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On or after November 1, 2004, four class action complaints were filed against SOURCECORP and certain officers and executives of the company, alleging violations of federal securities laws. The claims against SOURCECORP and certain executives were subsequently dismissed, leaving Bill D. Deaton as the only remaining defendant. Please refer to the Notice for additional details regarding the history of this class action.

Defendant Denton denies any wrongdoing. The Proposed Settlement is neither an admission of wrongdoing nor an acknowledgement that any law was violated. Instead, the Parties entered into this settlement agreement to avoid further expense, inconvenience, and uncertainty associated with a court trial.

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Plaintiffs believe that the claims asserted in the litigation have merit and that the evidence developed to date supports the claims. However, plaintiffs and counsel for plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the litigation against Deaton through trial and appeals. Plaintiffs and Lead Counsel also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as this litigation, as well as the difficulties and delays inherent in such litigation. Plaintiffs and Lead Counsel also are mindful of the inherent problems of proof and possible defenses to the claims asserted in the litigation and the fact that there exists a possibility that the Class could receive nothing, or less than the settlement amount, even if they were to prevail at trial. Therefore, plaintiffs and counsel for plaintiffs believe that the Proposed Settlement is fair, reasonable, and confers substantial benefits upon the Class.

Deaton maintains that he has meritorious defenses to each and all of the claims and contentions made by plaintiffs in the litigation. Nonetheless, Deaton has concluded that further litigation would be protracted, burdensome, and expensive. Deaton also has taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like this litigation. Deaton has, therefore, determined that it is desirable and beneficial to him that the litigation be settled.

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Deaton has paid or caused to be paid into an escrow account, pursuant to the terms of the Proposed Settlement, cash in the amount of $3.0 million which has been earning and will continue to earn interest for the benefit of the Class.

A portion of the settlement proceeds will be used for certain administrative expenses, including costs of printing and mailing the Notice, the cost of publishing a newspaper notice, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to Lead Counsel as attorneys’ fees and expenses. The balance of the Settlement Fund (the “Net Settlement Fund”) will be distributed according to the Plan of Allocation described in the Notice to Class Members who submit valid and timely Proof of Claim and Release Forms.

For a copy of the Proof of Claim and Release Form, please click here.

If you fall within the definition of the Class, you will be bound by any judgment entered with respect to the settlement in the litigation and any release of your claims pursuant thereto, whether or not you file a Proof of Claim and Release Form. In addition, if you are a member of the Class, you will automatically be represented by Lead Counsel. If you choose, however, you may enter an appearance individually or through your own counsel at your own expense.

TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOMPANIES THIS NOTICE.

The Proof of Claim and Release Form must be postmarked on or before July 20, 2009, and delivered to the Claims Administrator at the address below. Unless the Court orders otherwise, if you do not timely submit a valid Proof of Claim and Release Form, you will be barred from receiving any payments from the Net Settlement Fund, but will in all other respects be bound by the provisions of the Proposed Settlement and the Judgment, including the release of claims.

Please refer to the Notice of Pendency and Proposed Settlement of Class Action for more details regarding your rights.

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The Court appointed the following attorneys as “Lead Counsel” to represent all Class Members:

Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W.
Suite 500, West Tower
Washington, D.C. 20005

(202) 408-4600

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A Settlement Hearing will be held on July 23, 2009, at 9:00 a.m., before the Honorable David C. Godbey, United States District Judge, at the United States Courthouse, 1100 Commerce Street, Dallas, Texas 75242-1003.

No, you are not required to attend the Settlement Hearing. Lead Counsel will attend and present on behalf of all potential Class Members.

However, if you remain a Class Member, and object to any aspect of the settlement, the Plan of Allocation, or the application for attorneys’ fees and expenses, you may appear and be heard at the Settlement Hearing.

Any person wishing to appear and address the Court must submit a written notice of objection to the Court, Lead Counsel, and Defense Counsel. Written notice must be received on or before June 23, 2009.

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If you have any questions about the settlement or the litigation, you may contact Lead Counsel:

Herbert E. Milstein
Cohen, Milstein, Sellers & Toll, P.L.L.C.
1100 New York Avenue, N.W.
Suite 500, West Tower
Washington, D.C. 20005

Or you can contact the Claims Administrator by phone at 1-866-314-5812.