**Exhibit 10.1**

 

**AGREEMENTSETTLING DISPUTES AND RELEASING CLAIMS**

 

THIS AGREEMENTSETTLING DISPUTES AND RELEASING CLAIMS (this “Agreement”) is made by andbetween the following parties:  (1) (a) *SOURCECORP*, Incorporated (“Sourcecorp”);(b) Image Entry Acquisition Corp. (“IEAC”); and (c) Image Entry, Inc., ImageEntry of Owsley County Inc., Image Entry of Indianapolis Inc., Image EntryFederal Systems Inc., Image Entry of Arkansas Inc., Image Entry of Alabama Inc.(collectively the “IE Entities” and together with Sourcecorp and IEAC, the“Sourcecorp Parties”), and (2) Bill D. Deaton, Judy A. Deaton, Christopher D.Deaton, Lori Deaton-Orr, Jeremy M. Deaton, Christopher D. Deaton, as guardianfor Tara Deaton, a minor child, and Lucille Deaton Irrevocable Family GSTTTrust, and Cynthia A. Deaton (collectively, the “Deatons”).  Also joining this Agreement are LondonRentals, LLC, East Properties, LLC, West Properties, LLC, South U.S. 25, LLC, PearTree Farms, LLC, Cognitive Solutions, LLC, and Trinity Group, LLC (collectively,the “Deaton Related Entities”), for the purposes of making certainrepresentations, covenants and conveyances, as are more particularly set forthherein.  The Sourcecorp Parties, Deatonsand Deaton Related Entities are collectively referred to as the “SettlingParties.”  This Agreement is entered asof this 23rd day of September, 2005, with reference to the following facts:

 

RECITALS

 

A.  The Sourcecorp Parties have certain claimsagainst the Deatons relating to the Dispute (as defined herein).

 

B.  The Settling Parties recognize andacknowledge the expense and length of time that would be involved inprosecuting and defending the Dispute.

 

C.  The Settling Parties desire to avoid theuncertainty, risk and expense attendant upon further pursuing the Dispute andwish to fully and finally settle the Dispute in the manner and upon the termsand conditions set forth in this Agreement.

 

D.  The Deaton Related Entities have eachdetermined that it is in the best interest of their respective entities to jointhis Agreement and make the representations, covenants and conveyancescontemplated herein.

 

NOW, THEREFORE, the Settling Parties agreeas follows:

 

###### 1.                                       Payment by the Deatons. As soon as practicable, but in any event no later than the respectivedates set forth below, the Deatons shall cause to be paid to Sourcecorp viawire transfer into the Sourcecorp Account (as defined below), or in the case ofthe Shares (as defined below) by assignment, the sum of $30 million (the“Payment”):

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###### (a)                                  $20 million cash paid on or before two (2) business days followingthe execution of this Agreement or September 23, 2005, whichever is earlier;

 

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###### (b)                                 89,888 shares as reflected on Annex A to this Agreement (the“Shares”) of the common stock, par value $0.01 per share, of Sourcecorp, whichShares are hereby being transferred, assigned and conveyed to Sourcecorpeffective as of the date of this Agreement. For the purposes of this Agreement, the value of such Shares shall bedeemed to be the simple average closing price per share of such common stock asreported on the NASDAQ Stock Market for the five (5) consecutive trading dayspreceding (and not including) the date of the public disclosure of thisAgreement and the five (5) consecutive trading days after (and not including)the date of the public disclosure of this Agreement.  The Deatons hereby authorize Sourcecorp tocancel such shares as of the date of this Agreement and will deliver theoriginal stock certificates for such shares to Sourcecorp within two weeks (14calendar days) of the date of this Agreement. In the event that one or more of the Deatons’ original stockcertificates cannot be found, the respective Deaton(s) will, before the twoweeks expires, submit to the appropriate entity complete and effectiverequest(s) for expedited replacement of the stock certificate(s) at theDeatons’ sole expense, and within two (2) business days of the Deatons’ receiptof the replacement stock certificates, will deliver the replacement stockcertificates via Fed Ex Priority Overnight (signature required) to Sourcecorpc/o Sourcecorp’s General Counsel at the address contemplated by Section 20.

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###### (c)                                  An amount in cash, representing the balance of such $30 million(i.e. $30 million less the $20 million being paid pursuant to Section 1(a)above, and the deemed value of the Shares being assigned pursuant to Section1(b) above), shall be paid on or before 90 days following the date of thisAgreement.

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###### Eachof the Deatons and the Deaton Related Entities jointly and severally representand warrant to the Sourcecorp Parties that (i) none of them is insolvent as ofthe date of this Agreement nor will they be rendered insolvent as a result ofthe Payment or the Pledges; (ii) the Shares are in the amounts and held in thenames set forth on Annex A; (iii) collectively, the Deatons have good andmarketable title to the Shares transferred thereby free and clear of any lien,security interest, encumbrance, or adverse claim, and (iv) upon the transfer ofsuch Shares to Sourcecorp, Sourcecorp will obtain good and marketable title tosuch Shares free and clear of any such lien, security interest, encumbrance, oradverse claim.

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###### 2.                                       Security.  As security for the payments contemplated bySection 1(c) above, the Deatons and Deaton Related Entities shall grant toSourcecorp a first priority lien, security interest, and mortgage (the“Pledges”) in and to each of the properties (the “Properties”) listed on AnnexB.  Deatons and the Deaton RelatedEntities hereby represent and warrant that (i) to the best of their knowledge,the respective fair market value of each of the Properties are as specified onsuch Annex (with the aggregate fair market value of the Properties being atleast $15 million), (ii) each of the Properties is owned in its entirety by oneor more of the Deatons or Deaton Related Entities, and (iii) the Properties arenot encumbered by any lien, mortgage, other security interest, encumbrance, oradverse claim of any kind.  The Deatonsand Deaton Related Entities each hereby covenant that he, she, or it, asapplicable, shall neither create, nor allow the creation of any lien, mortgage,encumbrance, security interest or adverse claim without the prior writtenconsent of Sourcecorp (which consent will, subject to the terms of the lastsentence of this Section 2, be given in connection with the securing offinancing for the payments contemplated by Section 1(c) of this Agreement, andprovided that the proceeds from any such financing be wired directly from thefinancing escrow to the Sourcecorp Account). Concurrently with the

 

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execution of this Agreement, the Deatons and DeatonRelated Entities will deliver the fully executed Pledge documents, includingwithout limitation any necessary security agreement, UCC financing statements,mortgages or deeds of trust, to Sourcecorp or its agent for filing or recordingin the appropriate public records, as applicable. The Deatons and the DeatonRelated Entities, recognizing that time is of the essence, hereby covenant totake any and all further action as may be necessary or appropriate to grant,effectuate and perfect the lien, security interest, and mortgages contemplatedby this Section without delay.  To the extentthat the Deatons or the Deaton Related Entities do not have good and marketabletitle or if there are any liens, mortgages, encumbrances, security interests oradverse claims as to any of the Properties, or other exceptions to title thatare unacceptable to Sourcecorp as determined by Sourcecorp in its solediscretion, the Deatons or Deaton Related Entities, as applicable, will takesuch action as necessary to cure the title defect(s) and remove the liens, mortgages,encumbrances, security interests, adverse claims or other title exceptions, orto substitute the unacceptable Propert(ies) with additional propert(ies) andprovide any corresponding representations and condition of title report(s) ascontemplated by this Section. The parties agree that at such time as paymentsare made pursuant to Section 1(c), a proportional amount of such security shallbe released; provided, that Sourcecorp shall not be required to release anyProperties (or subsequently Pledged properties) to the extent that following suchrelease the then fair market value of the remaining unreleased Properties (andsubsequently Pledged properties) would fall below twice the amount of anyremaining amounts owed under Section 1(c); and further provided that to theextent that the aggregate fair market value of the then unreleased Properties(and subsequently Pledged properties) is reasonably determined by Sourcecorp inits sole discretion to be less than twice the amount of any remaining amountowed under Section 1(c), the Deatons and the Deaton Related Entities herebycovenant to Pledge additional propert(ies) and provide correspondingrepresentations and condition of title report(s) as contemplated by thisSection to meet the fair market value requirement such that the aggregatesecurity provided is more than twice the amount of any remaining amount owedunder Section 1(c).

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###### 3.                                       Future Payments; Offset.  Until such time as the amounts set forth inSection 1(c) are paid in full, the Sourcecorp Parties may offset against suchamounts any amounts otherwise that may in the future become directly orindirectly owed to the Deatons by the Sourcecorp Parties.  The Deatons and Deaton Related Entitieshereby acknowledge and confirm that (i) the only go-forward payment obligationsowed by the Sourcecorp Parties to the Deatons or the Deaton Related Entitiesare Future Tax Payments and Lease payments, described more fully below; and(ii)  they have no claims for any past,current or future payments under any Employment Agreement.

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###### 4.                                       Leases. Image Entry, Inc. is currently the tenant under 11 leases (each a“Lease” and collectively the “Leases”) for which the Deatons are directly (orindirectly through one or more of the Deaton Related Entities) thelandlords.  The parties hereby agree tomodify, and agree to cause the modification of, the Leases by (i) changing theexpiration date of such Leases to the applicable end date for each respectiveLease as set forth on Annex C of this Agreement;  (ii) providing that no maintenance orimprovements will be charged to tenant without the prior written consent oftenant as to scope and cost, and, upon expiration of the term of each lease,tenant’s sole obligation will be to deliver the premises to the landlord insubstantially the same state of condition and repair as existed on the dateBill Deaton vacated the premises (being October 1, 2004), reasonable wear andtear excepted; and (iii) providing that any

 

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provision in such Leases requiring the landlord’sconsent shall be amended to provide that the landlord may not unreasonablywithhold, condition or delay such consent (including without limitation suchthat with such consent tenant may make additions or modifications to any of thebuildings that are the subject to the Leases at its own expense). The Deatonsand the Deaton Related Entities represent and warrant that the only knownmonetary obligations of the IE Entities to the Deatons and the Deaton RelatedEntities under the Leases as of the date of this Agreement are for leasepayments, which are current and paid in full through September 30, 2005, withthe understanding that the IE Entities have a continuing obligation to payutilities, pay real estate taxes, obtain insurance, etc. under, but subject to,the terms of the Leases.

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###### 5.                                       D&O Insurance.  Deaton agrees not to directly or indirectlyseek advancement, reimbursement, indemnification or other coverage of anyexpenses or legal fees under Sourcecorp’s D&O Insurance or in any mannerfrom any of the Sourcecorp Parties (including without limitation with respectto advancement, reimbursement, indemnification, or other coverage, from any ofthe Sourcecorp Parties, for any loss related to the subject of the ReleasedClaims).  Deaton further agrees to take,if required, any actions necessary or appropriate to effectuate this Agreementwith the D&O Insurance carrier(s). Notwithstanding the foregoing, to the extent all claims that exist ormay arise and that might be covered by the D&O insurance againstSourcecorp, the named defendants, and all other covered persons (other thanDeaton) are resolved, and their related expenses, legal fees, and losses, ifany, have been reimbursed or otherwise covered under such D&O Insurancewithout exhausting such coverage, Deaton reserves the right to seek reimbursementsolely out of the remaining D&O Insurance, and not from any of theSourcecorp Parties, of any such expenses, legal fees, or loss.

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###### 6.                                       Insurance Carrier Agreement.  This Agreement is expressly contingent on theparties receiving written consent to the terms of this Agreement from theD&O Insurance carriers.

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###### 7.                                       Double Recovery.  It is the intent of the Settling Partiesthat, through this Agreement, the Releasing Parties are fully and finallyreleasing the Released Parties from the Released Claims such that, afterreceiving all of the payments contemplated by Section 1 of this Agreement, theReleasing Parties shall not have any further claim and agree that they will notassert any further claim to additional monies, directly or indirectly, from theReleased Parties as a result of the Released Claims. If (1) a non-party to this Agreement bringsan action against a Released Party to secure contribution or indemnificationfor a judgment against the non-party that is based in whole or in part on aReleased Claim, (2) a Released Party is held liable in that action forcontribution or indemnification, and (3) a portion of the recovery in thataction would be made to a Releasing Party for Released Claims, the ReleasingParty will take whatever steps are necessary to reflect that the portion ofsuch recovery that reflects Released Claims has been satisfied by thisAgreement.

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###### 8.                                       Noncompetition Agreement.  The Deatons acknowledge that theNoncompetition Agreements remain in full force and effect through February 28,2009 (or such later date, if any, pursuant to the terms of the applicableNoncompetition Agreement) and that the releases covered by this Agreement donot include a release from or waiver of their obligations thereunder.  The Deatons hereby represent and warrant thatthe Deatons have not violated the terms of the Noncompetition Agreements in anyrespect (with the Settling Parties acknowledging that Deaton

 

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has employed, with Sourcecorp’s consent, and maycontinue to employ, Greg Chaffins, Bruce Chaffins, Bill Chaffins and Mike Dixonto perform research and development relating to an optical characterrecognition engine, as well as other projects which the Deatons hereby representare unrelated and are not substantially similar to the Sourcecorp Parties’business).  Each of the Deatonsspecifically represents and warrants that they have had no direct or indirectinvolvement whether through providing information, leases, financial support,customer opportunities, investment opportunities, contacts or otherwise, withthe business known as Information Capture Solutions LLC or any other currentdata entry or imaging business.

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###### 9.                                       Quitclaim.  Upon receipt of all the funds contemplated bySection 1 of this Agreement, Sourcecorp agrees to take such action as may benecessary to convey its interest, if any, without representation or warranty ofany kind, in the property described in the Warranty Deed in Annex E.

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###### 10.                                 Forbearance by Sourcecorp. So long as all of the Payments are made by the dates contemplated bySection 1 of this Agreement, the Sourcecorp Parties agree to forebear on filinga demand for Arbitration or any other litigation against the Deatons arisingout of or related to the Dispute.

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###### 11.                                 Default. In the event that any amounts contemplated by Section 1 of thisAgreement are not paid by the dates so indicated, interest shall accrue on suchoutstanding amounts at the rate of 18% per annum or the Maximum Lawful Rate,whichever is less.  In the event of suchdefault, all promises, covenants, and releases herein granted by Sourcecorpshall be null and void.  Sourcecorpreserves all of its rights and remedies, both legal and equitable, to pursuethe Deatons’ failure to comply with the requirements of this Agreement, and maysue for breach of this Agreement, pursue the Properties subject to the Pledges,sue on the Released Claims, or seek any other remedies. However, if and only ifSourcecorp receives the full amount of the Payments contemplated by Section 1(a) and (b) by the dates contemplated therein and a perfected first liensecurity interest in the Properties (assuming that Sourcecorp has accepted thecondition of title reports and fair market values) as contemplated by Section 2,then any recovery Sourcecorp receives from the Deatons under any prosecution ofthe Dispute shall be capped at the unpaid amount contemplated by Section 1 ofthis Agreement, the interest contemplated by this Section, and reasonableattorneys fees and costs.  If not, the Deatons’ liability will not be capped, but they will beentitled to an offset for any funds or property transferred pursuant to thisAgreement.  There shall be no such limit on any claimsSourcecorp pursues against third parties other than the Deatons.

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###### 12.                                 Defined Terms.

 

(a)                                  The term “Dispute” shall refer toany and all disputes relating to earnout, holdback and other payments made inconnection with the Stock Purchase Agreement and related documents.

 

(b)         The term“D&O Insurance” shall refer to the following policies along with anypredecessor or replacement policies:

 

i.                                          Fireman’s Fund policy CDO-000-7627-3721 (01/23/04 - 01/23/05); XLpolicy ELU085338-04 (01/23/04 - 01/23/05); and

 

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ii.                                       Fireman’s Fund policy CDO-000-7667-7905 (01/23/05 - 01/23/06); XLexcess policy ELU087972-05 (01/23/05 - 01/23/06); XL Side A policy ELU087971-05(01/23/05 - 01/23/06).

 

(c)                                  The term “Employment Agreements” shall refer to:

 

i.                                          Employment Agreement, dated as of March 31, 2001, by and among ImageEntry Acquisition Corp., Sourcecorp, Incorporated, and Bill Deaton (the“Original Bill Deaton Employment Agreement”);

 

ii.                                       Employment Agreement, dated as of March 31, 2001, by and among ImageEntry Acquisition Corp., Sourcecorp, Incorporated, and Christopher D. Deaton(the “Chris Deaton Employment Agreement”); and

 

iii.                                    Employment Agreement, dated as of March 1, 2004, by and among ImageEntry Acquisition Corp., Sourcecorp, Incorporated, and Bill Deaton (the“Subsequent Bill Deaton Employment Agreement”).

 

(d)                                 The term “Future Tax Payments” shall mean the payments for taxcredits contemplated by Section (d) of Schedule 1.1 of the Stock PurchaseAgreement for periods commencing with the year ending December 31, 2005 and endingno later than March 2011.

 

(e)                                  The term “Maximum Lawful Rate” shall mean the maximum legalrate permitted under Texas law (or if another state or federal law isdeemed controlling on the issue, such other maximum legal rate, if lower) withrespect to commercial transactions.  It is the intention of theSourcecorp Parties, the Deatons and the Deaton Related Entities to conformstrictly to all applicable usury laws now or hereafter in force, and anyinterest payable under this Agreement will be subject to reduction to theamount not in excess of the maximum legal amount allowed under theapplicable laws as now or hereafter construed by the courts havingjurisdiction over such matters. The aggregate of all interest (whetherdesignated as interest, service charges, points or otherwise) contracted for,chargeable or receivable under this Agreement will under no circumstancesexceed such maximum lawful rate. If such interest does exceed the maximumlawful rate, it will be deemed a mistake and such excess will be canceledautomatically and, if theretofore paid, rebated by the payee to the payor.

 

(f)                                    The term “Noncompetition Agreements” shall refer to:

 

i.                                          Noncompetition Agreement entered into on March 31, 2001 by and amongImage Entry Acquisition Corp. and Bill D. Deaton;

 

ii.                                       Noncompetition Agreement entered into on March 31, 2001 by and amongImage Entry Acquisition Corp. and Christopher D. Deaton;

 

iii.                                    Noncompetition Agreement entered into on March 31, 2001 by and amongImage Entry Acquisition Corp. and Judy A. Deaton;

 

iv.                                   Noncompetition Agreement entered into on March 31, 2001 by and amongImage Entry Acquisition Corp. and Jeremy M. Deaton; and

 

v.                                      Noncompetition Agreement entered into on March 31, 2001 by and amongImage Entry Acquisition Corp. and Lori Deaton-Orr.

 

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(g)                                 The “Pledges” shall have the meaning set forth in Section 2 of thisAgreement.

 

(h)                                 The term “Released Parties” shallrefer to the Deatons and the Deaton Related Entities, and all of their respectiveheirs and their current and former spouses, marital communities, executors,administrators, estates, successors and assigns, provided however, thatthe Released Parties shall not include Third Parties G. Edward Henry II, Henry Watz Gardner Sellars & Gardner, PLLC, Michael Sulfridge, Cheryl Hubbard,Susan Cassidy, Jack Cloyd, or Cloyd & Associates.

 

(i)                                     The term “Third Parties” shall refer to G. Edward Henry II, HenryWatz Gardner Sellars & Gardner, PLLC, Michael Sulfridge, Cheryl Hubbard, SusanCassidy, Jack Cloyd, and Cloyd & Associates.

 

(j)                                     The term “Releasing Parties” shallrefer to the Sourcecorp Parties and all of their past and present parentcompanies, subsidiaries, related entities, divisions, predecessors, successors,and assigns.

 

(k)                                  The term “Released Claims” shallrefer to any and all claims, actions, causes of action, demands, damages,attorneys’ fees, costs, contracts, rights, debts, accounts, or liabilities,known or unknown, direct or indirect, that the Releasing Parties and the Released Parties may have against each other,individually or collectively, arising out of or based upon:  the relationship between the SourcecorpParties and the Deatons; the Dispute; the transactions, events, occurrences,acts, omissions or failures to act set forth in, arising out of, or pertainingin any way to the Stock Purchase Agreement or Employment Agreements, includingall Earnout, Share Release and Holdback payments specified in Schedule 1.1 ofthe Stock Purchase Agreement, or financial disclosures related to thesematters, or any actions, inactions, statements, omissions or conduct inconnection with an internal investigation and subsequent financial statementRestatement and ensuing governmental investigations relating to the Earnout,Share Release and Holdback payments specified in Schedule 1.1 of the StockPurchase Agreement, but specifically excluding any obligations under theNoncompetition Agreements, the Leases (amended as contemplated by thisAgreement), the Future Tax Payments, or this Agreement.

 

(l)                                     The term “Sourcecorp Account” shall mean the account identified bythe following wiring instructions:

 
| Bank Name:       |   | Bank of  America          |
|------------------|--------|---------------------------|
|             |   |                      |
| Account  Name:   |   | SOURCECORP,  Incorporated |
|             |   |                      |
| Account  Number: |   | 004770650126              |
|             |   |                      |
| ABA#:            |   | 111000025                 |

 

(m)                               The term “Stock Purchase Agreement” shall refer to that StockPurchase Agreement dated effective March 1, 2001, by and between the SourcecorpParties and the Deatons, pursuant to which IEAC acquired the stock of each ofthe IE Entities.

 

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###### 13.                                 Releases. In consideration of the foregoing Payment and other considerations setforth in this Agreement, in accordance with the terms hereof, the Released Parties and the ReleasingParties hereby agree to release eachother, individually and collectively, of all the Released Claims, andfurther agree that his, her, or its release shall operate forever and finallyto extinguish the Released Claims; provided that these releases shall beeffective, without any further action by the Sourcecorp Parties, immediatelyupon, but not prior to, Sourcecorp’s receipt of the full Payment, including thepayment contemplated by Section 1(c).  Inaddition, each of the Released Partiesagrees to release the Releasing Parties’ respective officers, directors,employees, attorneys, accountants, advisors, representatives, parent companies,subsidiaries, affiliates, predecessors and successors, of all of the ReleasedClaims.

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###### 14.                                 Resolution of All Claims. This Agreement is intended to resolve to the fullest extent possible allReleased Claims to the extent and at such times as contemplated by thisAgreement.  To that end, each of theReleasing Parties and Released Parties represents and warrants that all of his,her, or its Released Claims belong to him, her, or it, and to no other person,that no right, title, or interest to or in any of said claims or causes ofaction has been assigned, sold, pledged, or otherwise transferred to any thirdparty (other than any Releasing Party), whether by written or oral agreement orby operation of law or otherwise, and that there are no liens relating to anyReleased Claim, including any lien for attorneys’ fees, that will not be fullysatisfied and discharged as a result of this Agreement.  The Sourcecorp Parties and the Deatonsmutually confirm and agree that they have no remaining claims for commissionsor payments of any kind under the Employment Agreements, that the terms of BillDeaton’s and Christopher Deaton’s Employment Agreements dated March 31, 2001 haveexpired, and that Bill Deaton’s March 1, 2004 Employment Agreement has beenterminated pursuant to Section 4 thereunder. The Deatons and Deaton Related Entities further agree that they have nodirect or indirect claims against the Sourcecorp Parties due to Trinity GroupLLC’s (or any of the Deatons, the Deaton Related Entities or any other entitydirectly or indirectly owned or controlled by one or more of the Deatons)payment of any expenses of any of the Sourcecorp Parties, and will notrecommend or take any action that would permit or encourage any vendor topursue any of the Sourcecorp Parties for any such claims.  Each of the Releasing Parties and ReleasedParties further represents and warrants that the individual executing thisAgreement on his, her or its behalf has legal authority to do so, to releasetheir respective Released Claims, and to bind their respective ReleasingParties and Released Parties.  Each ofthe Released Parties and the Releasing Parties further agrees he, she or it hasno claim(s) and in the future will not assert any claim(s) of any kind relatedto: (1) the Order Resources sign purchased by Sourcecorp; (2) microfilm labrental; and (3) for a tractor purchased by Bill Deaton from Sourcecorp.

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###### 15.                                 General Releases. Each of the Releasing Parties and the Released Parties also herebywaives and relinquishes all rights and benefits that it, he, or she had or mayhave under any statutory or common law that limits the effect of a generalrelease to claims known or suspected by the releasing party, including anyclaim that this Agreement or any document incorporated by reference or any ofthe releases herein was induced by any misrepresentation or nondisclosure andany right to rescind or avoid this Agreement or the releases contained hereinbased upon presently existing facts, known or unknown.  Each of the Releasing Parties and theReleased Parties acknowledges that it, he, or she may hereafter discover factsdifferent from or in addition to those it, he, or she now knows or believes tobe true in respect to the Released Claims, and hereby agrees that the releasesdescribed above shall be and remain in effect in all

 

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respects as a complete, general release as to thematters released, notwithstanding any such different or additional facts.

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###### 16.                                 Limited Release of Third Parties.Concurrently with the Receipt of final Payment as set forth above (togetherwith any amounts contemplated by Section 11), the Releasing Parties agree toexecute a Limited Mutual Release with respect to Third Parties G. Edward HenryII, Henry Watz Gardner Sellars & Gardner, PLLC, Michael Sulfridge, CherylHubbard, Susan Cassidy, Jack Cloyd, and Cloyd & Associates in the form set forth as Annex D.

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###### 17.                                 Agreement May Be Pleaded AsDefense.  This Agreement may be pleaded as a full andcomplete defense by any of the Settling Parties to any action, suit, or otherproceeding that may be instituted, prosecuted or attempted for, upon or inrespect of any of the Released Claims released hereby.  The Settling Parties agree that any suchproceeding would cause irreparable injury to the party against whom it isbrought and that any court of competent jurisdiction may enter an injunctionrestraining prosecution thereof.

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###### 18.                                 No Admission of Wrongdoing. Nothing in this Agreement or any term or provision herein is or may bedeemed, construed or used, in any civil, criminal or administrative proceedingin any court, administrative agency, or other tribunal, as an admission ofwrongdoing of any of the Settling Parties or Released Parties hereto.

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###### 19.                                 Non-Disparagement. Each of the SettlingParties hereto agrees not to make disparaging remarks about the other SettlingParties or theirrespective officers, directors, employees, insurers, attorneys, accountants,advisors, representatives, parent companies, subsidiaries, affiliates,predecessors and successors, or their actions, inactions, statements, omissionsor conduct related to the subject of the Released Claims or this Agreement. This Section shall not apply to any legally required publicdisclosures by Sourcecorp, any remarks, disclosures or testimony by any personor the Sourcecorp Parties or the Sourcecorp Parties’ officers, directors,employees, agents, attorneys or accountants to any governmental agenciesinvestigating these matters, to any governmental regulatory agencies, in anycivil or criminal proceedings regarding these matters, or by the Sourcecorp Parties or theirofficers, directors, employees, agents, attorneys or accountants in remediation discussions with customers whose contracts wereinvolved in Sourcecorp’s financial statement restatement.

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###### 20.                                 Notices. All notices required or permitted to be given hereunder shall be inwriting and may be delivered by hand, by facsimile, by nationally recognizedprivate courier, or by United States mail. Notices delivered by mail shall be deemed given three (3) business daysafter being deposited in the United States mail, postage prepaid, registered orcertified mail.  Notices delivered byhand, by facsimile, or by nationally recognized private carrier shall be deemedgiven on the first business day following receipt; provided, however, that anotice delivered by facsimile shall only be effective if such notice is alsodelivered by hand, or deposited in the United States mail, postage prepaid,registered or certified mail, on or before two (2) business days following itsdelivery by facsimile.  All notices shallbe addressed as follows: (1) if to the Sourcecorp Parties, addressed to Sourcecorp,Attn:  General Counsel, 3232 McKinneyAvenue, Suite 1000, Dallas, TX 75204, Facsimile (214) 740-6589, with a copy toFrancis J. Burke, Jr., Steptoe & Johnson LLP, 201 E. Washington Street,Suite 1600, Phoenix, Arizona 85004, Facsimile (602) 257-5299; and (2) ifto the Deatons or any Deaton Related

 

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Entity, addressed to Charles E. Davidow, Wilmer,Cutler, Pickering, Hale & Dorr LLP, 2445 M Street NW, Washington DC, 20037,Facsimile (202) 663-6363; and/or (3) to such other respective addresses and/oraddressees as may be designated by notice given in accordance with theprovisions of this Paragraph.

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###### 21.                                 Entire Agreement; Authorship;Amendments.  This Agreement, together with any exhibits,sets forth the entire understanding of the Settling Parties in connection withthe subject matter hereof, and is intended to supercede all previous oralagreements concerning settlement.  Noneof the Settling Parties has made any statement, representation, or warranty inconnection herewith, except as expressly set forth herein, which has beenrelied upon by any of the other Settling Parties hereto or which acted as aninducement for the other Settling Parties to enter into this Agreement; andeach of the Settling Parties agrees it is not in fact relying upon any suchstatements, representations, or warranties, or any other expectations,understandings or agreements other than those expressly set forth orincorporated by reference in this Agreement. This Agreement shall be deemed to have been mutually prepared by theSettling Parties, and shall not be construed against any of them by reason ofauthorship.  This Agreement and thereleases contained herein may be amended or modified only by a writtenagreement executed by or on behalf of all the Settling Parties hereto thatunequivocally indicates the Settling Parties’ intention to modify thisAgreement.  No waiver of any breach ofthis Agreement or the releases contained herein shall be construed as animplied amendment or agreement to amend or modify any provision of thisAgreement.

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###### 22.                                 Assignments, Predecessors,Successors and Assigns.  The terms of this Agreementshall inure to the benefit of, and be binding upon, the Deatons, the DeatonRelated Entities, Settling Parties and their respective successors or assigns,except it shall not inure to the benefit of or be binding upon Third Parties G.Edward Henry II, Henry Watz Gardner Sellars &Gardner, PLLC MichaelSulfridge, Cheryl Hubbard, Susan Cassidy, Jack Cloyd, or Cloyd &Associates, .

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###### 23.                                 Severability. Should any clause, sentence, provision, paragraph or part of thisAgreement or its Annexes for any reason whatsoever be declared or determinedfinally by any court of competent jurisdiction, or by any other competentgovernmental authority having jurisdiction, to be illegal or invalid orunenforceable, the validity of the remaining parts, terms, or provisions shallnot be affected, impaired or invalidated thereby, and such determination ofillegality, invalidity or unenforceability shall be confined in its operationto the specific clause, sentence, provision, paragraph or part of thisAgreement directly involved.  Suchillegal or invalid part, term, or provision shall be deemed not to be a part ofthis Agreement and its Annexes, and the remainder of the Agreement and Annexes,wherever practicable, shall remain in full force and effect.

######  

###### 24.                                 Construction. The Sourcecorp Parties, the Deatons, and the Deaton Related Entitieseach acknowledges to the other that each understands the final and permanenteffect of this instrument.  Each SettlingParty hereto has made its own investigation of the facts and has consulted withwhatever consultants, attorneys or other advisors each deems is appropriate inconnection with the effect of this Agreement, is relying solely upon suchadvice and its own knowledge, and assumes the risk arising from not seekingfurther additional consultation with such advisors.  The Settling Parties hereto furtheracknowledge that they have had input into the

 

10

----

 

drafting of this Agreement and that, accordingly, inany construction to be made of this Agreement, it shall not be construed for oragainst any party, but rather shall be given a fair and reasonableinterpretation, based on the plain language of the Agreement and the expressedintent of the parties.

######  

###### 25.                                 Jurisdiction. This Agreement shall be governed by and construed inaccordance with the laws of the State of Texas. The SettlingParties hereby consent to the jurisdiction of the 116thDistrict Court for Dallas County, for the resolution of any and all claims and disputes arising out ofthe subject matter of this Agreement.

######  

###### 26.                                 Survivalof Representations and Warranties.**Each ofthe Settling Parties agrees and stipulates that it is relying upon therepresentations and warranties and covenants set forth herein in entering intothis Agreement, and that these representations and warranties and covenantsshall survive the execution of this Agreement.

######  

###### 27.                                 Authority. Each of the Settling Parties represents and warrants that it, she, or hehas full authority and power to enter into, execute, deliver and perform thisAgreement and to bind its, her, or his respective Settling Parties, and thatthe person signing below on behalf of each such Settling Party is authorized todo so.  The Deaton Related Entities willdeliver appropriate authorizing documents contemporaneously with theirexecution of this Agreement. The Settling Parties further agree that, upon theoccurrence of the conditions to effectiveness contained herein, this Agreementwill constitute a legal, valid and binding obligation, enforceable inaccordance with its terms.

######  

###### 28.                                 Execution.  This Agreement may be executed in one or morecounterparts, and as so executed shall constitute an Agreement binding on allthe Settling Parties, notwithstanding that all parties are not signatories tothe original or the same counterpart. The Settling Parties agree that a signature sent by facsimile to counselfor the Settling Parties shall have the same force and effect as an originalsignature.

######  

###### 29.                                 Inadmissibility.  If this Agreement does not become effectivefor any reason, it shall be deemed negotiation for settlement purposes only andwill not be admissible in evidence or usable for any purpose whatsoever.

######  

###### 30.                                 Breach of This Agreement.  The parties hereto agree that the damagessuffered by any persons, firms, corporations or other entities protected bythis Agreement by reason of any breach of any provision of this Agreement shallinclude not only the amount of any judgment that may be rendered against suchsaid persons, firms, corporations or other entities, or any of them, by reasonof a breach of this Agreement, (including without limitation under the provisionsof Section 11) but shall also include all damages suffered by them, includingthe costs, attorneys’ fees and other costs and expenses of instituting,preparing, prosecuting or defending any action or suit resulting from a breachof this Agreement, whether taxable or otherwise, and the cost to them ofattorneys’ fees, and all other costs and expenses of instituting, preparing, orprosecuting any counterclaim, suit, motion or action to recover damagesresulting from the breach of this Agreement, whether taxable or otherwise.

 

11

----

 

###### 31.                                 Mistake. Each party to this Agreement assumes the risk of any mistake of fact orlaw with regard to any aspect of this Agreement, the Dispute described herein,or any asserted rights released by this Agreement.

######  

###### 32.                                 Further Cooperation. The parties agree to use their best efforts in facilitating the processof drafting and executing such further documentation necessary or appropriateto ensure the timely and complete performance of this Agreement.

######  

| DATED: September 23, 2005. | SOURCECORP INCORPORATED           |
|----------------------------|-----------------------------------|
|                       |                              |
|                       | By:                               | /s/ Ed H. Bowman, Jr. |   |
|                       |                              |
|                       | Its:                              | President & CEO |   |
|                       |                              |
| DATED: September 23, 2005. | IMAGE ENTRY ACQUISITION  CORP.    |
|                       |                              |
|                       | By:                               | /s/ Barry L. Edwards |   |
|                       |                              |
|                       | Its:                              | Vice President |   |
|                       |                              |
| DATED: September 23, 2005. | IMAGE ENTRY, INC.                 |
|                       |                              |
|                       | By:                               | /s/ Barry L. Edwards |   |
|                       |                              |
|                       | Its:                              | Vice President |   |
|                       |                              |
| DATED: September 23, 2005. | IMAGE ENTRY OF OWSLEY COUNTY INC. |
|                       |                              |
|                       | By:                               | /s/ Barry L. Edwards |   |
|                       |                              |
|                       | Its:                              | Vice President |   |
|                       |                              |
|                       |                              |
| DATED: September 23, 2005. | IMAGE ENTRY OF INDIANAPOLIS INC.  |
|                       |                              |
|                       | By:                               | /s/ Barry L. Edwards |   |
|                       |                              |
|                       | Its:                              | Vice President |   |
|                       |                              |
| DATED: September 23, 2005. | IMAGE ENTRY FEDERAL SYSTEMS INC.  |
|                       |                              |
|                       | By:                               | /s/ Barry L. Edwards |   |
|                       |                              |
|                       | Its:                              | Vice President |   |
|                            |                                   |  |  |  |  |

 

12

----

 
| DATED: September 23, 2005. | IMAGE ENTRY OF ARKANSAS  INC.                |
|----------------------------|----------------------------------------------|
|                       |                                         |
|                       | By:                                          | /s/ Barry L. Edwards |   |
|                       |                                         |
|                       | Its:                                         | Vice President |   |
|                       |                                         |
| DATED: September 23, 2005. | IMAGE ENTRY OF ALABAMA  INC.                 |
|                       |                                         |
|                       | By:                                          | /s/ Barry L. Edwards |   |
|                       |                                         |
|                       | Its:                                         | Vice President |   |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Bill D. Deaton |   |
|                       |                                         | Bill D. Deaton |   |
|                       |                                         |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Judy A. Deaton |   |
|                       |                                         | Judy A. Deaton |   |
|                       |                                         |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Christopher D. Deaton |   |
|                       |                                         | Christopher D. Deaton |   |
|                       |                                         |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Lori Deaton-Orr |   |
|                       |                                         | Lori Deaton-Orr |   |
|                       |                                         |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Jeremy M. Deaton |   |
|                       |                                         | Jeremy M. Deaton |   |
|                       |                                         |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Cynthia A. Deaton |   |
|                       |                                         | Cynthia A. Deaton |   |
|                       |                                         |
|                       |                                         |
| DATED: September 23, 2005  | By:                                          | /s/ Christopher Deaton for Tara Deaton |   |
|                       |                                         | Christopher D. Deaton, as guardian for Tara  Deaton, a minor child |   |
|                       |                                         |
| DATED: September 23, 2005  | Lucille Deaton Irrevocable Family GSTT Trust |
|                       |                                         |
|                       | By:                                          | /s/ Bill D. Deaton |   |
|                       |                                         |
|                       | Its:                                         | Member |   |
|                            |                                              |  |  |  |  |

 

13

----

 
| DATED: September 23, 2005 | London Rentals, LLC      |
|---------------------------|--------------------------|
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |
|                      |                     |
| DATED: September 23, 2005 | East Properties, LLC     |
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |
|                      |                     |
| DATED: September 23, 2005 | West Properties, LLC     |
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |
|                      |                     |
| DATED: September 23, 2005 | Trinity Group, LLC       |
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |
|                      |                     |
| DATED: September 23, 2005 | South US 25, LLC         |
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |
|                      |                     |
| DATED: September 23, 2005 | Pear Tree Farms, LLC     |
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |
|                      |                     |
| DATED: September 23, 2005 | Cognitive Solutions, LLC |
|                      |                     |
|                      | By:                      | /s/ Bill D. Deaton |   |
|                      |                     |
|                      | Its:                     | Member |   |

 

14

----

 
| APPROVED AS TO FORM:      |                                             |
|---------------------------|--------------------------------------------------|
|                      |                                             |
|                      |                                             |
| DATED: September 23, 2005 | STEPTOE & JOHNSON LLP                        |
|                      |                                             |
|                      |                                             |
|                      | By:                                              | /s/ Stacey F. Gottlieb for |   |
|                      |                                             | Francis J. Burke, Jr. |   |
|                      |                                             | Attorneys for the Sourcecorp Parties |   |
|                      |                                             |
|                      |                                             |
| DATED: September 23, 2005 | WILMER, CUTLER, PICKERING,  HALE &  DORR LLP |
|                      |                                             |
|                      |                                             |
|                      | By:                                              | /s/ Charles E. Davidow |   |
|                      |                                             | Charles E. Davidow |   |
|                      |                                             | Attorneys for the Deatons |   |

 

15

----

 

**Annex A**

 

----

 

**Deaton Stock**

 
| **Holder**                                                                                                              | ** ** | **Certificate No.** | ** ** | **No. of Shares** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|-------------------|------------|
|                                                                                                                    |       |                |       |              |       |
| Bill D. Deaton                                                                                                          |       | C1832               |       | 15,334            |       |
|                                                                                                                    |       |                |       |              |       |
| Christopher D. Deaton                                                                                                   |       | C1834               |       | 5,505             |       |
|                                                                                                                    |       |                |       |              |       |
| Christopher  D. Deaton as Custodian for Tara Deaton, Minor Child Under the Uniform  Transfers to Minors Act of Kentucky |       | C1873               |       | 607               |       |
|                                                                                                                    |       |                |       |              |       |
| Jeremy M. Deaton                                                                                                        |       | C1835               |       | 5,505             |       |
|                                                                                                                    |       |                |       |              |       |
| Judy A. Deaton                                                                                                          |       | C1833               |       | 14,092            |       |
|                                                                                                                    |       |                |       |              |       |
| Lori Deaton                                                                                                             |       | C1836               |       | 5,505             |       |
|                                                                                                                    |       |                |       |              |       |
| Lucille Deaton Irrevocable Family GSTT Trust                                                                            |       | C1837               |       | 43,340            |       |
|                                                                                                                    |       |                |       |              |       |
| **Total Shares Held**                                                                                                   | ** ** | ** **          |       | **89,888**        |       |

 

----

 

**Annex B – PledgedProperties**

 
| **Property  Type** | ** ** | **Address**                                | ** ** | **City**   | ** ** | **County** | ** ** | **State**  | ** ** | **Owner**                                    | ** ** | **Deaton  Represented  Value*** | ** **        |
|--------------------|------------|--------------------------------------------|------------|------------|------------|------------|------------|------------|------------|----------------------------------------------|------------|---------------------------------|-------------------|
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | 465 Industrial Boulevard                   |       | London     |       | Laurel     |       | KY         |       | London Rentals, LLC                          |       | $                               | 3,200,000.00      |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Residential        |       | 484 Woods Edge                             |       | London     |       | Laurel     |       | KY         |       | Bill D. Deaton and Judy A.  Deaton           |       | $                               | 1,200,000.00      |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Residential        |       | 203 Chinook Drive                          |       | London     |       | Laurel     |       | KY         |       | Christopher D. Deaton and  Cynthia A. Deaton |       | $                               | 249,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Residential        |       | Roots Branch (470 Acres)                   |       | Manchester |       | Clay       |       | KY         |       | Bill D. Deaton and Judy A.  Deaton           |       | $                               | 940,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Residential        |       | Feltner Farm, 265 Bert  Feltner Road       |       | London     |       | Laurel     |       | KY         |       | Bill D. Deaton                               |       | $                               | 750,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Residential        |       | Highway 192 (54 Acres)                     |       | London     |       | Laurel     |       | KY         |       | Bill D. Deaton and Judy  Deaton              |       | $                               | 540,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Residential        |       | Highway 192 (51 Acres)  (Maple Grove Road) |       | London     |       | Laurel     |       | KY         |       | Billy D. Deaton and Judy A.  Deaton          |       | $                               | 510,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | U.S. Highway 25 South                      |       | London     |       | Laurel     |       | KY         |       | South US 25, LLC                             |       | $                               | 3,000,000.00      |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | U.S. Highway 25 South                      |       | London     |       | Laurel     |       | KY         |       | Billy D. Deaton and Judy A.  Deaton          |       | $                               | 370,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | Route 1, Box 1000  Muddy Gap Road          |       | Manchester |       | Clay       |       | KY         |       | Bill D. Deaton                               |       | $                               | 570,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | Industrial Park  555 Roark Road            |       | Annville   |       | Jackson    |       | KY         |       | Bill D. Deaton and Judy A.  Deaton           |       | $                               | 434,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | Lone Oak Industrial Park  Route 2 Box 710  |       | Booneville |       | Owsley     |       | KY         |       | Billy D. Deaton and Judy A.  Deaton          |       | $                               | 784,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | 24770 Highway 421                          |       | Hyden      |       | Leslie     |       | KY         |       | East Properties, LLC                         |       | $                               | 510,000.00        |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| Commercial         |       | 715 N. Main Street                         |       | London     |       | Laurel     |       | KY         |       | London Rentals, LLC                          |       | $                               | 2,000,000.00      |   |
|               |       |                                       |       |       |       |       |       |       |       |                                         |       |                            |              |
| **Total**          | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **                                   | ** ** | **$**                           | **15,057,000.00** | ** ** |

 

----

*Valueshave not been adopted or verified by Sourcecorp

 

----

 

Annex C - Leased Properties

 
| **Lessor**           | ** ** | **Location**                                          | ** ** | **Apx.  Sq. Ft.** | ** ** | **Beg**  | ** ** | **Amended  End** | ** ** | **Mo.  Rent  as of 9/23/2005** | ** ** | **Per Ft. (per Annum)** | ** ** |
|----------------------|------------|-------------------------------------------------------|------------|-------------------|------------|----------|------------|------------------|------------|--------------------------------|------------|-------------------------|------------|
|                 |       |                                                  |       |              |       |     |       |             |       |                           |       |                    |       |
| London Rentals, LLC  |       | Laurel I, 715 N. Main St., London, KY                 |       | 14,572            |       | 3/1/2001 |       | 2/28/2009        |       | 11,427                         |       | 9.41                    |       |
| London Rentals, LLC  |       | Laurel II, 715 N. Main St., London, KY                |       | 4,928             |       | 3/1/2001 |       | 2/28/2009        |       | 3,057                          |       | 7.44                    |       |
| London Rentals, LLC  |       | Laurel IV, 465 Industrial Blvd., London, KY - whse    |       | 29,000            |       | 3/1/2001 |       | 12/31/2005       |       | 16,378                         |       | 6.78                    |       |
| London Rentals, LLC  |       | Laurel III, 465 Industrial Blvd., London, KY - office |       | 18,000            |       | 3/1/2001 |       | 12/31/2005       |       | 12,823                         |       | 8.55                    |       |
| East Properties, LLC |       | Route 1, Muddy Gap Rd, Manchester, KY                 |       | 8,150             |       | 3/1/2001 |       | 2/28/2009        |       | 7,233                          |       | 10.65                   |       |
| West Properties, LLC |       | Rockcastle Industrial Park, Mt Vernon, KY             |       | 8,200             |       | 3/1/2001 |       | 2/28/2009        |       | 6,506                          |       | 9.52                    |       |
| East Properties, LLC |       | McKee Industrial Park, 555 Roark Rd, Annville, KY     |       | 6,200             |       | 3/1/2001 |       | 2/28/2009        |       | 2,704                          |       | 5.23                    |       |
| West Properties, LLC |       | RR 4 Box 3545, Monticello, KY                         |       | 9,300             |       | 3/1/2001 |       | 2/28/2009        |       | 8,299                          |       | 10.71                   |       |
| East Properties, LLC |       | Lone Oak Industrial Park, Booneville, KY              |       | 9,880             |       | 3/1/2001 |       | 2/28/2009        |       | 8,415                          |       | 10.22                   |       |
| East Properties, LLC |       | 24770 Highway 421, Hyden, KY                          |       | 7,240             |       | 9/1/2003 |       | 12/31/2005       |       | 6,033                          |       | 10.00                   |       |
| East Properties, LLC |       | 1094 Childs Branch, Jenkins, KY                       |       | 7,240             |       | 8/1/2002 |       | 12/31/2005       |       | 7,542                          |       | 12.50                   |       |

 

----

 

**ANNEX D**

 

**LIMITED MUTUAL RELEASE**

 

THIS MUTUAL RELEASE is made by and betweenthe following parties:  (1) (a) *SOURCECORP*, Incorporated (“Sourcecorp”);(b) Image Entry Acquisition Corp. (“IEAC”); and (c) Image Entry, Inc., ImageEntry of Owsley County Inc., Image Entry of Indianapolis Inc., Image EntryFederal Systems Inc., Image Entry of Arkansas Inc., Image Entry of Alabama Inc.(collectively the “IE Entities” and together with Sourcecorp and IEAC, the “SourcecorpParties”), and (2) G. Edward Henry II, Henry Watz Gardner Sellars &Gardner, PLLC.,Cheryl Hubbard, Michael Sulfridge, Susan Cassidy, JackCloyd, and Cloyd& Associates (the “Third Parties”).  This Mutual Release shall become effectiveonly when signed and dated by each of the parties hereto.

 

1.     The term the “Releasing Parties” shall mean (i) the SourcecorpParties, and all of their past and present parent companies, subsidiaries,related entities, divisions, predecessors, successors, and assigns and (ii) theThird Parties along with their heirs, spouses, executors, administrators,estates, successors and assigns of any such persons.

 

2.     The term “Person” means an individual, corporation, partnership,limited partnership, association, joint stock company, estate, legalrepresentative, trust, unincorporated association, government, politicalsubdivision or agency thereof, and any business or legal entity and theirspouses, heirs, predecessors, successors, representative, or assignees.

 

3.     The term “Released Claims” shall refer to any and all claims,actions, causes of action, demands, damages, attorneys’ fees, costs, contracts,rights, debts, accounts, or liabilities, known or unknown, direct or indirect,that the Releasing Parties may have against each other, arising out of or basedupon:  the relationship between theSourcecorp Parties and the Third Parties; the transactions, events, occurrences,acts, omissions or failures to act set forth in, arising out of, or pertainingin any way to the Stock Purchase Agreement, including all Earnout, ShareRelease and Holdback payments specified in Schedule 1.1 of the Stock PurchaseAgreement, as well as any actions, inactions, statements, omissions or conductin connection with the Sourcecorp Parties’ internal investigation andsubsequent financial statement restatement and any ensuing governmentalinvestigations relating to the Earnout, Share Release and Holdback paymentsspecified in Schedule 1.1 of the Stock Purchase Agreement.

 

4.     The term “StockPurchase Agreement” shall refer to that Stock Purchase Agreement datedeffective March 31, 2001, by and between the Sourcecorp Parties and Bill D. Deaton, Judy A. Deaton,Christopher D. Deaton, Lori Deaton-Orr, Jeremy M. Deaton, Christopher D.Deaton, as guardian for Tara Deaton, a minor child, and Lucille DeatonIrrevocable Family GSTT Trust (collectively, the “Deatons”).

 

5.     The Sourcecorp Parties hereby release the Third Parties, alongwith their heirs, spouses, executors, administrators, estates, successors andassigns of any such persons, of all the Released Claims, and agree that suchrelease shall operate forever and finally to extinguish the Released Claims;provided, that this release will not become effective in favor of a Third Partyunless and until that Third Party has also entered this Mutual Release.

 

----

 

6.     Each of the Third Parties hereby releases the SourcecorpParties, their respective officers, directors, employees, insurers, attorneys,accountants, advisors, representatives, parent companies, subsidiaries,affiliates, divisions, predecessors, successors, and assigns of any and allReleased Claims, and each Third Party agrees that such release shall operateforever and finally to extinguish the Released Claims; provided, that thisrelease will not become effective in favor of a Sourcecorp Party unless anduntil that Sourcecorp Party has also entered this Mutual Release.

 

7.     Each Releasing Party hereby mutually represents and warrants toeach other that they have not previously directly or indirectly assigned,transferred, encumbered or purported to assign, transfer or encumber, whethervoluntarily, involuntarily, by operation of law or otherwise, to any Person anyinterest in the Released Claims.

 

8.     Each Person signing this Mutual Release represents and warrantsthat he or she has the requisite authority to bind the Releasing Party on whosebehalf he or she is signing and has been duly authorized and empowered toexecute this Mutual Release on behalf of that Releasing Party.

 

9.     This Mutual Release shall be binding upon and shall inure to thebenefit of the Releasing Parties and their respective successors, assigns andlegal representatives.

 

10.   This Mutual Release shall be governed by and construed andenforced in accordance with the laws of the State of Texas.

 

11.   Execution.  This Mutual Release may be executed in one ormore counterparts, and as so executed shall be binding on all the ReleasingParties, notwithstanding that all parties are not signatories to the originalor the same counterpart.  The ReleasingParties agree that a signature sent by facsimile to counsel for the ReleasingParties shall have the same force and effect as an original signature.

 

 
| DATED:  September            , 2005. | SOURCECORP INCORPORATED        |
|---------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                        |                           |
|                                                                                        | By:                            |   |   |
|                                                                                        |                           |
|                                                                                        | Its:                           |   |   |
|                                                                                        |                           |
| DATED:  September            , 2005. | IMAGE ENTRY ACQUISITION  CORP. |
|                                                                                        |                           |
|                                                                                        | By:                            |   |   |
|                                                                                        |                           |
|                                                                                        | Its:                           |   |   |
|                                                                                             |                                |  |  |  |

 

2

----

 
| DATED:  September            , 2005.       | IMAGE ENTRY, INC.                                |
|---------------------------------------------------------------------------------------------------|--------------------------------------------------|
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
|                                                                                              |                                             |
|                                                                                              | Its:                                             |   |   |
|                                                                                              |                                             |
|  DATED:  September            , 2005. | IMAGE ENTRY OF OWSLEY COUNTY INC.                |
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
|                                                                                              |                                             |
|                                                                                              | Its:                                             |   |   |
|                                                                                              |                                             |
| DATED:  September            , 2005.       | IMAGE ENTRY OF INDIANAPOLIS INC.                 |
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
|                                                                                              |                                             |
|                                                                                              | Its:                                             |   |   |
|                                                                                              |                                             |
| DATED:  September            , 2005.       | IMAGE ENTRY FEDERAL SYSTEMS INC.                 |
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
|                                                                                              |                                             |
|                                                                                              | Its:                                             |   |   |
|                                                                                              |                                             |
| DATED:  September           ,  2005.       | IMAGE ENTRY OF ARKANSAS  INC.                    |
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
|                                                                                              |                                             |
|                                                                                              | Its:                                             |   |   |
|                                                                                              |                                             |
| DATED:  September           ,  2005.       | IMAGE ENTRY OF ALABAMA  INC.                     |
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
|                                                                                              |                                             |
|                                                                                              | Its:                                             |   |   |
|                                                                                              |                                             |
| DATED:  September           ,  2005        | By:                                              |   |   |
|                                                                                              | G. Edward Henry II                               |
|                                                                                              |                                             |
| DATED:  September           ,  2005        | Henry Watz  Gardner Sellars & Gardner, PLLC. |
|                                                                                              |                                             |
|                                                                                              | By:                                              |   |   |
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|                                                                                              | Its:                                             |   |   |
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| DATED:  September           ,  2005 | By:                     |   |   |
|--------------------------------------------------------------------------------------------|-------------------------|--------|--------|
|                                                                                       | Jack Cloyd              |
|                                                                                       |                    |
|                                                                                       |                    |
| DATED:  September           ,  2005 | Cloyd &  Associates |
|                                                                                       |                    |
|                                                                                       | By:                     |   |   |
|                                                                                       |                    |
|                                                                                       | Its:                    |   |   |
|                                                                                       |                    |
|                                                                                       |                    |
| DATED:  September           ,  2005 | By:                     |   |   |
|                                                                                       | Cheryl Hubbard          |
|                                                                                       |                    |
|                                                                                       |                    |
| DATED:  September           ,  2005 | By:                     |   |   |
|                                                                                       | Michael Sulfridge       |
|                                                                                       |                    |
|                                                                                       |                    |
| DATED:  September           ,  2005 | By:                     |   |   |
|                                                                                       | Susan Cassidy           |
|                                                                                            |                         |        |        |  |  |

 

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**Annex E - Deed**

 

**WARRANTY DEED**

 

THIS DEED, made and entered into this the 9th day ofSeptember, 1998, by and between LONDON-LAUREL COUNTY INDUSTRIAL DEVELOPMENTAUTHORITY, of 200 S. Main Street, Suite C, 1st National Bank Building, London,Laurel County, Kentucky, Party of the First Part (Grantor), and IMAGE ENTRY,INC., a Kentucky Corporation, of P. O. Box 1228, London, KY 40743-1228, Partyof the Second Part (Grantee).

 

WITNESSETH: That for and in consideration of the sum of NINETY-TWOTHOUSAND FIFTY-SIX DOLLARS ($92,056.00), all fully paid, the receipt andsufficiency of which is hereby acknowledged, the said Party of the First Parthas bargained and sold and does hereby grant, sell and convey unto the Party ofthe Second Part, its successors and assigns, forever, the following describedreal estate situated in Laurel County, Kentucky, and more particularlydescribed as follows:

 

Being a certain tract or parcel of land in the London-Laurel CountyIndustrial Park lying approximately 3.8 miles west along Kentucky 80 from theintersection of 80 and Interstate 75, more particularly described as follows:

 

(Unless otherwise stated, any monument referred to as an iron pin set(IPS) is a 5/8” steel re-bar pin, 18” in length, with a yellow plastic capstamped “R.L.S. 1804”.)

 

Being all of lot 3 of the London-Laurel County Industrial Park:

 

Commencing at an iron pin set in the west right of way line of aproposed Industrial access road, corner of lots 2, 3 thence leaving said westline of road with the line of lots 2, 3 South 76 deg. 05’ 06” West, a distanceof 873.17 feet to a disk found in a rock, corner no. 1 of tract 1546 of theDaniel Boone National Forest; thence South 32 deg. 24' 25" West, adistance of 183.42 feet to a aluminum disk found corner no. 2 of tract 1546 ofthe Daniel Boone National Forest; thence South 01 deg. 24’ 56” West, a distanceof 416.94 feet to an iron pin found (WLB 1804) corner no. 3, REFERENCE by a 14”bearing tree (S 61 E, 19.00’) and a reference monument found

 

CUNNAGIN AND CUNNAGINAttorneys at Law201 South Main StreetLondon, Kentucky40741

 

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(S 1-51 W, 47.46’); thence with lots 3, 4 North 76 deg. 05’ 06” East, adistance of 1156.49 feet to an iron pin set in the west line of said Industrialroad; thence with said road right of way for three calls: North 13 deg., 57’ 31”West, a distance of 132.99 feet to an iron pin set at the BEGINNING of a curvetangent to said line; thence northernly and northwesterly a distance of 374.80feet along the curve concave to the west, having a radius of 1970.00 feet and acentral angle of 10 deg. 54’ 03” and a chord bearing and distance of N 19 24’32” W, 374.24 feet to an iron pin set; thence North 24 deg. 51’ 33” Westtangent to said curve, a distance of 23.70 feet to the point of BEGINNING.Containing 12.893 acres, more or less, by a survey conducted under thedirection of Walter L. Bowman R.L.S. 1804, with Mayes, Sudderth &Etheredge, Inc., on August 21, 1998.

 

Being subject to all easements, right of ways of record and inexistence and first restatement and modification of protective covenantsadopted by the London-Laurel County Industrial Development Authority as shownin Misc Book 27, Pg. 83, dated 9/24/1997.

 

BEING A PART of the same land acquired byLondon-Laurel County Industrial Development Authority from Edith Broughton, awidow, by deed dated the 25th day of July, 1995, and of record in Deed Book No.447, at Page 582, records of the Laurel County Court Clerk’s Office, London,Kentucky.

 

TO HAVE AND TO HOLD the same, together with all the appurtenancesthereunto belonging unto the Party of the Second Part, its successors andassigns, forever, with covenants of General Warranty.

 

IN TESTIMONY WHEREOF, the Party of the First Part has hereuntosubscribed its name as of the date first above written.

 
|   | London-Laurel  County Industrial |
|--------|----------------------------------|
|   | Development  Authority, Grantee  |
|   |                             |
|   | BY:                              | /s/  Don Rogers |   |
|   |                             | CHAIRMAN |   |
|   |                             |
|   | BY:                              | /s/  Charles Pennington |   |
|   |                             | SECRETARY |   |
|        |                                  |  |  |  |

 

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| COMMONWEALTH OF KENTUCKY | ) |
|--------------------------|---|
| COUNTY OF LAUREL         | ) |

 

The foregoing Deed was subscribed, sworn toand acknowledged before me this 9th day of September, 1998, byLondon-Laurel County Industrial Development Authority, Grantor, by Don Rogers,its Chairman, and by Charles Pennington, its Secretary to be its free act anddeed.

 
|   | /s/ [ILLEGIBLE]                   |     |
|--------|-----------------------------------|----------|
|   | NOTARY PUBLIC, STATE AT LARGE, KY |
|   | MY COMMISSION EXPIRES:            | 2/5/2002 |   |
|        |                                   |          |  |  |

 

CONSIDERATIONCERTIFICATE

 

We, the undersigned, hereby certify thatthe consideration reflected in this deed is the full consideration paid for theproperty.

 
|   | London-Laurel  County Industrial |
|--------|----------------------------------|
|   | Development  Authority, Grantor  |
|   |                             |
|   | BY:                              | /s/  Don Rogers |   |
|   |                             | CHAIRMAN |   |
|   |                             |
|   | BY:                              | /s/  Charles Pennington |   |
|   |                             | SECRETARY |   |
|   |                             |
|   | IMAGE ENTRY, INC.,               |
|   | a Kentucky Corporation,          |
|   | Grantee                          |
|   |                             |
|   | BY:                              | /s/ Bill  D. Deaton |   |
|   |                             | AUTHORIZED AGENT |   |
|        |                                  |  |  |  |

 
| COMMONWEALTH OF KENTUCKY | ) |
|--------------------------|---|
| COUNTY OF LAUREL         | ) |

 

The foregoing Consideration Certificate wassubscribed, sworn to and acknowledged before me this 9th day ofSeptember, 1998, by London-Laurel County Industrial Development Authority,Grantor, by Don Rogers, its Chairman and Charles Pennington, its Secretary, tobe its free act and deed.

 
|   | /s/ [ILLEGIBLE]                   |     |
|--------|-----------------------------------|----------|
|   | NOTARY PUBLIC, STATE AT LARGE, KY |
|   | MY COMMISSION EXPIRES:            | 2/5/2002 |   |
|        |                                   |          |  |  |

 

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| STATE OF KENTUCKY | ) |
|-------------------|---|
| COUNTY OF LAUREL  | ) |

 

The foregoing Consideration Certificate wassubscribed, sworn to and acknowledged before me this 11th day ofSeptember, 1998, by IMAGE ENTRY, INC., a Kentucky Corporation, Grantee by BillD. Deaton, its authorized agent, to be the free act and deed of saidcorporation.

 
|   | /s/ Cheryl A. Hubbard             |    |
|--------|-----------------------------------|---------|
|   | NOTARY PUBLIC, STATE AT LARGE, KY |
|   | MY COMMISSION EXPIRES:            | 8/31/99 |   |
|        |                                   |         |  |  |

 

THE FOREGOING INSTRUMENT WAS PREPARED INTHE LAW OFFICES OF CUNNAGIN AND CUNNAGIN, 201 SOUTH MAIN STREET, P.O. BOX 1070,LONDON, KENTUCKY,

 
|   | BY:    | /s/ WILLIS  C. CUNNAGIN |   |
|--------|--------|-------------------------|--------|
|   |   | WILLIS C. CUNNAGIN      |   |

 

State ofKentucky, County of Laurel, Sct, I, DEAN JOHNSON, Clerk of the Laurel CountyCourt, do certify that the foregoing deed was, on the 14 day of Sept 1998, at3:04 PM., lodged in my office for record, and that it has been duly recorded inmy said office, together with this and the certificate thereon endorsed.

 

Given under my hand this 14 day of Sept.1998. Deed Book 486 Page 602 Clerk Dean Johnson [ILLEGIBLE] D.C.

 

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