**Exhibit2.1**

 

 

**ASSETPURCHASE AGREEMENT**

** **

**DATEDAS OF JUNE 4, 2004**

**AMONG**

**PREMIERACQUISITION CORP.**

**ASSELLER,**

**SOURCECORP,INCORPORATED**

**ASPARENT OF SELLER**

**AND**

**SECUREHEALTH INFORMATION CORP.**

**ASBUYER**

 

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**ASSETPURCHASE AGREEMENT**

 

This ASSET PURCHASEAGREEMENT (this “Agreement”), dated as of June 4, 2004, among **PREMIER ACQUISITION CORP.,**a Delawarecorporation (“Seller”), **SOURCECORP,INCORPORATED**, a Delaware corporation (“Parent”), and **SECURE HEALTH INFORMATION CORP.**, a Coloradocorporation (“Buyer”).

 

R E C I T A L S:

 

WHEREAS Seller desires tosell, and Buyer wishes to buy, substantially all of the assets used inconnection with the medical records release of information business currentlyengaged in by Seller (collectively the “Business”), other than the assetsexpressly excluded hereunder, for the price and on the terms and conditionshereinafter set forth.  Parent is theparent company of Seller and desires that this transaction take place.  Capitalized terms not defined in thisAgreement shall have the respective meanings ascribed thereto in Exhibit Ahereto.

 

A G R E E M E N TS:

 

NOW, THEREFORE, for andin consideration of the premises and of the mutual representations, warranties,covenants and agreements hereinafter set forth, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,and upon the terms and subject to the conditions hereinafter set forth, theparties hereto do hereby agree as follows:

 

# **ARTICLE I**

 

# **SALE AND PURCHASEOF ASSETS**

 

## 1.1.                              Agreementto Sell and Buy.  Subject to theterms and conditions set forth in this Agreement, Seller hereby agrees to sell,transfer and deliver to Buyer on the Closing Date, and Buyer agrees to purchaseand accept, all of Seller’s right, title and interest in and to the Assets,free and clear of any Liens (except for those permitted in accordance with Sections2.5 and 2.6 below), more specifically described as follows:(a) the Personal Property; (b) the Customer Contracts; (c) theTransferable Licenses; (d) all books and records relating to the CustomerContracts (the “Customer Contract Records”), subject to the rights of Sellerset forth in Section 4.11(b); (e) all goodwill and goingconcern value of the Business; and (f) without duplication, all otherassets of Seller owned, used or held primarily for use in the Business exceptthe Excluded Assets.

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## 1.2.                              ExcludedAssets.  The Assets shall excludethe following assets (the “Excluded Assets”), which shall remain the propertyof Seller after the Closing:

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### (a)                                  Seller’scash and cash equivalents on hand as of the Closing Date and all other cash andcash equivalents in any of Seller’s bank or investment accounts, anysecurities, whether debt or equity, owned by or on behalf of Seller, any chosesin action, any Untagged Assets, any insurance policies, letters of credit,deposits or other similar items and any cash surrender value in regard thereto,and any refunds for taxes or other governmental charges or claims thereto;(b) the Accounts Receivable; (c) the Real Property Leases (including,without limitation, any prepaid rent or lease deposits with respect to the RealProperty Leases); (d) any Licenses other than the

 

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Transferable Licenses;(e) any Intellectual Property Rights; (f) the minute books and stockrecords of Seller and any books and records that Seller is required by law toretain, subject to the right of Buyer to have access and to copy such books andrecords related to the Business or the Assets at its sole cost and expense fora period of six (6) years from the Closing Date (Seller shall maintain suchbooks and records during such period in their current or a comparable format),and books and records related to internal corporate matters of Seller or itsaffiliates; (g) any and all claims relating to the Business arising out ofevents or transactions occurring, or contractually required to occur, entirelyprior to the Effective Time, including claims to any refunds or rebates offederal, state or local franchise, income or other taxes for periods or partialperiods prior to the Effective Time and all prepayments of taxes for anyperiod, whether ending prior to, on or after the Effective Time; (h) insurancepolicies owned by Seller or its affiliates in connection with the Business orthe Assets and all rights of Seller or such affiliates under or arising out ofsuch insurance policies; (i) the Employee Benefit Plans and their assetsand rights in connection therewith; (j) Seller’s software and data (other thandata relating to the Customer Contracts) that is to be removed from the Assetsafter the Closing as contemplated in Section 4.2; and (k) allrights of Seller to receive payments from employees of the Business prior tothe Effective Time.

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## 1.3.                              Instrumentsof Conveyance.  In order to effectthe sale, assignment, transfer and conveyance of the Assets contemplated by Section 1.1,Seller shall execute and deliver to Buyer at Closing the Bill of Sale andAssignment in substantially the form attached hereto as Exhibit B (the“Bill of Sale”) and such other assignments, endorsements, deeds and instrumentsof transfer as shall be reasonably necessary to carry out the intent of thisAgreement and as shall be sufficient to vest in Buyer title to the Assets andthe right, title and interest of Seller thereto.

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## 1.4.                              PurchasePrice.  The Purchase Price for theAssets shall be Seven Hundred Fifty Thousand Dollars ($750,000.00), whichamount shall be adjusted to reflect any adjustments or prorations made atClosing as provided in Section 1.5, and shall be paid by Buyer toSeller at Closing by wire transfer of immediately available funds to suchaccount or accounts as are designated by Seller in written instructions toBuyer.

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## 1.5.                              Adjustmentsand Prorations.  Except as otherwiseprovided in this Section 1.5, all Transferable License fees,utility charges, real and personal property taxes and assessments leviedagainst the Assets, property and equipment rentals, wages, payroll taxes,salaries, commissions, time sales and service charges, taxes, trade and bartertransactions and similar prepaid and deferred items (excluding any prepaiditems included as Excluded Assets in Section 1.2), shall berecorded as of the Effective Time in accordance with generally acceptedaccounting principles consistently applied (“GAAP”) and prorated between Buyerand Seller (based on the number of calendar days remaining in the relevantcurrent payment period in which the Effective Time occurs and, with respect toservices to be performed by Buyer under Customer Contracts that have been paidfor prior to the Effective Time, based on the amount paid prior to Closing(estimated to be approximately $17,825)). The Purchase Price shall be adjusted (*i.e.*,increased or decreased) to reflect such prorations.  In addition, and subject to the last sentence of Section 4.5(a),the Purchase Price shall be increased to include the amount of the postageoutstanding at the Effective Time on the Pitney Bowes postage meter included inthe Personal Property (approximately $20,000 at March 31, 2004).

 

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## 1.6.                              Assumptionof Liabilities and Obligations. (a) As of the Effective Time, Buyer shall assume, pay, dischargeand perform: (i) all of the obligations and liabilities under the TransferableLicenses and the Customer Contracts, arising out of an event occurring from andafter the Effective Time, including without limitation any cancellationcharges, liabilities or penalties in the event that Buyer elects to terminateor cease performance under such Customer Contracts; (ii) all obligations andliabilities arising out of events occurring from and after the Effective Timerelated to the ownership of the Assets or the conduct of the Business from andafter the Effective Time, including, without limitation, property taxes due andpayable based on an assessment date after the Effective Time, whether or notaccrued prior to the Effective Time; (iii) any obligations and liabilitiesresulting from or associated with the termination of employment after theClosing Date of the Transferred Employees (as defined in Section 4.5)or to otherwise comply with its obligations as set forth in Section 4.5;and (iv) the obligations and liabilities of Seller under the Real PropertyLeases with respect to the Real Property Leases and for the periods specifiedin Section 4.1(a) and (b) hereof (the foregoing, the“Assumed Liabilities”).

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### (b)                                 Allof the obligations and liabilities of Seller arising prior to the EffectiveTime, and not otherwise assumed by Buyer pursuant to this Agreement, shallremain the obligations and liabilities of Seller, including, withoutlimitation: (i) any obligations under any contract, lease or agreement notincluded in the Customer Contracts; (ii) any obligations under the Customer Contractsarising from a breach thereby prior to the Effective Time and obligations underthe Real Property Leases other than as specified in Section 4.1hereof; (iii) any liability or obligation relating to the Employee BenefitPlans; and (iv) any property tax liability due and payable based on anassessment date prior to the Effective Time, whether or not accrued prior tothe Effective Time.

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## 1.7.                              Instrumentsof Assumption.  In order to effectand evidence the assumption of the Assumed Liabilities contemplated by Section 1.6(a),Buyer shall execute and deliver to Seller at Closing the Assumption Agreementin substantially the form attached hereto as Exhibit C (the “AssumptionAgreement”) and such other documents as shall be reasonably necessary to carryout the intent of this Agreement and as shall be sufficient to effect andevidence Buyer’s assumption of the Assumed Liabilities.

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## 1.8.                              Allocationof Purchase Price.  At or before theClosing Date, the parties shall allocate the Purchase Price among the Assets inthe manner complying with Section 1060 of the Code.  Such allocation will be added to thisAgreement as Schedule 1.8 and shall be conclusive and binding oneach of the parties hereto for purposes of federal and, where applicable, stateand local tax returns, and the parties do hereby agree that they will notvoluntarily take any position on such returns inconsistent with suchallocation, as adjusted for any Purchase Price adjustments hereunder.  The parties hereby agree to prepare andtimely file all applicable forms concerning the allocation of the PurchasePrice with the IRS and any other government authority consistent with theallocation, as adjusted for any Purchase Price adjustments hereunder, tocooperate with each other in the preparation of such forms, and to furnish eachother with a copy of such forms prepared in draft, within a reasonable periodprior to the filing due date thereof.

 

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# **ARTICLE II**

 

# **REPRESENTATIONSAND WARRANTIES OF SELLER AND PARENT**

 

Seller and Parentrepresent and warrant to Buyer that all of the following representations andwarranties with respect to Seller set forth in this Article II aretrue and correct at the time of this Agreement and at the time of the Closing:

 

## 2.1.                              Incorporation,Standing and Authority.  Seller is acorporation duly incorporated, validly existing and in good standing under thelaws of the State of Delaware, and is duly qualified to transact business inthe States of Washington and Oregon. Seller has the requisite corporate power and authority (i) to own, leaseand use the Assets as presently owned, leased and used, (ii) to conduct theBusiness as presently conducted, and (iii) to execute and deliver thisAgreement, the Bill of Sale and the other documents contemplated hereby, and toperform and comply with all of the terms, covenants and conditions to beperformed and complied with by Seller hereunder and thereunder.

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## 2.2.                              Authorizationand Binding Obligation.  Theexecution, delivery and performance of this Agreement by Seller have been dulyauthorized by all necessary corporate action on the part of Seller.  This Agreement has been duly executed anddelivered by Seller and constitutes the legal, valid and binding obligation ofSeller, enforceable against it in accordance with its terms except that (i)such enforcement may be subject to bankruptcy, insolvency, reorganization,moratorium or similar laws affecting creditors’ rights generally, (ii) theremedies of specific performance and injunctive relief are subject to certainequitable defenses and to the discretion of the court before which anyproceedings may be brought and (iii) rights to indemnification hereunder may belimited under applicable securities laws (the “Equitable Exceptions”).

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## 2.3.                              Absenceof Conflicting Agreements.  Exceptas set forth on Schedule 2.3, the execution, delivery andperformance of this Agreement (with or without the giving of notice, the lapseof time, or both):  (i) does not requireany Consent of, or any filing with, any governmental regulatory authority orany third party;  (ii) will not conflictwith any provision of the certificate of incorporation or bylaws ofSeller;  (iii) will not violate orconflict with, result in a breach of, or constitute a default under, any law,judgment, order, ordinance, injunction, decree, rule, regulation or ruling ofany court or governmental instrumentality, which is applicable to Seller, theAssets or the Business;  (iv) will notconflict with, constitute grounds for termination of, result in a breach of,constitute a default under, or accelerate the acceleration of any performancerequired by the terms of, any Customer Contract or Transferable License towhich any of Seller, the Assets or the Business is a party or by which any ofSeller, the Assets or the Business may be bound except for such violations,conflicts, breaches or defaults that, individually or in the aggregate, wouldnot be reasonably likely to have a Material Adverse Effect;  or (v) will not create any Lien upon theAssets.

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## 2.4.                              RealProperty; Real Property Leases. Seller does not own or hold any interest in Real Property other than asset forth on Schedule 2.4 with respect to the Real PropertyLeases.  Schedule 2.4 setsforth a list and copies of all leases and subleases under which Seller islessor or lessee or sublessor or sublessee of any Real Property (the “RealProperty Leases”).  Copies of all RealProperty Leases have been delivered to Buyer. Seller has not assigned any Real Property Leases.

 

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## 2.5.                              Titleto Personal Property.  Schedule 2.5contains a true and complete list of all items of the Personal Property used toconduct the Business as now conducted that have a net book value in excess of$1,000.  Seller owns and has good titleto all Personal Property set forth on Schedule 2.5 except as notedthereon.  None of the Personal Propertyset forth on Schedule 2.5 is subject to any Lien, except for (i)Liens for current taxes and assessments not yet due and payable and (ii) anyother Liens described on Schedule 2.5.

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## 2.6.                              MaterialCustomers and Customer Contracts.  Schedule 2.6contains a list of Seller’s Customer Contracts.  Seller has not given to or received from any party on or prior tothe Closing any notice or other written communication terminating, or givingnotice of termination of, a Customer Contract, and there exists no writtennotice of, or to Seller’s knowledge, threatened, termination, cancellation ormaterial and adverse modification of a Customer Contract.

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## 2.7.                              FinancialStatements.  Schedule 2.7contains true and complete copies of the unaudited statements of income ofSeller for the fiscal year ended December 31, 2003, and for thethree-month period ended March 31, 2004 (collectively, the “FinancialStatements”).  Except as set forth on Schedule 2.7,the Financial Statements have been prepared in accordance with generallyaccepted accounting principles and present fairly on a basis consistent withSeller’s historical practice, the results of operations for the periods thenended; provided, however, that the statements do not includenotes and normal recurring year-end adjustments, goodwill, deferred taxes anditems of corporate overhead.

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## 2.8.                              NoUndisclosed Liabilities, Etc.  SinceMarch 31, 2004 (except (i) for the transactions contemplated by thisAgreement, and (ii) as set forth on Schedule 2.8), Seller hasnot incurred any material liability or material obligation (absolute, accrued,contingent or otherwise) of any nature, other than liabilities and obligationsincurred in the ordinary course of business, that would properly be reflectedor reserved against in a balance sheet prepared in conformity with generallyaccepted accounting principles applied on a basis consistent with that used inthe preparation of the Financial Statements.

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## 2.9.                              Taxes.  Seller has filed or caused to be filed allfederal income tax returns and all other federal, state, foreign, county, localor city tax returns that are required to be filed and such returns are correctin all material respects, and it has paid or caused to be paid all taxes shownon said returns or on any tax assessment received by it to the extent that suchtaxes have become due, or has set aside on its books reserves deemed by it tobe adequate with respect thereto. Except as set forth on Schedule 2.9, there is no action,suit, proceeding, audit or investigation pending or, to the knowledge ofSeller, threatened in respect of any taxes for which Seller is or may becomeliable and relating to the Assets or the Business; no deficiency for such taxeshas been proposed, asserted, or to the knowledge of Seller, threatened, nor tothe knowledge of Seller, is there a basis for any such action ordeficiency.  To Seller’s knowledge, allReal Property and Personal Property of Seller included within the Assets isproperly assessed and is not subject to assessment adjustment.  There are no Liens for delinquent taxes onthe Assets.  Seller has duly and timelywithheld and paid taxes that it is required to withhold and pay relating tosalaries and other compensation paid to Seller’s Employees.

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## 2.10.                        EmployeeBenefit Plans.  Schedule 2.10contains a complete list as of the date of this Agreement of (i) all Seller’sEmployees, and (ii) all “employee benefit plans” as defined in

 

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Section 3(3) of theEmployee Retirement Income Security Act of 1974, as amended (“ERISA”), and allother plans and arrangements that provide compensation or benefits toemployees, whether deferred or not, in excess of base pay, including any bonusor incentive plan, stock rights plan or other fringe benefit plan affectingSeller’s Employees as of the date of this Agreement (collectively, “EmployeeBenefit Plans”), other than those relating to employees not being offeredemployment by Buyer.  Seller does notmaintain any welfare benefit plan (as defined in Section 3(2) of ERISA)providing for continuing benefits or coverage for any participant or any beneficiaryof a participant following termination of employment, except as may be requiredunder the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended(“COBRA”).

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## 2.11.                        Insurance.  Schedule 2.11 contains acomplete list of insurance policies relating to the Assets or the Businessowned or held by Seller as of the date of this Agreement.

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## 2.12.                        Claimsand Legal Actions.  Except as setforth on Schedule 2.12, there is no claim, legal action, suit,arbitration, governmental investigation or other proceeding pending, or toSeller’s knowledge, threatened, against or relating to Seller, the Assets orthe Business that, individually or in the aggregate, would materially andadversely affect Seller’s ability to consummate the transactions contemplatedby this Agreement.

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## 2.13.                        Compliancewith Laws.  Seller has complied withand is in compliance with all federal, state, local and foreign statutes, laws,ordinances, regulations, rules, permits, judgments, orders or decreesapplicable to it or any of its properties, assets, operations and businesses,and there does not exist any basis for any claim of default under or violationof any such statute, law, ordinance, regulation, rule, judgment, order ordecree except with respect to (i) Seller’s business practices with respectto copy and retrieval fees with respect to the Business and the litigation setforth on Schedule 2.12, neither of which shall be deemed to becovered by this Section 2.13, or (ii) such defaults orviolations, if any, that in the aggregate do not and will not have a MaterialAdverse Effect.  Seller has not receivedany opinion or memorandum or legal advice from any legal counsel to the effectthat either Seller or the Business is exposed to any liability or disadvantagethat is or may be material to Seller or the Business.

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## 2.14.                        Absenceof Certain Changes.  SinceMarch 31, 2004 (except (i) for the execution and delivery of thisAgreement and (ii) as set forth on Schedule 2.8), Seller has not:

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### (a)                                  hadany change in the condition of the Assets of the Business (financial orotherwise), other than changes in the ordinary course of business or those thatwould not be reasonably likely to have a Material Adverse Effect;

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### (b)                                 sufferedany damage, destruction or loss with respect to the Assets (whether or notcovered by insurance) that would be reasonably likely to have a MaterialAdverse Effect;

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### (c)                                  sufferedany substantial loss with respect to the Assets or waived any substantial rightwith respect to the Business, except in the ordinary course of business or thatwould not be reasonably likely to have a Material Adverse Effect;

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### (d)                                 agreedto sell, transfer or otherwise dispose of any assets having a fair market valueat the time of sale, transfer or disposition of $10,000 or more in theaggregate or agreed to cancel any debts or claims, in each event other than inthe ordinary course of business; or

 

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### (e)                                  increasedor agreed to increase the compensation or bonuses or special compensation ofany kind of any of its officers, employees or agents over the rate being paidto them on March 31, 2004, other than as set forth on Schedule 2.14or normal merit and/or cost of living increases pursuant to customaryarrangements consistently followed, or adopted or increased any benefit underany insurance, pension or other employee benefit plan, payment or arrangementmade to, for or with any such officer, employee or agent (with the foregoing toexclude any stay bonus offered or paid to any of the specified individuals byBuyer or by Seller at Buyer’s request).

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## 2.15.                        Consents.  No consent, approval, authorization or orderof any court, agency or any other person is required in order to permit Sellerto consummate the transactions contemplated by this Agreement, except ascontemplated on Schedule 2.15 and in Section 4.9;provided, however, that this representation shall not be deemed to apply to theCustomer Contracts or any assignment thereof to Buyer as contemplated by Section 4.9hereof.

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# **ARTICLE III**

 

# **REPRESENTATIONSAND WARRANTIES OF BUYER**

 

Buyer represents andwarrants to Seller that all of the following representations and warrantieswith respect to Buyer set forth in this Article III are true andcorrect at the time of this Agreement and at the time of the Closing:

 

## 3.1.                              Incorporation,Standing and Authority.  Buyer is acorporation duly incorporated, validly existing and in good standing under thelaws of the State of Colorado, and is duly qualified to transact business inthe State of Washington.  Buyer has allrequisite corporate power and authority to execute and deliver this Agreement,the Assumption Agreement and the other documents contemplated hereby, and toperform and comply with all of the terms, covenants and conditions to beperformed and complied with by Buyer hereunder and thereunder.

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## 3.2.                              Authorizationand Binding Obligation.  Theexecution, delivery and performance of this Agreement by Buyer have been dulyauthorized by all necessary action on the part of Buyer.  This Agreement has been duly executed anddelivered by Buyer and constitutes the legal, valid and binding obligation ofBuyer, enforceable against Buyer in accordance with its terms except to theextent that the enforceability hereof may be affected by the EquitableExceptions.

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## 3.3.                              Absenceof Conflicting Agreements.  Subject toobtaining the Consents, the execution, delivery and performance of thisAgreement and the documents contemplated hereby (with or without the giving ofnotice, the lapse of time, or both): (i) does not require the consent of any third party;  (ii) will not conflict with the articles ofincorporation or bylaws of Buyer;  (iii)will not conflict with, result in a breach of, or constitute a default under,any law, judgment, order, injunction, decree, rule, regulation or ruling of anycourt or governmental instrumentality, which is applicable to Buyer;  or (iv) will not conflict with, constitutegrounds for termination of, result in a breach of, constitute a default under,or accelerate or permit the acceleration of any performance required by theterms of, any agreement, instrument, license or permit to which Buyer is aparty or by which Buyer may be bound, such that Buyer could not acquire oroperate the Assets.

 

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## 3.4.                              Consents.  No consent, approval, authorization or orderof any court, agency or any other person is required in order to permit Buyerto consummate the transactions contemplated by this Agreement, except ascontemplated on Schedule 3.4 and in Section 4.9.

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## 3.5.                              FinancingCommitment.  Buyer has, or will haveprior to the Closing, sufficient cash, available lines of credit or othersources of immediately available funds to enable it to make payment of thePurchase Price and the other amounts to be paid by Buyer hereunder.

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## 3.6.                              Litigation.  There is no claim, legal action, suit,arbitration, governmental investigation or other proceeding pending or, toBuyer’s knowledge, threatened, in which it is sought to restrain, prohibit,invalidate or obtain damages in respect of the consummation of the transactionscontemplated hereby or that would reasonably be likely to adversely affect thetimely consummation of the transactions contemplated by this Agreement.

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## 3.7.                              Examinationof Books and Records.  Buyer and itsrepresentatives have had the opportunity prior to the Closing Date to conductdue diligence and to make such examinations and investigations of the business,properties, assets and affairs of Seller with respect to the Assets and theBusiness, and to ask questions of Seller and its authorized representatives insuch a manner as Buyer has deemed necessary or desirable for all purposesrelating to this Agreement.  Based onthe foregoing, Buyer has no reason to believe that any representation,warranty, covenant or agreement of Seller hereunder is incorrect oruntrue.  In addition, Buyer hasinspected the Assets and has determined that the Assets constitute all of theassets, tangible or intangible, necessary to operate the Business.  Accordingly, any deviation with respect tothe Assets as examined by Buyer  fromthe listings thereof set forth on the schedules described in Article IIshall not be deemed to be a breach of Seller’s representations in Article IIhereof.  Notwithstanding Seller’srepresentations and warranties set forth in Section 2.13 hereof,Buyer is also engaged in the medical records release business and has soleresponsibility with respect to its use of the Assets and its business practiceswith respect thereto following the Closing.

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# **ARTICLE IV**

 

# **SPECIAL COVENANTSAND AGREEMENTS**

 

## 4.1.                              InterimPeriod Obligations Under Real Property Leases.

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### (a)                                  Sellerand Buyer agree that within ten (10) days following the Closing Buyer shall tagand remove certain of the Assets, as selected by Buyer, located at St. JamesTower, 920 N. 34th Street, Seattle, Washington (the “Seattle LeasedPremises”).  Buyer shall indemnify andhold Seller harmless from any and all losses, costs, damages, claims andexpenses caused by the removal of such Assets from such premises.  Unless Buyer has requested and Seller hasgranted in its sole discretion an extension of such ten-day period, any Assetsthat are remaining at the Seattle Leased Premises at the end of the ten-dayperiod (or at the end of any extension thereof) shall be referred to asUntagged Assets and shall constitute Excluded Assets.  Buyer shall assume, pay, discharge and perform Seller’sobligations as lessee with respect to the Seattle Leased Premises described inthe lease for the Seattle Leased Premises (including without limitation rentand utilities) for the period of any extension(s) beyond such ten-day period.

 

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### (b)                                 Sellerand Buyer agree that following the Closing Buyer shall assume, pay, dischargeand perform the obligations of Seller as “lessee” arising after the Closingunder (i) the Real Property Lease for 501 West Lincoln Avenue, Yakima,Washington (the “Yakima Real Property Lease”) and (ii) the Real PropertyLease for 2201 South 19th Street, Tacoma, Washington (the “TacomaReal Property Lease”) through the end of the current lease terms thereof and,except as contemplated below, shall vacate the premises subject to the YakimaReal Property Lease and the Tacoma Real Property Lease at the end of thecurrent lease terms thereof.  Buyershall have no obligation with respect to the Yakima Real Property Lease or theTacoma Real Property Lease other than with respect to the rent and otherobligations of the lessee described in therein that arise after the Closing,and shall have no authority to extend, amend or modify either the Yakima RealProperty Lease or the Tacoma Real Property Lease without the prior writtenconsent of Seller or any affiliate thereof, which may be given or withheld inits sole discretion.  In the event thatBuyer desires to remain at the premises that are the subject of either theYakima Real Property Lease or the Tacoma Real Property Lease following theexpiration of the current terms thereof, it shall give Seller prior notice inwriting and shall negotiate directly with the applicable lessor thereof withrespect to execution of a new lease agreement between such lessor and Buyer forits own account, which new lease agreement shall expressly provide or otherwiseacknowledge that it does not in any manner obligate Seller or any affiliatethereof or is in any way based upon the credit or financial condition of Selleror any affiliate thereof.

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### (c)                                  Sellershall have access to the premises subject to each of the Yakima Real PropertyLease, the Tacoma Real Property Lease and the Seattle Leased Premises uponreasonable advance notice and for a reasonable period of time following theClosing (not to exceed thirty (30) days) to remove Excluded Assets from suchpremises.

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## 4.2.                              Transitionto Buyer’s Software; Removal of Excluded Assets.  Seller shall provide Buyer with access promptly following theClosing to its personal computers to permit Buyer to install its softwarethereon; provided, however, that Buyer shall discontinue immediately followingthe Closing the use of the RIMS software currently installed on Seller’spersonal computers.  Seller and Buyershall agree on a date no later than thirty (30) days after the Closingfollowing which Buyer will switch processing on such personal computers to itssoftware platform and following which billing under the Customer Contracts andother functions shall cease to be performed on Seller’s systems.  Prior to such transfer and subsequent to theClosing, Buyer shall operate the Business utilizing the software and datacontained on such equipment included within the Assets (except as describedabove) pursuant to a royalty-free license from Seller, which shall beautomatically revoked after the 30th day following the Closing, andpursuant to which license access shall be made available only to the compiled objectcode of such software.  Such softwareand data shall be made available to Buyer under this Section 4.2 onan as-is, where-is basis, without warranty of any kind, and without anyrepresentation or warranty that such software and data is free of any defects,errors, malfunctions, viruses, bugs or Trojan horses.  Each of Seller and Buyer shall reasonably cooperate with theother party to effect such transfer.  Inconnection with such transfer, Buyer shall provide Seller with reasonableaccess for the thirty (30) day period following the Closing to facilitateSeller’s removal from the equipment included within the Assets of its software,data and Excluded Assets, including, without limitation confidential files andrecords that are not intended to be conveyed to Buyer hereunder.  Buyer shall indemnify and hold harmlessSeller for any loss, claim, damage or expense suffered thereby arising from orbased upon Buyer’s installation of or subsequent use of its software asdescribed in this Section 4.2, without application of the

 

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Threshold described in Section 6.2(b).  This indemnification is in addition to anyother indemnification that may be provided in this Agreement.

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## 4.3.                              Collectionof Accounts Receivable and Other Amounts. After the Closing, Seller shall continue to collect Accounts Receivable,and Buyer will cooperate with Seller in all commercially reasonable respects insuch collection efforts and shall remit to Seller the proceeds of any AccountsReceivable received or collected by Buyer. Seller may directly solicit the applicable account debtors with respectto collection of uncollected Accounts Receivable.  After the Closing, Seller shall remit to Buyer the proceeds ofany account receivable received or collected by Seller and relating to servicesprovided from and after the Closing Date. Buyer shall not settle, compromise, write down or write off any AccountsReceivable without Seller’s prior written consent, which may be given orwithheld in its sole discretion.

##  

## 4.4.                              Taxes,Fees and Expenses.  (a) Theparties to this Agreement shall cooperate with one another in the preparationof all tax returns, questionnaires, applications or other documents regardingany taxes or transfer, recording, registration or other fees that becomepayable in connection with the transactions contemplated by this Agreement thatare required to be filed on or before the Closing Date, or in connection withthe filing of any tax returns, the preparation for any audit by any taxingauthority, the response to any inquiry by a taxing authority or securityholder, the mailing or filing of any notice and the prosecution or defense ofany claim, suit or proceeding relating to any tax returns or any other filingrequired to be made with any taxing authority or any other matter related totaxes.  Seller and Buyer shall cooperatewith each other in the conduct of any audit or other proceeding related totaxes involving the Business prior to the Effective Time.  Buyer further agrees to (i) retainwithin its possession all books and records and all other information regardingtaxes relating to the Assets or the conduct or operation of the Business forany taxable period or portion thereof ending on or before the Effective Time(the “Tax Information”) until the expiration of the statute of limitationsapplicable to Seller for such taxable periods (giving effect to any waiver orextension thereof), (ii) maintain the Tax Information in such manner so asto enable Seller to have prompt and complete access thereto and (iii) notdestroy any Tax Information without the prior written consent of Seller (whichconsent shall not be unreasonably withheld) until the seventh anniversary ofthe Effective Time or the expiration of the statute of limitations applicableto Seller for such taxable periods (giving effect to any waiver or extensionthereof), whichever is later.

##  

### (b)                                 Buyerand Seller agree that with respect to any income or payment subject toreporting or withholding occurring prior to and including the Effective Time,Seller shall be responsible for (i) the filing of any tax return(including, but not limited to, Forms 945 and 1042), information return(including, but not limited to, Forms 1099-B, 1099-INT, 1099-OID and1042S), or withholding tax deposit coupons and (ii) the withholding andremittance of tax to each appropriate taxing authority, and the mailing of anyrelated payee statement or notice to a securityholder.  Buyer shall be responsible for such filingswith respect to any income or payment with respect to the Assets subject toreporting or withholding occurring on or after the Effective Time.

###  

### (c)                                  Sellershall pay the cost or expense of all sales, use, excise, transfer, purchase,recordation, retitling and documentary taxes and fees arising out of thetransfer of the Assets pursuant to this Agreement (“Transfer Taxes”).  Except as otherwise provided in thisAgreement, each party shall pay its own expenses incurred in connection withthe authorization,

 

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preparation, executionand performance of this Agreement, including all fees and expenses of counsel,accountants, consultants, agents and other representatives.  Seller will remit these Transfer Taxes tothe appropriate taxing authority by the due date of the Transfer Tax return forthe month in which the Effective Time shall occur.

###  

### (d)                                 Buyerand Seller shall cooperate in the preparation and filing of any tax returnsthat are required to be filed in connection with Transfer Taxes.

###  

## 4.5.                              EmployeeMatters.  (a) Buyer agrees thateffective on the Closing Date each of Seller’s Employees who is listed on Schedule 4.5shall be offered employment by Buyer (collectively, the “TransferredEmployees”) at a level of benefits that is comparable to the benefits providedto similarly situated employees of Buyer. Buyer shall assume all paid time off (“PTO”) obligations through theClosing Date with respect to the Transferred Employees; provided, however, thatBuyer may apply one-half (1⁄2) of the aggregate cost of such assumed PTOobligations against the amount of the postage outstanding on the Pitney Bowespostage meter included in the Personal Property.

##  

### (b)                                 Buyershall cause the Transferred Employees to be eligible to participate in itsemployee benefit plans, including its medical, dental, vision, disability,insurance and 401(k) plans.  Forpurposes of eligibility and vesting under such plans, the Transferred Employeeswho accept employment with Buyer on or about the Closing Date shall be givencredit for their years of service for their most recent hire date with Seller,all benefit plan waiting periods shall be waived for such employees, andBuyer’s group medical plan shall give credit to such employees for amounts paidtoward deductibles and co-payments, if any, under Seller’s medical plan for thecurrent plan year.

###  

## 4.6.                              TemporaryAdministrative Support.  At Buyer’srequest, for a period of up to thirty (30) days following the Closing,Seller shall provide to Buyer temporary corporate office support services****(which shall be provided by Pam Knudsenand Larry Blanco****subject to theiravailability), on an as-needed basis at the hourly rates of $70 (plus expenses)for Ms. Knudsen and $45 (plus expenses) for Mr. Blanco (calculated inminimum 1⁄2 day increments).

##  

## 4.7.                              Useof Intellectual Property Rights. Immediately following the Closing, Buyer shall cease to use in allrespects any and all of the Intellectual Property Rights, including withoutlimitation all trade names, trademarks, service marks, slogans, domain namesand other similar items used by Seller or any of its affiliated entities, andshall take all actions reasonably necessary to ensure that the Assets and theBusiness no longer appear to be affiliated in any manner with Seller, *SOURCECORP*, Incorporated or any of theaffiliates thereof.

##  

## 4.8.                              PutativeClass Action Lawsuits.  Buyeracknowledges and agrees that, notwithstanding the retention by Seller under Section 1.6(b)of the liabilities and obligations of Seller associated with the legal mattersstyled “K.D. Severin vs. Auburn Regional Medical Center, Inc. et al.”and “Takashima vs. Overlake Hospital Medical Center et al.”, it willcooperate with Seller in all commercially reasonable respects in Seller’sdefense of (or its efforts to settle or otherwise resolve) the foregoingmatters and any other similar litigation and shall make any prospective feechanges necessary or appropriate with respect to the Assets and the Businessand

 

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consistent with changesmade by Buyer at its other facilities in jurisdictions subject to suchlitigation to resolve such matters or to mitigate the damages related thereto.

##  

## 4.9.                              Consents.  (a) Seller shall use its commerciallyreasonable efforts to obtain following the Closing Date the Consents, includingbut not limited to the Material Consents identified by Buyer and Seller on Schedule 4.9hereof.  Nothing herein shall requirethe expenditure or payment of any monies (other than in respect of normal andusual filing fees and the fees of Seller’s professional advisors) or the givingof any other consideration by Seller in order to obtain any Consent.  Buyer shall use its commercially reasonableefforts to cooperate with Seller in obtaining any Consents.  A Consent shall be deemed to have beenobtained by Seller if the applicable licensing authority or contracting partyhas provided Seller with an unexecuted form of its Consent and has indicatedits willingness to grant its Consent upon execution of such form by Buyer andSeller and/or upon confirmation that the Closing has occurred.

##  

### (b)                                 Ifsuch Consent with respect to a Customer Contract is not obtained following theClosing Date, Seller and Buyer shall use all reasonable efforts to enter intoan arrangement with respect to such Customer Contract to provide Buyer with allof the benefits enjoyed by Seller thereunder, and Buyer shall perform all ofthe obligations under such Customer Contract arising from the Effective Timeand enjoy the benefits thereof as though it had been assigned to Buyer, unlessand until such Customer Contract has been terminated by the other party theretoor, as a result of the failure to obtain such Consent, a default occurs underthe Customer Contract and deprives Buyer of the benefits of such CustomerContract.

###  

## 4.10.                        Noticeof Termination of Customer Contract. Seller shall give Buyer prompt written notice in the event that itreceives any notice or other written communication terminating, canceling ormaterially and adversely modifying, or giving notice of termination,cancellation or such modification of, a Customer Contract.

##  

## 4.11.                        Brokers.  Each of Buyer and Seller shall indemnify andhold each other harmless against any fees, commissions, losses, liability orexpenses (including reasonable attorneys’ fees) incurred by such party as aresult of any person or entity acting on behalf of the other party as a brokeror finder in connection with the transactions contemplated by this Agreement.

##  

## 4.12.                        Confidentiality;Public Announcements.  Except asnecessary for the consummation of the transactions contemplated hereby, or asrequired by law or in connection with proceedings relating to the Closing,Buyer and Seller will keep confidential any information that is obtained fromthe other party in connection with the transactions contemplated hereby andthat is not readily available to members of the general public.  In the event this Agreement is terminatedand the purchase and sale contemplated hereby abandoned, each of Buyer andSeller will return to the other party or dispose of all documents, work papersand other written material obtained by it in connection with the transactionscontemplated hereby.  Prior to theClosing Date, neither Buyer nor Seller shall, without the approval of theother, make any press release or other public announcement concerning thetransactions contemplated by this Agreement, except as and to the extent thatsuch party shall be so obligated by law or regulation, in which case such partyshall give advance notice to the other and the parties shall use reasonableefforts to cause a mutually agreeable release or announcement to be issued.

 

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## 4.13.                        Cooperation.  (a) Buyer and Seller shall cooperate fullywith each other and their respective counsel, accountants and agents inconnection with any actions required to be taken as part of their respectiveobligations under this Agreement, and Buyer and Seller shall execute such otherdocuments as may be necessary and desirable to the implementation andconsummation of this Agreement, and otherwise use their commercially reasonableefforts to consummate the transactions contemplated hereby and to fulfill theirobligations hereunder.

##  

### (b)                                 Fromand after the Closing, Buyer shall cooperate with and shall make available toSeller upon reasonable prior notice and for reasonable periods of time such ofthe Transferred Employees as Seller shall request and reasonably determine tobe necessary to assist Seller in Seller’s participation in any action, suit,proceeding, arbitration, investigation, dispute or inquiry, whether civil,criminal or administrative, whether known or unknown, threatened or pending,arising from or relating to any claims against the Assets or the Businessrelating to events occurring, or contractually required to occur, prior to theEffective Time.  Seller shall reimburseBuyer for reasonable travel, lodging and meal expenses incurred by such of theTransferred Employees that are immediately related to Buyer’s obligations underthis Section 4.13, and shall reimburse Buyer for the cost of makingTransferred Employees available to Seller for such purposes in an amount equalto such Transferred Employee’s salary for the period of time during which aTransferred Employee has been made available to Seller under this Section 4.13(calculated in 1⁄2 day increments).  Buyershall cause all Customer Contract Records to be retained until June 1,2010.  Until June 1, 2010, Buyershall allow Seller and its representatives to inspect or copy the CustomerContract Records during normal business hours and shall have the right to takepossession of any such Customer Contract Records on June 1, 2010 providedthat it has given Buyer sixty (60) days prior written notice.  Seller shall reimburse Buyer for reasonablecopy expenses that are directly related to Buyer’s obligations under this Section 4.13.

###  

## 4.14.                        BulkSales Compliance.  Each of Buyer andSeller waive compliance with the provisions of all applicable statutes relatingto bulk transfers or bulk sales.

##  

## 4.15.                        Non-Competition.  At Closing, Seller shall enter into aNoncompetition Agreement that provides that for a period of four (4) yearscommencing on the Closing Date, Seller will not, and Seller will not permit anyaffiliate of Seller to, directly or indirectly, sell or provide, within theState of Washington, any medical records release of information services tohospitals, clinics or other healthcare providers sold or provided by Seller atany time during the four-year period ending on the Closing Date or otherwiseattempt to compete with Buyer with respect to the medical records release ofinformation services in the State of Washington included within the Business tobe sold by Seller to Buyer pursuant to this Agreement.  The parties agree (and the NoncompetitionAgreement shall so provide) that the services to be subject to the restrictionson competition set forth in the Noncompetition Agreement shall be limited tothe medical records release of information services to hospitals, clinics andother healthcare providers in the State of Washington and shall not include anyconversion, imaging, data entry or electronic repository services or otherservices ancillary thereto provided by Seller or any affiliate thereof.  The parties hereto agree that the terms ofthe Noncompetition Agreement shall govern and supersede the above provisions ofthis Section 4.15.  Sellerhereby assigns and transfers to Buyer on a quitclaim basis all rights it mayhave under the non-solicitation and non-competition agreements set forth on Schedule 4.15with respect to the obligations of the promisors thereunder arising from andafter the Closing Date; provided, however, that Seller makes no representationsas to the validity or enforceability of such

 

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agreements.  To the extent present employees of Sellerwho are not Transferred Employees with such agreements (presently contemplatedto be Pamela Knudsen, Larry Blanco, Nancy McIlvain, Christina Quigtar and DarenSchillinger) leave the employ of Seller or are terminated thereby after theClosing, each of Seller and Buyer shall be entitled to the rights and benefitsgranted to Seller under the provisions of such agreements, and to the extentany of the individuals listed in the parenthetical of this sentence becomeTransferred Employees, the noncompetition and nondisclosure obligations of suchindividuals under such agreements for the period from and after the Closingshall be assigned and transferred by Seller to Buyer on a quitclaim basis asdescribed in the immediately preceding sentence.

##  

# **ARTICLE V**

 

# **CLOSING ANDCLOSING DELIVERIES**

 

## 5.1.                              Closing.  Subject to the satisfaction or waiver of allof the conditions set forth in Article V, the closing of thetransactions contemplated hereby (the “Closing”) shall take place at theoffices of Locke Liddell & Sapp LLP in Dallas, Texas, or such other placeor by such other means (e.g., telecopy and overnight delivery of originalexecution materials) as is agreed to by Buyer and Seller on June 4, 2004or such other date as the parties may agree upon in writing (the “ClosingDate”).

##  

## 5.2.                              Deliveriesby Seller.  Prior to or on theClosing Date, Seller shall deliver to Buyer the following, in form andsubstance reasonably satisfactory to Buyer and its counsel:

##  

### (a)                                  TransferDocuments.  The Bill of Sale andlimited or special warranty deeds, titles, assignments and other transferdocuments that shall be duly executed and sufficient to vest good title to theAssets in the name of Buyer or its permitted assigns, consistent with the termsof this Agreement;

###  

### (b)                                 NoncompetitionAgreement.  The NoncompetitionAgreement, executed by Seller;

###  

### (c)                                  MaterialConsents.  Subject to Section 4.9,each Material Consent;

###  

### (d)                                 OtherDeliveries.  Any other deliveriesrequired to be made by Seller prior to or on the Closing Date pursuant to thisAgreement.

###  

## 5.3.                              Deliveriesby Buyer.  Prior to or on theClosing Date, Buyer shall deliver to Seller the following, in form andsubstance reasonably satisfactory to Seller and its counsel:

##  

### (a)                                  PurchasePrice.  The Purchase Price asprovided in Section 1.3;

###  

### (b)                                 AssumptionAgreements.  The AssumptionAgreement and other assumption agreements pursuant to which Buyer shall assumeand undertake to perform the Assumed Liabilities consistent with the terms ofthis Agreement;

###  

### (c)                                  OtherDeliveries.  Any other deliveriesrequired to be made by Buyer prior to or on the Closing Date pursuant to thisAgreement.

 

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### (d)                                 ConditionPrecedent.  The obligation of Buyerto purchase the Assets is subject to there being no event or circumstanceimmediately prior to the Closing that would constitute a Material AdverseEffect.

###  

# **ARTICLE VI**

 

# **SURVIVAL OFREPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION**

 

## 6.1.                              Representationsand Warranties.  Allrepresentations, warranties, covenants and agreements contained in thisAgreement or in any document delivered in connection herewith shall survive theClosing Date for a period of eighteen (18) months thereafter.

##  

## 6.2.                              Indemnificationby Seller.  (a) Seller shallindemnify, defend and hold Buyer harmless against and with respect to, andshall reimburse Buyer for: (i) losses, liabilities or damages resultingfrom any untrue representation, breach of warranty or nonfulfillment of anycovenant by Seller contained herein or in any certificate delivered by Sellerto Buyer pursuant thereto; (ii) obligations of Seller not assumed by Buyerpursuant to the terms hereof; and (iii) actions, suits, proceedings, claims,demands, assessments, judgments, costs and expenses, including reasonable legalfees and expenses, resulting from any of the foregoing or incurred ininvestigating or attempting to avoid the same or to oppose the impositionthereof, or in enforcing this indemnity.

##  

### (b)                                 Notwithstandingthe above, (i) Seller shall have no indemnification obligations under thisAgreement unless Buyer has given Seller written notice of such claims withinthe applicable survival period provided for in Section 6.1, and (ii)indemnification shall only be made for claims of Buyer that exceed SevenThousand Five Hundred Dollars ($7,500) (the “Threshold”) in the aggregate andto the extent of such excess over the Threshold; provided, that claimsof Buyer pursuant to Section 6.2(a)(ii) shall be subject toindemnification without regard to the Threshold.  Seller’s indemnification obligations under this Agreement shallbe calculated net of any amounts recoverable under insurance policies and netof any related Tax benefits.

###  

### (c)                                  Inno event shall Seller’s aggregate obligation to indemnify Buyer pursuant tothis Agreement exceed an amount equal to eighty percent (80%) of the PurchasePrice paid by Buyer to Seller.

###  

### (d)                                 Notwithstandingthe above, Seller’s obligation to Buyer under this Article VI withrespect to a breach of the second sentence of Section 2.6 shall bedetermined by reference to such Customer Contract(s) that is the subject ofsuch breach, and recovery with respect to any such breach shall be in an amountwith respect to the applicable Customer Contract(s) equal to the revenuesgenerated by such Customer Contract(s) during the previous twelve (12) months(less revenues received by Buyer under such Customer Contract after theEffective Time) divided by the revenues generated by all Customer Contractsduring the previous twelve (12) months, multiplied by $750,000; provided,however, that there shall be no recovery under this Section 6.2(d)in the event that the customer(s) with respect to such Customer Contract(s)terminated to move such business to Buyer or an affiliate thereof.

###  

## 6.3.                              Indemnificationby Buyer.  (a) Buyer shallindemnify, defend and hold Seller harmless against and with respect to, andshall reimburse Seller for: (i) losses, liabilities or damages

 

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resulting from any untruerepresentation, breach of warranty or nonfulfillment of any covenant by Buyercontained herein or in any certificate delivered by Buyer to Seller pursuanthereto; (ii) obligations of Seller assumed by Buyer pursuant to the termshereof; (iii) losses, liabilities or damages resulting from Buyer’soperation or ownership of the Assets or the Business at and after the EffectiveTime, including any and all liabilities arising under the Transferable Licensesor the Customer Contracts that relate to events occurring after the EffectiveTime and any other liabilities assumed by Buyer pursuant to Section 1.6;and (iv) actions, suits, proceedings, claims, demands, assessments,judgments, costs and expenses, including reasonable legal fees and expenses,incident to any of the foregoing or incurred in investigating or attempting toavoid the same or to oppose the imposition thereof, or in enforcing thisindemnity.

##  

### (b)                                 Notwithstandingthe above, (i) Buyer shall have no indemnification obligations under thisAgreement unless Seller has given Buyer written notice of such claims withinthe applicable survival period provided for in Section 6.1, and(ii) indemnification shall only be made for claims of Seller that exceed theThreshold in the aggregate and shall only be made to the extent of such excessover the Threshold; provided, that claims of Seller pursuant to Section 6.3(a)(ii)shall be subject to indemnification without regard to time limit or the Threshold.  Buyer’s indemnification obligations underthis Agreement shall be calculated net of any amounts recoverable underinsurance policies and net of any related Tax benefits.

###  

### (c)                                  Inno event shall Buyer’s aggregate obligation to indemnify Seller pursuant tothis Agreement exceed an amount equal to eighty percent (80%) of the PurchasePrice paid by Buyer to Seller.

###  

## 6.4.                              Noticeof Loss.  Except to the extent setforth in the next sentence, a party to the Agreement will not have anyliability under the indemnity provisions of this Agreement with respect to aparticular matter unless a notice setting forth in reasonable detail the breachor other matter that is asserted has been given to the Indemnifying Party (asdefined below) and, in addition, if such matter arises out of a suit, action,investigation, proceeding or claim, such notice is given promptly, but in anyevent within thirty (30) days after the Indemnified Party (as defined below) isgiven notice of the claim or the commencement of the suit, action,investigation or proceeding. Notwithstanding the preceding sentence, failure of the Indemnified Partyto give notice hereunder shall not release the Indemnifying Party from itsobligations under this Article VI, except to the extent theIndemnifying Party is actually prejudiced by such failure to give notice.  With respect to the items set forth in Section 6.2,Seller shall be the Indemnifying Party and Buyer shall be the IndemnifiedParty.  With respect to the items setforth in Section 6.3, Buyer shall be the Indemnifying Party andSeller shall be the Indemnified Party.

##  

## 6.5.                              Rightto Defend.  Upon receipt of noticeof any suit, action, investigation, claim or proceeding for whichindemnification might be claimed by an Indemnified Party, the IndemnifyingParty shall be entitled to defend, contest or otherwise protect against suchsuit, action, investigation, claim or proceeding at its own cost and expense,and the Indemnified Party must cooperate in any such defense or other action.  The Indemnified Party shall have the right,but not the obligation, to participate at its own expense in a defense thereofby counsel of its own choosing, but the Indemnifying Party shall be entitled tocontrol the defense unless the Indemnified Party has relieved the IndemnifyingParty from liability with respect to the particular matter or if theIndemnifying Party fails or elects by written notice to the Indemnified Partynot to assume defense of the matter.

 

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In the event theIndemnifying Party shall fail or elect not to defend, contest or otherwiseprotect in a timely manner against any such suit, action, investigation, claimor proceeding, the Indemnified Party shall have the right, but not theobligation, to thereafter defend, contest or otherwise protect against the sameand make any compromise or settlement thereof, and to recover the entire costthereof from the Indemnifying Party, including without limitation, reasonableattorneys’ fees, disbursements and all amounts paid as a result of such suit,action, investigation, claim or proceeding or the compromise or settlementthereof; provided, however, that the Indemnified Party must senda written notice to the Indemnifying Party of any such proposed settlement orcompromise, which settlement or compromise the Indemnifying Party may reject,in its reasonable judgment, within thirty (30) days of receipt of suchnotice.  Failure to reject such noticewithin such thirty (30) day period shall be deemed an acceptance of suchsettlement or compromise.  TheIndemnified Party shall have the right to effect a settlement or compromiseover the objection of the Indemnifying Party; provided, that if (i) theIndemnifying Party is contesting such claim in good faith or (ii) the IndemnifyingParty is controlling the defense of the particular matter, the IndemnifiedParty waives any right to indemnity therefor. If the Indemnifying Party is controlling the defense of such matter, theIndemnified Party shall not, so long as the Indemnifying Party does not abandonor elect by written notice to the Indemnified Party not to continue the defensethereof, be entitled to recover from the Indemnifying Party any legal or otherexpenses subsequently incurred by the Indemnified Party in connection with thedefense thereof other than the reasonable costs of investigation undertaken bythe Indemnified Party with the prior written consent of the Indemnifying Party.

##  

## 6.6.                              Cooperation.  Each of Buyer and Seller, and each of theiraffiliates, successors and assigns, shall cooperate with each other in thedefense of any suit, action, investigation, proceeding or claim by a thirdparty and, during normal business hours, shall afford each other access totheir books and records and employees relating to such suit, action,investigation, proceeding or claim and shall furnish each other all suchfurther information that they have the right and power to furnish as mayreasonably be necessary to defend such suit, action, investigation, proceedingor claim.

##  

## 6.7.                              Exclusivityof Remedies.  The remedies providedto Seller and Buyer by the post-closing indemnification provisions of this Article VIshall be the exclusive remedies to which the respective parties are entitledafter the Closing for any breach of or noncompliance with the provisions ofthis Agreement or any instrument or document delivered in connection herewithor for any other claim whatsoever relating to this Agreement and thetransactions contemplated hereby.  To themaximum extent permitted by applicable law, Buyer does hereby waive and releaseSeller from, and agrees to indemnify and hold Seller harmless against, any andall claims, causes of action, actions, suits and proceedings asserted or thatmay be asserted by Buyer against Seller with respect to the foregoing mattersother than the rights of indemnification provided under this Article VI,and Seller does hereby waive and release Buyer from, and agrees to indemnifyand hold Buyer harmless against, any and all claims, causes of action, actions,suits and proceedings asserted or that may be asserted by Seller against Buyerwith respect to the foregoing matters, other than the rights of indemnificationprovided under this Article VI.

 

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# **ARTICLE VII**

 

# **MISCELLANEOUS**

 

## 7.1.                              Notices.  All notices, demands and requests requiredor permitted to be given under the provisions of this Agreement shall be (i) inwriting, (ii) delivered by personal delivery, facsimile or sent by commercialdelivery service or registered or certified mail, return receipt requested,(iii) deemed to have been given on the date of personal delivery or the dateset forth on the facsimile confirmation or in the records of the deliveryservice or the return receipt, and (iv) addressed as follows:

##  

| (i)    | If to Seller, addressed  to it at :               | with copies to:                           |
|--------|---------------------------------------------------|-------------------------------------------|
|   |                                              |                                      |
|   | Premier Acquisition  Corp.                        | Locke Liddell &  Sapp LLP             |
|   | 3232 McKinney Avenue,  Suite 1000                 | 2200 Ross Avenue, Suite  2200             |
|   | Dallas, Texas  75204                         | Dallas, Texas  75201                 |
|   | Facsimile No.: (214)  740-6598                    | Facsimile No.: (214)  740-8800            |
|   | Attn:  General Counsel                       | Attn:  Kent Jamison, Esq.            |
|   |                                              |                                      |
| (ii)   | If to Buyer, addressed  to it at:                 | with copies to:                           |
|   |                                              |                                      |
|   | Secure Health  Information Corp.                  | Carr, McClellan,  Ingersoll, Thompson     |
|   | 23 Lake Bellevue, Suite  100                      | & Horn, Professional  Law Corporation |
|   | Bellevue,  Washington  98005                 | 216 Park Road                             |
|   | Facsimile No.: (206)  340-9031                    | Burlingame,  California  94010       |
|   | Attn:   Mr. Brian Whiteside             | Facsimile No.: (650)  342-7685            |
|   |                                              | Attn:   Mark A. Cassanego, Esq. |
|   | and marked “Personal  and Confidential” |                                      |

 

or to any such other oradditional persons and addresses as the parties may from time to time designatein a writing delivered in accordance with this Section 7.1.

 

## 7.2.                              Benefitand Binding Effect.  Neither partyhereto may assign this Agreement without the prior written consent of the otherparty hereto.  This Agreement shall bebinding upon and inure to the benefit of the parties hereto and theirrespective successors and permitted assigns.

##  

## 7.3.                              Headings,Etc..  The headings herein are includedfor ease of reference only and shall not control or affect the meaning orconstruction of the provisions of this Agreement.  As used in this Agreement, the word “including,” is deemed tomean “including, without limitation.” All references herein to Articles, Sections or Schedules are referencesto Articles, Sections or Schedules, respectively, of this Agreement unless thecontext clearly otherwise provides.

##  

## 7.4.                              Genderand Number.  Words used herein,regardless of the gender and number specifically used, shall be deemed andconstrued to include any other gender, masculine, feminine or neuter, and anyother number, singular or plural, as the context requires.

##  

## 7.5.                              EntireAgreement.  This Agreement, allSchedules hereto, and all certificates to be delivered by the parties pursuanthereto collectively represent the entire understanding and

 

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agreement between Buyerand Seller with respect to the subject matter of this Agreement.  All Schedules to this Agreement shall bedeemed part of this Agreement and incorporated herein, where applicable, as iffully set forth herein.  Each of Buyerand Seller acknowledges that it has not made any, and makes no, promises, representations,warranties, covenants or undertakings, other than those expressly set forth orreferred to herein.  This Agreementsupersedes all prior agreements and understandings between the parties withrespect to the transactions contemplated by this Agreement.  This Agreement cannot be amended,supplemented or modified except by an agreement in writing that makes specificreference to this Agreement or an agreement delivered pursuant hereto, as thecase may be, and which is signed by Buyer and Seller.

##  

## 7.6.                              Waiverof Compliance; Consents.  Except asotherwise provided in this Agreement, any failure of any of the parties tocomply with any obligation, representation, warranty, covenant, agreement orcondition herein may be waived by the party entitled to the benefits thereofonly by a written instrument signed by the party granting such waiver, but suchwaiver or failure to insist upon strict compliance with such obligation,representation, warranty, covenant, agreement or condition shall not operate asa waiver of, or estoppel with respect to, any subsequent or other failure.

##  

## 7.7.                              Severability.  If any provision of this Agreement or theapplication thereof to any person or circumstance shall be invalid orunenforceable to any extent, the remainder of this Agreement and theapplication of such provision to other persons or circumstances shall not beaffected thereby and shall be enforced to the greatest extent permitted by lawso long as the economic or legal substance of the transactions contemplatedhereby is not affected in any manner materially adverse to any party.

##  

## 7.8.                              **GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT SHALL BE CONSTRUED INACCORDANCE WITH LAWS OF THE STATE OF WASHINGTON. SUBJECT TO SECTION 7.9HEREOF, THE PARTIES HERETO EXPRESSLY CONSENT AND AGREE THAT ANY DISPUTE, CONTROVERSY,LEGAL ACTION OR OTHER PROCEEDING THAT ARISES UNDER, RESULTS FROM, CONCERNS ORRELATES TO THIS AGREEMENT MAY BE BROUGHT IN THE FEDERAL AND STATE COURTS IN ANDOF THE COUNTY OF DALLAS, STATE OF TEXAS IF BUYER IS THE INITIATING PARTY, ANDIN AND OF THE COUNTY OF KING, STATE OF WASHINGTON IF SELLER IS THE INITIATINGPARTY, AND DO HEREBY ACKNOWLEDGE THAT SAID COURTS HAVE JURISDICTION OVER SUCHDISPUTE OR CONTROVERSY AND HEREBY WAIVE ANY OBJECTION TO PERSONAL JURISDICTIONOR THAT SUCH COURTS ARE AN INCONVENIENT FORUM.**

##  

## 7.9.                              DisputeResolution.  If a dispute orcontroversy arises between the parties relating to this Agreement, thefollowing procedure will be implemented before any party pursues other remediesavailable hereunder except that any party may seek injunctive relief from acourt where appropriate in order to maintain the status quo while thisprocedure is being followed or to enforce this Section 7.9:

##  

### (a)                                  Theparties will hold a meeting promptly, attended by persons with decision-makingauthority regarding the dispute or controversy, to attempt in good faith tonegotiate a

 

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resolution of the disputeor controversy; provided, however, that no such meeting will be deemed tovitiate or reduce the obligations and liabilities of the parties hereunder orbe deemed a waiver by a party hereto of any remedies to which such party wouldotherwise be entitled hereunder.

###  

### (b)                                 If,within thirty (30) days after such meeting, the parties have not succeeded innegotiating a resolution of the dispute or controversy, they hereby agree thatsuch dispute or controversy shall be settled exclusively by arbitration,conducted before a panel of three (3) arbitrators in Dallas, Texas if Buyer isthe initiating party and in Seattle, Washington if Seller is the initiatingparty, in either event in accordance with the rules of the American ArbitrationAssociation then in effect.  Thearbitrators shall not have the authority to add to, detract from, or modify anyprovision hereof nor to award punitive 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 7.8 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.

###  

## 7.10.                        Counterparts.  This Agreement may be signed in any numberof counterparts with the same effect as if the signature on each suchcounterpart were upon the same instrument.

##  

**[Signature page follows.]**

 

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IN WITNESS WHEREOF, thisAgreement has been executed by Buyer and Seller as of the date first abovewritten.

 
|   | **SELLER:**                      |                            |   |
|--------|----------------------------------|---------------------------------|--------|
|   |                             |                            |   |
|   | PREMIER ACQUISITION  CORP.       |                            |
|   |                             |                            |   |
|   | By:                              | /s/  Charles S. Gilbert         |   |
|   | Printed Name:                    | Charles S. Gilbert              |   |
|   | Title:                           | Vice  President & Secretary |   |
|   |                             |                            |   |
|   |                             |                            |   |
|   | **BUYER:**                       |                            |   |
|   |                             |                            |   |
|   | SECURE HEALTH  INFORMATION CORP. |                            |
|   |                             |                            |   |
|   | By:                              | /s/  Brian Whiteside            |   |
|   | Printed Name:                    | Brian Whiteside                 |   |
|   | Title:                           | President                       |   |
|   |                             |                            |   |
|   |                             |                            |   |
|   | **PARENT:**                      |                            |   |
|   |                             |                            |   |
|   |                             |                            |   |
|   | *SOURCECORP*,  INCORPORATED      |                            |
|   |                             |                            |   |
|   |                             |                            |   |
|   | By:                              | /s/  Ed H. Bowman, Jr.          |   |
|   | Printed Name:                    | Ed H. Bowman, Jr.               |   |
|   | Title:                           | President  & CEO            |   |
|        |                                  |                                 |        |  |  |  |  |

 

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**EXHIBITA**

** **

Definitions.  In addition to the terms defined within theAgreement, the terms set forth below shall have the following meanings in theAgreement:

 

“Accounts Receivable”means the rights of Seller to payment for the sale of goods or services bySeller or for other revenues generated by the Business prior to the EffectiveTime, whether evidenced by accounts or notes receivable, contract rights,commercial paper, debt securities or otherwise, as reflected on the books andrecords of Seller.

 

“Assets” means thereal, personal and mixed property, both tangible and intangible, used primarilyin the conduct of the Business, which properties are being sold, transferred orotherwise conveyed to Buyer under the Agreement, as specified in Section 1.1,other than the Excluded Assets.

 

“Assumed Liabilities”  shall have the meaning set forth in Section 1.6(a)of the Agreement.

 

“Assumption Agreement*”*shall have the meaning set forth in Section 1.7of the Agreement.

 

“Bill of Sale” hasthe meaning set forth in Section 1.3 of the Agreement.

 

“Closing” meansthe consummation of the transactions contemplated by the Agreement inaccordance with the provisions of Article V thereof.

 

“Closing Date”means the date of the Closing specified in Article V of theAgreement.

 

“COBRA” shall havethe meaning set forth in Section 2.10 of the Agreement.

 

“Code” means theInternal Revenue Code of 1986, as amended.

 

“Consents” meansthe material consents, permits or approvals of government authorities and otherthird parties necessary to transfer the Assets and Assumed Liabilities to Buyeror to assign to Buyer the Customer Contracts or otherwise to consummate thetransactions contemplated by the Agreement.

 

“Customer ContractRecords” shall have the meaning set forth in Section 1.1 of theAgreement.

 

“Customer Contracts”means all contract agreements relating to the services provided to customers orclients in connection with the Business to which Seller is a party or which arebinding upon Seller and that are in effect on the date hereof, excludingcontract agreements (i) between Seller and *SOURCECORP*, Incorporated or an affiliate thereof (theforegoing, the “*SOURCECORP*AffiliatedGroup”) (ii) to which Seller is a party and that relate to goods orservices to be provided by or to Seller and another

 

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member or members of the *SOURCECORP* Affiliated Group, and(iii) comprising the Real Property Leases.

 

“Effective Time”means 12:01 a.m., Pacific Daylight Savings Time, on the Closing Date.

 

“Employee BenefitPlans” shall have the meaning set forth in Section 2.10 of theAgreement.

 

“Equitable Exceptions”shall have the meaning set forth in Section 2.2 of the Agreement.

 

“ERISA” shall havethe meaning set forth in Section 2.10 of the Agreement.

 

“Excluded Assets”shall have the meaning set forth in Section 1.2 of the Agreement.

 

“Financial Statements”shall have the meaning set forth in Section 2.7 of the Agreement.

 

“GAAP” shall havethe meaning set forth in Section 1.5 of the Agreement.

 

“Indemnified Party”shall have the meaning set forth in Section 6.4 of the Agreement.

 

“Indemnifying Party”shall have the meaning set forth in Section 6.4 of the Agreement.

 

“Intellectual PropertyRights” means all trademarks, trademark applications, trade names, patents,patent applications, service marks, service mark applications, copyrights,slogans, domain names, logos and other similar intangible property rights ownedby Seller and used in the conduct of the Business.  Intellectual Property Rights of Seller shall be Excluded Assets.

 

“IRS” shall meanthe Internal Revenue Service.

 

“Licenses” meansall of the material licenses, permits and other authorizations issued by theapplicable federal, state or local governmental authorities to Seller inconnection with and that are material to the conduct of the Business.

 

“Liens” means anymortgage, pledge, lien, security interest or encumbrance other than (i) Lienswhich, individually or in the aggregate, are not reasonably likely to result ina Material Adverse Effect, (ii) Liens created by or through Buyer or anyaffiliate thereof and (iii) Liens disclosed in this Agreement or in anyschedule or exhibit hereto.

 

“Material AdverseEffect” means any effect or change that is materially adverse to theoperations, results or financial condition of the Assets or the Business, otherthan effects or changes resulting from general economic conditions.

 

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“Material Consent”means a Consent which, if not obtained, would (i) have a Material AdverseEffect or (ii) materially and adversely affect Buyer’s ability to operate theBusiness and utilize the Assets as now being operated and utilized.

 

“NoncompetitionAgreement” shall mean the Noncompetition Agreement between Seller, aspromisor, and Buyer.

 

“Personal Property”means all of the machinery, equipment (mobile or otherwise), tools, vehicles,furniture, fixtures, furnishings, leasehold improvements, office equipment,computers, inventory, spare parts, supplies and other tangible personalproperty owned or leased by Seller and used as of the date hereof in theconduct of the Business, and such additions thereto and deletions therefromarising in the ordinary course of business between the date hereof and theClosing Date, including the property listed or described on Schedule 2.5.

 

“Purchase Price”means the purchase price specified in Section 1.4 of the Agreement.

 

“Real Property”means fee estates and buildings, fixtures and other improvements thereon,leasehold interests, easements, licenses, rights to access, rights-of-way andother real property interests, if any, owned or leased by Seller and used as ofthe date hereof in the conduct of the Business, and such additions thereto anddeletions therefrom arising in the ordinary course of business between the datehereof and the Closing Date.

 

“Real Property Leases”shall have the meaning set forth in Section 2.4 of the Agreement.

 

“Seattle LeasedPremises” shall have the meaning set forth in Section 4.1(a) ofthe Agreement.

 

“Seller’s Employees”means the employees of Seller involved in the Business.

 

“Tacoma Real PropertyLease” shall have the meaning set forth in Section 4.1(b) ofthe Agreement.

 

“Threshold” shallhave the meaning specified in Section 6.2(b) of the Agreement.

 

“Transferable Licenses”means the Licenses that may be transferred or assigned by Seller to Buyerwithout the payment of consideration or the assumption of additional liabilityby Seller.

 

“Transferred Employees”shall have the meaning set forth in Section 4.5 of the Agreement.

 

“Untagged Assets”shall have the meaning set forth in Section 4.1(a) of theAgreement.

 

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“Yakima Real PropertyLease” shall have the meaning set forth in Section 4.1(b) ofthe Agreement.

 

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