**Exhibit2.2**

 

EXECUTION COPY

 

 

**ASSET PURCHASE AGREEMENTby and amongCREATIVE MAILING & MARKETING, LLC**

** **

**as Buyerand**GLOBAL DIRECT, INC. AND MAILING & MARKETING INC.

** **

**as Sellers**

** **

**and**

** **

***SOURCECORP*,INCORPORATEDJuly 8, 2004**

 

 

----

 

**TABLE OF CONTENTS**

 
| **ARTICLE I TRANSFER OF ASSETS; ASSUMPTION OF  LIABILITIES** |                                              |
|--------------------------------------------------------------|---------------------------------------------------|
|                                                         |                                              |   |
| Section 1.1                                                  | Transfer of Assets                                |   |
| Section 1.2                                                  | Excluded Assets                                   |   |
| Section 1.3                                                  | Assumption of Liabilities.                        |   |
| Section 1.4                                                  | Excluded Liabilities                              |   |
|                                                         |                                              |   |
| **ARTICLE II PURCHASE PRICE**                                |                                              |
|                                                         |                                              |   |
| Section 2.1                                                  | Amount.                                           |   |
| Section 2.2                                                  | Manner of Payment                                 |   |
| Section 2.3                                                  | Allocation of Purchase Price                      |   |
|                                                         |                                              |   |
| **ARTICLE III CLOSING**                                      |                                              |
|                                                         |                                              |   |
| Section 3.1                                                  | Closing                                           |   |
| Section 3.2                                                  | General Procedure                                 |   |
|                                                         |                                              |   |
| **ARTICLE IV REPRESENTATIONS AND WARRANTIES OF  SELLERS**    |                                              |
|                                                         |                                              |   |
| Section 4.1                                                  | Incorporation and Corporate Power                 |   |
| Section 4.2                                                  | Subsidiaries                                      |   |
| Section 4.3                                                  | Execution, Delivery; Valid and Binding  Agreement |   |
| Section 4.4                                                  | Authority; No Breach                              |   |
| Section 4.5                                                  | Governmental Authorities; Consents                |   |
| Section 4.6                                                  | Financial Statements                              |   |
| Section 4.7                                                  | Absence of Undisclosed Liabilities                |   |
| Section 4.8                                                  | No Material Adverse Changes                       |   |
| Section 4.9                                                  | Absence of Certain Developments                   |   |
| Section 4.10                                                 | Title to Properties.                              |   |
| Section 4.11                                                 | Accounts Receivable                               |   |
| Section 4.12                                                 | Inventory                                         |   |
| Section 4.13                                                 | Tax Matters.                                      |   |
| Section 4.14                                                 | Contracts and Commitments.                        |   |
| Section 4.15                                                 | Patents, Trademarks, Trade Secrets, Etc.          |   |
| Section 4.16                                                 | Litigation                                        |   |
| Section 4.17                                                 | Warranties                                        |   |
| Section 4.18                                                 | Employees                                         |   |
| Section 4.19                                                 | Employee Benefit Plans.                           |   |
| Section 4.20                                                 | Insurance                                         |   |
| Section 4.21                                                 | Affiliate Transactions                            |   |

 

i

----

 
| Section 4.22                                           | Customers and Suppliers                                    |   |
|--------------------------------------------------------|------------------------------------------------------------|--------|
| Section 4.23                                           | Compliance with Laws; Permits.                             |   |
| Section 4.24                                           | Environmental Matters.                                     |   |
| Section 4.25                                           | Brokerage                                                  |   |
| Section 4.26                                           | No Other Representations and Warranties                    |   |
|                                                   |                                                       |   |
| **ARTICLE V REPRESENTATIONS AND WARRANTIES OF  BUYER** |                                                       |
|                                                   |                                                       |   |
| Section 5.1                                            | Formation and Power                                        |   |
| Section 5.2                                            | Execution, Delivery; Valid and Binding  Agreement          |   |
| Section 5.3                                            | No Breach                                                  |   |
| Section 5.4                                            | Governmental Authorities; Consents                         |   |
| Section 5.5                                            | Financing Commitment                                       |   |
| Section 5.6                                            | Litigation                                                 |   |
| Section 5.7                                            | No Knowledge                                               |   |
| Section 5.8                                            | Brokerage                                                  |   |
|                                                   |                                                       |   |
| **ARTICLE VI COVENANTS OF THE PARTIES**                |                                                       |
|                                                   |                                                       |   |
| Section 6.1                                            | Access to Books and Records                                |   |
| Section 6.2                                            | Assignment of Noncompetition Agreement                     |   |
| Section 6.3                                            | Regulatory Filings                                         |   |
| Section 6.4                                            | Employee Matters                                           |   |
| Section 6.5                                            | Contribution of Equity                                     |   |
| Section 6.6                                            | Retained Intellectual Property Rights                      |   |
|                                                   |                                                       |   |
| **ARTICLE VII CONDITIONS TO CLOSING**                  |                                                       |
|                                                   |                                                       |   |
| Section 7.1                                            | Conditions to Buyer’s Obligations                     |   |
| Section 7.2                                            | Conditions to Sellers’ Obligations                    |   |
|                                                   |                                                       |   |
| **ARTICLE VIII ADDITIONAL AGREEMENTS**                 |                                                       |
|                                                   |                                                       |   |
| Section 8.1                                            | Noncompetition; Nonsolicitation;  Nondisclosure.           |   |
| Section 8.2                                            | Certain Assignments                                        |   |
| Section 8.3                                            | Name Change                                                |   |
| Section 8.4                                            | Tax Matters.                                               |   |
| Section 8.5                                            | Repurchase of Uncollectible Accounts  Receivable           |   |
| Section 8.6                                            | Agreements Concerning Real Property and  Equipment Leases. |   |
| Section 8.7                                            | Confidentiality                                            |   |
|                                                   |                                                       |   |
| **ARTICLE IX SURVIVAL; INDEMNIFICATION**               |                                                       |
|                                                   |                                                       |   |
| Section 9.1                                            | Reliance and Survival of Representations  and Warranties   |   |
| Section 9.2                                            | Indemnification by Sellers                                 |   |
| Section 9.3                                            | Indemnification by Buyer                                   |   |
| Section 9.4                                            | Method of Asserting Claims                                 |   |

 

ii

----

 
| Section 9.5                 | Limitations  on Indemnification.                                             |   |
|-----------------------------|------------------------------------------------------------------------------|--------|
| Section  9.6                | *SOURCECORP’s Representations,  Warranties and Guaranty of SOURCECORP.* |   |
| Section 9.7                 | Exclusivity  of Remedies                                                     |   |
|                        |                                                                         |   |
| **ARTICLE X MISCELLANEOUS** |                                                                         |
|                        |                                                                         |   |
| Section 10.1                | Press  Releases and Announcements                                            |   |
| Section 10.2                | Expenses                                                                     |   |
| Section 10.3                | Further  Assurances                                                          |   |
| Section 10.4                | Amendment  and Waiver                                                        |   |
| Section 10.5                | Notices                                                                      |   |
| Section 10.6                | Binding  Effect; Assignment                                                  |   |
| Section 10.7                | Severability                                                                 |   |
| Section 10.8                | Complete  Agreement; Interpretation                                          |   |
| Section 10.9                | Counterparts                                                                 |   |
| Section 10.10               | **GOVERNING LAW; CONSENT TO JURISDICTION**                                   |   |
| Section 10.11               | Dispute Resolution                                                           |   |

 

iii

----

 

**SCHEDULES**

 
| Schedule 1.1(b)    | Personal Property Leases                      |
|-------------------------|-----------------------------------------------|
| Schedule 1.2       | Excluded Assets                               |
| Schedule 1.3       | Assumed Liabilities                           |
| Schedule 2.1(b)(x) | Preliminary Balance Sheet                     |
| Schedule 2.1(b)(y) | Preliminary Valuation Balance Sheet           |
| Schedule 2.3       | Allocation of Purchase Price                  |
| Schedule 4.6       | Financial Statements                          |
| Schedule 4.7       | Liabilities                                   |
| Schedule 4.9       | Absence of Certain Developments               |
| Schedule 4.10      | Title to Properties                           |
| Schedule 4.11      | Accounts Receivable                           |
| Schedule 4.12      | Inventory                                     |
| Schedule 4.13      | Tax Matters                                   |
| Schedule 4.14      | Contracts and Commitments                     |
| Schedule 4.15      | Patents, Trademarks, Trade Secrets, Etc.      |
| Schedule 4.16      | Litigation                                    |
| Schedule 4.17      | Warranties                                    |
| Schedule 4.18      | Employees                                     |
| Schedule 4.19      | Employee Benefit Plans                        |
| Schedule 4.20      | Insurance                                     |
| Schedule 4.21      | Affiliate Transactions                        |
| Schedule 4.22      | Customers and Suppliers                       |
| Schedule 4.23      | Permits                                       |
| Schedule 4.24      | Environmental Matters                         |
| Schedule 6.4(a)    | Transferred Employees                         |
| Schedule 6.4(b)    | Sellers’ Employees                       |
|                    |                                          |
| **EXHIBIT  LIST**       |
|                    |                                          |
| Exhibit A               | Form of Promissory Note                       |
| Exhibit B               | [Intentionally Omitted]                       |
| Exhibit C               | Form of Bill of Sale                          |
| Exhibit D               | Form of Assignment and Assumption Agreement   |
| Exhibit E               | Form of Written Opinion of Counsel for Seller |
| Exhibit F               | Form of Certificate of Officer of Seller      |
| Exhibit G               | Form of Security Agreement                    |
| Exhibit H               | Form of Certificate of Officer of Buyer       |

 

iv

----

 

**ASSETPURCHASE AGREEMENT**

** **

This ASSET PURCHASE AGREEMENT (this “*Agreement*”), dated as of July 8,2004, is made and entered into by and among Creative Mailing & Marketing, LLC, a Delaware limited liabilitycompany (“*Buyer*”), Global Direct,Inc., an Oklahoma corporation (“*GDI*”),Mailing & Marketing, Inc., a California corporation (“*M&M*” and, together with GDI, each a “*Seller*” and collectively “*Sellers*”) and solely with respect toSection 9.6, *SOURCECORP*,Incorporated, a Delaware corporation (“*SOURCECORP*”).

 

WHEREAS, Sellers are engaged in the business ofproviding commercial print and direct mail services for charities,not-for-profit organizations and for-profit organizations (the “*Business*”); and

 

WHEREAS, Sellers desire to sell and assign to Buyer,and Buyer desires to purchase and assume from Sellers, on the terms and subjectto the conditions set forth in this Agreement, substantially all of the assetsand certain liabilities of Sellers that are currently being used by Sellers inthe conduct of the Business.

 

NOW, THEREFORE, for and in consideration of the mutualcovenants, representations, warranties and agreements and the conditions setforth in this Agreement, Buyer and Sellers hereby agree as follows:

 

# **ARTICLEI**

 

# **TRANSFER OF ASSETS; ASSUMPTION OFLIABILITIES**

 

Section 1.1             Transfer of Assets.  On the terms and subject to the conditions set forth in thisAgreement, Sellers shall, at the Closing (as defined in Section 3.1 hereof),sell, transfer and assign to Buyer, and Buyer shall purchase and acquire fromSellers, all of Sellers’ right, title and interest, as of the Closing Date (asdefined in Section 3.1 hereof), in and to all of the assets of Sellers relatedto or used in the Business (collectively, except for the assets specificallyenumerated or described in Section 1.2 hereof as being excluded, the “*Assets*”), including, but not limited to:

 

### (a)  All of the equipment, machinery, vehicles, furniture,trade fixtures used in the ordinary course of business, including, withoutlimitation, movable and removable equipment (including any equipment which hasbeen installed in or on the premises where the Business is located) andfurnishings owned by Sellers and used thereby in the operation of the Business;

###  

### (b)  The personal property leases to whichSellers are a party that are used in connection with the operation of theBusiness and set forth on Schedule 1.1(b);

###  

### (c)  The leasehold interests in all of the realproperty leased or otherwise used or occupied by Sellers and listed on Schedule4.10, including all improvements and fixtures thereon and all rights andeasements appurtenant thereto;

 

----

 

### (d)  All of Sellers’ inventories of supplies, rawmaterials, parts, finished goods, work-in-process, product labels and packagingmaterials used in connection with the Business and Sellers’ interest in allorders or contracts for the purchase of supplies, raw materials, parts, productlabels and packaging materials used in connection with the Business;

###  

### (e)  Sellers’ interest in all contracts oragreements with respect to the Business to which Sellers are a party andidentified on Schedule 4.14**,**butexcluding those contracts and agreements identified therein as eitherterminating or otherwise not being assumed by Buyer or which do not relatesolely to the Business;

###  

### (f)  All unfilled or uncompleted customercontracts, commitments or purchase or sales orders received and accepted bySellers in connection with the Business in the ordinary course of business;

###  

### (g)  All documents or other tangible materialsembodying technology or intellectual property rights owned by, licensed to orotherwise controlled by Sellers and used solely in connection with theBusiness, whether such properties are located on Sellers’ business premises oron the business premises of Sellers’ suppliers or customers, including, withoutlimitation all software programs (including both source and object codes) andrelated documentation for software used solely in or developed exclusively forsupport of the Business, but excluding the retained intellectual propertyrights set forth on Schedule 1.2 (the “*Retained Intellectual Property Rights*”);

###  

### (h)  All rights in patents, patent applications,trademarks, service marks, trade names, corporate names, copyrights, maskworks, trade secrets or other intellectual property rights owned by, licensedto or otherwise controlled by Sellers, in each case that are used solely in ordeveloped exclusively for use in the Business as now conducted and set forth onSchedule 4.15, but excluding the Retained Intellectual PropertyRights;

###  

### (i)  The names “Creative Mailing, Inc.,” “Mailing& Marketing Inc.” and “Global Direct, Inc.” or any combination of words inwhich the name “Creative Mailing,” “Mailing & Marketing” or “Global Direct”appears or any rights associated with such name or any right to use such namein all jurisdictions in which Sellers either currently use any such name orhave any right to use any such name used in the Business, subject to Sellers’rights in Section 8.3 hereof and other than as reasonably required inconnection with securities filings by Seller’s ultimate corporate parent, *SOURCECORP*, or as necessary for Sellers tocomply with applicable disclosure obligations;

###  

### (j)  All of Sellers’ books, records and otherdocuments and information relating solely to the Assets or the Business,including, without limitation, all customer, prospect, dealer and distributorlists, sales literature, inventory records, purchase orders and invoices, salesorders and sales order log books, customer information, commission records,correspondence, employee payroll and personnel records, product data, materialsafety data sheets, price lists, product demonstrations, quotes and bids andall product catalogs and brochures, in each case relating solely to the Assetsor the Business;

 

2

----

 

### (k)  All accounts or notes receivable (excludingintra-company accounts) owing to Sellers that relate solely to the Business(the “*Accounts Receivable*”);

###  

### (l)  Seller’s current telephone listings of theBusiness and the right to use the telephone numbers currently being used at theprincipal offices and other offices or facilities of the Business;

###  

### (m)  All permits, licenses and other governmentalapprovals held by Sellers relating solely to the Business, to the extent theyare assignable or transferable;

###  

### (n)  All prepaid expenses and deposits owned bySellers with respect to the Business;

###  

### (o)  All long-term investments of Sellersrelating solely to the Business;

###  

### (p)  Rights to receive all refunds booked inSellers’ current Accounts Receivable to the extent included in Sellers’ NetTangible Book Value at Closing; and

###  

### (q)  Goodwill (including all goodwill associatedwith and symbolized by the name or names identified in Section 1.1(i) above asused as a trademark or service mark and all goodwill associated with andsymbolized by any other trademark or service mark, trade name or corporate nameused in the conduct of the Business as now conducted) (excluding, however, forall purposes the Retained Intellectual Property Rights set forth in Section1.2(f)), all related tangibles and intangibles that Seller uses exclusively inthe conduct of the Business and all rights to continue to use the Assets in theconduct of a going business.

###  

The parties hereto expressly agree that Buyer is notassuming any of the liabilities, obligations or undertakings relating to theforegoing Assets, except for those liabilities and obligations specificallyassumed by Buyer in Section 1.3 hereof.

 

Section 1.2             Excluded Assets. Notwithstanding the terms of Section 1.1, the assets set forth below andthose assets that are specifically listed on Schedule 1.2 hereto (collectively,the “*Excluded Assets*”), shall beretained by Sellers and shall not be sold, transferred or assigned to Buyer inconnection with the purchase of the Assets:

 

### (a)  Sellers’ cash and cash equivalents on handas of the Closing Date and all other cash and cash equivalents in any ofSellers’ bank or investment accounts, any securities, whether debt or equity,owned by or on behalf of Sellers;

###  

### (b)  The customer deposits with inactivecustomers aged over one hundred twenty (120) days and set forth on Schedule 1.2hereto (the “*Aged Deposits*”);

###  

### (c)  Any permits, licenses and other governmentalapprovals, to the extent that they do not directly relate to the Business orare not assignable or transferable;

 

3

----

 

### (d)  The minute books and stock records of Sellerand any books and records that Sellers are required by law to retain, subjectto the right of Buyer to have access and to copy such books and records relatedto the Business or the Assets at its sole cost and expense for a period of six(6) years from the Closing Date, and books and records related to internalcorporate matters of Sellers or their affiliates;

###  

### (e)  Any and all Claims of Seller against otherparties relating to the Business arising out of events or transactionsoccurring, or contractually required to occur, prior to the Closing Date,whether or not accruing after the Closing Date;

###  

### (f)  The Retained Intellectual Property Rightsset forth on Schedule 1.2 hereto, which shall include withoutlimitation any and all names, tradenames, trademarks, service marks, logos,websites and URL addresses using “*SOURCECORP*,”SRCP or any derivation thereof, whether on behalf of Sellers or any affiliatesthereof, and internally developed software and hardware;

###  

### (g)  All insurance policies owned by Sellersobtained in connection with the Business and all rights of Sellers under orarising out of such insurance policies;

###  

### (h)  All refunds for Taxes and other governmentalcharges or claims thereto, including claims to any refunds or rebates offederal, state or local franchise, income or other Taxes for periods or partialperiods prior to the Closing Date and all prepayments of Taxes for any period,whether ending prior to, on or after the Closing Date, whether or not accruingafter the Closing Date;

###  

### (i)  The Plans and their interests and assets;

###  

### (j)  Assets consumed or disposed of in theordinary course of Seller’s business prior to the Closing Date; and

###  

### (k)  All rights of Sellers to receive paymentsfrom employees of the Business prior to the Closing Date.

###  

Section 1.3             Assumptionof Liabilities.

 

### (a)  On the Closing Date, Buyer shall assume,pay, perform in accordance with their terms or otherwise satisfy, as of theClosing Date, the liabilities of Sellers set forth in Schedule 1.3,subject to the last sentence in Section 1.3(b), including the following(the “*Assumed Liabilities*”):

###  

#### (i)            All of the obligations of Sellersunder the permits, licenses and governmental approvals set forth inSection 1.1(m), the contracts and agreements set forth inSection 1.1(e), including without limitation any cancellation charges,liabilities or penalties in the event that Buyer elects to terminate or ceaseperformance under such contracts or agreements;

 

4

----

 

#### (ii)           All obligations and liabilitiesarising out of events occurring from and after the Closing Date related to theownership of the Assets or the conduct of the Business from and after theClosing Date, including without limitation property taxes due and payable withrespect to periods from and after the Closing Date; and

####  

#### (iii)          Any obligations and liabilitiesresulting from or associated with the termination by Buyer (or its permittedassigns) of employment on or after the Closing Date, or otherwise in connectionwith this transaction, of any employee of the Business or the failure of Buyer(or its permitted assigns) to offer employment to all of the employees of theBusiness as provided in Section 6.4 other than those listed on Schedule 1.2or to otherwise comply with its obligations as set forth in Section 6.4.

####  

### (b)  Nothing in this Agreement will be construedas an attempt or agreement to assign any lease, contract or other agreement orany license which cannot be assigned, transferred, subleased or sublicensedwithout the consent or waiver of the party or parties thereto (other thanSellers) or any third party (including a government or governmental unit)unless such consent or waiver has been obtained, or if such assignment,transfer, sublease or sublicense or attempt to assign, transfer, sublease orsublicense would constitute a breach thereof or a violation of any law, decree,order, regulation or other governmental edict, this Agreement will notconstitute an assignment, transfer, sublease or sublicense thereof.  Sellers will use all reasonable effortsprior to and, if necessary with respect to the Assets after, the Closing, toobtain such consents, if any, as may be required for the assignment or transferby Sellers of the Assets.  Buyer willcooperate with Sellers, in such manner as may be reasonably requested, inconnection therewith.  If any suchconsent is not obtained prior to the Closing, then Sellers and Buyer will useall reasonable efforts to enter into an arrangement with respect to any suchlease, contract, agreement or license to provide Buyer with all of the benefitsenjoyed by Sellers under any such license, lease, contract or other agreement,and Buyer will perform all of the obligations under such licenses, leases,contracts and other agreements as though they had been assigned to Buyer,unless and until such licenses, leases, contracts and other agreements havebeen terminated or as a result of Sellers’ failure to obtain the consent orwaiver of the party or parties thereto, default occurs under such licenses,leases, contracts and other agreements (and Sellers’ default continues uncuredand deprives Buyer of the use and enjoyment of the Assets subject to thelicense, lease, contract or other agreement).

###  

Section 1.4             Excluded Liabilities.  Other than as set forth above in Section 1.3, Seller shallretain, and Buyer shall not assume, and nothing contained in this Agreementshall be construed as an assumption by Buyer of, any liabilities, obligationsor undertakings of Sellers of any nature whatsoever, whether accrued, absolute,fixed or contingent, known or unknown, due or to become due, unliquidated orotherwise.  Sellers shall be responsiblefor all of the liabilities, obligations and undertakings of Sellers not assumedby Buyer pursuant to Section 1.3 hereof, including without limitation:

 

5

----

 

### (a)  Any obligations under the contracts oragreements arising from a breach thereby prior to the Closing Date;

###  

### (b)  Any liability or obligation relating to thePlans;

###  

### (c)  Any liability for Taxes arising as a resultof Sellers’ operation of the Business or ownership of the Assets prior to theClosing Date;

###  

### (d)  Any Environmental Liabilities.  For purposes of this Agreement, the term “*Environmental Liabilities*” shall mean anyand all claims, demands, complaints, allegations, actions, suits, proceedings,investigations or notice by any person or entity alleging potential liabilitiesarising under or based upon or relating to Environmental Laws or the release ofHazardous Materials prior to the Closing Date, even if first discovered orcontinuing after the Closing Date; and

###  

### (e)  All Worker’s Compensation Claims againstSellers to the extent relating to matters occurring prior to the Closing,including, without limitation, those Worker’s Compensation Claims set forth on Schedule4.18.

###  

**ARTICLE II**

 

# **PURCHASE PRICE**

 

Section 2.1             Amount.

 

### (a)  Subject to adjustment as provided in Section2.1(b) and Section 2.1(c), the total purchase price (the “*Purchase Price*”) for the Assets shall beSeven Million Two Hundred and Nine Thousand Dollars ($7,209,000), plus thevalue of the Assumed Liabilities.  ThePurchase Price shall be comprised of:

###  

#### (i)            $5,759,000 in cash (the “*Cash Portion*”), subject to the Book ValueAdjustment (as defined below) and the Post-Closing Adjustment (as definedbelow), plus

####  

#### (ii)           a three-year 12% subordinated securedpromissory note, in form and substance as set forth in Exhibit A,payable to Sellers in the amount of $1,450,000 (the “*Promissory Note*”), plus

####  

#### (iii)          the assumption of the other AssumedLiabilities.

####  

### (b)  Sellers have previously prepared anddelivered to Buyer the balance sheet of the Business as of May 31, 2004attached hereto as Schedule 2.1(b)(x) (the “*Preliminary Balance Sheet*”) and haveattached hereto as Schedule 2.1(b)(y) a preliminary valuationbalance sheet (the “*Preliminary ValuationBalance Sheet*”) with such adjustments setting forth, in reasonabledetail, a calculation of the valuation net tangible asset value of the Business(the “*Valuation Net Tangible Asset Value*”)as of May 31, 2004 and the resulting Purchase Price.  Within 15 days following the Closing Date,Sellers shall

 

6

----

 

prepare and deliver to Buyer a balance sheet of theBusiness as of the Closing Date (the “*ClosingBalance Sheet*”) and with such adjustments applied in a mannerconsistent with the Preliminary Valuation Balance Sheet to determine theValuation Net Asset Tangible Value as of such date (the “*Closing Valuation Balance Sheet*”).  If the Valuation Net Tangible Asset Value ofthe Business as of the date of the Closing Valuation Balance Sheet andcalculated in accordance therewith is above $7,209,000, then the Purchase Priceshall be increased by the amount of such excess Valuation Net Tangible AssetValue over $7,209,000, and if the Valuation Net Tangible Asset Value of theBusiness as of the date of the Closing Valuation Balance Sheet is below$7,209,000, then the Purchase Price shall be reduced by the amount that suchValuation Net Tangible Asset Value is less than $7,209,000 (such increase orreduction to be reflected in the Cash Portion being referred to hereinafter asthe “*Net Tangible Asset Value Adjustment*”).  The Preliminary Balance Sheet and theClosing Balance Sheet shall be prepared by Sellers in accordance with generallyaccepted accounting principles consistently applied (“*GAAP*”) and shall be certified as true andcorrect as of May 31, 2004 and the date of the Closing Balance Sheet,respectively, by an officer of Seller. The Valuation Net Tangible Asset Value set forth on the ClosingValuation Balance Sheet shall include a net property, plant and equipment valueof $5,024,000 (the “*Equipment Value*”).

###  

### (c)  McGladrey & Pullen, LLP or suchother independent accounting firm engaged by Buyer at Buyer’s sole expense(which shall not be the Unrelated Accounting Firm referred to below) shall havethe opportunity to examine, promptly as and when prepared, the work papers,schedules and other documents prepared by Sellers in connection with theirpreparation of the Closing Balance Sheet and the Closing Valuation BalanceSheet and the calculation of the Valuation Net Tangible Asset Value as of thedate of the Closing; provided, that the GAAP assumptions and calculationsutilized by McGladrey & Pullen, LLP or such other independentaccounting firm will be based upon and consistent with the GAAP assumptionsutilized by Sellers prior to the Closing with respect to the Closing BalanceSheet and adjustments utilized by Sellers with respect to the Closing ValuationBalance Sheet.  Within 30 days followingthe delivery of the Closing Balance Sheet and the Closing Valuation BalanceSheet, Buyer may deliver to Sellers a notice of objection (an “*Objection Notice*”) with respect to theClosing Balance Sheet or the Closing Valuation Balance Sheet and thecalculation of the Valuation Net Tangible Asset Value as of the date of theClosing.  If no Objection Notice isdelivered to Sellers within such 30 day period, the Closing Balance Sheet andthe Closing Valuation Balance Sheet and the calculation of the Net TangibleAsset Value Adjustment, if any, shall be final and binding on the parties.  Any Objection Notice shall specify inreasonable detail the items on the Closing Balance Sheet or the ClosingValuation Balance Sheet disputed and shall describe in reasonable detail thebasis for the objection and all information in the possession of the objectingparty which forms the basis thereof, as well as the amount in dispute.  In no event shall the Objection Noticerelate to or be based upon the Equipment Value or the valuation adjustments (*i.e.*, those adjustments set forth underthe heading “Valuation Adjustments” included on Schedule 2.1(b)(y))employed to prepare the Preliminary Valuation Balance Sheet and to prepare theClosing Valuation Balance Sheet.  If anObjection Notice is given, Sellers and Buyer shall consult with each other withrespect to the objection.  If theparties are unable to reach agreement within 15 days

 

7

----

 

### after an Objection Notice has been given, anyunresolved disputed items shall be promptly referred to a mutually acceptableindependent public accounting firm registered with the Public CompanyAccounting Oversight Board in accordance with Section 102 of theSarbanes-Oxley Act of 2002 (the “*UnrelatedAccounting Firm*”).  TheUnrelated Accounting Firm shall be directed to render a written report on theunresolved disputed issues with respect to the Closing Balance Sheet and theClosing Valuation Balance Sheet within 30 days following its retention and toresolve only those issues of dispute set forth in the Objection Notice.  If unresolved disputed issues are submittedto the Unrelated Accounting Firm, Sellers and Buyer will each promptly furnishto the Unrelated Accounting Firm such work papers, schedules and otherdocuments relating to the unresolved disputed issues as the UnrelatedAccounting Firm may reasonably request. The resolution of the dispute by the Unrelated Accounting Firm shall befinal and binding on the parties.  Thefees and expenses of the Unrelated Accounting Firm shall be borne equally bySellers and Buyer.  If the parties orthe Unrelated Accounting Firm determine that an adjustment under this Section2.1(c) (a “*Post-Closing Adjustment*”)is appropriate, then payment of the amount of the Post-Closing Adjustment shallbe made by wire transfer of immediately available funds within 10 days afterthe determination of the Post-Closing Adjustment by the party owing such amountto the party entitled to receive the Post-Closing Adjustment;

###  

Section 2.2             Manner of Payment.  Buyer shall pay the Cash Portion of the Purchase Price for theAssets to Sellers on the Closing Date by wire transfer of immediately availablefunds to such account or accounts as Sellers may designate in writing to Buyerno later than two business days before the Closing Date.

 

Section 2.3             Allocation of Purchase Price.  Buyer and Sellers shall allocate the PurchasePrice among the Assets as set forth on Schedule 2.3 hereto.  Schedule 2.3 shall be updated as ofthe Closing Date to reflect the Book Value Adjustment and, no later than 90business days after the Closing Date, to reflect the Post-Closing Adjustment asdetermined in Section 2.1, in each event by Buyer and Sellers inaccordance with the applicable Treasury Regulations and the fair market valueof the Assets.  The parties do herebyagree that they will not voluntarily take any position on any Tax Returns (asdefined in Section 4.13(e)) inconsistent with the allocation set forth on Schedule 2.3,as adjusted for any Post-Closing Adjustment hereunder.  The parties hereby agree to prepare andtimely file all applicable forms concerning the allocation of the PurchasePrice with the Internal Revenue Service and any other government authorityconsistent with the allocation, as adjusted for any Purchase Price adjustmentshereunder, to cooperate with each other in the preparation of such forms, andto furnish each other with a copy of such forms prepared in draft, within areasonable period prior to the filing due date thereof.  Buyer and Seller shall jointly prepare forfiling all Tax Returns that may be required with respect to the transactionprovided for herein pursuant to Section 1060 of the Internal Revenue Codeof 1986, as amended (the “*Code*”),any Treasury Regulations promulgated thereunder, any other applicable provisionof the Code and any other similar applicable foreign, state or local tax law orregulation.

 

8

----

 

**ARTICLE III**

 

# **CLOSING**

 

Section 3.1             Closing. The closing of the transactions contemplated by this Agreement (the “*Closing*”) will take place at the officesof Dorsey & Whitney, 50 South Sixth Street, Minneapolis, Minnesota at10:00 a.m. on July 8, 2004 or at such other place and on such other dateor by such other means (*e.g.*,telecopy and overnight delivery of original execution materials) as is mutuallyagreeable to Buyer and Sellers after all of the conditions to the parties’obligations set forth in Article VII hereof have been satisfied (or waivedby the party entitled to the benefit of such conditions).  The date on which the Closing occurs isreferred to herein as the “*Closing Date*,”and the Closing shall be deemed effective as of 10:00 a.m. on the Closing Date.

 

Section 3.2             General Procedure.  At the Closing, each party shall deliver to the party entitled toreceipt thereof the documents required to be delivered pursuant toArticle VII hereof and such other documents, instruments and materials (orcomplete and accurate copies thereof, where appropriate) as may be reasonablyrequired in order to effectuate the intent and provisions of this Agreement,and all such documents, instruments and materials shall be satisfactory in formand substance to counsel for the receiving party.  The conveyance, transfer, assignment and delivery of the Assetsshall be effected by Sellers’ execution and delivery to Buyer of a bill of salesubstantially in the form attached hereto as Exhibit C (the “*Bill of Sale*”) and such other instrumentsof conveyance, transfer, assignment and delivery as Buyer shall reasonablyrequest to cause Sellers to transfer, convey, assign and deliver the Assets toBuyer, and the assignment and assumption of Sellers’ liabilities to Buyer shallbe effected by Buyer’s execution of an assignment and assumption agreementsubstantially in the form attached hereto as Exhibit D (the “*Assignment and Assumption Agreement*”).

 

**ARTICLE IV**

 

# **REPRESENTATIONS AND WARRANTIES OFSELLERS**

 

Each Seller hereby represents and warrants to Buyerthat, except as set forth in the Schedules delivered by Sellers to Buyer on thedate hereof (the “*Disclosure Schedule*”)(which Disclosure Schedule sets forth, among other things, the exceptions tothe representations and warranties contained in this Article IV undercaptions referencing the Sections to which such exceptions apply):

 

Section 4.1             Incorporation and Corporate Power.  GDI is a corporation duly incorporated,validly existing and in good standing under the laws of the State of Oklahomaand has all requisite corporate power and authority and all authorizations,licenses, permits and certifications necessary to carry on the Business as nowbeing conducted and to own, lease and operate the Assets.  M&M is a corporation duly incorporated,validly existing and in good standing under the laws of the State of Californiaand has all requisite corporate power and authority and all authorizations,licenses, permits and certifications necessary to carry on the Business as nowbeing conducted and to own, lease and operate the Assets.  Each Seller is qualified as a foreigncorporation to transact business in each jurisdiction in which the business

 

9

----

 

or its ownership of property requires it to be qualified and in whichthe failure to be so qualified would be reasonably likely to have a MaterialAdverse Effect.  For the purposes ofthis Agreement, “*Material Adverse Effect*”shall mean any one or more events, conditions or circumstances that result in,individually or in the aggregate, a material adverse effect on (a) thebusiness, operations, financial or operating condition, assets or properties ofthe Business, (b) the ability of Seller to perform its obligations underthis Agreement or (c) the validity or enforceability of this Agreement.

 

Section 4.2             Subsidiaries. The Assets do not include any stock, partnership interest, joint ventureinterest or any other security or ownership interest issued by any othercorporation, organization or entity.

 

Section 4.3             Execution, Delivery; Valid and Binding Agreement.  The execution, delivery and performance ofthis Agreement by Seller and the consummation of the transactions contemplatedhereby have been duly and validly authorized by the Board of Directors and thesole shareholder of Seller, and no other proceedings on its part are necessaryto authorize the execution, delivery and performance of this Agreement.  This Agreement has been duly executed anddelivered by Seller and, assuming that this Agreement is the valid and bindingagreement of Buyer, constitutes the valid and binding obligation of Seller,enforceable in accordance with its terms.

 

Section 4.4             Authority; No Breach.  Seller has the requisite corporate power and authority to executeand deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance ofthis Agreement by Seller and the consummation of the transactions contemplatedhereby do not conflict with or result in any breach of any of the provisionsof, or constitute a default under, result in a violation of, result in thecreation of a right of termination or acceleration or any lien, securityinterest, charge, or encumbrance upon any of the Assets or require anyauthorization, consent, approval, exemption or other action by or notice to anycourt or other governmental body, under the provisions of the Articles ofIncorporation or Certificate of Incorporation, as applicable, or Bylaws of Selleror any indenture, mortgage, lease, loan agreement or other agreement orinstrument by which Seller or the Assets are bound or affected (other thanconsents required under Section 7.1(d) hereof, which Seller undertakes toobtain prior to the Closing Date) or any law, statute, rule or regulation ororder, judgment or decree to which Seller or the Assets are subject, other thanany breach, default or violation that is not reasonably likely to have aMaterial Adverse Effect.

 

Section 4.5             Governmental Authorities; Consents.  Seller is not required to submit any notice,report or other filing with any governmental authority in connection with theexecution or delivery by it of this Agreement or the consummation of thetransactions contemplated hereby. Except as set forth in the Disclosure Schedule, no consent, approval orauthorization of any governmental or regulatory authority is required to beobtained by Seller in connection with its execution, delivery and performanceof this Agreement.

 

Section 4.6             Financial Statements.  Seller has delivered to Buyer copies of the financial statementslisted on Schedule 4.6 (such statements being herein referred to asthe “*Financial Statements*”).  The Financial Statements are based upon theinformation contained in the books

 

10

----

 

and records of Seller and fairly present the financial condition of thebusiness as of the dates thereof and results of operations for the periodsreferred to therein.  Except (i) asset forth on Schedule 4.6 and (ii) for the absence of notesand normal recurring year-end adjustments, goodwill, deferred Taxes and itemsof corporate overhead, the Financial Statements have been prepared inaccordance with GAAP.

 

Section 4.7             Absence of Undisclosed Liabilities.  With respect to the Assets or the Business,Seller has no liabilities (whether accrued, absolute, contingent, unliquidatedor otherwise, whether due or to become due, whether known or unknown, andregardless of when asserted) arising out of or based upon transactions orevents heretofore entered into or occurring prior to the Closing Date, except(i) as reflected on the Financial Statements, (ii) liabilities thathave arisen after the date of the Financial Statements in the ordinary courseof business (none of which is a material uninsured liability for breach ofcontract, breach of warranty, tort, or infringement), or (iii) asotherwise set forth on Schedule 4.7.

 

Section 4.8             No Material Adverse Changes.  Since May 31, 2004 (the “*Latest Balance Sheet Date*”), there hasbeen no material adverse change in the assets, financial condition, operatingresults, customer, employee or supplier relations or business condition of theBusiness other than as may be set forth on the Financial Statements.

 

Section 4.9             Absence of Certain Developments.  Since the Latest Balance Sheet Date, Sellerhas not, except as set forth on Schedule 4.9:

 

### (a)  Borrowed any amount or incurred or becomesubject to any liability in excess of $25,000, except (i) currentliabilities incurred in the ordinary course of business and(ii) liabilities under contracts entered into in the ordinary course ofbusiness;

###  

### (b)  Mortgaged, pledged or subjected to any lien,charge or any other encumbrance, any of the Assets except (i) liens forcurrent property Taxes not yet due and payable, (ii) liens imposed by lawand incurred in the ordinary course of business for obligations not yet due tocarriers, warehousemen, laborers, materialmen and the like, (iii) liens inrespect of pledges or deposits under workers’ compensation laws, or(iv) liens voluntarily created in the ordinary course of business, all ofwhich liens aggregate less than $25,000;

###  

### (c)  Discharged or satisfied any lien orencumbrance or paid any liability, in each case with a value in excess of$25,000, other than current liabilities paid in the ordinary course ofbusiness;

###  

### (d)  Sold, assigned or transferred (including,without limitation, transfers to any employees, affiliates or shareholders) anytangible assets of the Business with a fair market value in excess of $25,000,or canceled any debts or claims, in each case, except in the ordinary course ofbusiness;

###  

### (e)  Sold, assigned or transferred (including,without limitation, transfers to any employees, affiliates or shareholders) anypatents, trademarks, trade names, copyrights, trade secrets or other intangibleassets used in or held for use in the Business;

 

11

----

 

### (f)  Disclosed, to any person other than Buyerand authorized representatives of Buyer, any proprietary confidentialinformation of the Business or otherwise related to the Assets, other thanpursuant to a confidentiality agreement prohibiting the use or furtherdisclosure of such information, which agreement is identified on Schedule 4.9and is in full force and effect on the date hereof;

###  

### (g)  Waived any rights of material value orsuffered any extraordinary losses or adverse changes in collection lossexperience, whether or not in the ordinary course of business or consistentwith past practice;

###  

### (h)  Suffered any material theft, damage,destruction or loss of or to any property or properties owned or used by it inthe Business, whether or not covered by insurance;

###  

### (i)  Made or granted any bonus or any wage,salary or compensation increase to any officer or employee who earns more than$25,000 per year (excluding for purposes of this Section 4.9(i) any retentionbonuses offered by Buyer’s representatives or by Sellers at Buyer’s request, ifany), or made or granted any increase in any employee benefit plan orarrangement, or amended or terminated any existing employee benefit plan orarrangement, or adopted any new employee benefit plan or arrangement or madeany commitment or incurred any liability to any labor organization;

###  

### (j)  Made any commitment for any single capitalexpenditure in excess of $25,000 or any pledges for charitable contributionsthat in the aggregate exceed $25,000;

###  

### (k)  Made any loans or advances to, or guaranteesfor the benefit of, any persons such that the aggregate amount of such loans,advances or guarantees at any time outstanding is in excess of $25,000; or

###  

### (l)  Made any changes in accounting principles orpractices from those utilized in the preparation of the Annual FinancialStatements.

###  

Section 4.10           Titleto Properties.

 

### (a)  The real property owned by Seller or demisedby the leases (the “*Leases*”)described on Schedule 4.10 (the “*LeasedReal Property*”) constitutes all of the real property owned, used oroccupied by Seller used in connection with the Business (the “*Real Property*”).  The Real Property has access, sufficient for the conduct of theBusiness as now conducted, to public roads and to all relevant utilities,including electricity, sanitary and storm sewer, potable water, natural gas andother utilities used in the operation of the Business at that location.

###  

### (b)  The Leases are in full force and effect, andSeller holds a valid and existing leasehold interest under each of the Leasesfor the term set forth on Schedule 4.10.  Seller has delivered to Buyer a complete and accurate copy ofeach of the Leases, and none of the Leases has been modified in any respect,except to the extent that such modifications are disclosed by the copiesdelivered to Buyer.  Seller is not indefault, and no circumstances exist which, if unremedied, would, either with orwithout notice or the

 

12

----

 

### passage of time or both, result in such default underthe Leases; nor, to Seller’s knowledge, is any other party to any of the Leasesin default thereunder.

###  

### (c)  Seller owns good and marketable title to theAssets, including each of the tangible properties and tangible assets reflectedon the Latest Balance Sheet or acquired since the date thereof, free and clearof all liens and encumbrances, except for (i) liens for current taxes notyet due and payable, (ii) liens set forth on Schedule 4.10,(iii) the Leased Real Property, (iv) assets disposed of since thedate of the Latest Balance Sheet in the ordinary course of business,(v) liens imposed by law and incurred in the ordinary course of businessfor obligations not yet due to carriers, warehousemen, laborers and materialmenand (vi) liens in respect of pledges or deposits under workers’compensation laws, all of which liens aggregate less than $25,000.

###  

### (d)  Schedule 4.10 sets forth adescription of all the Assets that constitute equipment, machinery, motorvehicles, furniture, fixtures and furnishings. With respect to the equipment, machinery and vehicles, upon agreement ofthe parties hereto the foregoing schedule is based upon the description of suchAssets prepared by the certified appraisal firm in determining the EquipmentValue, and any inaccuracies in such schedule with respect to equipment,machinery and vehicles shall not be the basis of a Claim underSection 9.2(a) or limit in any manner Seller’s conveyance of the Assets asdescribed in Section 1.1(a) hereof. Except as otherwise described on Schedule 4.10, all of thebuildings, machinery, equipment and other tangible assets necessary for theconduct of the Business are in good condition and repair, ordinary wear andtear and obsolescence excepted, and are usable in the ordinary course ofbusiness.

###  

### (e)  Seller is not in violation of any applicablezoning ordinance or other law, regulation or requirement relating to theoperation of any properties used in the operation of the Business, and Sellerhas not received any notice of any such violation or the existence of anycondemnation proceeding with respect to any of the Real Property, except, ineach case, with respect to violations the potential consequences of which arenot likely to have a Material Adverse Effect.

###  

### (f)  Seller has no knowledge of improvementsmade, or contemplated to be made, by any public or private authority, the costsof which are to be assessed as special taxes or charges against any of the RealProperty, and there are no present assessments.

###  

Section 4.11           Accounts Receivable.  The Accounts Receivable of the Business reflected on the Latest BalanceSheet are valid receivables, have arisen from bona fide transactions in theordinary course of business, are not subject to valid counterclaims or setoffs,and are collectible in accordance with their terms, except as to the extent ofthe bad debt reserve reflected on Seller’s balance sheet at May 31, 2004(the “*Latest Balance Sheet*”), asadjusted for the passage of time through the Closing Date in the ordinarycourse of business, or as described on Schedule 4.11.

 

Section 4.12           Inventory. Seller’s inventory of raw materials, work in process and finished goodsrelating to the Business consists of items of a quality and quantity usable ineach

 

13

----

 

case, in the ordinary course of the business.  Subject to the allowances therefor set forth on the latestBalance Sheet and except as otherwise disclosed on Schedule 4.12,Seller’s inventory of work in process and finished goods generated by theBusiness is not obsolete or damaged and is merchantable and fit for itsparticular use.  As of the LatestBalance Sheet Date, the values at which such inventory is carried on the LatestBalance Sheet are in accordance with GAAP. Schedule 4.12 contains a complete and accurate summary ofSeller’s inventory of raw materials, work in progress and finished goodsrelating to the Business as of the Latest Balance Sheet Date.

 

Section 4.13           TaxMatters.

 

### (a)  Seller has timely filed or caused to befiled all federal income Tax Returns and all other federal, state, foreign,county, local or city Tax Returns that are required to be filed by it and suchreturns are correct in all material respects, and it has timely paid or causedto be paid all Taxes shown on such Returns or on any Tax assessment received byit to the extent that such Taxes have become due, or has set aside on its booksreserves adequate for the payment of any Taxes not yet due and payable, inaccordance with GAAP.  Except as setforth on Schedule 4.13, there is no action, suit, proceeding, audit orinvestigation pending or, to the knowledge of Seller, threatened in respect ofany Taxes for which Seller is or may become liable and relating to the Assetsor the Business; no deficiency for any Taxes has been proposed, asserted or, tothe knowledge of Seller, threatened in writing or otherwise againstSeller.  There are no liens for Taxesupon any of the Assets, except liens for Taxes not yet due.  Seller has duly and timely withheld and paidTaxes that it is required to withhold and pay relating to salaries and othercompensation paid to its Seller Employees.

###  

### (b)  No waiver, extension or comparable consentgiven by Seller or regarding the application of the statute of limitations withrespect to any Taxes or Returns is outstanding, nor is any request for any suchwaiver or consent pending.  Seller hasnot requested an extension of time within which to file any Return, whichReturn has not since been filed.

###  

### (c)  Seller is not a party to any agreement,contract or arrangement that would result, separately or in the aggregate, inthe payment by Seller of any “excess parachute payments” within the meaning ofSection 280G of the Code and the consummation of the transactionscontemplated by this Agreement will not be a factor causing payments to be madeby Seller that are not deductible (in whole or in part) under Section 280Gof the Code.

###  

### (d)  To the knowledge of Seller, no claim hasever been made against Seller or the Assets by an authority in a jurisdictionwhere Seller does not file Returns with respect to Taxes that it is or may besubject to taxation by that jurisdiction.

###  

### (e)  Schedule 4.13 lists all states andlocalities with respect to which Seller has filed any corporate, income and/orfranchise Tax Returns for taxable periods ending after December 31,2000.  Seller is not subject to thepassive investment income Tax imposed by Section 1375 of the Code or anysimilar provision of state or local law.

 

14

----

 

### (f)  For purposes of this Agreement, the term “*Tax*” or, with correlative meaning, “*Taxes,*” means all taxes, charges, fees,levies, or other assessments, including, without limitation, all net income,gross income, gross receipts, sales, use, ad valorem, transfer, franchise,profits, license, withholding, payroll, employment, social security,unemployment, excise, estimated, severance, stamp, occupation, property, orother taxes, customs duties, fees, assessments, or charges of any kindwhatsoever, including, without limitation, all interest and penalties thereon,and additions to tax or additional amounts imposed by any taxing authority,domestic or foreign, upon Seller.  “*Tax Returns*” (or “*Returns*”) means any return, report,information return or other document (including schedules or any related orsupporting information) filed or required to be filed with any governmentalentity or other authority in connection with the determination, assessment orcollection of any Tax or the administration of any laws, regulations oradministrative requirements relating to any Tax.

###  

Section 4.14           Contractsand Commitments.

 

### (a)  Schedule 4.14 lists thefollowing agreements, whether oral or written, to which Seller is a party,which are currently in effect, and which relate solely to the operation of theBusiness or the Assets and to be conveyed in accordance withSection 1.1(e) hereof: (i) collective bargaining agreement or contract with any laborunion; (ii) bonus, pension, profit sharing, retirement or other form ofdeferred compensation plan, other than as described in Schedule 4.18(or excluded by Section 4.18 from inclusion thereunder);(iii) hospitalization insurance or other welfare benefit plan or practice,whether formal or informal, other than as described in Schedule 4.18 (orexcluded by such schedule from inclusion thereunder); (iv) contract forthe employment of any officer, individual employee or other person on afull-time or consulting basis or relating to severance pay for any such person;(v) confidentiality agreement; (vi) agreement or indenture relating tothe borrowing of money or to mortgaging, pledging or otherwise placing a lienon any of the Assets; (vii) guaranty of any obligation for borrowed moneyor otherwise; (viii) lease or agreement under which it is lessee of, orholds or operates any property, real or personal, owned by any other party, forwhich the annual rental exceeds $25,000; (ix) lease or agreement underwhich it is lessor of, or permits any third party to hold or operate, anyproperty, real or personal; (x) contract or group of related contractswith the same party for the purchase of products or services under which theundelivered balance of such products or services is in excess of $25,000;(xi) contract or group of related contracts with the same party for thesale of products or services under which the undelivered balance of suchproducts or services has a sales price in excess of $25,000;(xii) contract or group of related contracts with the same party (otherthan any contract or group of related contracts for the purchase or sale ofproducts or services) continuing over a period of more than six months from thedate or dates thereof, not terminable by it on 30 days’ or less notice withoutpenalty and involving more than $25,000; (xiii) contract which prohibitsSeller from freely engaging in business anywhere in the world;(xiv) contract for the distribution of any of the products of the Business(including any distributor, sales and original equipment manufacturercontract); (xv) franchise agreement; (xvi) license agreement or agreementproviding for the payment or receipt of royalties or other compensation bySeller in connection with the

 

15

----

 

### intellectual property rights listed under Schedule 4.15;(xvii) contract or commitment for capital expenditures in excess of$25,000; (xviii) agreement for the sale of any capital asset with a valuein excess of $25,000; or (xix) to Seller’s knowledge, other agreement thatis material to the Business.

###  

### (b)  Seller has performed all obligationsrequired to be performed by it in connection with the contracts or commitmentsrequired to be disclosed on Schedule 4.14.  Seller is not in receipt of any claim ofdefault under any contract or commitment required to be disclosed under suchcaption; and Seller has no knowledge of any breach or anticipated breach by anyother party to any contract or commitment required to be disclosed under suchcaption.

###  

### (c)  Prior to the date of this Agreement, Buyerhas been supplied with a true and complete copy of each written contract orcommitment described in Section 4.14(a).

###  

Section 4.15           Patents,Trademarks, Trade Secrets, Etc.

 

### (a)  Except for the Retained IntellectualProperty Rights set forth on Schedule 1.2 or as set forth on Schedule 4.15,Seller has no trademarks, trade dresses, service marks, trade names,copyrights, computer programs or program rights, patents, licenses or othersimilar intangible property rights and interests that it uses solely inconnection with the Business, the loss or absence of which would be reasonablylikely to have a Material Adverse Effect. Seller’s records adequately document its ownership or properly licenseduse of all software (including commercial “shrink wrap” software) used in theBusiness, including software listed on Schedule 4.15, except forsuch documentation the lack of which would not be reasonably likely to have aMaterial Adverse Effect.  Seller has notreceived written notice from any third person that its use of the RetainedIntellectual Property rights or any other intellectual property conflicts withthe intellectual property rights of any third Person.  No person has made or, to the Seller’s knowledge, threatened inwriting to make any claims that the operation of the Assets or Business is inviolation of or infringes any intellectual property rights of any third person.

###  

### (b)  Seller has received no written claimschallenging its right to use any trade secrets, customer lists or operatingmethods required for or incident to the operation of the Business.  To the best of its knowledge, Seller is notusing or in any way making use of any confidential information or trade secretsof any third person, including without limitation, a former employer of anypresent or past employee or Seller.

###  

Section 4.16           Litigation. Except as set forth on Schedule 4.16, there are no actions,suits, proceedings, orders or investigations pending or, to the best knowledgeof Seller, threatened in writing against Seller, at law or in equity, or beforeor by any federal, state, municipal or other governmental department,commission, board, bureau, agency or instrumentality, domestic or foreign.  Seller has not received any opinion or legaladvice to the effect that Seller is exposed from a legal standpoint to anyliability or disadvantage that may be material to the Assets, financialcondition, operating result, business condition or prospects of the Business orSeller.

 

16

----

 

Section 4.17           Warranties. Schedule 4.17 sets forth all claims outstanding, pending or, tothe knowledge of Seller, threatened for breach of any warranty relating to anyproducts of the Business sold by Seller prior to the date hereof.

 

Section 4.18           Employees. Except as set forth on Schedule 4.18 and only with respectto employees of Seller who perform functions in connection with the Business (“*Seller Employees*”):  (a) Seller has complied with all lawsrelating to the employment of labor, including provisions thereof relating towages, hours, equal opportunity, collective bargaining and the payment ofsocial security and other taxes; (b) Seller has no material laborrelations problem pending and, to its knowledge, its labor relations aresatisfactory; (c) there are no workers’ compensation claims pendingagainst Seller nor is Seller aware of any facts that would give rise to such aclaim; (d) to Seller’s knowledge, no Seller Employee is subject to anysecrecy or noncompetition agreement or any other agreement or restriction ofany kind that would impede in any way the ability of such employee to carry outfully all activities of such employee in furtherance of the Business; and(e) no Seller Employee or former employee of Seller has any claim withrespect to any intellectual property rights of Seller set forth under Schedule 4.15.  Schedule 4.18, lists, as of thedate set forth thereon, each Seller Employee and the position, remuneration(including any scheduled salary or remuneration increases), date of employmentand accrued vacation pay of each such Seller Employee.

 

Section 4.19           EmployeeBenefit Plans.

 

### (a)  Schedule 4.19 contains a completelist as of the date of this Agreement of all “employee benefit plans” asdefined in Section 3(3) of the Employee Retirement Income Security Act of 1974,as amended (“ERISA”), and all other plans and arrangements that providecompensation or benefits to employees, whether deferred or not, in excess ofbase pay, including any bonus or incentive plan, stock rights plan or otherfringe benefit plan affecting Seller’s Employees as of the date of thisAgreement (collectively, the “*Plans*”),other than employment agreements listed on Schedule 4.14 withrespect to employees of Seller engaged in the operation of the Business.  Seller has furnished or made available toBuyer complete copies of all employee handbooks, applicable plan documents,trust documents and, where applicable, summary plan descriptions of the Planslisted on Schedule 4.19.

###  

### (b)  To the extent required (either as a matterof law or to obtain the intended tax treatment and tax benefits), all Plans complywith the requirements of ERISA and the Code. With respect to the Plans, (i) all required contributions which aredue have been made and a proper accrual has been made for all contributions duein the current fiscal year; (ii) there are no actions, suits or claimspending, other than routine uncontested claims for benefits; and(iii) there have been no prohibited transactions (as defined inSection 406 of ERISA or Section 4975 of the Code).

###  

### (c)  Seller does not contribute (and has not evercontributed) to any multi-employer plan, as defined in Section 3(37) ofERISA.  Seller has no actual orpotential liabilities under Section 4201 of ERISA for any complete orpartial withdrawal from a multi-employer plan. Seller has no actual or potential liability for death or medical

 

17

----

 

### benefits after separation from employment, other than(i) death benefits under the Plans set forth on Schedule 4.19and (ii) health care continuation benefits described in Section 4980Bof the Code.

###  

Section 4.20           Insurance.  Schedule 4.20lists and briefly describes each insurance policy in effect as of the datehereof (*e.g.*, type of policy,insurer and policy amount) owned by Seller with respect to the Assets andoperations of the Business and sets forth the date of expiration of each suchinsurance policy.  Seller is not indefault with respect to its obligations under any of such insurance policies.

 

Section 4.21           AffiliateTransactions.  Except as disclosedon Schedule 4.21, and other than pursuant to this Agreement, toSeller’s knowledge no officer, director or employee of Seller or any member ofthe immediate family of any such officer, director or employee, or any entityin which any of such persons owns any beneficial interest (other than anypublicly-held corporation whose stock is traded on a national securitiesexchange or in the over-the-counter market and less than one percent of thestock of which is beneficially owned by any of such persons) (collectively “*insiders*”), has any agreement with Seller(other than normal employment arrangements) or any interest in any property,real, personal or mixed, tangible or intangible, used in or pertaining to theBusiness of Seller (other than ownership of capital stock of Seller).  To Seller’s knowledge, none of the insidershas any such direct or indirect interest in any competitor, supplier orcustomer of Seller or in any person, firm or entity from whom or to whom Sellerleases any property, or in any other person, firm or entity with whom Sellertransacts business of any nature.  Forpurposes of this Section 4.21, the members of the immediate family of anofficer, director or employee shall consist of the spouse, parents, children,siblings, mothers- and fathers-in-law, sons- and daughters-in-law, andbrothers- and sisters-in-law of such officer, director or employee.

 

Section 4.22           Customers and Suppliers.  Schedule 4.22 lists the 10 largest customers andsuppliers of Seller relating to the Business for the fiscal year endedDecember 31, 2003 and for the four-month period ended April 30, 2004and sets forth opposite the name of each such customer or supplier theapproximate net sales or purchases by Seller attributable to such customer orsupplier for each such period.

 

Section 4.23           Compliance with Laws; Permits.

 

### (a)  Seller and its officers, directors, agentsand employees have complied in all material respects with all applicable laws,regulations and other requirements, which materially affect the Business or theAssets and to which Seller may be subject, and no claims have been filedagainst Seller alleging a violation of any such laws, regulations or otherrequirements, which violation is reasonably likely to have a Material AdverseEffect.

###  

### (b)  A true, correct and complete list of alllicenses, permits and certificates of Seller from federal, state, local andforeign authorities (including, without limitation, federal and state agenciesregulating occupational health and safety) necessary to conduct the Businessand operate the Assets (collectively, the “*Permits*”)is set forth on

 

18

----

 

### Schedule 4.23.  Seller has conducted its business incompliance with all terms and conditions of the Permits, except where suchnoncompliance is not reasonably likely to have a Material Adverse Effect.

###  

### (c)  In connection with the Business, to Seller’sknowledge, no employee of Seller has made or agreed to make gifts of money,other property or similar benefits (other than incidental gifts of articles ofnominal value) to any actual or potential customer, supplier, governmentalemployee or any other person in a position to assist or hinder Seller inconnection with any actual or proposed transaction.

###  

### (d)  In particular, but without limiting thegenerality of the foregoing, Seller is in compliance in all material respectswith, and has not received a notice or charge asserting any violation of orliability under, the federal Occupational Safety and Health Act of 1970 or anyother federal or state acts (including rules and regulations thereunder)regulating employee health and safety in connection with the Business.

###  

Section 4.24           EnvironmentalMatters.

 

### (a)  As used in this Section 4.24, the followingterms shall have the following meanings:

###  

#### (i)            “*HazardousMaterials*” means any dangerous, toxic or hazardous pollutant,contaminant, chemical, waste, material or substance as defined in or governedby any federal, state or local law, statute, code, ordinance, regulation, ruleor other requirement relating to such substance or otherwise relating to theenvironment or human health or safety, including without limitation any waste,material, substance, pollutant or contaminant that might cause any injury tohuman health or safety or to the environment or might subject Seller to anyimposition of costs or liability under any Environmental Law.

####  

#### (ii)           “*EnvironmentalLaws*” means all applicable federal, state, local and foreign laws,rules, regulations, codes, ordinances, orders, decrees, directives, permits,licenses and judgments relating to pollution, contamination or protection ofthe environment (including, without limitation, all applicable federal, state,local and foreign laws, rules, regulations, codes, ordinances, orders, decrees,directives, permits, licenses and judgments relating to Hazardous Materials ineffect as of the date of this Agreement).

####  

#### (iii)          “*Release*”shall mean the spilling, leaking, disposing, discharging, emitting, depositing,ejecting, leaching, escaping or any other release or threatened release, howeverdefined, whether intentional or unintentional, of any Hazardous Material.

####  

### (b)  Seller, with respect to the Business and theReal Property, is in material compliance with, and to its knowledge has noliabilities for any Losses under, any Environmental Laws.

 

19

----

 

### (c)  Seller has obtained, and maintained in fullforce and effect, all permits, licenses, certificates of compliance, approvalsand other environmental authorizations necessary to conduct the Business andown or operate the Assets, including the Leased Real Property in compliancewith all applicable Environmental Laws, except for those the absence of whichwould not be reasonably likely to have a Material Adverse Effect (collectively,the “*Environmental Permits*”).  Seller has conducted the Business incompliance with all terms and conditions of the Environmental Permits, exceptwhere such noncompliance is not reasonably likely to have a Material AdverseEffect.  Seller filed all reports andnotifications required to be filed under and pursuant to all applicableEnvironmental Laws, except with respect to such reports and notifications thefailure of which to file would not be reasonably likely to have a MaterialAdverse Effect.  Seller has not acceptedfor storage, and does not store, any hazardous substance or hazardous materialon the Leased Real Property except for *de minimis* amounts of items such ascleaning supplies used in the ordinary course of business.

###  

### (d)  Neither Seller nor, to Seller’s knowledge,any third person has ever disposed of, released or caused the release from, at,under or onto the Leased Real Property or any other property of an amount ofany hazardous substance or hazardous material into the environment whichrelease or disposal would constitute a violation by Seller of, requirereporting or notification by Seller to any governmental agency pursuant to, orrequire investigation or clean-up by Seller under any Environmental Laws orotherwise become a liability to Seller under Environmental Laws.

###  

### (e)  Seller is not a potentially responsibleparty under, nor has it received any notice that it is a potentiallyresponsible party, notice of responsibility, notice of violation or request forinformation from any government agency or other person under any EnvironmentalLaws with respect to the Business or the Leased Real Property or any otherproperty.  Seller does not own, lease,rent or otherwise utilize any underground storage tanks in connection with theBusiness, and to Seller’s knowledge, there are no tanks, containers, cylinders,drums or cans buried, stored or deposited in or at the Leased Real Property.

###  

### (f)  To Seller’s knowledge, no materialexpenditure (*i.e.*, in excess of$50,000) will be required in order for Buyer to comply with any EnvironmentalLaws in effect at the time of the Closing in connection with the operation orcontinued operation of the Business or the Real Property in a manner consistentwith the current operation thereof by Seller.

###  

### (g)  Neither Seller or, to Seller’s knowledge,any Leased Real Property is or has been listed on the United StatesEnvironmental Protection Agency National Priorities List of Hazardous WasteSites, or any other list, schedule, inventory or record of hazardous or solidwaste sites maintained by any federal, state or local agency.

###  

### (h)  Seller has delivered to Buyer copies of allenvironmental assessments, surveys, permits and reports in Seller’s possessionor control related to the Leased Real Property, all of which are identified in Schedule 4.24.

 

20

----

 

### (i)  Seller has not received any written reportor other written information regarding any actual or alleged material violationof Environmental Laws, or any material liabilities or potential materialliabilities (whether accrued, absolute, contingent, unliquidated or otherwise),including any material investigatory, remedial or corrective obligations,relating to it or the Leased Real Property arising under Environmental Laws.

###  

Section 4.25           Brokerage.  Other than the fees and expenses of AdplexRhodes and Aston Mergers and Acquisitions, which shall be paid by Sellers, nothird party shall be entitled to receive any brokerage commissions, finder’sfees, fees for financial advisory services or similar compensation inconnection with the transactions contemplated by this Agreement based on anyarrangement or agreement made by or on behalf of Seller.

 

Section 4.26           NoOther Representations and Warranties. Seller shall not be deemed to have made any representation or warranty,except for the representations and warranties of Seller set forth herein (assuch representations and warranties are qualified by the Schedules relatingthereto).  **EXCEPT AS SET FORTH IN THIS ARTICLE IV, SELLER MAKES NO OTHERREPRESENTATIONS OR WARRANTIES CONCERNING THE ASSETS, INCLUDING WITHOUTLIMITATION ANY REPRESENTATION OR WARRANTY REGARDING THE SALEABILITY ORCOLLECTIBILITY OF ANY OF THE ASSETS, AND SELLER EXPRESSLY DISCLAIMS ALL IMPLIEDWARRANTIES, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY ORFITNESS FOR A PARTICULAR PURPOSE. SELLER DOES NOT MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO ANYPROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO BUYER.**

 

# **ARTICLEV**REPRESENTATIONS AND WARRANTIES OF BUYER

# ** **

Buyer hereby represents and warrants to Sellers that:

 

Section 5.1             Formation and Power.  Buyer is a limited liability company dulyformed, validly existing and in good standing under the laws of the State ofDelaware, with the requisite power and authority to enter into this Agreementand perform its obligations hereunder.

 

Section 5.2             Execution, Delivery; Valid andBinding Agreement.  The execution,delivery and performance of this Agreement by Buyer and the consummation of thetransactions contemplated hereby have been duly and validly authorized by allrequisite action, and no other proceedings on its part are necessary toauthorize the execution, delivery or performance of this Agreement.  This Agreement has been duly executed anddelivered by Buyer and constitutes the valid and binding obligation of Buyer,enforceable in accordance with its terms.

 

Section 5.3             No Breach.  The execution, delivery and performance ofthis Agreement by Buyer and the consummation by Buyer of the transactionscontemplated hereby do not conflict with or result in any breach of any of theprovisions of, constitute a default under, result in a violation of, result inthe creation of a right of termination or acceleration or any lien, securityinterest, charge or encumbrance upon any assets of Buyer, or require anyauthorization,

 

21

----

 

consent, approval, exemption or other action by or notice to any courtor other governmental body, under the provisions of the limited liabilitycompany agreement of Buyer or any indenture, mortgage, lease, loan agreement orother agreement or instrument by which Buyer is bound or affected, or any law,statute, rule or regulation or order, judgment or decree to which Buyer issubject.

 

Section 5.4             Governmental Authorities;Consents.  Buyer is not required tosubmit any notice, report or other filing with any governmental authority inconnection with the execution or delivery by it of this Agreement or theconsummation of the transactions contemplated hereby.  No consent, approval or authorization of any governmental orregulatory authority or any other party or person is required to be obtained byBuyer in connection with its execution, delivery and performance of thisAgreement or the transactions contemplated hereby.

 

Section 5.5             Financing Commitment.  Buyer has, or will have prior to theClosing, sufficient cash, available lines of credit or other sources ofimmediately available funds to enable it to make payment of the Purchase Priceand the other amounts to be paid by Buyer hereunder.  Buyer’s members will make a cash equity contribution of ThreeMillion Dollars ($3,000,000) to it prior to or at the Closing for use by Buyerin the operation of the Business.

 

Section 5.6             Litigation.  To Buyer’s knowledge, as of the date hereof,there are no suits, claims, actions, proceedings or investigations pending orthreatened, (a) against Buyer which, if determined adversely to Buyer’sinterests, would have a material adverse effect, or (b) seeking to prevent,hinder, modify or challenge the transactions contemplated by thisAgreement.  Buyer is not subject to anyoutstanding order, writ, judgment, injunction, decree, or arbitration award ororder which has a material adverse effect.

 

Section 5.7             No Knowledge.  Buyer has no reason to believe that anyrepresentation, warranty, covenant or agreement of Sellers set forth herein isincorrect or untrue.  Sellers orSOURCECORP, as the case may be, shall have the burden of pleading and theburden of proving, by a preponderance of the evidence, that Buyer is notentitled to indemnification pursuant to Section 9.2 or Section 9.6 by reason ofthe preceding sentence.

 

Section 5.8             Brokerage.  Other than the fees and expenses of PrivateEquity Capital Corporation, which shall be paid by Buyer, no third party shallbe entitled to receive any brokerage commissions, finder’s fees, fees forfinancial advisory services or similar compensation in connection with thetransactions contemplated by this Agreement based on any arrangement oragreement made by or on behalf of Buyer.

 

# **ARTICLEVI**COVENANTS OF THE PARTIES

# ** **

The parties hereto make the following covenants andagreements:

 

Section 6.1             Accessto Books and Records.  Prior to theClosing Date, Sellers shall afford to Buyer and its authorized representatives(“*Buyer’s Representatives*”) fullaccess at all reasonable times and upon reasonable notice to the offices,properties, books, records, officers,

 

22

----

 

employees and other items of the Business, and the work papers ofDeloitte & Touche LLP, Sellers’ independent accountants, relating towork done by Deloitte & Touche LLP for Seller (insofar as the workrelates to the Business or the Assets) for each of the fiscal years endedDecember 31, 2003 and 2002, and otherwise provide such assistance as isreasonably requested by Buyer in order that Buyer may have a full opportunityto make such investigation and evaluation as it shall reasonably desire to makeof the Business and the Assets.  Inaddition, Sellers and their officers and directors shall cooperate fully(including providing introductions where necessary) with Buyer to enable Buyerto contact such third parties, including customers, prospective customers,specifying agencies, vendors or suppliers of the Business, as Buyer deemsreasonably necessary to complete its due diligence; provided that Buyer agreesnot to initiate such contacts without the prior approval of Thomas C.Walker, Chief Development Officer of *SOURCECORP*,as the ultimate corporate parent of Sellers.

 

Section 6.2             Assignment of NoncompetitionAgreement.  At or prior to theClosing, GDI shall assign to Buyer on a quitclaim basis all of its rights toenforce the obligations of Jeffrey T. Pelcher as promisor arising from andafter the Closing Date under that Noncompetition Agreement datedJanuary 18, 2000 by and among GDI and Mr. Pelcher (the “*Pelcher Noncompetition Agreement*”).

 

Section 6.3             Regulatory Filings.  As promptly as practicable after theexecution of the Agreement, Buyer shall make or cause to be made all filingsand submissions under any laws or regulations applicable to Buyer for theconsummation of the transactions contemplated herein.  Buyer will coordinate and cooperate with Sellers in exchangingsuch information, will not make any such filing without providing to Sellers afinal copy thereof for their review and consent at least two full business daysin advance of the proposed filing and will provide such reasonable assistanceas Sellers may request in connection with all of the foregoing.

 

Section 6.4             EmployeeMatters

 

### (a)  Effective as of the Closing Date, Buyer willoffer employment to the individuals set forth on Schedule 6.4(a),which individuals constitute substantially all persons who immediately prior tothe Closing Date are Seller Employees and active employees of the Business(collectively, the “*Transferred Employees*”)on the same or substantially equivalent salary, in the same or substantiallyequivalent job function or position in effect immediately prior to Closing, andBuyer will neither take nor fail to take any actions that would violate theprovisions of the Worker Adjustment Retraining Notification Act and theregulations promulgated thereunder, and any state or similar laws (collectively,with all amendments, “*WARN*”)(including the giving of notices as may be required to governmental agencies aswell as affected employees).  Schedule 6.4(b)also includes a complete list of all Seller Employees who are eligible tobecome Transferred Employees.

###  

### (b)  Buyer shall establish (i) effective as ofthe Closing Date, employee benefit plans for the Transferred Employees,including life, medical, disability and profit sharing plans, and (ii) within60 days of the Closing Date, 401(k) plans.  For purposes of such

 

23

----

 

### plans, the Transferred Employees shall be given creditfor their years of service for their most recent hire date with Sellers.

###  

### (c)  (i) As soon as reasonably possible after theClosing Date, Buyer shall cause each Transferred Employee to be given creditfor his or her service with Sellers (only to the extent such service is takeninto account under any Seller’s vacation policy, program or arrangement) forthe purpose of determining such Transferred Employee’s vacation (on agoing-forward basis) in any vacation plan, program or arrangement maintainedfor Buyer’s employees’ benefit on or after the Closing Date.  (ii) Buyer will assume Sellers’ vacationaccrual obligations through the Closing Date with respect to the TransferredEmployees and shall apply such accrued vacation amounts for the TransferredEmployees in a manner consistent with Sellers’ vacation policies existing atthe Closing Date.

###  

### (d)  Buyer will indemnify and hold Sellersharmless from any loss, liabilities, debt, costs (including, but not limitedto, attorneys’ fees) or any other amounts that Sellers may incur, withoutapplication of the Threshold described in Section 9.5(d), due toterminations of Sellers’ employees with respect to, arising under or relatingto WARN as a result of the transactions contemplated by this Agreement or itsfailure to comply with its undertakings in this Section 6.4.

###  

Section 6.5             Contribution of Equity.  Prior to or simultaneous with the Closing,Buyer shall have received the Three Million Dollars ($3,000,000) cash equitycontribution from its members described in Section 5.5.

 

Section 6.6             Retained Intellectual PropertyRights.  Immediately following theClosing, Buyer shall cease to use in all respects any and all of the RetainedIntellectual Property Rights and shall take all actions reasonably necessary toensure that the Assets and the Business no longer appear to be affiliated inany manner with Sellers, *SOURCECORP*or any of the affiliates thereof.

 

# **ARTICLEVII**CONDITIONS TO CLOSING

# ** **

Section 7.1             Conditions to Buyer’sObligations.  The obligation ofBuyer to consummate the transactions contemplated by this Agreement is subjectto the satisfaction (or waiver by Buyer in its sole discretion) of thefollowing conditions on or before the Closing Date:

 

### (a)  The representations and warranties set forthin Article IV hereof shall be true and correct in all material respects(except with respect to representations and warranties that are already qualifiedby materiality or Material Adverse Effect, which shall be true and correct inall respects) at and as of the Closing Date as though then made at and as ofsuch time, except that any such representation or warranty made as of aspecified date (other than the date hereof) shall only need to have been trueon and as of such date;

 

24

----

 

### (b)  Sellers shall have performed in all materialrespects all of the covenants and agreements required to be performed andcomplied with by it under this Agreement prior to the Closing;

###  

### (c)  Sellers shall have assigned to Buyer theagreements and permits specified in Schedule 1.3 (except asotherwise noted thereon);

###  

### (d)  Sellers shall have obtained, or caused to beobtained, each consent and approval necessary in order that the transactionscontemplated herein not constitute a breach or violation of, or result in aright of termination or acceleration of, or creation of any encumbrance on anyof the Assets pursuant to the provisions of, any agreement, arrangement orundertaking of or affecting Sellers or any license, franchise or permit of oraffecting Sellers, other than those consents the failure of which to obtainwould not be reasonably likely to have a Material Adverse Effect;

###  

### (e)  Sellers’ shareholders shall have approvedthis Agreement and the transactions contemplated hereby;

###  

### (f)  There shall not be threatened, instituted orpending any action or proceeding, before any court or governmental authority oragency, domestic or foreign, (i) challenging or seeking to make illegal,or to delay or otherwise directly or indirectly restrain or prohibit, theconsummation of the transactions contemplated hereby or seeking to obtainmaterial damages in connection with such transactions, (ii) seeking toprohibit direct or indirect ownership or operation by Buyer of all or amaterial portion of the Assets, or to compel Buyer or any of its subsidiariesto dispose of or to hold separately all or a material portion of the businessor assets of Buyer and its subsidiaries, as a result of the transactionscontemplated hereby, or (iii) seeking to invalidate or renderunenforceable any material provision of this Agreement, or any of the otheragreements attached as exhibits hereto (collectively, the “*Related Agreements*”);

###  

### (g)  There shall not be any action taken, or anystatute, rule, regulation, judgment, order or injunction enacted, entered,enforced, promulgated, issued or deemed applicable to the transactionscontemplated hereby by any federal, state or foreign court, government orgovernmental authority or agency, which would reasonably be expected to result,directly or indirectly, in any of the consequences referred to in Section7.1(f) hereof;

###  

### (h)  After the Latest Balance Sheet Date, thereshall have been no damage, destruction or loss of or to any of the Assets,whether or not covered by insurance, which, in the aggregate, has, or would bereasonably likely to have, a Material Adverse Effect;

###  

### (i)  Buyer shall have received from counsel forSellers a written opinion, dated as of the Closing Date, addressed to Buyer andreasonably satisfactory to Buyer’s counsel, in form and substance substantiallyas set forth in Exhibit E hereto;

###  

### (j)  On the Closing Date, Sellers shall havedelivered to Buyer all of the following:

 

25

----

 

#### (i)            The Bill of Sale, executed bySellers, and such other instruments of conveyance, transfer, assignment anddelivery as Buyer shall have reasonably requested pursuant to Section 3.2hereof;

####  

#### (ii)           A certificate of an officer of eachSeller to the best knowledge of Seller substantially in the form set forth in Exhibit Fhereto, dated the Closing Date, stating that the conditions precedent set forthin subsections (a) and (b) above have been satisfied;

####  

#### (iii)          Copies of the third party andgovernmental consents and approvals referred to in subsection (d) above;

####  

#### (iv)          A copy of the text of the resolutionsadopted by the board of directors and shareholders of Sellers authorizing theexecution, delivery and performance of this Agreement and the consummation ofall of the transactions contemplated hereby; along with a certificate executedon behalf of each Seller, by its corporate secretary certifying to Buyer thatsuch copy is a true, correct and complete copy of such resolutions, and thatsuch resolutions were duly adopted and have not been amended or rescinded, andcertifying the signature and office of each officer executing this Agreement orany of the Related Agreements;

####  

#### (v)           Copies, duly executed by Sellers andany other appropriate parties, of assignments and assumptions of Leases orother appropriate documents for the Leased Real Property;

####  

#### (vi)          An executed copy of each of theRelated Agreements required to be executed by Sellers;

####  

#### (vii)         Each of Sellers shall provide, at orprior to the Closing, an executed certification in form and substancereasonably satisfactory to Buyer, duly executed and signed under penalties ofperjury, certifying facts that would exempt from any withholding requirementunder Section 1445 of the Code and applicable Treasury Regulations any paymentsfor United States real property interests, if any, being transferred pursuantto this Agreement; and

####  

#### (viii)        Such other certificates, documents andinstruments as Buyer reasonably requests related to the transactionscontemplated hereby, including receipts or other evidence reasonablysatisfactory to Buyer from the taxing authority of the State of Oklahoma andthe State of California, evidencing payment in full by Sellers of all sales anduse taxes imposed by the State of Oklahoma and the State of California onSellers prior to the Closing Date.

####  

### (k)  GDI shall have assigned to Buyer on aquitclaim basis all of its rights to enforce the obligations of Jeffrey T.Pelcher as promisor arising from and after the Closing Date under the PelcherNoncompetition Agreement; and

 

26

----

 

### (l)  Buyer shall have received UCC-3 or otherreleases as necessary to release all liens, claims, encumbrances and securityinterests in the Assets, except for security interests and other liens relatingto liabilities to be assumed by Buyer pursuant to Section 1.3.

###  

Section 7.2             Conditions to Sellers’Obligations.  The obligations ofeach Seller to consummate the transactions contemplated by this Agreement aresubject to the satisfaction (or waiver by each Seller in its sole discretion)of the following conditions on or before the Closing Date:

 

### (a)  The representations and warranties set forthin Article V hereof shall be true and correct in all material respects atand as of the Closing as though then made at and as of such time, except thatany such representation or warranty made as of a specified date (other than thedate hereof) shall only need to have been true on and as of such date;

###  

### (b)  Buyer shall have performed in all materialrespects all the covenants and agreements required to be performed by it underthis Agreement prior to the Closing;

###  

### (c)  Buyer shall have assumed from Sellers theAssumed Liabilities;

###  

### (d)  There shall not be threatened, instituted orpending any action or proceeding, before any court or governmental authority oragency, domestic or foreign, (i) challenging or seeking to make illegal,or to delay or otherwise directly or indirectly restrain or prohibit, theconsummation of the transactions contemplated hereby or seeking to obtainmaterial damages in connection with such transactions, or (ii) seeking toinvalidate or render unenforceable any material provision of this Agreement orany of the Related Agreements;

###  

### (e)  There shall not be any action taken, or anystatute, rule, regulation, judgment, order or injunction, enacted, entered,enforced, promulgated, issued or deemed applicable to the transactions contemplatedhereby by any federal, state or foreign court, government or governmentalauthority or agency, which would reasonably be expected to result, directly orindirectly, in any of the consequences referred to in Section 7.2(d) hereof;

###  

### (f)  Buyer shall have provided evidencereasonably satisfactory to Seller of its receipt of the Three Million Dollar($3,000,000) cash equity contribution from its members described in Section6.5; and

###  

### (g)  On the Closing Date, Buyer shall havedelivered to Sellers:

###  

#### (i)            A wire transfer in immediatelyavailable funds in the amount of the Cash Portion of the Purchase Price,

####  

#### (ii)           The Assignment and AssumptionAgreement, executed by Buyer,

####  

#### (iii)          The Promissory Note, executed byBuyer,

 

27

----

 

#### (iv)          A Security Agreement, executed byBuyer, in the form attached hereto as Exhibit G,

####  

#### (v)           A certificate of an appropriateofficer of Buyer substantially in the form set forth as Exhibit Hattached hereto, dated the Closing Date, stating that the conditions precedentset forth in subsections (a) and (b) above have been satisfied,

####  

#### (vi)          A copy of the text of the resolutionsadopted by the board of managers of Buyer authorizing the execution, deliveryand performance of this Agreement and the consummation of all of thetransactions contemplated by this Agreement, along with a certificate executedon behalf of Buyer by its secretary certifying to Sellers that such copy is atrue, correct and complete copy of such resolutions, and that such resolutionswere duly adopted and have not been amended or rescinded, and certifying thesignature and office of each officer executing this Agreement or any of theRelated Agreements required to be executed by Buyer,

####  

#### (vii)         An executed copy of each of the RelatedAgreements required to be executed by Buyer, and

####  

#### (viii)        A written opinion, dated as of theClosing Date, addressed to Sellers and reasonably satisfactory to Sellers’counsel, opining (A) as to the due authorization, execution and deliveryby Buyer of this Agreement, the Assignment and Assumption Agreement, thePromissory Note and the Security Agreement, (B) that such agreementsconstitute the valid and binding obligations of Buyer enforceable in accordancewith their terms and do not require the consent, approval, authorization ororder of, or any notice to or filing with, any Federal or Delaware stategovernmental agency or body or any court, except as has been obtained or madeprior to the Closing, and (C) that the execution and delivery of suchagreements and the consummation of the transactions contemplated thereby willnot violate or conflict with (I) the certificate of formation or theregulations of Buyer, (II) any agreement known to counsel to which Buyeris a party, (III) any law of the State of Delaware, or (IV) anyjudgment, order or decree known to counsel and applicable to Buyer of anycourt, governmental authority or arbitrator.

####  

# **ARTICLEVIII**ADDITIONAL AGREEMENTS

# ** **

Section 8.1             Noncompetition;Nonsolicitation; Nondisclosure.

 

### (a)  Noncompetition.  During the period commencing on the ClosingDate and ending on the fourth anniversary thereof (such period beinghereinafter referred to as the “*RestrictedPeriod*”), Sellers shall not, directly or indirectly, engage in anymanner or capacity (*e.g.*, as anadvisor, principal, agent, partner, member, joint venturer, officer,

 

28

----

 

### director, stockholder, employee, equity holder,lender, member of any association or otherwise) in a Competing Business.  For the purposes of this Agreement, theterm”*Competing Business*” shallmean any entity or business venture that is engaged in a not incidental mannerin the business of providing commercial print and direct mail services (asdefined below) for charities, not-for-profit organizations and for-profitorganizations, but in no event shall such term be deemed to prohibit(i) the provision of critical mail services (as defined below) by Sellersor any of the entities described above in this Section 8.1(a) or(ii) commercial print direct and mail services in an aggregate annualamount not exceeding $3,000,000 during the Restricted Period and undertaken onan unsolicited basis by a Seller or any such entity described above in thisSection 8.1(a) at the request of a party for which it is providingcritical mail services.  The term“commercial print and direct mail services” as used in this Agreement shallmean direct marketing and fulfillment services and related (primarily 3rdclass) outgoing mail services, but shall not include “critical mail services,”which constitute the receipt of information from clients, the processing andformatting of such information and the subsequent delivery or communication(primarily by first class mail) of that information to the clients’ customers,with such information or communications as invoices, statements, customerservice and related collection activities.

###  

### (b)  Indirect Competition.  Sellers shall not, directly or indirectly,assist or encourage any other person in carrying out, directly or indirectly,any activity that would be prohibited by the above provisions of this Section8.1, if such activity were carried out by Sellers, either directly orindirectly.  In particular, but withoutlimiting the generality of the foregoing, each Seller agrees that it will not,directly or indirectly, induce any employee to carry out, directly orindirectly, any such activity.

###  

### (c)  Geographic Extent of Covenant.  The obligations of each Seller under thisSection 8.1 shall apply to any geographic area in which such Seller(i) has engaged in business prior to the consummation of the transactionscontemplated by this Agreement through the providing of its services,promotional, sales or marketing activity or otherwise or (ii) hasotherwise established its goodwill, business reputation or any customer orsupplier relations.

###  

### (d)  Nonsolicitation.  During the Restricted Period, Sellers shallnot (i) induce or attempt to induce any employee of Buyer to leave theemploy of Buyer or any of its Affiliates or in any way interfere adversely withthe relationship between any such employee and Buyer or any of its Affiliates,(ii) induce or attempt to induce any employee of Buyer to work for, renderservices or provide advice to or supply confidential business information ortrade secrets of any such entity to any third person, firm or corporation,(iii) employ, or otherwise pay for services rendered by, any employee ofBuyer in any business enterprise with which Sellers may be associated,connected or affiliated, (iv) induce or attempt to induce any customer,supplier, licensee, licensor or other business relation of Sellers prior to theconsummation of the transactions contemplated by this Agreement to cease doingcommercial print and direct mail business with Buyer or any of its Affiliatesor in any way interfere with the commercial print and direct mail relationshipbetween any such customer, supplier, licensee, licensor or other

 

29

----

 

### business relation and Buyer or (v) directly orindirectly solicit, sell or render commercial print and direct mail services toor for the benefit of any entity that competes with any phase of the Businessas conducted by Sellers or under active consideration by Sellers prior to theClosing Date.  For the purposes of thisAgreement, (i) the term “*Affiliate*”shall mean a person, partnership, limited liability company, corporation, jointventure, association, joint stock company, trust, unincorporated organizationor other entity (each a “*Person*”)that directly, or indirectly through one or more intermediaries, controls, oris controlled by, or is under common control with the Person specified (for thepurposes of this definition, control and all permutations thereof, means theability of a Person to, directly or indirectly, direct the business and affairsof such Person, whether through the ownership of voting securities, by contractor otherwise).

###  

### (e)  Nondisclosure.  Sellers shall not communicate or divulge to,or use for the benefit of, any person, firm or corporation other than Buyer,its agents and representatives, any of the trade secrets, methods, formulas,business and/or marketing plans, processes, names of customers, their productsand prices or any other proprietary information included in the Assets, whichis not generally ascertainable from public or published information or tradesources, other than as may be necessary in connection with judicial oradministrative proceedings or claims under Article IX or as may be required in orderto comply with applicable governmental laws, rules or regulations.  Buyer acknowledges that prior to the datehereof Sellers have communicated information to other potential purchasers ofthe Assets or as reasonably necessary for operations that are not related tothe Business, some of which information might be considered of a naturedescribed in this Section 8.1, and that such communications shall not be deemedto violate this Section 8.1.

###  

### (f)  Acknowledgment.  Each Seller acknowledges that (i) the restrictionsand agreements contained in this Section 8.1 are a material inducement to Buyerentering into this Agreement and are reasonable and necessary to protect thelegitimate interests of Buyer and (ii) any violation of this Section 8.1will cause substantial and irreparable harm to Buyer that would not bequantifiable and for which no adequate remedy would exist at law.  Accordingly, without limiting the remediesavailable to Buyer, injunctive relief shall be available for any violation ofthis Section 8.1.

###  

### (g)  Blue Pencil Doctrine.  If the duration or geographical extent of,or business activities covered by, this Section 8.1 are in excess of what isvalid and enforceable under applicable law, then such provision shall beconstrued to cover only that duration, geographical extent or activities thatare valid and enforceable.  Sellersacknowledge the uncertainty of the law in this respect and expressly stipulatethat this Agreement is to be given the construction which renders itsprovisions valid and enforceable to the maximum extent (not exceeding itsexpress terms) possible under applicable law.

###  

Section 8.2             Certain Assignments.  If Sellers do not obtain the consent of anythird party to the assignment of a contract, operating lease or other agreement(each of the foregoing being referred to in this Section 8.2 as an “*Operating Agreement*”) which constitutes an“Asset” under Section 1.1 hereof and which, according to its terms, is notassignable without the consent

 

30

----

 

of such third party, and if the Operating Agreement is assigned toBuyer pursuant to this Agreement and the third party thereafter raisesobjections to the assignment and refuses to allow Buyer to perform theOperating Agreement on the terms therein provided, or threatens to terminatethe Operating Agreement or sues for damages, Sellers and Buyer will cooperatewith each other, and use all commercially reasonable efforts, so that theOperating Agreement can be performed by Buyer and the third party’s objectioncan thereby be vitiated.  Suchcooperation and commercially reasonable efforts may include Buyer and Sellers,rather than assigning the Operating Agreement, (i) entering into anarrangement (a so-called “*SecondingArrangement*”), pursuant to which Sellers shall nominally perform theOperating Agreement and Buyer shall retain the economic benefits and detrimentsof the Operating Agreement or (ii) entering into a sublease of theOperating Agreement, in any event without cost to Sellers.  If necessary to comply with this Section8.2, Sellers shall maintain their corporate existence for such period of timeas Buyer may reasonably request for a period extending up to six (6) monthsfrom the Closing Date.

 

Section 8.3             Name Change.  Within twenty (20) days following theClosing, each Seller shall change its name to a name not containing any of thewords “Creative Mailing”, “Mailing & Marketing” or “Global Direct”.  At the request and sole expense of Buyer,Sellers shall take such action as may be reasonably necessary or appropriate topermit Buyer to qualify as a foreign or domestic entity to do business undereither or both of the names set forth above and under any similar names in anystate in which the Business is currently conducted.

 

Section 8.4             TaxMatters.

 

### (a)  The parties hereto shall cooperate with oneanother in the preparation of all Tax Returns, questionnaires, applications orother documents regarding any Taxes or transfer, recording, registration orother fees that become payable in connection with the transactions contemplatedby this Agreement that are required to be filed on or before the Closing Date,or in connection with the filing of any Tax Returns, the preparation for anyaudit by any taxing authority, the response to any inquiry by a taxingauthority or security holder, the mailing or filing of any notice and theprosecution or defense of any claim, suit or proceeding relating to any TaxReturns or any other filing required to be made with any taxing authority orany other matter related to Taxes. Sellers and Buyer shall cooperate with each other in the filing of anyTax Return, amended Return, claim for refund or in conducting any audit orother proceeding related to Taxes and involving the Assets prior to the ClosingDate.  Such cooperation and informationshall include providing copies of relevant Tax returns or portions thereof,together with accompanying schedules and related work papers and documentsrelating to rulings or other determinations by Taxing authorities.  Each party shall make its employeesavailable on a mutually convenient basis to provide explanation of anydocuments or information provided hereunder. Sellers, upon written request by Buyer, will provide to Buyer suchfactual information that is in Sellers’ possession reasonably necessary forfiling Tax Returns, Tax planning and contesting any Tax audit as Buyer mayreasonably request with respect to the Assets (which information Sellers agreeto maintain and preserve for a period of six (6) years from the ClosingDate and at Buyer’s expense for such period thereafter as Buyer may request,with such additional period not to exceed two (2) years).

 

31

----

 

### (b)  Buyer agrees to: (i) retain within itspossession all books and records and all other information regarding Taxesrelating to the Assets or the conduct or operation of the Business for anytaxable period or portion thereof, ending on or before the Closing Date (the “*Tax Information*”), until the expiration ofthe statute of limitations applicable to Seller for such taxable periods(giving effect to any waiver or extension thereof); (ii) maintain the TaxInformation in such manner so as to enable Sellers to have access thereto on abasis that is commercially reasonable and mutually convenient to both Buyersand Seller; and (iii) not destroy any Tax Information without the priorwritten consent of Sellers (which consent shall not be unreasonably withheld)until the sixth anniversary of the Closing Date or the expiration of thestatute of limitations applicable to Sellers for such Taxable periods (givingeffect to any waiver or extension thereof), whichever is later.

###  

### (c)  Seller shall:  (i) file all Tax Returns and elections or information statementswith respect to any liabilities for Taxes of Seller which affect the Assets andwhich, pursuant to applicable law, are required to be filed prior to theClosing Date; and (ii) promptly upon filing provide copies of any such TaxReturns, elections or information statement to Buyer.

###  

### (d)  Seller shall not make any election withrespect to Taxes, change an annual accounting period, adopt or change anyaccounting method, take any discretionary position with respect to Taxes, orfile an amended Tax Return or any report or form with respect to Taxes ofSeller which affects the Assets without prior consultation with and consent ofBuyer (which shall not be unreasonably withheld), if such election, adoption,change, position or filing would have the effect of increasing the Tax liabilityof Buyer with respect to any period ending after the Closing Date.

###  

### (e)  All transfer, documentary, sales, use,stamp, registration and other such Taxes and fees (including any penalties andinterest) incurred in connection with the transactions contemplated by thisAgreement (“*Transfer Taxes*”)shall be the responsibility of Buyer; provided, however, that ifBuyer provides Sellers (i) prior to the Closing with a “Uniform Sales & UseTax Certificate-Multijurisdiction” completed for Oklahoma and (ii) promptlyfollowing the Closing with a copy of Buyer’s Oklahoma Seller’s Permit, TransferTaxes shall be shared equally by Buyer, on the one hand, and Sellers, on theother hand.  Buyer will remit to Sellersits share of the Transfer Taxes (whether all of such Transfer Taxes or 50%thereof in accordance with the preceding sentence) by the later of (i) thefifteenth (15) day of the month following the month in which the Closing Dateoccurs or (ii) fifteen (15) days following the determination of the amountsdue.  Sellers will remit the aggregateamount of Transfer Taxes to the appropriate taxing authority by the due date ofthe Transfer Tax Return for the month in which the Closing Date shall occur.  Sellers will file all necessary Tax Returnsand other documentation with respect to all such Transfer Taxes, with theexpenses for such Returns to be shared equally by Buyer, on the one hand, andSellers, on the other hand.  Buyer andSellers shall cooperate in the preparation and filing of any Tax Returns that arerequired to be filed in connection with the Transfer Taxes described in thisSection 8.4(e).

 

32

----

 

Section 8.5             Repurchase of UncollectibleAccounts Receivable.  If Buyer shallfail to collect the aggregate full face amount of the Accounts Receivable setforth on the Closing Balance Sheet, net of such reserves set forth therefor onthe Closing Balance Sheet, by one hundred twenty (120) days from the date ofthe Closing Date, then, upon written notice from Buyer, Sellers shall promptlyacquire the uncollected Accounts Receivable by payment to Buyer of an amount incash equal to all such uncollected Accounts Receivable less the amount ofreserves therefor as shown on the Closing Balance Sheet.  By means of illustration, in the event that$1,500,000 remains uncollected one hundred twenty (120) days after the ClosingDate, and the Closing Balance Sheet has reserves therefor of $1,000,000,Sellers shall acquire such $1,500,000 of Accounts Receivable by payment to Buyerof $500,000 in cash.  Buyer shall keepdocumentation in reasonable detail evidencing or setting forth its efforts tocollect the Accounts Receivable during such one hundred twenty (120) day periodand, at Sellers’ request, shall furnish to Sellers copies of such documentationfor their review.  Proceeds fromAccounts Receivables collected after one hundred twenty (120) days from thedate of the Closing and for which Buyer has received payment under this Section8.5 shall be promptly and in any event within ten (10) business days ofcollection delivered by Buyer to Sellers. Buyer shall credit monies received by it from debtors doing businesswith Buyer after the Closing and included as an account debtor with respect tothe Accounts Receivable in accordance with the remittance instructions oradvice from the applicable account debtor if the account debtor specificallyidentifies the invoice being paid. Otherwise, said sums shall be applied to the oldest outstanding balancedue from the account debtor.  Everythirty (30) days following the Closing, Buyer shall provide Sellers with aschedule of the then-uncollected Accounts Receivable set forth on the ClosingBalance Sheet, together with a summary of its collection efforts with respectthereto.  Buyer shall not settle,compromise, write-down or write-off any Accounts Receivable without Sellers’prior written consent, which may be given or withheld in Sellers’ solediscretion.

 

Section 8.6             AgreementsConcerning Real Property and Equipment Leases.  

 

### (a)  Effective at the Closing Date, Sellers shallassign (or if they cannot effect such assignment, shall sublease) to Buyer, andBuyer shall assume and/or sublease from Sellers for the balance of theapplicable lease terms, the Leased Real Property pursuant to assignments(and/or subleases) to be negotiated in good faith between Sellers andBuyer.  Any sublease with respect to theforegoing leasehold premises shall provide that Buyer shall reimburse theapplicable sublessor-Seller for all rents, costs and expenses (including commonarea maintenance, taxes, utilities and other items payable by the sublessorthereunder) incurred thereby and relating to such leasehold premises withrespect to the lease term from and after the Closing Date.  Sellers shall include in the Closing BalanceSheet a reserve of $550,000 to reflect such leased space.

###  

### (b)  Buyer shall cooperate with Sellers and withthe lessors of any leases relating to the personal property to effect theassignment or transfer of such leases to Buyer.

###  

### (c)  Without the prior written consent of theapplicable Seller or any affiliate thereof, which may be given or withheld inits sole discretion, Buyer shall have no authority to extend, amend or modifyany leases with respect to the Leased Real Property without obtaining anunconditional release from the lessor of such Leased Real Property

 

33

----

 

### of the applicable Seller and its affiliates withrespect thereto (in which case no consent shall be necessary).  In the event that Buyer desires to remain atany of the premises that are the subject of the Leased Real Property followingthe expiration of the current terms thereof, it shall give the applicableSeller prior notice in writing and shall negotiate directly with the lessor ofsuch Leased Real Property with respect to execution of a new lease agreementbetween such lessor and Buyer for its own account, which new lease agreementshall not in any manner obligate either Seller or any affiliate thereof or bein any way based upon the credit or financial condition of either Seller or anyaffiliate thereof.  Buyer shall usereasonable best efforts to remove *SOURCECORP*from any guaranties to lessors of the Leased Real Property and toreplace letters of credit issued for the benefit of lessors of the Leased RealProperty by *SOURCECORP* or anyaffiliate thereof with security otherwise acceptable to such lessors.

###  

Section 8.7             Confidentiality.  Each party hereto will hold, and will useits reasonable best efforts to cause its affiliates and their respectiveofficers, directors and agents to hold, in strict confidence from any person,unless (i) compelled to disclose by judicial or administrative process or byother requirements of law or (ii) disclosed in an action or proceeding broughtby a party hereto in pursuit of its rights or in the exercise of its remedieshereunder, all documents and information concerning the other party or any ofits affiliates furnished to it by any other party or such other party’sofficers, directors and agents in connection with this Agreement or thetransactions contemplated hereby, except to the extent that such documents orinformation can be shown to have been (a) previously known by the partyreceiving such documents or information, (b) in the public domain (either priorto or after the furnishing of such documents or information hereunder) throughno fault of such receiving party or (c) later acquired by the receiving partyfrom another source if the receiving party is not aware following reasonableinquiry that such source is under an obligation to another party hereto to keepsuch documents and information confidential; provided, however, that followingthe Closing the foregoing restrictions will not apply to Buyer’s or any of itsaffiliates’ use of documents and information concerning the Business.  After the Closing, each Seller will hold,and will use its reasonable best efforts to cause its affiliates to hold, instrict confidence from any person all information regarding the Business thatis not now (and does not become part of, through no fault of Seller or itsaffiliates) generally available to the public, subject to the exceptions setforth in the first sentence of this Section 8.7.  In the event the transactions contemplated hereby are not consummated,upon the request of the other party, each party hereto will, and will cause itsaffiliates, promptly (and in no event later than five days after such request)redeliver or cause to be redelivered all copies of documents and informationfurnished by the other party in connection with this Agreement or thetransactions contemplated hereby and destroy or cause to be destroyed allnotes, memoranda, summaries, analyses, compilations and other writings relatedthereto or based thereon prepared by the party that furnished such documentsand information or its officers, directors and agents.  Notwithstanding any other express or impliedagreement to the contrary, the parties hereto agree that each of them and eachof their employees, representatives, and other agents may disclose to any andall person, without limitation of any kind, the tax treatment and tax structureof the purchase of the Assets and the other transactions contemplated by thisAgreement and all materials of any kind (including opinions or other taxanalyses) that are provided to any of them relating to such tax treatment andtax structure, except where confidentiality is reasonably necessary to complywith U.S. federal or state securities laws. For purposes of this paragraph,

 

34

----

 

the terms “tax treatment” and “tax structure” have the meaningsspecified in Treasury Regulation section 1.6011-4.

 

# **ARTICLEIX**SURVIVAL; INDEMNIFICATION

# ** **

Section 9.1             Reliance and Survival ofRepresentations and Warranties. Notwithstanding any investigation made by or on behalf of the partieshereto or the results of any such investigation and notwithstanding theparticipation of the parties in the Closing, each party shall be deemed to haverelied on the representations, warranties and covenants of the other parties,and the representations and warranties contained in Article IV andArticle V hereof shall survive the Closing for a period of eighteen (18)months thereafter, provided, however, that (i) the representationsand warranties contained in Section 4.1, Section 4.3, Section 4.4, Section4.10(c), Section 5.1, Section 5.2 and Section 5.3 and the covenant inSection 6.4(c)(ii) shall survive indefinitely, and (ii) therepresentations and warranties contained in Section 4.13, Section 4.19 andSection 4.24 shall survive the Closing until the earlier of (A) seven yearsfollowing the Closing or (B) all applicable statutes of limitation with respectto any Claims governing the respective matters set forth therein have expired.

 

Section 9.2             Indemnification by Sellers.  Subject to the limitations of Section 9.5,Sellers, agree to indemnify, defend and hold harmless Buyer, its respectiveofficers, managers, employees, agents and members (collectively, the “*Buyer Indemnified Parties*”) against anyloss, liability, deficiency, damage, expense or cost (including reasonableattorneys’ fees and expenses) including, without limitation, environmentaldamages, response costs (including response costs under CERCLA or anycomparable state, local or foreign law), remediation expenses and disbursementsincurred by an Indemnified Party including, without limitation, any of theforegoing relating to, resulting from or arising out of any action, suit,administrative proceeding, investigation, defense, audit or other proceedingbrought by any person or entity or Governmental Entity and any settlement orcompromise thereof (collectively, “*Losses*”),whether or not involving a third-party Claim (as defined in Section 9.4),which the Buyer Indemnified Parties may suffer, sustain or become subject to,as a result of any of the following (the items set forth in (a) through (f)below are hereinafter referred to, collectively, as the “*Indemnifiable Liabilities*”):

 

### (a)  Any misrepresentation in any of therepresentations and warranties of Sellers contained in this Agreement or inSellers’ Disclosure Schedules;

###  

### (b)  Any breach of, or failure to perform, anyagreement or covenant of Sellers contained in this Agreement;

###  

### (c)  Any Claim or threatened Claim against theBuyer Indemnified Parties that arises in connection with the actions orinactions of Sellers with respect to the Assets or the Business prior to theClosing Date;

 

35

----

 

### (d)  Any liability of each Seller for Taxes ofany person other than either Seller under Treasury RegulationSection 1.1502-6 (or any similar provision of state, local or foreignlaw);

###  

### (e)  With respect to each Plan that is subject toTitle IV of ERISA, the satisfaction of all minimum funding requirements underSection 412 of the Code with respect to each such Plan, and any liabilityunder Title IV of ERISA with respect to each such Plan; or

###  

### (f)  Any Excluded Assets or any liability notspecifically assumed by Buyer pursuant to this Agreement.

###  

Section 9.3             Indemnification by Buyer.  Subject to the limitations of Section 9.5,Buyer agrees to indemnify, defend and hold harmless Sellers, their respectiveofficers, directors, employees, agents or shareholders (collectively, the “*Seller Indemnified Parties*”) against anyLosses, whether or not involving a third-party Claim, which the SellerIndemnified Parties may suffer, sustain or become subject to as a result of anyof the following:

 

### (a)  Any misrepresentation in any of the representationsand warranties of Buyer contained in this Agreement (including any schedule tobe delivered to Buyer pursuant to this Agreement) or in Buyer’s DisclosureSchedules;

###  

### (b)  Any breach of, or failure to perform, anyagreement or covenant of Buyer contained in this Agreement; or

###  

### (c)  Any Claim or threatened Claim against eitherSeller that arises in connection with the actions or inactions of Buyer withrespect to the Assets or the Business after the Closing Date or with respect tothe Assumed Liabilities.

###  

Section 9.4             Method of Asserting Claims.  As used herein, an “*Indemnified Party*” shall refer to a BuyerIndemnified Party or a Seller Indemnified Party, as applicable, and the “*Indemnifying Party*” shall refer to theparty or parties hereto obligated to indemnify such Indemnified Party.

 

### (a)  In the event that any of the IndemnifiedParties is made a defendant in or party to any action or proceeding, judicialor administrative, instituted by any third party for the liability or the costsor expenses of which are Losses (any such third party action or proceedingbeing referred to as a “*Claim*”),then such Indemnified Party shall give the Indemnifying Party prompt noticethereof.  The failure to give suchnotice shall not affect any Indemnified Party’s ability to seek reimbursementunless such failure has materially and adversely affected the IndemnifyingParty’s ability to defend successfully a Claim.  The Indemnifying Party shall be entitled to contest and defend suchClaim; provided, that the Indemnifying Party (i) has a reasonable basisfor concluding that such defense may be successful and (ii) diligentlycontests and defends such Claim.  Noticeof the intention so to contest and defend shall be given by the IndemnifyingParty to the Indemnified Party within 15 business days after the IndemnifiedParty’s notice of such Claim (but, in any event, at least five business daysprior to the date that an answer to such Claim is due to be filed).  Such contest and defense shall be conductedby reputable attorneys employed

 

36

----

 

### by the Indemnifying Party.  If the Indemnifying Party fails to give such notice or assumesuch defense, then the Indemnified Party shall be entitled to undertake suchdefense and its reasonable costs and expenses (including, without limitation,attorney fees and expenses) shall be included in the Loss to be indemnified bythe Indemnifying Party.  If theIndemnifying Party elects to contest and defend a Claim, the Indemnified Partyshall be entitled at any time, at its own cost and expense (which expense shallnot constitute a Loss unless the Indemnified Party reasonably determines thatthe Indemnifying Party is not adequately representing or, because of a conflictof interest, may not adequately represent, any interests of the IndemnifiedParties, and only to the extent that such expenses are reasonable), toparticipate in such contest and defense and to be represented by attorneys ofits or their own choosing.  If theIndemnified Party elects to participate in such defense, the Indemnified Partywill cooperate with the Indemnifying Party in the conduct of such defense.  Neither the Indemnified Party nor theIndemnifying Party may concede, settle or compromise any Claim without theconsent of the other party, which consents will not be unreasonably withheld ordelayed.  Notwithstanding the foregoing,if (i) a Claim seeks equitable relief, (ii) the subject matter of aClaim relates to the ongoing business of any of the Indemnified Parties, whichClaim, if decided against any of the Indemnified Parties, would materiallyadversely affect the ongoing business or reputation of any of the IndemnifiedParties, or (iii) the Indemnified Party would not be fully indemnifiedwith respect to a Claim, then, in each such case, the Indemnified Parties aloneshall be entitled to contest, defend and settle such Claim in the firstinstance and, if the Indemnified Parties do not contest, defend or settle suchClaim, the Indemnifying Party shall then have the right to contest and defend(but not settle) such Claim.

###  

### (b)  In the event any Indemnified Party shouldhave a claim for indemnification against any Indemnifying Party (whether suchclaim does not involve a Claim or involves a settled or resolved Claim whichthe Indemnifying Party has not defended for any reason, or a Claim from whichan Indemnified Party has suffered Losses by reason of the Indemnifying Party’sfailure to adequately represent a Indemnified Party’s interests or otherwise toindemnify the Indemnified Party), the Indemnified Party shall deliver a noticeof such claim to the Indemnifying Party, setting forth in reasonable detail theidentity, nature and estimated amount of Losses (if reasonably determinable)related to such claim or claims, with reasonable promptness and in all eventsprior to the expiration of the Indemnifying Party’s indemnification obligationhereunder.  If the Indemnifying Partynotifies the Indemnified Party that it does not dispute the claim described insuch notice or fails to notify the Indemnified Party within 30 days afterdelivery of such notice by the Indemnified Party whether the Indemnifying Partydisputes the claim described in such notice or that it needs additionalinformation to make a determination with respect to such claim, the Loss in theamount specified in the Indemnified Party’s notice will be conclusively deemeda liability of the Indemnifying Party and the Indemnifying Party shall pay theamount of such Loss to the Indemnified Party on demand.  If the Indemnifying Party has timely (i)disputed its liability with respect to such claim or (ii) indicated that itneeds additional information to make a determination with respect to suchclaim, the Indemnifying Party and the Indemnified Party will proceed in goodfaith to negotiate a resolution of such dispute for a period of at least 30days.  If such dispute has not beenresolved by such time, it shall be resolved fully and finally in Cedar Rapids,

 

37

----

 

### Iowa if a Seller Indemnified Party is the IndemnifiedParty or in Dallas, Texas if a Buyer Indemnified Party is the IndemnifiedParty, by an arbitrator selected by the parties pursuant to the provisions ofSection 10.12.  Payment of suchLoss shall be made within 10 days following final determination thereof(whether such determination is made pursuant to the procedures set forth inthis Section 9.4, by agreement between Sellers and Buyer, by arbitration awardor by final adjudication).

###  

Section 9.5             Limitationson Indemnification.

 

### (a)  Notwithstanding any provision in thisAgreement or the Related Documents to the contrary or any investigation made byor on behalf of any of the parties hereto or the results of any suchinvestigation and notwithstanding the participation of such party in theClosing, with respect to any specific representation or warranty under whichany party shall have made a claim for indemnification hereunder prior to theexpiration date of the applicable survival term specified in Section 9.1 and asto which such claim has not been completely and finally resolved prior to suchexpiration date, such representation or warranty shall survive for the periodof time beyond such expiration date sufficient to resolve, completely andfinally, the claim relating to such representation or warranty.

###  

### (b)  Sellers shall have no obligation to provideindemnification pursuant to Section 9.2 except to the extent that the aggregateamount of indemnification to which the Buyer Indemnified Parties, but for thisSection 9.5(b), otherwise shall have become entitled hereunder shall exceed$150,000 (the “*Threshold*”), andin such event Sellers shall be obligated to provide indemnification withrespect to all such amounts (and not just the amounts in excess of theThreshold).  Sellers’ indemnificationobligations under this Agreement shall be calculated net of any amountsrecoverable under insurance policies and net of any related Tax benefits.

###  

### (c)  Notwithstanding any other provisioncontained in this Agreement to the contrary, in no event shall Sellers have anyliability for indemnification pursuant to Section 9.2 or otherwise in anaggregate amount in excess of seventy-five percent (75%) of the Purchase Pricepaid at Closing (as adjusted pursuant to the adjustment provisions of Sections 2.1(b)and 2.1(c) hereof) and in accordance with the Promissory Note (excludinginterest paid thereon), and less any amount paid by *SOURCECORP* in satisfaction of its guarantor obligationsunder this Agreement.

###  

### (d)  Buyer shall have no obligation to provideindemnification pursuant to Section 9.3 or otherwise except to the extent thatthe aggregate amount of indemnification to which Sellers, but for this Section9.5(d), otherwise shall have become entitled hereunder shall exceed theThreshold, and in such event Buyer shall be obligated to provideindemnification with respect to all such amounts (and not just the amounts inexcess of the Threshold).  Buyer’sindemnification obligations under this Agreement shall be calculated net of anyamounts recoverable under insurance policies and net of any related Taxbenefits.

 

38

----

 

### (e)  Notwithstanding any other provisioncontained in this Agreement to the contrary, in no event shall Buyer have anyliability for indemnification pursuant to Section 9.3 or the other terms ofthis Agreement in an aggregate amount in excess of seventy-five percent (75%)of the Purchase Price paid at Closing (as adjusted pursuant to the adjustmentprovisions of Sections 2.1(b) and 2.1(c) hereof), and in accordance withthe Promissory Note (excluding interest paid thereon).

###  

### (f)  Any indemnification payable under thisArticle IX shall be, to the extent permitted by law, an adjustment to thePurchase Price.

###  

Section 9.6             *SOURCECORP’s*Representations,Warranties and Guaranty of *SOURCECORP*.

 

### (a)  *SOURCECORP*is a corporation duly incorporated, validly existing and in goodstanding under the laws of the State of Delaware.  *SOURCECORP*has therequisite corporate power and authority to execute and deliver this Agreementand to perform its obligations hereunder.

###  

### (b)  The execution, delivery and performance ofthis Agreement by *SOURCECORP* andthe consummation of the transactions contemplated hereby have been duly andvalidly authorized by the Board of Directors of *SOURCECORP*, and no other proceedings on its part arenecessary to authorize the execution, delivery and performance of thisAgreement.  This Agreement has been dulyexecuted and delivered by *SOURCECORP*and, assuming that this Agreement is the valid and binding agreement of Buyer,constitutes the valid and binding obligation of *SOURCECORP*, enforceable in accordance with its terms.

###  

### (c)  *SOURCECORP*hereby guarantees to Buyer payment of any and all amounts thatSellers may owe to Buyer under this Agreement (the “*Obligations*”);provided, however, that notwithstanding any other provisioncontained in this Agreement to the contrary, in no event shall *SOURCECORP* have any liability forindemnification or otherwise pursuant to Article IX or the other terms ofthis Agreement in an aggregate amount in excess of seventy-five percent (75%)of the Purchase Price paid at Closing (as adjusted pursuant to the adjustmentprovisions of Sections 2.1(b) and 2.1(c) hereof) and in accordance withthe Promissory Note (excluding interest paid thereon), and less any amount paidby Sellers in satisfaction of their indemnification obligations under thisAgreement.  *SOURCECORP’s*liability under this Section 9.6(c) is primary,direct, absolute and nonconditional and independent of the obligations ofeither Seller.  *SOURCECORP’*’s guaranty of the Obligations (the “*Guaranty*”)may be immediately enforced without necessity of any action, claim or demandagainst either Seller or the resort by Buyer to any remedy at law or in equityand is an absolute, unconditional andcontinuing guaranty of payment and performance of the Obligations, and theobligations of *SOURCECORP*hereunder shall not be released, in whole or in part, by any action or thingwhich might, but for this provision of the Agreement, be deemed a legal orequitable discharge of a surety or guarantor, other than irrevocable paymentand performance in full of the Obligations.  If any payment receivedby Buyer and applied to

 

39

----

 

### the Obligations issubsequently set aside, recovered, rescinded or required to be returned for anyreason (including, without limitation, the bankruptcy, insolvency orreorganization of Sellers), the Obligations to which such payment was appliedshall for the purposes of the Guaranty be deemed to have continued inexistence, notwithstanding such application, and the Guaranty shall beenforceable as to such Obligations as fully as if such application had neverbeen made.

###  

Section 9.7             Exclusivity of Remedies.  The remedies provided to Sellers and Buyerby the post-closing indemnification provisions of this Article IX shall be theexclusive remedies to which the respective parties are entitled after theClosing for any breach of or noncompliance with the provisions of thisAgreement or the Related Documents. Notwithstanding the foregoing, nothing herein shall prevent anyIndemnified Party from bringing an action based upon allegations of fraud withrespect to any party in connection with this Agreement and the RelatedDocuments.  In the event such action isbrought, the prevailing party’s attorneys’ fees and costs shall be paid by thenonprevailing party.

 

# **ARTICLEX**

# ** **

# **MISCELLANEOUS**

# ** **

Section 10.1           Press Releases and Announcements.  Prior to the Closing Date, neither partyhereto shall issue any press release (or make any other public announcement)related to this Agreement or the transactions contemplated hereby or make anyannouncement to the employees, customers or suppliers of Sellers without priorwritten approval of the other party hereto, except as may be necessary, in theopinion of counsel to the party seeking to make disclosure, to comply with therequirements of this Agreement or applicable law or regulation.  If any such press release or public announcementis so required, the party making such disclosure shall consult with the otherparty prior to making such disclosure, and the parties shall use all reasonableefforts, acting in good faith, to agree upon a text for such disclosure whichis satisfactory to both parties. Notwithstanding the foregoing, Sellers shall be permitted to make suchpublic disclosures as shall be reasonably necessary to permit its ultimatecorporate parent, *SOURCECORP*, tocomply with its obligations under federal and other applicable securities lawsand regulations.

 

Section 10.2           Expenses.  Except as otherwise expressly provided forherein, Sellers and Buyer will pay all of their own expenses (includingattorneys’ and accountants’ fees, in connection with the negotiation of thisAgreement, the performance of their respective obligations hereunder and theconsummation of the transactions contemplated by this Agreement (whetherconsummated or not).

 

Section 10.3           Further Assurances.  Each party to this Agreement agrees that, onand after the Closing Date, they shall take all appropriate action and executeany documents, instruments or conveyances of any kind which may be reasonablynecessary or advisable to carry out any of the provisions hereof, includingwithout limitation, putting Buyer in possession of the Assets and transferringto Buyer all Permits of Sellers that are transferable.

 

40

----

 

Section 10.4           Amendment and Waiver.  This Agreement may not be amended or waivedexcept in a writing executed by the party against which such amendment orwaiver is sought to be enforced.  Nocourse of dealing between or among any persons having any interest in thisAgreement will be deemed effective to modify or amend any part of thisAgreement or any rights or obligations of any person under or by reason of thisAgreement.

 

Section 10.5           Notices.  All notices, demands and othercommunications to be given or delivered under or by reason of the provisions ofthis Agreement will be in writing and will be deemed to have been given orthree business days after being mailed by first class U.S. mail, return receiptrequested, or when receipt is acknowledged, if sent by facsimile, telecopy orother electronic transmission device. Notices, demands and communications to Buyer and Sellers will, unlessanother address is specified in writing, be sent to the address indicatedbelow:

 
| Notices to Buyer:                     |   | with a copy to:                               |
|---------------------------------------|--------|-----------------------------------------------|
|                                  |   |                                          |
| Creative Mailing & Marketing, LLC |   | Dorsey & Whitney LLP                 |
| 7041 E. 15th Street                   |   | 50 South Sixth Street                         |
| Tulsa, Oklahoma 74112                 |   | Minneapolis, Minnesota 55402                  |
| Attention:   John Rodewald       |   | Attention:   Matthew J. Knopf, Esq. |
| Telecopy:   (918) 834-6073       |   | Telecopy:   (612) 340-8738               |
|                                  |   |                                          |
| Notices to Sellers:                   |   | with a copy to:                               |
|                                  |   |                                          |
| Global Direct, Inc.                   |   | Locke Liddell & Sapp LLP                  |
| Mailing & Marketing Inc.          |   | 2200 Ross Avenue, Suite 2200                  |
| 3232 McKinney Avenue, Suite 1000      |   | Dallas, Texas 75201                           |
| Dallas, Texas 75204                   |   | Attention:   Kent Jamison, Esq.          |
| Attention:   General Counsel     |   | Telecopy:   (214) 740-8800               |
| Telecopy:   (214) 740-6598       |   |                                          |

 

Section 10.6           Binding Effect; Assignment.  This Agreement and all of the provisionshereof will be binding upon and inure to the benefit of the parties hereto andtheir respective successors and permitted assigns, except that neither thisAgreement nor any of the rights, interests or obligations hereunder may beassigned, by operation of law or otherwise, by either party hereto without theprior written consent of the other party hereto; provided, however, that(i) Buyer may assign its interest under this Agreement to any Affiliate ofBuyer, whether now in existence or organized after the date hereof and mayassign or grant a security interest in Buyer’s rights under this Agreement andthe any related documents to any bank, financial institution or other lenderproviding financing to Buyer and (ii) either Seller may assign itsinterest under this Agreement to *SOURCECORP*or any subsidiary thereof.  Anyunauthorized assignment will be void.

 

Section 10.7           Severability.  Whenever possible, each provision of thisAgreement will be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Agreement is held to be prohibitedby or invalid under applicable law, such provision will be ineffective only tothe extent of such prohibition or invalidity, without invalidating theremainder of such provision or the remaining provisions of this Agreement.

 

41

----

 

Section 10.8           Complete Agreement; Interpretation.  This Agreement, the Related Agreements, theExhibits hereto, the Disclosure Schedule and the other documents referred toherein contain the complete agreement between the parties and supersede anyprior understandings, agreements or representations by or between the parties,written or oral, which may have related to the subject matter hereof in anyway, and no party shall be liable or bound to the other parties in any mannerby any representations, warranties or covenants not set forth herein.  As used in this Agreement, “*knowledge*” means the actual knowledge of adirector or any officer of the applicable party.

 

Section 10.9           Counterparts.  This Agreement may be executed in one ormore counterparts, any one of which need not contain the signatures of morethan one party, but all such counterparts taken together will constitute oneand the same instrument.

 

Section 10.10         **GOVERNING LAW; CONSENT TO JURISDICTION**.  **THISAGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH LAWS OF THE STATE OF TEXAS.SUBJECT TO SECTION 10.12 HEREOF, THE PARTIES HERETO EXPRESSLY CONSENT AND AGREETHAT ANY DISPUTE, CONTROVERSY, LEGAL ACTION OR OTHER PROCEEDING THAT ARISESUNDER, RESULTS FROM, CONCERNS OR RELATES TO THIS AGREEMENT MAY BE BROUGHT INTHE FEDERAL AND STATE COURTS IN AND OF THE COUNTY OF DALLAS, STATE OF TEXAS ANDDO HEREBY ACKNOWLEDGE THAT SAID COURTS HAVE JURISDICTION OVER SUCH DISPUTE ORCONTROVERSY AND HEREBY WAIVE ANY OBJECTION TO PERSONAL JURISDICTION OR THATSUCH COURTS ARE AN INCONVENIENT FORUM.**

 

Section 10.11         Dispute Resolution.  If a dispute or controversy arises betweenthe parties relating to this Agreement (except for any dispute to which Section2.1(c) is applicable), the following procedure will be implemented before anyparty pursues other remedies available hereunder except that any party may seekinjunctive relief from a court where appropriate in order to maintain thestatus quo while this procedure is being followed or to enforce this Section10.11:

 

### (a)  The parties will hold a meeting promptly,attended by persons with decision-making authority regarding the dispute orcontroversy, to attempt in good faith to negotiate a resolution of the disputeor controversy; provided, however, that no such meeting will bedeemed to vitiate or reduce the obligations and liabilities of the partieshereunder or be deemed a waiver by a party hereto of any remedies to which suchparty would otherwise be entitled hereunder.

###  

### (b)  If, within thirty (30) days after suchmeeting, the parties have not succeeded in negotiating a resolution of thedispute or controversy, they hereby agree that such dispute or controversyshall be settled exclusively by arbitration, conducted before a panel of three(3) arbitrators in Dallas, Texas if Buyer is the initiating party or in CedarRapids, Iowa if a Seller is the initiating party, in either event in accordancewith the rules of the American Arbitration Association then in effect.  The arbitrators shall not have the authorityto add to, detract from, or modify any provision hereof nor to award punitiveor

 

42

----

 

### exemplary damages to any injured party.  A decision by a majority of the arbitrationpanel shall be final and binding. Judgment may be entered on the arbitrators’ award in any court havingjurisdiction under Section 10.11 hereof.  The costs of any arbitration proceeding and related attorneys’fees (including the allocable cost of in-house counsel) shall be borne by theparty or parties not substantially prevailing in such proceeding as determinedby the arbitrators.

###  

**[Remainder of page intentionally leftblank; signature page follows]**

 

43

----

 

IN WITNESS WHEREOF, the parties hereto have executedthis Agreement as of the day and year first above written.

 
|   | **BUYER:**                                 |
|--------|--------------------------------------------|
|   |                                       |   |   |
|   | **CREATIVE MAILING & MARKETING,  LLC** |
|   |                                       |   |   |
|   |                                       |   |   |
|   | By:                                        | /s/ Randall D. Seberg |
|   |                                       | Name: | Randall D. Sebert |
|   |                                       | Title: | President |
|   |                                       |   |   |
|   |                                       |   |
|   | **SELLERS:**                               |   |
|   |                                       |   |   |
|   | **GLOBAL DIRECT, INC.**                    |   |
|   |                                       |   |
|   |                                       |   |
|   | By:                                        | /s/ Charles S. Gilbert |
|   |                                       | Name: | Charles S. Gilbert |
|   |                                       | Title: | VP &  Secretary |
|   |                                       |
|   |                                       |   |   |
|   | **MAILING & MARKETING INC.**           |   |
|   |                                       |   |   |
|   |                                       |   |   |
|   | By:                                        | /s/ Barry L. Edwards |
|   |                                       | Name: | Barry L. Edwards |
|   |                                       | Title: | Acting President  & CEO |
|   |                                       |   |   |
|   |                                       |   |   |
|   | For purposes of Section 9.6 hereof:   |   |
|   |                                       |   |   |
|   | ***SOURCECORP,*INCORPORATED**              |   |
|   |                                       |   |   |
|   |                                       |   |   |
|   | By:                                        | /s/ W. Bryan Hill |
|   |                                       | Name: | W. Bryan Hill |
|   |                                       | Title: | VP & Chief  Accounting Officer |
|        |                                            |  |  |  |  |

 

44

----