the Dated Assets of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Liabilities of such Borrower or, as the case may be, (ii) acknowledges receipt of and recognizes its right to subrogation and contribution ratably from each of the other Borrowers in the amount, if any, by which the Dated Liabilities of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Assets of such Borrower under this Section 10.19.  In recognizing the value of the Dated Assets and the Dated Liabilities, it is understood that Borrowers will recognize, to at least the same extent of their aggregate recognition of liabilities hereunder, their rights to subrogation and contribution hereunder.  It is a material objective of this Section 10.19 that each Borrower recognizes rights to subrogation and contribution rather than be deemed to be insolvent (or in contemplation thereof) by reason of an arbitrary interpretation of its joint and several obligations hereunder.  In addition to and not in limitation of the foregoing provisions of this Section 10.19, the Borrowers and Lender hereby agree and acknowledge that it is the intent of each Borrower and of Lender that the obligations of each Borrower hereunder be in all respects in compliance with, and not be voidable pursuant to, applicable fraudulent conveyance and fraudulent transfer laws.”

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SECTION 2.07       Addition of Section 10.20 to the Loan Agreement; “Structure of Credit Facility”.  Effective as of the Effective Date, a new Section 10.20 is added to the Loan Agreement to read in its entirety as follows:

“10.20     Structure of Credit Facility.  Each Borrower agrees and acknowledges that the present structure of the credit facilities detailed in this Agreement is based in part upon the financial and other information presently known to Lenders regarding each Borrower, the organizational structure of Borrowers, and the present financial condition of each Borrower.  Each Borrower hereby agrees that Agent, on behalf of Lenders, shall have the right, in its sole discretion, to require that any or all of the following changes be made to these credit facilities:  (i) establish a separate ‘borrowing base’ for each Borrower, (ii) advance a Revolving Advance specifically to a specific Borrower, based on such Borrower’s availability under its own ‘borrowing base’, (iii) restrict loans and advances between Borrowers, (iv) establish separate lockbox and dominion accounts for each Borrower, and (v) establish such other procedures as shall be reasonably deemed by Agent to be useful in tracking where Loans are made under this Agreement and the source of payments received by Agent or any Lender on such Loans.”

SECTION 2.08       Addition of Section 10.21 to the Loan Agreement; “The Term ‘Borrower’ or ‘Borrowers.’”  Effective as of the Effective Date, a new Section 10.21 is added to the Loan Agreement to read in its entirety as follows:

“10.21     The Term ‘Borrower’ or ‘Borrowers’.  All references to ‘Borrower’ or ‘Borrowers’ herein shall refer to and include each of the Original Borrower and the Additional Borrower separately and all representations contained herein shall be deemed to be separately made by each of them, and each of the covenants, agreements and obligations set forth herein shall be deemed to be the joint and several covenants, agreements and obligations of them (except as otherwise specifically provided herein).  Any notice, request, consent, report or other information or agreement delivered to Agent or any Lender by any Borrower shall be deemed to be ratified by, consented to and also delivered by the other Borrower.  Each Borrower recognizes and agrees that each covenant and agreement of ‘Borrower’ or ‘Borrowers’ under this Agreement and the other Loan Documents shall create a joint and several obligation of the Borrowers, which may be enforced against Borrowers, jointly, or against each Borrower separately.  Without limiting the terms of this Agreement and the other Loan Documents, Liens granted under this Agreement and other Loan Documents in properties, interests, assets and collateral shall extend to the properties, interests, assets and collateral of each Borrower.  Similarly, the term ‘Obligations’ shall include, without limitation, all obligations, liabilities and indebtedness of such Persons, or any one of them, to Agent or Lenders, whether such obligations, liabilities and indebtedness shall be joint, several, joint and several or individual.”

SECTION 2.09       Amendment to Section 11.1 of the Loan Agreement; Addition of Certain Definitions.  Effective as of the Effective Date, Section 11.1 of the Loan Agreement is

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hereby amended by adding the following new definitions thereto, to be inserted in their proper alphabetical order:

“‘Additional Borrower’— BTI Technologies, L.P., a Texas limited partnership.

‘BTJ Sale’ — has the same meaning as in the Fourth Amendment.

‘Eligible Cash Collateral’ — shall mean such cash of Borrower and such short-term liquid investments of Borrower as are acceptable to Agent to the extent that Agent, for the benefit of Lenders, has a first priority perfected Lien in such cash and such liquid investments, such Lien to be perfected in such a manner and pursuant to such documentation as shall be satisfactory to Agent in its sole discretion.

‘Fourth Amendment’ — that certain Fourth Amendment to Loan and Security Agreement executed by Original Borrower, Additional Borrower, Agent and Lenders.

‘Original Borrower’ — BancTec, Inc., a Delaware corporation.”

SECTION 2.10       Amendment to Section 11.1 of the Loan Agreement; Deletion of Definition of “Real Property Advance Amount”.  Effective as of the Effective Date, Section 11.1 of the Loan Agreement is hereby amended by deleting therefrom the definition of “Real Property Advance Amount.”

SECTION 2.11       Amendment to Exhibit C.  Effective as of the Effective Date, Exhibit C to the Loan Agreement (Form of Revolving Note) is hereby deleted in its entirety and replaced with Exhibit C attached hereto.

SECTION 2.12       Amendment to Schedule 4.1B.  Effective as of the Effective Date, Schedule 4.1B to the Loan Agreement (Capitalization) is hereby deleted in its entirety and replaced with Schedule 4.1B attached hereto.

SECTION 2.13       Amendment to Schedule 4.6.  Effective as of the Effective Date, Schedule 4.6 to the Loan Agreement (Names and Locations) is hereby deleted in its entirety and replaced with Schedule 4.6 attached hereto.

SECTION 2.14       Amendment to Schedule 7.11.  Effective as of the Effective Date, Schedule 7.11 to the Loan Agreement (Subsidiaries) is hereby deleted in its entirety and replaced with Schedule 7.11 attached hereto.

SECTION 2.15       Grant by Additional Borrower of Security Interest in Collateral.  Additional Borrower hereby agrees that by becoming a party to the Loan Agreement, it is subject to all the provisions of the Loan Agreement, including, without limitation, the grant to Agent, on behalf of Lenders, of a continuing security interest, lien and mortgage in and to all right, title and interest of Additional Borrower in all of Additional Borrower’s personal andrealproperty, whether now owned or existing or hereafter acquired or arising and regardless of where located,

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as specified in Section 2.7 of the Loan Agreement.  In accordance therewith and in order to secure the prompt payment and performance of the Obligations, Additional Borrower hereby grants to Agent, on behalf of Lenders, a continuing security interest, lien, and mortgage in and to all of Additional Borrower’s personal and real property, whether now owned or existing or hereafter acquired or arising and regardless of where located, including, without limitation, (A) Accounts, and all guaranties and security therefor, and all goods and rights represented thereby or arising therefrom including the rights of stoppage in transit, replevin and reclamation; (B) Inventory; (C) general intangibles (as defined in the UCC); (D) documents (as defined in the UCC) or other receipts covering, evidencing or representing goods; (E) instruments (as defined in the UCC); (F) chattel paper (as defined in the UCC); (G) Equipment; (H) Mortgaged Property; (I) investment property (as defined in the UCC) including, without limitation, all securities (certificated and uncertificated) security accounts, security entitlements, commodity contracts and commodity accounts; (J) Intellectual Property; (K) all deposit accounts of Additional Borrower maintained with any bank or financial institution; (L) all cash and other monies and property of Additional Borrower in the possession or under the control of Agent, any Lender or any participant; (M) all books, records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing software that at any time evidence or contain informa­tion relating to any of the property described above or are otherwise necessary or helpful in the collection thereof or realization thereon; and (N) proceeds and products of all or any of the property described above, including, without limitation, the proceeds of any insurance policies covering any of the above described property; provided, however, the grant by Additional Borrower to Agent, on behalf of the Lenders, of a continuing security interest, lien, and mortgage in and to all right, title and interest of Additional Borrower in all of Additional Borrower’s personal and real property is subject to the conditions and limitations set forth in the last two sentences of Section 2.7 of the Loan Agreement.

SECTION 2.16       Restrictions on Transactions between the Original Borrower and the Additional Borrower and the Original Borrower or Additional Borrower and Newco.  Notwithstanding anything to the contrary in the Loan Agreement and in addition to other restrictions, covenants and agreements contained in the Loan Agreement, effective immediately, each Borrower, Agent and the Lender hereby agree as follows:

(a)           Unless otherwise consented to in writing by Agent, requests for Loans shall be made by Original Borrower and the proceeds of Loans shall be disbursed directly to Original Borrower; and

(b)           Unless otherwise consented to in writing by Agent, Original Borrower shall not:

(i)            make any Loans or advances of money to the Additional Borrower or Newco;

(ii)           inject any additional capital into Additional Borrower or Newco;

(iii)          enter into any transaction with the Additional Borrower, except (A) as part of the Proposed Transaction or (B) in the ordinary course of and pursuant to the reasonable requirements of Original Borrower’s business and upon

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terms which are fully disclosed to Agent and are no less favorable to Original Borrower than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of Original Borrower;

(iv)          enter into any transaction with Newco except (A) as part of the Proposed Transaction or (B) distributions by Newco to Original Borrower to the extent permitted by Section 7.5 of the Loan Agreement;

(v)           guarantee, assume, endorse or otherwise, in any way, become directly or contingently liable with respect to the Indebtedness of Additional Borrower or Newco, other than the Obligations, and other than recourse Indebtedness of Additional Borrower for which Borrower, as the sole general partner of Additional Borrower, is obligated as a matter of law, and other than in connection with the Proposed Transaction; or

(vi)          transfer any assets to Additional Borrower, except (A) the Additional Borrower Contribution Property and (B) as permitted by (b)(iii) above; and

(c)           Unless otherwise consented to in writing by Agent, Additional Borrower shall not:

(i)            make any Loans or advances of money to Newco;

(ii)           enter into any transaction with Newco other than as part of the Proposed Transaction;

(iii)          guarantee, assume, endorse or otherwise, in any way, become directly or contingently liable with respect to the indebtedness of Newco; or

(iv)          transfer any assets to Newco  other than distributions by Additional Borrower to Newco to the extent permitted by Section 7.5 of the Loan Agreement.

SECTION 2.17       Addition of New Section 7.16 to the Loan Agreement.  Effective as of the Effective Date, a new Section 7.16 is added to the Loan Agreement to read in its entirety as follows:

“7.16       Minimum Availability.  Permit the Availability on any day during the period beginning on the first date upon which the Borrower makes any prepayment on the Senior Subordinated Note from the cash proceeds of the BTJ Sale and continuing through the forty-fifth (45^th) day after such date to at any time be less than $7,500,000.”

SECTION 2.18       References to “Guarantor”.  Effective as of the Effective Date, all references in the Loan Agreement to “Guarantor” shall be deemed to also be references to BancTec Upper-Tier Holding, LLC and to BancTec Intermediate Holding, Inc.

SECTION 2.19       Amendment Fee.  In consideration for the agreements set forth herein, Borrower agrees to pay Agent, for Agent’s benefit and for the benefit of Lenders, an amendment fee of $25,000, which fee shall be (i) deemed fully earned on the date hereof, (ii) non-refundable, and (iii) due and payable in full on the date hereof.

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ARTICLE III.
CONDITIONS PRECEDENT

SECTION 3.01       Condition to Effectiveness.  The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent in a manner and pursuant to documentation satisfactory to Agent:

(a)           The Agent shall have received all of the following, each in form and substance satisfactory to Agent:  (i) this Amendment, duly executed by the Original Borrower, the Additional Borrower, the Agent, and the Lenders, (ii) a certificate of the Secretary of each Borrower acknowledging (A) that each Borrower’s board of directors has adopted, approved, consented to and ratified resolutions which authorize the execution, delivery and performance by each Borrower of this Amendment, and all other Loan Documents to which each Borrower is or is to be a party and (B) the names of the officers of each Borrower authorized to sign this Amendment and each of the other Loan Documents to which each Borrower is or is to be a party hereunder (including the certificates contemplated herein), together with specimen signatures of such officers, (iii) a guaranty from Newco guaranteeing payment of the Obligations, (iv) security agreements from Newco whereby Newco grants Agent, for the benefit of Lenders, a first priority Lien in all assets of Newco, including without limitation, a first priority Lien in the partnership interest of Newco in Additional Borrower, (v) an amended and restated pledge agreement from Original Borrower, whereby Original Borrower grants Agent, for the benefit of Lenders, a perfected first priority Lien in Original Borrower’s partnership interest in Additional Borrower and capital stock in Newco, which Lien shall be in addition to the Lien in the capital stock or equivalent ownership interest of Original Borrower in each of its Subsidiaries previously granted by Original Borrower to Agent, (vi) if specifically requested by Agent,a security agreement from Additional Borrower covering the Intellectual Property of Additional Borrower, in a form materially the same as such other intellectual property security agreements previously executed by Original Borrower, whereby Additional Borrower grants Agent, for the benefit of Lenders, a perfected first priority Lien in all currently or hereafter owned Intellectual Property of Additional Borrower, (vii) a Revolving Note in the form of Exhibit C attached hereto, duly executed by each Borrower, (viii) satisfactory evidence of the organization and good standing of Additional Borrower and Newco, (ix) a legal opinion from counsel to Borrower, covering the execution of this Amendment and the other Loan Documents executed in connection with this Amendment, the transactions contemplated hereby, and the existence and good standing of Newco and Additional Borrower, (x) the Consent and Ratification attached hereto, duly executed by each existing Guarantor and by WCAS, and (xi) such additional documents, instruments and information as the Agent may reasonably request;

(b)           The representations and warranties contained herein and in the Loan Agreement and the Loan Documents, as each is amended hereby, shall be true and correct in all material respects as of the date hereof, as if made on the date hereof (except insofar as such representations and warranties relate expressly to an earlier date);

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(c)           After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing; and

(d)           All corporate and partnership and limited liability company proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto, shall be satisfactory to the Agent.

ARTICLE IV.
CONSENT TO PROPOSED TRANSACTION

SECTION 4.01       Consent.  Subject to the satisfaction of the conditions precedent specified in Article III of this Amendment and the other terms, conditions, and provisions of this Amendment, each of Agent and Lenders hereby consents to the consummation of the Proposed Transaction; provided, however, that in addition to the satisfaction of the conditions precedent specified above in Article III, the consent of Agent and Lenders to the BTJ Sale, the transfer and license by Original Borrower to Additional Borrower of the Additional Borrower Contribution Property and the Additional Borrower’s execution of and performance under the Additional Borrower Ancillary Agreements (collectively, the “Japanese Subsidiary Transactions”) is further subject to the satisfaction of the following conditions precedent in a manner and pursuant to documentation satisfactory to Agent:

(a)           Receipt by Agent of evidence satisfactory to Agent that the Japanese Subsidiary Transactions have been consummated consistent with the description of the Japanese Subsidiary Transactions contained in the Recitals to this Amendment, and Agent shall have received copies of all documents, agreements and materials executed or issued in connection with the Japanese Subsidiary Transactions, including, without limitation, the Purchase Agreement, all documents by which the Additional Borrower Contribution Property is transferred or licensed to Additional Borrower by Original Borrower, and the Additional Borrower Ancillary Agreements, all of which documents, certificates and materials shall be in form and substance satisfactory to Agent;

(b)           A legal opinion from counsel to Borrower covering the Japanese Subsidiary Transactions;

(c)           The representations and warranties contained herein and in the Loan Agreement and the Loan Documents, as each is amended hereby, shall be true and correct in all material respects as of the date of consummation of the Japanese Subsidiary Transactions, as if made on such date (except insofar as such representations and warranties relate expressly to an earlier date);

(d)           No Default or Event of Default shall have occurred and be continuing; and

(e)           All corporate and partnership and limited liability company proceedings taken in connection with the Japanese Subsidiary Transactions and all documents, instruments and other legal matters incident thereto, shall be satisfactory to the Agent.

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SECTION 4.02       Limited Nature of Consent.  Consummation of the Proposed Transaction in accordance with the terms, provisions and conditions of this Amendment shall not constitute a Default or Event of Default under the Loan Agreement or any other Loan Document.  The foregoing consent described in this Article IV is strictly limited to the Proposed Transaction as described and limited by this Amendment and, except as otherwise specifically provided for in this Amendment, nothing contained herein shall be construed as a waiver by Agent or any Lender of any covenant or provision of the Loan Agreement, the other Loan Documents, this Amendment, or any of other contract or instrument between each Borrower and Agent and/or any Lender or as a consent by Agent or any Lender to any other transaction involving Borrower or any Affiliate of Borrower.  In addition, the failure of Agent or any Lender at any time or times hereafter to require strict performance by each Borrower of any provision thereof shall not waive, affect or diminish any right of Agent or any Lender to thereafter demand strict compliance therewith.  The Agent and each Lender hereby reserves all rights granted under the Loan Agreement, the other Loan Documents, this Amendment and any other contract or instrument between any Borrower and Agent and/or any Lender.

ARTICLE V.  RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

SECTION 5.01       Ratifications.  The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and the other Loan Documents, and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect.  Borrower, Agent and Lenders agree that the Loan Agreement and the other Loan Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

SECTION 5.02       Representations and Warranties.  Each Borrower hereby represents and warrants to Agent and Lenders that (a) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate and partnership action on the part of each Borrower and will not violate the Certificate of Incorporation or Bylaws of Original Borrower or the Certificate of Limited Partnership or limited partnership agreement of Additional Borrower; (b) the representations and warranties contained in the Loan Agreement, as amended hereby, and any other Loan Document are true and correct on and as of the date hereof and on and as of the date of execution hereof as though made on and as of each such date; (c) no Event of Default or Default under the Loan Agreement has occurred and is continuing, unless such Event of Default or Default has been, or by the terms of this Amendment is, specifically waived in writing by Lenders; (d) until the effective date of the Blocked Account Control Agreement entered into as of November 27, 2002, to be effective as of January 1, 2003, by and among BTC International Holdings, Inc., Agent and JPMorgan Chase Bank, the proceeds of the BTJ Sale deposited into Deposit Account No. 323414192 maintained at JPMorgan Chase Bank will be the only amounts deposited into such account and no Borrower, nor any Affiliate of any Borrower will make any other deposits to such account before such effective date and (e) each Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement and the other Loan Documents, as amended hereby.

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ARTICLE VI.  MISCELLANEOUS PROVISIONS

SECTION 6.01       Survival of Representations and Warranties.  All representations and warranties made in the Loan Agreement or any other Loan Document, including, without limitation, any document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Agent or any Lender nor any closing shall affect the representations and warranties or the right of Agent or any Lender to rely upon them.

SECTION 6.02       Reference to Loan Agreement.  Each of the Loan Documents, including the Loan Agreement and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement, as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean a reference to the Loan Agreement, as amended hereby.

SECTION 6.03       Expenses of Agent.  As provided in the Loan Agreement, each Borrower agrees to promptly pay all fees, costs and expenses incurred by Agent (including attorneys’ fees and expenses, the allocated cash of Agent’s internal legal staff and fees of environmental consultants, accountants and other professionals retained by Agent) incurred in connection with the review, negotiation, preparation, documentation and execution of this Amendment.

SECTION 6.04       Severability.  Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

SECTION 6.05       Successors and Assigns.  This Amendment is binding upon and shall inure to the benefit of Agent and Lenders and each Borrower and their respective successors and assigns, except no Borrower may assign or transfer any of its rights or obligations hereunder without the prior written consent of Agent and Lenders.

SECTION 6.06       Counterparts.  This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument.

SECTION 6.07       Effect of Waiver.  No consent or waiver, express or implied, by Agent or any Lender to or for any breach of or deviation from any covenant or condition by Borrower shall be deemed a consent to or waiver of any other breach of the same or any other covenant, condition or duty.

SECTION 6.08       Headings.  The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

SECTION 6.09       APPLICABLE LAW.  THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE

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GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

SECTION 6.10       FINAL AGREEMENT.  THE LOAN DOCUMENTS, AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.  THE LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.  NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY EACH BORROWER, LENDERS AND AGENT.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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                IN WITNESS WHEREOF, this Amendment has been executed and is effective as of the Effective Date.

BANCTEC, INC.
By:
Name:	Brian R. Stone
Title:	Chief Financial Officer
BTI TECHNOLOGIES, L.P.
By:	BANCTEC, INC., its General Partner
	By:
	Name:	Brian R. Stone
	Title:	Chief Financial Officer
HELLER FINANCIAL, INC.,
as Agent and Sole Lender
By:
Name:
Title:

CONSENT AND RATIFICATION

                Each of the undersigned hereby consents to the terms of the within and foregoing Amendment, confirms and ratifies the terms of its guaranty agreement relating to the Obligations and of each Loan Document it has executed in connection with the Obligations (collectively, the “Loan Documents”), agrees that each of the Loan Documents to which it is a party shall hereafter be deemed to cover the Obligations of Additional Borrower as well as of Original Borrower, and acknowledges that the Loan Documents to which it is a party are in full force and effect and ratifies the same, that it has no defense, counterclaim, set–off or any other claim to diminish its liability under such Loan Documents, that its consent is not required to the effectiveness of the within and foregoing Amendment, and that no consent by it is required for the effectiveness of any future amendment, modification, forbearance or other action with respect to the Loans, the collateral securing the Obligations, or any of the other Loan Documents.

WELSH, CARSON, ANDERSON & STOWE VIII, L.P., a Delaware limited partnership
By:	WCAS VIII ASSOCIATES, L.L.C., its General Partner
	By:
	Name:
	Title:
BTC INTERNATIONAL HOLDINGS, INC.
By:
Name:	Brian R. Stone
Title:	Chief Financial Officer
BANCTEC (PUERTO RICO), INC.
By:
Name:
Title:
BANCTEC UPPER-TIER HOLDING, LLC
By:
Name:
Title:

BANCTEC INTERMEDIATE HOLDING, INC.

By:

Name:

Title:

SCHEDULE I

Original Borrower Transfer Agreements

1.Property Transfer Agreement, dated November 27, 2002, executed by Original Borrower, in favor of Additional Borrower.

2.Hardware Agreement, dated November 27, 2002, executed by Original Borrower and Additional Borrower.

3.Master Know-How Agreement, dated November 27, 2002, executed by Original Borrower and Additional Borrower.

4.Trademark License Agreement, dated November 27, 2002, executed by Original Borrower and Additional Borrower.

5.Software Agreement, dated November 27, 2002, executed by Original Borrower and Additional Borrower.

SCHEDULE II

Additional Borrower Ancillary Agreements

1.Master Know-How Agreement, dated November 27, 2002, executed by Additional Borrower and BTJ.

2.Software Reseller Agreement, dated November 27, 2002, executed by Additional Borrower and BTJ.

3.Agreement for Purchase of Spare Parts Products, dated November 27, 2002, executed by Additional Borrower and BTJ.

4.Trademark License Agreement, dated November 27, 2002, executed by Additional Borrower and BTJ.

EX-10.14

EXHIBIT 10.14

November 1, 2002

Via Facsimile: (972) 579-6448
BANCTEC, INC.
BANCTEC UPPER-TIER HOLDING, LLC
BANCTEC INTERMEDIATE HOLDING, INC.
2701 East Grauwyler Road
Building #3
Irving, Texas 75061
Attention: Chief Financial Officer

Re:LOAN AND SECURITY AGREEMENT—WAIVER, CONSENT AND AMENDMENT  RELATING TO BANCTEC RESTRUCTURING

Ladies and Gentleman:

Reference is hereby made to that certain Loan and Security Agreement by and among BANCTEC, INC., a Delaware corporation (“Borrower”), the financial institution(s) listed on the signature pages hereof, and their respective successors and Eligible Assignees (“Lender”) and HELLER FINANCIAL, INC., a Delaware corporation (“Agent”), as Agent for the Lender, dated as of May 30, 2001 (as amended or otherwise modified in writing, the “Loan Agreement”).  Unless otherwise indicated, all terms used herein shall have the same meanings as in the Loan Agreement.

Borrower has requested that Agent and Lender consent to the consummation of the following transactions, as such transactions are more fully described in that certain Contribution and Subscription Agreement (the “Contribution Agreement”), dated as of November 1, 2002, executed by Borrower, BancTec Upper-Tier Holding, LLC, a Delaware limited liability company (“Upper-Tier Holding”), and BancTec Intermediate Holding, Inc., a Delaware corporation (“Intermediate Holding”), and in that certain Limited Liability Company Agreement of BancTec Upper-Tier Holding, LLC (“Limited Liability Company Agreement”), dated as of November 1, 2002, executed by Welsh, Carson, Anderson & Stowe VIII, L.P., WCAS Capital Partners III, L.P., WCAS Information Partners, L.P., the other WCAS Members (as defined in the Limited Liability Company Agreement), Convergent Equity Partners, L.P., the Executive Members (as defined in the Limited Liability Company Agreement), and the other Members (as defined in the Limited Liability Company Agreement):  (a) (i) the creation of BancTec Upper-Tier Holding, a Delaware general partnership (“Original Partnership”), and (ii) the contribution to Original Partnership by the WCAS Members of the Senior Subordinated Note and the Deferred Interest Notes (as defined in the Senior Subordinated Note), and of the entirety of their ownership interest in the capital stock of Borrower and in the warrants to purchase capital stock of Borrower issued to them by Borrower; (b) (i) the creation of Upper-Tier Holding, and (ii) the contribution to

Upper-Tier Holding: (A) by the WCAS Members of all of their interests in Original Partnership, (B) by Convergent of 1,181,946 shares of Class A Common Stock, par value $.01 per share of Borrower, and (C) by the Executive Members of $100,000 in cash, in each case in exchange for such interest in Upper-Tier Holding as is described in the Limited Liability Company Agreement; (c) the dissolution and termination of Original Partnership and transfer of all of the assets of Original Partnership to Upper-Tier Holding, whereupon Upper-Tier Holding becomes the owner of the Senior Subordinated Note and the Deferred Interest Notes (hereinafter, the “Subordinated Notes”) and of all the issued and outstanding capital stock of Borrower and of warrants to purchase capital stock of Borrower (such capital stock and warrants being hereinafter collectively referred to as the “BancTec Stock and Warrants”); and (d) (i) creation of an Intermediate Holding, (ii) contribution by Upper-Tier Holding to Intermediate Holding of the BancTec Stock and Warrants and $100,000 in cash in exchange for the issuance by Intermediate Holding to Upper-Tier Holding of 100% of the issued and outstanding capital stock of Intermediate Holding, and (iii) subscription by Intermediate Holding for, and issuance by Borrower to Intermediate Holding of, 667 shares of Series A Preferred Stock of Borrower for an aggregate subscription price of $100,000 (such transactions being hereinafter referred to collectively as the “Proposed Transaction”), and that Agent and Lender waive any violation of any provision of the Loan Agreement to the extent such provision would otherwise be deemed violated solely due to the consummation of the Proposed Transaction.

Borrower has further requested that Agent and the Lender (a) amend the Loan Agreement to permit Borrower to make cash dividends to Intermediate Holding (i) in an aggregate amount equal to the actual federal and state income and franchise tax liability for any applicable year of Intermediate Holding, Borrower and Borrower’s Subsidiaries as determined on a consolidated basis pursuant to actually filed consolidated tax returns of Intermediate Holding, Borrower and Borrower’s Subsidiaries, (ii) in an amount not to exceed $200,000 during each fiscal year of Borrower to be used to pay the administrative expenses of Intermediate Holding and Upper-Tier Holding,  and (iii) in connection with the purchase by Upper-Tier Holding pursuant to Section 8.05 of the Limited Liability Company Agreement of all Interests (as defined in the Limited Liability Company Agreement) in Upper-Tier Holding then held by a Carry Member (as defined in the Limited Liability Company Agreement) and his affiliates or transferees, provided that the amount of such cash dividend in connection with such specific purchase does not exceed the Series C Principal Balance (as defined in the Limited Liability Company Agreement) of such Carry Member, and (b) amend the Loan Agreement to permit Borrower to file consolidated income tax returns with Intermediate Holding, and (c) make the other agreements hereinafter set forth.

Subject to the terms, conditions and provisions of this letter, (a) each of Lender and Agent hereby (i) consents to the consummation of the Proposed Transaction, and (ii) waives any violation of the provisions of the Loan Agreement to the extent such provisions would be deemed violated solely due to the consummation of the Proposed Transaction, and (b) each of Agent, Lender and Borrower hereby amends the Loan Agreement and hereby makes such other agreements as follows:

(i)            Borrower, Agent and Lender hereby amend Section 7.5 of the Loan Agreement by deleting it in its entirety and replacing it with the following:

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“7.5         Restricted Junior Payments.  Directly or indirectly declare, order, pay, make or set apart any sum for any Restricted Junior Payment, except that (a) Subsidiaries of Borrower may make Restricted Junior Payments with respect to their common stock, (b) the Borrower may declare and pay dividends with respect to its capital stock payable in additional shares of its common stock, (c) the Borrower may make Restricted Junior Payments pursuant to and in accordance with currently existing stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (d) Borrower may make regularly scheduled interest payments on the Senior Subordinated Note and issue and pay interest on Deferred Interest Notes (as defined in the Senior Subordinated Note) provided that at the time of such payment or issuance Borrower is in compliance with the Fixed Charge Coverage Ratio specified in B of the Financial Covenants Rider, (e) Borrower may make cash dividends to BancTec Intermediate Holding, Inc., a Delaware corporation (‘Intermediate Holding’), up to the aggregate amount equal to the actual federal and state income and franchise tax liability for any applicable taxable year of Intermediate Holding, Borrower and Borrower’s Subsidiaries as determined on a consolidated basis pursuant to consolidated tax returns actually filed for Intermediate Holding, Borrower and Borrower’s Subsidiaries, (f) Borrower may make cash dividends to Intermediate Holding in an amount each fiscal year of Borrower not to exceed $200,000 to be used to pay the administrative expenses of Intermediate Holding and of BancTec Upper-Tier Holding, LLC, a Delaware limited liability company (‘Upper-Tier Holding’), and (g) provided no Default or Event of Default then exists, Borrower may make cash dividends to Intermediate Holding in connection with the purchase by Upper-Tier Holding pursuant to Section 8.05 of the Upper-Tier Holding LLC Agreement of all Interests (as defined in the Upper-Tier Holding LLC Agreement) in Upper-Tier Holding then held by a ‘Carry Member’ (as defined in the Upper-Tier Holding LLC Agreement) and his affiliates or other transferees, provided that the amount of such cash dividend in connection with any such specific purchase shall not exceed the Series C Principal Balance (as defined in the Upper-Tier Holding LLC Agreement) of such Carry Member.”

(ii)           Borrower, Agent and Lenders hereby amend Section 7.10 of the Loan Agreement by deleting it in its entirety and replacing it with the following:

“7.10       Tax Consolidations.  File or consent to the filing of any consolidated income tax return with any Person other than any of Borrower’s Subsidiaries or Intermediate Holding;provided that in the event Borrower files a consolidated return with Intermediate Holding or any such other Person, Borrower’s contribution with respect to taxes as a result of the filing of such consolidated return shall not be greater, nor the receipt of tax benefits less, than they would have been had Borrower not filed a consolidated return with Holdings or such other Person.”

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(iii)          Borrower, Agent and Lender hereby agree that in addition to and not in limitation of the Events of Default presently set forth in Section 8.1 of the Loan Agreement, the occurrence of any of the following shall also constitute an Event of Default:

                (A)          Upper-Tier Holding and/or Intermediate Holding hereafter forms a new Subsidiary; or

                (B)           Upper-Tier Holding conducts any business other than being the holding company for all the issued and outstanding capital stock in Intermediate Holding and the Subordinated Notes; or

                (C)           Intermediate Holding conducts any business other than being the holding company for all the issued and outstanding capital stock of and of all the issued warrants to purchase capital stock of Borrower.

(iv)          Borrower, Agent and Lender hereby amend Section 11.1 of the Loan Agreement by adding thereto a new definition, “Upper-Tier Holding LLC Agreement,” to read in its entirety as follows:

“‘Upper-Tier Holding LLC Agreement’ means that certain Limited Liability Company Agreement of BancTec Upper-Tier Holding LLC, dated as of November 1, 2002, executed by WCAS, et al., as in effect on the original date of execution thereof and as thereafter amended, to the extent Agent has consented to such amendment.”

(v)           Borrower, Agent and Lender hereby agree that unless otherwise required by Agent, calculation of the covenants contained in the Financial Covenants Rider attached to the Loan Agreement shall continue to only take into account Borrower and its Subsidiaries (and not Intermediate Holding) and that unless otherwise required by Agent the reporting required by the Reporting Rider attached to the Loan Agreement shall continue to be reported on the basis of Borrower and its Subsidiaries (and not on the basis of Intermediate Holding and its Subsidiaries).

Notwithstanding the foregoing, Lender’s and Agent’s consents, waivers and agreements herein are subject to the satisfaction of the following conditions in a manner and pursuant to documentation satisfactory to Agent:

(a)Agent shall have received a copy of this letter, duly and validly executed by Borrower, Upper-Tier Holding and Intermediate Holding;

(b)Agent shall have received a copy of the executed Contribution Agreement, including all exhibits and schedules thereto, and of the executed Limited Liability Company Agreement, including all exhibits and schedules thereto, and of all other documentation executed and issued in connection with the Proposed Transaction;

(c)Agent shall have received (i) a Guaranty Agreement duly executed by Upper-Tier Holding, in favor of Agent and Lender, whereby Upper-Tier Holding guarantees payment of the Obligations, and (ii) a Guaranty Agreement duly executed by

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Intermediate Holding, in favor of Agent and Lender, whereby Intermediate Holding guarantees payment of the Obligations; and

(d)satisfaction of such other conditions as Agent shall reasonably require.

By execution of this letter, each of Borrower, Upper-Tier Holding and Intermediate Holding hereby agrees for the benefit of Agent and Lender that (a) the Loan Agreement constitutes the “Credit Agreement” for the purpose of the Senior Subordinated Notes, (b) all Obligations constitute “Senior Indebtedness” for purposes of the Senior Subordinated Notes, and (c) the consummation of the Proposed Transaction does not and shall not be deemed to constitute a “Change of Control” for purposes of the Senior Subordinated Notes.

Each of Borrower, Upper-Tier Holding and Intermediate Holding is hereby notified that irrespective of (a) any waivers previously granted by Agent or Lender regarding the Loan Agreement and the Loan Documents, (b) any previous failures or delays of Agent or Lender in exercising any right, power or privilege under the Loan Agreement or the Loan Documents, or (c) any previous failures or delays of Agent or Lender in the monitoring or in the requiring of compliance by Borrower with the duties, obligations, and agreements of Borrower in the Loan Agreement and the Loan Documents, hereafter each of Borrower, Upper-Tier Holding and Intermediate Holding will be expected to comply strictly with its duties, obligations and agreements under the Loan Agreement and the Loan Documents.

Except as expressly provided above, nothing contained in this letter or any other communication between Agent and/or Lender and Borrower shall be a waiver of any past, present or future violation, default or Event of Default of Borrower under the Loan Agreement or any Loan Documents.  Similarly, each of Agent and Lender hereby expressly reserves any rights, privileges and remedies under the Loan Agreement and each Loan Document that Agent or Lender may have with respect to each violation, default or Event of Default, and any failure by Agent or Lender to exercise any right, privilege or remedy as a result of the violation set forth above shall not directly or indirectly in any way whatsoever either (a) impair, prejudice or otherwise adversely affect the rights of Agent or Lender, except as set forth herein, at any time to exercise any right, privilege or remedy in connection with the Loan Agreement or any Loan Documents, (b) amend or alter any provision of the Loan Agreement or any Loan Documents or any other contract or instrument, or (c) constitute any course of dealing or other  basis for altering any obligation of Borrower or Upper-Tier Holding or Intermediate Holding or any rights, privilege or remedy of Agent under the Loan Agreement or any Loan Documents or any other contract or instrument.  Nothing in this letter shall be construed to be a consent by Agent or Lender to any prior, existing or future violations of the Loan Agreement or any Loan Document or to any transaction involving Borrower or Intermediate Holding or Upper-Tier Holding other than the Proposed Transaction.

This letter and its agreement to and acceptance by Borrower, Upper-Tier Holding and Intermediate Holding may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute one and the same instrument.

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Please acknowledge your agreement to the terms and conditions of this letter by executing it in the space below and returning it to the undersigned.

	Very truly yours,
	HELLER FINANCIAL, INC.,
	as Agent and Lender
	By:
	Name:
	Title:
AGREED TO AND ACCEPTED:
BANCTEC, INC.
By:
Name:
Title:
BANCTEC UPPER-TIER UPPER-TIER HOLDING, LLC
By:
Name:
Title:
BANCTEC INTERMEDIATE INTERMEDIATE HOLDING, INC.
By:
Name:
Title:

cc:Via Facsimile (212) 841-5725
Reboul, MacMurray, Hewitt,
Maynard & Kristol
45 Rockefeller Plaza
New York, New York  10111
Attn:  Steven R. Rutkovsky, Esq.

Via Facsimile (312) 441-6876
Heller Financial, Inc.
500 West Monroe
Chicago, Illinois  60661
Attn:  Legal Services/HCF- BancTec, Inc.

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EX-99.1

Exhibit 99.1

Contact:	Brian R. Stone	FOR IMMEDIATE RELEASE
	Chief Financial Officer
	972-579-6000

BancTec Sells Japan Subsidiary

DALLAS, TX, December 2, 2002 — BancTec, Inc. (“BTI”) today announced that it has completed the sale of its Japanese subsidiary BancTec Japan (“BTJ”).  The sale involved two separate transactions: payment from the buyer, JAFCO MBO Co., Ltd., a subsidiary of JAFCO Co., Ltd., for the sale of 100% of the outstanding shares of BTJ, and a one-time, up-front payment from BTJ under certain distribution and licensing agreements.

Net proceeds from the transactions are estimated to aggregate $82.5 million.

Under the distribution and licensing agreements, BTJ will continue to supply BancTec products and services in its markets, and will continue to operate under the trade name “BancTec Japan”.

BancTec, Inc., a worldwide systems integration, manufacturing and services company, delivers solutions that transform complex data- and paper-intensive business processes using advanced imaging, workflow and e-business technologies. The company is also a leading provider of maintenance services for major computer companies, government and corporate customers. A Forbes 500 Top Private Company, BancTec employs more than 3,000 people and is headquartered in Dallas, Texas.   For more information, visit www.banctec.com.

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BancTec is a registered trademark of BancTec, Inc. All other trademarks are the property of their respective owners.