FYI INC, 8-K, 1996-09-09

FYI INC
8-K, 1996-09-09
MANAGEMENT SERVICES

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): August 30, 1996

F.Y.I. INCORPORATED
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

Delaware 0-27444 75-2560895
- --------------- --------------------- ----------------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)

3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)

(214) 953-7555
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets.

CMRS Acquisition

On August 30, 1996, California Medical Record Service Acquisition Corp.
("California Acquisition Corp."), a wholly-owned subsidiary of F.Y.I.
Incorporated (the "Company"), acquired by merger C.M.R.S. Incorporated ("CMRS")
pursuant to an Agreement and Plan of Reorganization (the "California
Agreement"), by and among California Acquisition Corp., the Company and Alan
Simon (the "California Shareholder") (such acquisition is referred to herein as
the "California Acquisition"). California Acquisition Corp. provides medical
records release services in and around Los Angeles, California.

The aggregate consideration paid by the Company as a result of the California
Acquisition was determined pursuant to arm's length negotiations and consisted
of 53,450 shares of common stock, par value $.01 per share ("Common Stock"), and
$898,685 in cash for CMRS. Of such amount, an amount equal to 2,914 shares of
Common Stock and $49,005 in cash will be retained by the Company for a period
of 90 days from the date of closing as security and as an offset for any breach
of the California Agreement by CMRS or the California Shareholder. The Common
Stock issued in the California Acquisition is contractually restricted as to
resale for two years. The Company may make an additional lump-sum, cash and
stock earnout payment in September 1997 to the California Shareholder, up to a
maximum earnout amount of $2,500,000.

The primary source of the cash portion of the purchase price used in the
California Acquisition was provided from the Company's line of credit with
Banque Paribas.

Texas Medical Acquisition

On August 30, 1996, Texas Medical Record Service Acquisition Corp. ("Texas
Acquisition Corp."), a wholly-owned subsidiary of the Company, acquired by
merger Texas Medical Record Service, Inc. ("Texas Medical") pursuant to an
Agreement and Plan of Reorganization ("Texas Agreement"), by and among Texas
Acquisition Corp., the Company, Texas Medical Record and Karen Jill Simon and
California Acquisition Corp. (the "Texas Stockholders") (such acquisition is
referred to herein as the "Texas Acquisition"). Texas Acquisition Corp.
provides medical records release services in and around Houston, Texas.

The aggregate consideration paid by the Company as a result of the Texas
Acquisition was determined pursuant to arm's length negotiations and consisted
of 56,135 shares of Common Stock (of which 36,670 shares of Common Stock were
issued to California Acquisition Corp.) and $327,292 in cash for Texas
Medical. Of such amount, an amount equal to 1,457 shares of Common Stock and
$24,502 in cash will be retained by the Company for a period of 90 days from
the date of closing as security and as an offset for any breach of the Texas
Agreement by Texas Medical or the Texas Stockholders. The
<PAGE> 3
Common Stock issued in the Texas Acquisition is contractually restricted as to
resale for two years.

The primary source of the cash portion of the purchase price used in the Texas
Acquisition was provided from the Company's line of credit with Banque Paribas.

Minnesota Medical Acquisition

On August 30, 1996, Minnesota Medical Record Service Acquisition Corp.
("Minnesota Acquisition Corp."), a wholly-owned subsidiary of the Company,
acquired by merger Minnesota Medical Record Service, Inc. ("Minnesota Medical")
pursuant to an Agreement and Plan of Reorganization, (the "Minnesota Agreement")
by and among Minnesota Acquisition Corp., the Company, Minnesota Medical Record
and Alan Simon (the "Minnesota Stockholder") (such acquisition is referred to
herein as the "Minnesota Acquisition"). Minnesota provides medical records
release services in and around Minneapolis, Minnesota.

The aggregate consideration paid by the Company as a result of the Minnesota
Acquisition was determined pursuant to arm's length negotiations and consisted
of 105,136 shares of Common Stock and $1,081,450 in cash for Minnesota
Medical. Of such amount, an amount equal to 7,286 shares of Common Stock and
$122,495 in cash will be retained by the Company for a period of 90 days from
the date of closing as security and as an offset for any breach of the
Minnesota Agreement by Minnesota Medical or the Minnesota Stockholder. The
Common Stock issued in the Minnesota Acquisition is contractually restricted as
to resale for two years, except 20,000 shares of Common Stock is restricted as
to resale for six months.

The primary source of the cash portion of the purchase price used in the
Minnesota Acquisition was provided from the Company's line of credit with
Banque Paribas.

CMRS, Texas Medical and Minnesota Medical were affiliated companies.

The description of the foregoing acquisition agreements are qualified in their
entirety by reference to the copy of such agreements filed as exhibits to this
Form 8-K.

The Company is not aware of any material relationship that existed prior to
the Texas Acquisition, the California Acquisition, the Minnesota Acquisition
(collectively referred to as the "New Acquisitions") between the Company and its
officers and directors, on the one hand and the New Acquisitions and their
stockholders, on the other hand.

The assets acquired as a result of the New Acquisitions include accounts
receivables, inventory, equipment
<PAGE> 4
and other real and personal property. The Company intends to use these assets
in order to provide document management services, including medical records
release services.

ITEM 5. Other Events

Probable Acquisition

As of August 30, 1996, ZIA Acquisition Corp. ("ZIA Acquisition Corp."), a
wholly-owned subsidiary of the Company, entered into a definitive agreement to
acquire by merger ZIA Information Analysis Group ("ZIA Information") pursuant to
an Agreement and Plan of Reorganization, (the "ZIA Agreement") by and among the
Company, ZIA Acquisition Corp., ZIA Information and David L. Delgado, Rebecca D.
Homan and Christopher R. Yowell (the "ZIA Shareholders") (such pending
acquisition is referred to herein as the "ZIA Acquisition"). ZIA provides
litigation consulting services in California. The acquisition of ZIA is
subject to customary closing conditions and there can be no assurance that such
acquisition will be made.

The aggregate consideration to be paid by the Company as a result of the ZIA
Acquisition was determined pursuant to arm's length negotiations and consists
of 154,286 shares of Common Stock and $2,300,000 in cash for ZIA Information.
Of such amount, an amount equal to 12,343 shares of Common Stock and $183,997.49
in cash will be held in escrow as security and as an offset for any breach of
the ZIA Agreement by ZIA Information or the ZIA Shareholders. The Common Stock
to be issued in the ZIA Acquisition will be contractually restricted as to
resale for two years.

The primary source of the cash portion of the purchase price to be used in the
ZIA Acquisition will be provided from the Company's line of credit with Banque
Paribas.

The description of the foregoing agreement is qualified in its entirety by
reference to the copy of such agreement filed as an exhibit to this Form 8-K.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements. See Index to Financial Statements and
the accompanying financial statements that form a part of this
Form 8-K.

(b) Pro Forma Financial Information. See Index to Financial
Statements and the accompanying financial statements that form
a part of this Form 8-K.
<PAGE> 5
(c) Exhibits

2.11 Agreement and Plan of Reorganization, dated as of May
31, 1996, by and among F.Y.I. Incorporated, B&B
(Baltimore-Washington) Acquisition Corp., B&B
Information and Image Management, Inc. and Charles J.
Bauer, Jr. (Exhibit 10.17 of the Registrant's
Registration Statement on Amendment No. 2 to the
Form S-1 (Registration No. 333-1084) is hereby
incorporated by reference)

2.12 Agreement and Plan of Reorganization, dated as of May
31, 1996, by and among F.Y.I. Incorporated, Premier
Acquisition Corp., Premier Document Management, Inc.,
PDM Services, Inc., Brian E. Whiteside, Christopher
S. Moore, Lynnette C. Pomerville and Gary T. Sievert.
(Exhibit 10.18 of the Registrant's Registration
Statement on Amendment No. 2 to the Form S-1
(Registration No. 333-1084) is hereby incorporated
by reference)

2.13 Asset Purchase Agreement, dated as of June 28, 1996,
by and among F.Y.I. Incorporated, Robert A. Cook
Acquisition Corp., Robert A. Cook and Staff, Inc. and
RAC Services, Inc., Robert A. Cook and Robert A.
Cook and Anna M. Cook, as Co-Trustees of the Cook
1993 Living Trust. (Exhibit 10.19 of the Registrant's
Registration Statement on Amendment No. 2 to the
Form S-1 (Registration No.333-1084) is hereby
incorporated by reference)

2.14 Agreement and Plan of Reorganization, dated as of
August 30, 1996, by and among F.Y.I. Incorporated,
California Medical Record Service Acquisition Corp.,
C.M.R.S. Incorporated and Alan Simon

2.15 Agreement and Plan of Reorganization, dated as of
August 30, 1996, by and among F.Y.I. Incorporated,
Texas Medical Record Service Acquisition Corp., Texas
Medical Record Service, Inc., California Medical
Record Service Acquisition Corp. and Karen Jill Simon

2.16 Agreement and Plan of Reorganization, dated as of
August 30, 1996, by and among F.Y.I. Incorporated,
Minnesota Medical Record Service Acquisition Corp.,
Minnesota Medical Record Service, Inc. and Alan Simon

2.17 Agreement and Plan of Reorganization, dated as of
August 30, 1996, by and among F.Y.I. Incorporated,
ZIA Acquisition Corp., ZIA Information Analysis
Group and the Shareholders named therein

10.23 Employment Agreement between F.Y.I. Incorporated and
Timothy J. Barker

21.1 List of Subsidiaries

23.1 Consent of Arthur Andersen LLP
<PAGE> 6
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NEW ACQUISITIONS

C.M.R.S. INCORPORATED
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Shareholder's Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
MINNESOTA MEDICAL RECORD SERVICE, INC.
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13
Statements of Stockholder's Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-15
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-16
TEXAS MEDICAL RECORD SERVICE, INC.
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-22
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-23
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-24
ZIA INFORMATION ANALYSIS GROUP
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-28
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-30
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-31
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-32

PRO FORMA FINANCIAL STATEMENTS

F.Y.I. INCORPORATED AND SUBSIDIARIES
Pro Forma Balance Sheet -- June 30, 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . F-37
Pro Forma Statement of Operations for the Year Ended December 31, 1995
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-38
Pro Forma Statement of Operations for the Six Months Ended June 30, 1996
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-39
Notes to Pro Forma Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . F-40
</TABLE>

F-1
<PAGE> 7
SIGNATURE

Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.

Dated: September 9, 1996

F.Y.I. INCORPORATED

By: /s/ ED H. BOWMAN, JR.
-------------------------------------
Ed H. Bowman, Jr.
President and Chief Executive Officer
<PAGE> 8
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
2.11 Agreement and Plan of Reorganization, dated as of May 31,
1996, by and among F.Y.I. Incorporated, B&B
(Baltimore-Washington) Acquisition Corp., B&B Information and
Image Management, Inc. and Charles J. Bauer, Jr. (Exhibit
10.17 of the Registrant's Registration Statement on Amendment
No. 2 to the Form S-1 (Registration No. 333-1084) is hereby
incorporated by reference)

2.12 Agreement and Plan of Reorganization, dated as of May 31,
1996, by and among F.Y.I. Incorporated, Premier Acquisition
Corp., Premier Document Management, Inc., PDM Services, Inc.,
Brian E. Whiteside, Christopher S. Moore, Lynnette C.
Pomerville and Gary T. Sievert. (Exhibit 10.18 of the
Registrant's Registration Statement on Amendment No. 2 to the
Form S-1 (Registration No. 333-1084) is hereby incorporated
by reference)

2.13 Asset Purchase Agreement, dated as of June 28, 1996, by and
among F.Y.I. Incorporated, Robert A. Cook Acquisition Corp.,
Robert A. Cook and Staff, Inc. and RAC Services, Inc., Robert
A. Cook and Robert A. Cook and Anna M. Cook, as Co-Trustees of
the Cook 1993 Living Trust. (Exhibit 10.19 of the
Registrant's Registration Statement on Amendment No. 2 to the
Form S-1 (Registration No. 333-1084) is hereby incorporated
by reference)

2.14 Agreement and Plan of Reorganization, dated as of August 30,
1996, by and among F.Y.I. Incorporated, California Medical
Record Service Acquisition Corp., C.M.R.S. Incorporated and
Alan Simon

2.15 Agreement and Plan of Reorganization, dated as of August 30,
1996, by and among F.Y.I. Incorporated, Texas Medical Record
Service Acquisition Corp., Texas Medical Record Service, Inc.,
California Medical Record Service Acquisition Corp. and Karen
Jill Simon

2.16 Agreement and Plan of Reorganization, dated as of August 30,
1996, by and among F.Y.I. Incorporated, Minnesota Medical
Record Service Acquisition Corp., Minnesota Medical Record
Service, Inc. and Alan Simon

2.17 Agreement and Plan of Reorganization, dated as of August 30,
1996, by and among F.Y.I. Incorporated, ZIA Acquisition Corp.,
ZIA Information Analysis Group and the Shareholders named
therein

10.23 Employment Agreement between F.Y.I. Incorporated and Timothy
J. Barker

21.1 List of Subsidiaries

23.1 Consent of Arthur Andersen LLP

</TABLE>

<PAGE> 1

Exhibit 2.14

--------------------------------------

AGREEMENT AND PLAN OF REORGANIZATION

dated as of the 30th day of August, 1996

by and among

F.Y.I. INCORPORATED

CALIFORNIA MEDICAL RECORD SERVICE ACQUISITION CORP.

C.M.R.S. INCORPORATED

and

THE STOCKHOLDER named herein

--------------------------------------

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
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<S> <C> <C>
1. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Delivery and Filing of Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Certificate of Incorporation, By-laws and Board of
Directors of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certain Information With Respect to the Capital
Stock of the Company, FYI and Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. CONVERSION OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Manner of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Calculation of FYI Shares for the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Earnings Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. DELIVERY OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Delivery Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

-i-
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<TABLE>
<S> <C> <C>
5.20 Employees; Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.22 Interests in Customers, Suppliers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.23 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.24 Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.25 Bank Accounts and Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.26 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(B) Representations and Warranties of the Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.27 Authority; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.28 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.29 No Intention to Dispose of FYI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.30 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.31 No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

6. REPRESENTATIONS OF FYI AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 FYI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Capitalization of FYI and Ownership of FYI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Transactions in Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Business; Real Property; Material Agreements;
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Conformity with Law and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
STOCKHOLDER AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Representations and Warranties; Performance of Obligations . . . . . . . . . . . . . . . . . . . . . 26
7.2 Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.7 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.8 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

8. CONDITIONS PRECEDENT TO OBLIGATIONS OF FYI AND
NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Representations and Warranties; Performance of Obligations . . . . . . . . . . . . . . . . . . . . . 27
8.2 Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>

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<PAGE> 4

<TABLE>
<S> <C> <C>
8.4 Repayment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 Stockholder Release; Related Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Lock-Up Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

9. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 [Intentionally Left Blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Preservation of Tax and Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.4 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 FYI Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Employee Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Stockholder Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Indemnification for Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.6 Notice of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7 Right to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.9 Satisfaction of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.10 Limitations of Indemnification; Proportionate Payments . . . . . . . . . . . . . . . . . . . . . . . 34
10.11 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

11. SECURITIES ACT REPRESENTATIONS AND TRANSFER
RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2 Economic Risk; Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

12. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Survival of Covenants, Agreements, Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.6 Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.10 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>

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<PAGE> 5

<TABLE>
<S> <C> <C>
12.11 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.12 Reformation and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.15 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>

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<PAGE> 6
SCHEDULES AND ANNEXES

SCHEDULES
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1.1 Articles of Merger and Plan and Agreement of Merger
1.3(d) Officers of the Surviving Corporation
5.2 Company Charter Documents
5.3 Capital Stock
5.5 Financial Statements and Contingent Liabilities
5.6 Accounts and Notes Receivable
5.7 Permits and Licenses
5.8 Taxes
5.9 Assets and Properties
5.10 Real Property Leases
5.11 Environmental Matters
5.12 Contracts
5.16 Litigation
5.18 Intellectual Property Rights
5.19 Employee Benefit Plans
5.20 Employee Matters
5.21 Insurance
5.23 Business Relations
5.24 Officers and Directors
5.25 Bank Accounts
5.26 Absence of Certain Changes
5.27 Liens on Stock
6.6 FYI Capital Stock
6.8 FYI Subsidiaries
6.9 FYI Financial Information
6.10 FYI Compliance with Laws
6.11 No Violations by FYI
8.6 Continuing Obligations
8.7 Continuing Related Party Agreements
9.4 Optionees

ANNEXES
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I Stockholder of the Company
II Aggregate Consideration to be paid to the Stockholder
III FYI Charter Documents
IV Opinion of Counsel to FYI and Newco
V Employment Agreement
VI Opinion of Counsel to the Company
VII Noncompetition Agreement
VIII Lock-Up Agreement
IX Subordination Agreement

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<PAGE> 7
AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of the 30th day of August, 1996, by and among F.Y.I. INCORPORATED, a
Delaware corporation ("FYI"), CALIFORNIA MEDICAL RECORD SERVICE ACQUISITION
CORP., a Delaware corporation ("Newco"), C.M.R.S. INCORPORATED, a California
corporation (the "Company"), and ALAN D. SIMON, holding shares in the Company
in the amount set forth on Annex I (the "Stockholder") and constituting the
sole stockholder of the Company.

WHEREAS, Newco is a corporation duly organized and existing under the
laws of the State of Delaware, having been incorporated on August 20, 1996,
solely for the purpose of completing the transactions set forth herein, and is
a wholly-owned subsidiary of FYI, a corporation organized and existing under
the laws of the State of Delaware;

WHEREAS, the respective Boards of Directors of Newco and the Company
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the Constituent
Corporations and their respective stockholders that the Company merge with and
into Newco pursuant to this Agreement and the applicable provisions of the laws
of the State of Delaware, such transaction sometimes being herein called the
"Merger";

WHEREAS, the Boards of Directors of FYI, Newco and the Company have
approved and adopted this Agreement and intend the transactions with respect to
the Company to qualify as partially tax-free transfers of property under
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code");

NOW, THEREFORE, for and in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and covenants herein
contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:

1. THE MERGER

1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause Articles of Merger with respect to the Merger (the
"Articles of Merger") to be signed, verified and delivered to the Secretary of
State of the State of Delaware and, if required, a similar filing to be made
with the relevant authorities in the State of California, on or before the
Closing Date (as defined in Section 4). The Articles of Merger and related
Plan and Agreement of Merger are attached hereto as Schedule 1.1.

1.2 EFFECTIVE TIME OF THE MERGER. The "Effective Time of the
Merger" shall be the Closing Date as defined in Section 4. At the Effective
Time of the Merger, the Company shall be merged with and into Newco, in
accordance with the Articles of Merger, the separate existence of the Company
shall cease and the corporate name of Newco shall be California Medical Record
Service Acquisition Corp. Newco shall be the surviving party in
<PAGE> 8
the Merger and is hereinafter sometimes referred to as the "Surviving
Corporation." The Merger will be effected in a single transaction.

1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS
OF SURVIVING CORPORATION. At the Effective Time of the Merger:

(a) The Certificate of Incorporation of Newco then in
effect shall become the Certificate of Incorporation of the Surviving
Corporation; and subsequent to the Effective Time of the Merger, such
Certificate of Incorporation shall be the Certificate of Incorporation
of the Surviving Corporation until changed as provided by law.

(b) The By-laws of Newco then in effect shall become the
By-laws of the Surviving Corporation; and subsequent to the Effective
Time of the Merger, such By-laws shall be the By-laws of the Surviving
Corporation until they shall thereafter be duly amended.

Ed H. Bowman, Jr.
Thomas C. Walker
David Lowenstein

The Board of Directors of the Surviving Corporation shall hold office
subject to the provisions of the laws of the State of Delaware and of
the Certificate of Incorporation and By-laws of the Surviving
Corporation.

(d) The officers of the Surviving Corporation shall be
the persons set forth on Schedule 1.3(d) hereto, each of such officers
to serve, subject to the provisions of the Certificate of
Incorporation and By-laws of the Surviving Corporation and the terms
of any employment agreement executed by any such officer, until such
officer's successor is duly elected and qualified.

1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANY, FYI AND NEWCO. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of the
Company, FYI and Newco as of the date of this Agreement are as follows:

(a) As of the date of this Agreement, the authorized
capital stock of the Company consists of one hundred thousand
(100,000) shares of Common Stock, no par value per share (the "Company
Stock"), of which one thousand (1,000) shares are issued and
outstanding and held by the Stockholder;

(b) As of the date of this Agreement, the authorized
capital stock of FYI consists of twenty-six million (26,000,000)
shares of Common Stock, $.01 par value

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<PAGE> 9
per share ("FYI Stock"), of which five million five hundred
twenty-three thousand one hundred forty-seven (5,523,147) shares were
issued and outstanding at July 31, 1996, and one million (1,000,000)
shares of Preferred Stock, $.01 par value per share, of which no shares
are issued and outstanding; and

(c) As of the date of this Agreement, the authorized
capital stock of Newco consists of 3,000 shares of Common Stock, $.01
par value per share ("Newco Stock"), of which ten (10) shares are
issued and outstanding.

1.5 EFFECT OF MERGER. At the Effective Time of the Merger, the
effect of the Merger shall be as provided in the applicable provisions of the
General Corporation Law of the State of Delaware (the "Delaware GCL"). Except
as herein specifically set forth, the identity, existence, purposes, powers,
objects, franchises, privileges, rights and immunities of the Company shall
continue unaffected and unimpaired by the Merger and the corporate franchises,
existence and rights of the Company shall be merged with and into Newco, and
Newco, as the Surviving Corporation, shall be fully vested therewith. At the
Effective Time of the Merger, the separate existence of the Company shall cease
and, in accordance with the terms of this Agreement, the Surviving Corporation
shall possess all the rights, privileges, immunities and franchises, of a
public as well as of a private nature, and all property, real, personal and
mixed, and all debts due on whatever account, including subscriptions to
shares, all taxes, including those due and owing and those accrued, and all
other chooses in action, and all and every other interest of or belonging to or
due to the Company and Newco shall be taken and deemed to be transferred to,
and vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and Newco; and the title to any real
estate, or interest therein, whether by deed or otherwise, vested in the
Company and Newco, shall not revert or be in any way impaired by reason of the
Merger. The Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of the Company and Newco and any claim
existing, or action or proceeding pending, by or against the Company or Newco
may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place. Neither the rights of creditors
nor any liens upon the property of the Company or Newco shall be impaired by
the Merger, and all debts, liabilities and duties of the Company and Newco
shall attach to the Surviving Corporation, and may be enforced against such
Surviving Corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by such Surviving Corporation.

2. CONVERSION OF STOCK

2.1 MANNER OF CONVERSION. The manner of converting the shares of
(a) the Company Stock and (b) Newco Stock, issued and outstanding immediately
prior to the Effective Time of the Merger, respectively, into (i) FYI Stock and
(ii) shares of Common Stock, $.01 par value per share, of the Surviving
Corporation, shall be as follows:

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<PAGE> 10
As of the Effective Time of the Merger:

(a) All of the shares of the Company Stock issued and
outstanding immediately prior to the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of the holder
thereof, automatically shall be deemed to represent (i) that number of
shares of FYI Stock determined pursuant to Section 2.2 below and (ii)
the right to receive the amount of cash determined pursuant to Section
2.2 below, such shares and cash to be distributed to the Stockholder
as provided in Annex II hereto;

(b) All shares of the Company Stock that are held by the
Company as treasury stock (as defined in Section 5) shall be cancelled
and retired and no shares of FYI Stock or other consideration shall be
delivered or paid in exchange therefor; and

(c) Each share of Newco Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall, by virtue
of the Merger and without any action on the part of FYI, automatically
be converted into one fully paid and non-assessable share of Common
Stock of the Surviving Corporation that shall constitute all of the
issued and outstanding shares of Common Stock of the Surviving
Corporation immediately after the Effective Time of the Merger.

All FYI Stock received by the Stockholder as of the Effective Time of
the Merger shall, except for restrictions on resale or transfer described in
Section 11.1 hereof, have the same rights as all of the other shares of
outstanding FYI Stock and shall be registered under the 1933 Act (as
hereinafter defined). All voting rights of such FYI Stock received by the
Stockholder shall be fully exercisable by the Stockholder and the Stockholder
shall not be deprived nor restricted in exercising those rights. At the
Effective Time of the Merger, FYI shall have no class of capital stock issued
and outstanding which, as a class, shall have any rights or preferences senior
to the shares of FYI Stock received by the Stockholder, including, without
limitation, any rights or preferences as to dividends or as to the assets of
FYI upon liquidation or dissolution or as to voting rights.

2.3 EARNINGS ADJUSTMENT. All net earnings and net cash flow of
the Company for the period from July 31, 1996 (the "Effective Date") through
the Effective Time of the Merger shall be for the benefit of Newco and shall be
conveyed to Newco at the Closing pursuant to the Merger of the Company into
Newco.

3. DELIVERY OF SHARES

3.1 DELIVERY PROCEDURE. At or after the Effective Time of the
Merger and at the Closing:

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<PAGE> 11
(a) The Stockholder, as the holder of all outstanding
certificates representing shares of the Company Stock, shall, upon
surrender of such certificates, be entitled to receive the number of
shares of FYI Stock and the amount of cash calculated pursuant to
Section 2.2 above less the sum of $49,005.00 in cash and 2,914 shares
of FYI Stock to be retained by FYI for a period of ninety (90) days
from the date of the Closing as security and as an offset for any
breach of the representations, warranties, covenants and agreements of
the Company and the Stockholder, and for the Stockholder's
indemnification obligations, in the manner and to the extent set forth
herein; and

(b) Until the certificates representing the Company Stock
have been surrendered by the Stockholder and replaced by the FYI
Stock, the certificates for the Company Stock shall, for all corporate
purposes be deemed to evidence the ownership of the number of shares
of FYI Stock and/or cash that such Stockholder is entitled to receive
as a result of the Merger, as set forth in Section 2.2 above,
notwithstanding the number of shares of the Company such certificates
represent.

4. CLOSING

On the Closing Date (as defined below), the parties shall take all
actions necessary (i) to effect the Merger (including, if permitted by
applicable state law, the filing with the appropriate state authorities of the
Articles of Merger) and (ii) to effect the conversion and delivery of shares
referred to in Section 3 hereof (hereinafter referred to as the "Closing").
The Closing shall take place at the offices of Locke Purnell Rain Harrell (A
Professional Corporation), 2200 Ross Avenue, Suite 2200, Dallas, Texas 75201.
The date on which the Closing shall occur shall be referred to as the "Closing
Date." On the Closing Date, the Articles of Merger shall be filed with the
appropriate state authorities, or if already filed shall become effective, and
all transactions contemplated by this Agreement, including the conversion and
delivery of shares, the delivery by wire transfers or by certified checks (at
the option of the Stockholder) in amounts equal to the aggregate cash portion
of the consideration that the Stockholder shall be entitled to receive pursuant
to the Merger referred to in Section 2 hereof, shall occur and be deemed to be
completed. Time is of the essence.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER

(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDER

Each of the Company and the Stockholder, jointly and severally,
represent and warrant that all of the following representations and warranties
with respect to the Company and its business and operations set forth in this
Section 5(A) are true and correct at the time of the Closing.

5.1 AUTHORIZATION. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of
each such party, enforceable

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<PAGE> 12
in accordance with its terms, except that (i) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief are subject to certain equitable defenses and to the
discretion of the court before which any proceedings may be brought and (iii)
rights to indemnification hereunder may be limited under applicable securities
laws. The Company has full corporate power, capacity and authority to execute
this Agreement and the Articles of Merger and all other agreements and
documents contemplated hereby.

5.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF THE COMPANY. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation with all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. The Company is not qualified or licensed
as a foreign corporation in any other jurisdiction and the character or
location of the property owned, leased or operated by it or the nature of the
business conducted by it does not make such qualification necessary, except
where the failure to be so duly qualified or licensed would not have a material
adverse effect on the business, financial condition or results of operations of
the Company. True, complete and correct copies of the Articles of
Incorporation of the Company certified by the Secretary of State of the
applicable state of incorporation as of the date not more than twenty (20) days
prior to the Closing and of the By-laws of the Company are all attached hereto
on Schedule 5.2. Except as set forth on Schedule 5.2 the minute books of the
Company, as heretofore made available to FYI, are correct and complete in all
material respects.

5.3 CAPITAL STOCK OF THE COMPANY.

(a) The Company's authorized capital stock is as set
forth in Section 1.4(a) or (b), as applicable. All of the Company
Stock has been validly issued and is fully paid and nonassessable and
no holder thereof is entitled to any preemptive rights. There are no
outstanding conversion or exchange rights, subscriptions, options,
warrants or other arrangements or commitments obligating the Company
to issue any shares of capital stock or other securities or to
purchase, redeem or otherwise acquire any shares of capital stock or
other securities, or to pay any dividend or make any distribution in
respect thereof, except as set forth on Schedule 5.3.

(b) The Stockholder (i) owns of record and beneficially
(subject to the community property interest of the Stockholder's
spouse) and has good and marketable title to all of the issued and
outstanding shares of the Company Stock, free and clear of any and all
liens, mortgages, security interests, encumbrances, pledges, charges,
adverse claims, options, rights or restrictions of any character
whatsoever other than standard state and federal securities law
private offering legends and restrictions or arising under any
buy-sell or stockholders' or similar agreement existing and to which
the Stockholder is a party (each of which shall be terminated on or
before the Closing) (collectively, "Liens"), and (ii) has the right to
vote the Company Stock on any matters as to which any shares of the
Company Common Stock are entitled to be voted under the laws of the
state of incorporation

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<PAGE> 13
of the Company and the Company's Articles of Incorporation and
By-laws, free of any right of any other person.

5.4 SUBSIDIARIES. The Company does not presently own, of record
or beneficially, or control directly or indirectly, any capital stock,
securities convertible into capital stock or any other equity interest in any
corporation, association or business entity nor is the Company, directly or
indirectly, a participant in any joint venture, partnership or other
non-corporate entity.

5.5 FINANCIAL STATEMENTS.

(a) The Company has previously furnished to FYI and Newco
the reviewed balance sheet of the Company as of December 31, 1995 and
the related statements of operations, stockholder's equity and cash
flows for the three fiscal years then ended, as reviewed by Richard
Gralitzer & Company, certified public accountants, together with
management's statements of operations and stockholder's equity for the
seven-month period ended July 31, 1996 ("Gralitzer Financial
Statements"). The Company has furnished to FYI the audited balance
sheet of the Company as of July 31, 1996 and the related statements of
operations, stockholder's equity and cash flows for the fiscal year
then ended, as reviewed by Arthur Andersen LLP, independent public
accountants (the "AA Financial Statements," and together with the
Gralitzer Financial Statements, the "Financial Statements"). The
Gralitzer Financial Statements and, to the best knowledge of the
Company and the Stockholder, the AA Financial Statements present
fairly the financial position and results of operations of the Company
as of the indicated dates and for the indicated periods and have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"). The Company has previously permitted
FYI and Newco full access to papers pertaining to the Financial
Statements, including those work papers in the possession of or
prepared by Richard Gralitzer & Company and Arthur Andersen LLP.

(b) Except to the extent (and not in excess of the
amounts) reflected in the December 31, 1995 balance sheet included in
the Financial Statements or as disclosed on Schedule 5.5 or any other
schedule attached hereto, the Company has no liabilities or
obligations (including, without limitation, Taxes (as defined in
Section 5.8)) required to be reflected in the Financial Statements (or
the notes thereto) in accordance with GAAP other than current
liabilities incurred in the ordinary course of business, consistent
with past practice, subsequent to December 31, 1995, or liabilities
arising under any Contract listed on Schedule 5.12 hereto or which are
not required to be listed on such schedule because of their
immateriality.

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<PAGE> 14
receivable through July 31, 1996 showing amounts due in 30-day aging
categories. Except to the extent reflected on Schedule 5.6, all such accounts
and notes are legal, valid and binding obligations of the obligors collectible
in the amount shown on Schedule 5.6, net of reserves reflected in such balance
sheet.

5.7 PERMITS AND INTANGIBLES. The Company holds all licenses,
franchises, permits and other governmental authorizations, including permits,
titles (including motor vehicle titles and current registrations), licenses,
franchises, certificates, trademarks, trade names and copyrights owned or held
by the Company, the absence of any of which would have a material adverse
effect on the business, operations, properties, assets or condition (financial
or otherwise) of the Company taken as a whole (a "Material Adverse Effect").
The Company has delivered to FYI an accurate list and summary description as
Schedule 5.7 hereto of all such licenses, franchises, permits and other
governmental authorizations. The licenses, franchises, permits and other
governmental authorizations listed on Schedule 5.7 are valid, and the Company
has not received any written notice that any governmental authority intends to
cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization. The Company has conducted and is conducting its
business in compliance with the requirements, standards, criteria and
conditions set forth in applicable permits, licenses, orders, approvals,
variances, rules and regulations, and is not in violation of any of the
foregoing except where such noncompliance or violation would not have a
Material Adverse Effect. Except as specifically provided on Schedule 5.7, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by, any such licenses, franchises, permits and
governmental authorizations, the breach or violation of which would constitute
a Material Adverse Effect.

5.8 TAX MATTERS.

(a) The Company has filed all income tax returns required
to be filed thereby and all returns of other Taxes (as defined below)
required to be filed thereby and has paid or provided for all Taxes
shown to be due on such returns and all such returns are accurate and
correct in all material respects. Except as set forth on Schedule
5.8, (i) no action or proceeding for the assessment or collection of
any Taxes is pending against the Company; (ii) no deficiency,
assessment or other formal claim for any Taxes has been asserted or
made against the Company that has not been fully paid or finally
settled; and (iii) no issue has been formally raised by any taxing
authority in connection with an audit or examination of any return of
Taxes. To the best knowledge of the Company and the Stockholder, no
federal, state or foreign income tax returns of the Company have been
examined, and there are no outstanding agreements or waivers extending
the applicable statutory periods of limitation for such Taxes for any
period. All Taxes that the Company has been required to collect or
withhold have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority. No Taxes
will be assessed on or after the Closing Date against the Company for
any tax period ending on or prior to July 31, 1996, or for any period
ending after July 31, 1996 with respect to any portion of such tax
period that includes or is prior to July 31, 1996 other than

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<PAGE> 15
for Taxes disclosed on Schedule 5.8. For purposes of this Agreement,
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, excise, property,
withholding, sales and franchise taxes, imposed by the United States,
or any state, county, local or foreign government or subdivision or
agency thereof, and including any interest, penalties or additions
attributable thereto.

(b) The Company is not a party to any Tax allocation or
sharing agreement.

(c) None of the assets of the Company constitutes
tax-exempt bond financed property or tax-exempt use property, within
the meaning of Section 168 of the Code. The Company is not a party to
any "safe harbor lease" that is subject to the provisions of Section
168(f)(8) of the Code as in effect prior to the Tax Reform Act of
1986, or to any "long-term contract" within the meaning of Section 460
of the Code.

(d) At the Closing Date, the Company will hold at least
ninety percent (90%) of the fair market value of its net assets and at
least seventy percent (70%) of the fair market value of its gross
assets held immediately prior to the Closing Date. For purposes of
making this representation, amounts paid by the Company to pay
reorganization expenses and all redemptions and distributions in
anticipation of or as part of the plan of reorganization by the
Company will be included as assets of the Company immediately prior to
the Merger.

(e) At the Closing Date, the Company will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire stock
in the Company that, if exercised or converted, would affect FYI's
acquisition or retention of ownership of more than eighty percent
(80%) of the total combined voting power of all classes of the Company
Stock and more than eighty percent (80%) of the total number of shares
of each class of Company non-voting stock. The Company has no plan or
intention to issue additional shares of its stock that would result in
FYI losing control of the Surviving Corporation within the meaning of
Section 368(c) of the Code.

(f) The Company is not an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.

(g) The fair market value of the assets of the Company
exceeds the sum of its liabilities, plus the amount of liabilities, if
any, to which the assets are subject.

(h) The Company is not under jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of
the Code.

(i) The liabilities of the Company to be assumed by Newco
and the liabilities to which the transferred assets are subject were
incurred by the Company in the ordinary course of its trade or
business.

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<PAGE> 16
(j) The fair market value of the FYI stock and other
consideration received by the Stockholder will be approximately equal
to the fair market value of the Company Stock surrendered in the
Merger.

(k) There is no plan or intention by the Stockholder to
sell, exchange, or otherwise dispose of any shares of FYI Stock
received by such Stockholder in the Merger as of the Effective Time of
the Merger or otherwise described in Annex II. For purposes of this
representation, shares of the Company Stock exchanged for cash or
other property and shares of the Company Stock exchanged for cash in
lieu of fractional shares of FYI Stock will be treated as outstanding
shares of the Company Stock on the date of the transaction. Moreover,
shares of the Company Stock and shares of FYI stock held by the
Stockholder and otherwise sold, redeemed, or disposed of prior to or
subsequent to the Closing Date will be considered in making this
representation. In addition, there is no plan or intention by the
Stockholder to sell, exchange or otherwise dispose of FYI Stock
received by such Stockholder pursuant to Section 10.10.

(l) The Company and the Stockholder will each pay their
respective expenses, if any, incurred in connection with the Merger.

(m) There is no intercorporate indebtedness existing
between FYI and the Company or between Newco and the Company that was
issued, acquired, or will be settled at a discount.

(n) None of the shares of FYI Stock received by the
Stockholder in the Merger will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to
the Stockholder in his capacity as an employee, including but not
limited to amounts paid pursuant to the Employment Agreement described
in Section 7.5, will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.

(o) The Company is a C corporation within the meaning of
Subchapter C of the Code. The Company presently files its federal
income tax returns on a cash basis of accounting.

5.9 ASSETS AND PROPERTIES.

(a) REAL PROPERTY. The Company does not own or hold any
interest in real property other than as set forth in Schedule 5.10.

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<PAGE> 17
in the Financial Statements or acquired since December 31, 1995, free
and clear of any Liens, except for statutory Liens for current taxes,
assessments or governmental charges or levies on property not yet due
and payable and such imperfections of title and encumbrances as would
not detract in any material respect from the value of the property
encumbered (collectively, the "Permitted Liens").

(c) CONDITION OF PROPERTIES. Except as set forth on
Schedule 5.9, the leasehold estates the subject of the Real Property
Leases (as defined in Section 5.10) and the tangible personal property
owned or leased by the Company are in good operating condition and
repair, ordinary wear and tear excepted; and neither the Company nor
the Stockholder has any knowledge of any condition not disclosed
herein of any such leasehold estate that would materially affect the
fair market value, use or operation of any leasehold estate or
otherwise have a Material Adverse Effect.

(d) COMPLIANCE. The continued use and occupancy of the
leasehold estates the subject of the Real Property Leases as currently
operated, used and occupied will not violate any zoning, building,
health, flood control, fire or other law, ordinance, order or
regulation or any restrictive covenant the violation of which would
have a Material Adverse Effect. To the best knowledge of the
Stockholder, there are no violations of any federal, state, county or
municipal law, ordinance, order, regulation or requirement affecting
any portion of the leasehold estates and no written notice of any such
violation has been issued by any governmental authority, the violation
of which would have a Material Adverse Effect.

5.10 REAL PROPERTY LEASES; OPTIONS. Schedule 5.10 sets forth a
list of (i) all leases and subleases under which the Company is lessor or
lessee or sublessor or sublessee of any real property, together with all
amendments, supplements, nondisturbance agreements, brokerage and commission
agreements and other agreements pertaining thereto ("Real Property Leases");
(ii) all material options held by the Company or contractual obligations on the
part of the Company to purchase or acquire any interest in real property; and
(iii) all options granted by the Company or contractual obligations on the part
of the Company to sell or dispose of any material interest in real property.
Copies of all Real Property Leases and such options and contractual obligations
have been delivered to FYI and Newco. The Company has not assigned any Real
Property Leases or any such options or obligations. There are no liens on the
interest of the Company in the Real Property Leases, subject only to (i)
Permitted Liens and (ii) those matters set forth on Schedule 5.10. The Real
Property Leases and options and contractual obligations listed on Schedule 5.10
are in full force and effect and constitute binding obligations of the Company
and the other parties thereto, and (x) there are no defaults thereunder by the
Company or, to the best knowledge of the Company and the Stockholder, by any
other party thereto, and (y) no event has occurred that with notice, lapse of
time or both would constitute a default by the Company or, to the best
knowledge of the Company and the Stockholder, by any other party thereto,
except where any such default would not have a Material Adverse Effect.

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<PAGE> 18
5.11 ENVIRONMENTAL LAWS AND REGULATIONS.

(a) (i) During the occupancy and operation of the
"Subject Property" (as defined below) by the Company and, to the best
knowledge of the Company and the Stockholder, prior to its occupancy
and operation, the operations of the Subject Property, and any use,
storage, treatment, disposal or transportation of "Hazardous
Substances" (as defined below) that has occurred in or on the Subject
Property prior to the date of this Agreement have been in compliance
with "Environmental Requirements" (as defined below); (ii) during the
occupancy and operation of the Subject Property by the Company and, to
the best knowledge of the Company and the Stockholder, prior to its
occupancy or operation, no release, leak, discharge spill, disposal or
emission of Hazardous Substances has occurred in, on or under the
Subject Property in a quantity or manner that materially violates or
requires remediation under Environmental Requirements; (iii) to the
best knowledge of the Company and the Stockholder, the Subject
Property is free of Hazardous Substances as of the date of this
Agreement, except for the presence of small quantities of Hazardous
Substances utilized by the Company or other tenants of the Subject
Property in the ordinary course of their business; (iv) there is no
pending or, to the best knowledge of the Company and the Stockholder,
threatened litigation or administrative investigation or proceeding
concerning the Subject Property involving Hazardous Substances or
Environmental Requirements; (v) to the best knowledge of the Company
and the Stockholder, there are no above-ground or underground storage
tank systems located at the Subject Property; and (vi), except as set
forth on Schedule 5.11, the Company has never owned, operated, or
leased any real property other than the Subject Property.

(b) DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:

"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, guidance documents, judgments, decrees,
orders, agreements and other restrictions and requirements (whether
now or hereafter in effect) of any governmental authority, including,
without limitation, federal, state and local authorities, relating to
the regulation or protection of human health and safety, natural
resources, conservation, the environment, or the storage, treatment,
disposal, transportation, handling or other management of industrial
or solid waste, hazardous waste, hazardous or toxic substances or
chemicals, or pollutants.

"Hazardous Substance" means (i) any "hazardous substance" as
defined in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended from
time to time (42 U.S.C. Sections 9601 et seq.) ("CERCLA") or any
regulations promulgated thereunder; (ii) petroleum and petroleum
by-products; or (iii) any additional substances or materials that have
been or are currently classified or considered to be pollutants,
hazardous or toxic under Environmental Requirements.

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<PAGE> 19
"Subject Property" means all property subject to the Real
Property Leases.

5.12 CONTRACTS.

(a) Set forth on Schedule 5.12 is a list of all material
contracts, agreements, arrangements and commitments (whether oral or
written) to which the Company is a party or by which its assets or
business are bound including, without limitation, contracts,
agreements, arrangements or commitments that relate to (i) the sale,
lease or other disposition by the Company of all or any substantial
part of its business or assets (otherwise than in the ordinary course
of business), (ii) the purchase or lease by the Company of a
substantial amount of assets (otherwise than in the ordinary course of
business), (iii) the supply by the Company of any customer's
requirements for any item or the purchase by the Company of its
requirements for any item or of a vendor's output of any item, (iv)
lending or advancing funds by the Company, (v) borrowing of funds or
guaranteeing the borrowing of funds by any other person, whether under
an indenture, note, loan agreement or otherwise, (vi) any transaction
or matter with any affiliate of the Company, (vii) noncompetition,
(viii) licenses and grants to or from the Company relating to any
intangible property listed on Schedule 5.18, (ix) the acquisition by
the Company of any operating business or the capital stock of any
person since December 31, 1995, or (x) any other matter that is
material to the business, assets or operations of the Company
("Contracts").

(b) Except as set forth on Schedule 5.12, each Contract
is in full force and effect on the date hereof, the Company is not in
default under any Contract, the Company has not given or received
notice of any default under any Contract, and, to the knowledge of the
Company and the Stockholder, no other party to any Contract is in
default thereunder, except in all cases where any such default would
not have a Material Adverse Effect.

5.13 NO VIOLATIONS. A certified copy of the Articles of
Incorporation and a true, correct and complete copy of the By-laws, both as
amended to date, of the Company (the "Charter Documents") have been delivered
to FYI. The execution, delivery and performance of this Agreement and the
other agreements and documents contemplated hereby by the Company and the
Stockholder and the consummation of the transactions contemplated hereby will
not (i) violate any provision of any Charter Document, (ii) except as set forth
on Schedule 5.8, violate any statute, rule, regulation, order or decree of any
public body or authority by which the Company or the Stockholder or its or his
respective properties or assets are bound, or (iii) result in a violation or
breach of, or constitute a default under, or result in the creation of any
encumbrance upon, or create any rights of termination, cancellation or
acceleration in any person with respect to any Contract or any material
license, franchise or permit of the Company or any other agreement, contract,
indenture, mortgage or instrument to which the Company is a party or by which
any of its properties or assets is bound, in each event except where such
breach or violation would not have a Material Adverse Effect.

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<PAGE> 20
5.14 GOVERNMENT CONTRACTS. The Company is not now a party to any
governmental contracts subject to price redetermination or renegotiation.

5.15 CONSENTS. Except as set forth on Schedule 5.15, no consent,
approval or other authorization of any governmental authority or under any
Contract or other agreement or commitment to which the Company or the
Stockholder are parties or by which its or his respective assets are bound is
required as a result of or in connection with the execution or delivery of this
Agreement and the other agreements and documents to be executed by the Company
and the Stockholder or the consummation by the Company and the Stockholder of
the transactions contemplated hereby, except where the failure to obtain any
such consent, approval or other authorization would not have a Material Adverse
Effect.

5.16 LITIGATION AND RELATED MATTERS. Set forth on Schedule 5.8 and
Schedule 5.16 is a list of all actions, suits, proceedings, investigations or
grievances pending against the Company or, to the best knowledge of the Company
and the Stockholder, threatened against the Company, the business or any
property or rights of the Company, at law or in equity, before or by any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign ("Agencies").
None of the actions, suits, proceedings or investigations listed on Schedule
5.8 and Schedule 5.16 either (i) results or would, if adversely determined,
have a Material Adverse Effect or (ii) affects or would, if adversely
determined, affect the right or ability of the Company to carry on its business
substantially as now conducted. The Company is not subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to
its business, operations or assets or its employees, nor in default with
respect to any order, writ, injunction or decree of any court or Agency with
respect to its assets, business, operations or employees. Schedule 5.16 lists
(x) all worker's compensation claims outstanding against the Company as of the
date hereof and (y) all actions, suits or proceedings filed by or against the
Company since December 31, 1995.

5.17 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.8,
the Company (a) is in compliance with all applicable laws, regulations
(including federal, state and local procurement regulations), orders, judgments
and decrees except where the failure to so comply would not have a Material
Adverse Effect, and (b) possesses all necessary licenses, franchises, permits
and governmental authorizations to conduct its business in the manner in which
and in the jurisdictions and places where such business is now conducted,
except where the failure to possess the same would not have a Material Adverse
Effect.

5.18 INTELLECTUAL PROPERTY RIGHTS. Schedule 5.18 lists the
domestic and foreign trade names, trademarks, service marks, trademark
registrations and applications, service mark registrations and applications,
patents, patent applications, patent licenses, software licenses and copyright
registrations and applications owned by the Company or used thereby in the
operation of its business (collectively, the "Intellectual Property"), which
Schedule indicates (i) the term and exclusivity of its rights with respect to
the Intellectual Property and (ii) whether each item of Intellectual Property
is owned or licensed by the Company, and if licensed, the licensor and the
license fees therefor. Unless otherwise indicated on Schedule 5.18, the
Company has the right to use and license the Intellectual Property, and

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the consummation of the transactions contemplated hereby will not result in the
loss or material impairment of any rights of the Company in the Intellectual
Property. Each item constituting part of the Intellectual Property has been,
to the extent indicated on Schedule 5.18, registered with, filed in or issued
by, as the case may be, the United States Patent and Trademark Office or such
other government entity, domestic or foreign, as is indicated on Schedule 5.18;
all such registrations, filings and issuances remain in full force and effect;
and all fees and other charges with respect thereto are current. Except as
stated on Schedule 5.18, there are no pending proceedings or adverse claims
made or, to the best knowledge of the Company and the Stockholder, threatened
against the Company with respect to the Intellectual Property; there has been
no litigation commenced or threatened in writing within the past five (5) years
with respect to the Intellectual Property or the rights of the Company therein;
and the Company and the Stockholder have no knowledge that (i) the Intellectual
Property or the use thereof by the Company conflicts with any trade names,
trademarks, service marks, trademark or service mark registrations or
applications, patents, patent applications, patent licenses or copyright
registrations or applications of others ("Third Party Intellectual Property"),
or (ii) such Third Party Intellectual Property or its use by others or any
other conduct of a third party conflicts with or infringes upon the
Intellectual Property or its use by the Company.

5.19 EMPLOYEE BENEFIT PLANS. Each employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or contributed to by the Company or any of its
Group Members (as defined below) (collectively, the "Plans") is listed on
Schedule 5.19, is in substantial compliance with applicable law and has been
administered and operated in all material respects in accordance with its
terms. Each Plan that is intended to be "qualified" within the meaning of
Section 401(a) of the Code has applied for or received a favorable
determination letter from the Internal Revenue Service (the "IRS") and, to the
best knowledge of the Company and the Stockholder, no event has occurred and no
condition exists that could be expected to result in the denial or revocation
of any such determination. No event that constitutes a "reportable event"
(within the meaning of Section 4043(b) of ERISA) for which the 30-day notice
requirement has not been waived by the Pension Benefit Guaranty Corporation
(the "PBGC") has occurred with respect to any Plan. No Plan is subject to
Title IV of ERISA, and neither the Company nor any Group Member has made any
contributions to or participated in any "multiple employer plan" (within the
meaning of the Code or ERISA) or "multi-employer plan" (as defined in Section
4001(a)(3) of ERISA). Full payment has been made of all amounts that the
Company was required under the terms of the Plans to have paid as contributions
to such Plans on or prior to the date hereof (excluding any amounts not yet
due) and all amounts properly accrued to date as liabilities of the Company
that have not been paid have been properly recorded on the Financial
Statements, and no Plan that is subject to Part 3 of Subtitle B of Title 1 of
ERISA has incurred any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived. The
Company and, to the knowledge of the Company and the Stockholder, no other
"disqualified person" or "party in interest" (within the meaning of Section
4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in
any transactions in connection with any Plan that could be expected to result
in the imposition of a material penalty pursuant to Section 502(i) of

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<PAGE> 22
ERISA, damages pursuant to Section 409 of ERISA or a tax pursuant to Section
4975(a) of the Code. No material claim, action, proceeding, or litigation has
been made, commenced or, to the knowledge of the Company and the Stockholder,
threatened with respect to any Plan (other than for benefits payable in the
ordinary course and PBGC insurance premiums). No Plan or related trust owns
any securities in violation of Section 407 of ERISA. Neither the Company nor
any Group Member has incurred any liability or taken any action, or has any
knowledge of any action or event, that could cause it to incur any liability
(i) under Section 412 of the Code or Title IV of ERISA with respect to any
"single employer plan" (within the meaning of Section 4001(a)(15) of ERISA),
(ii) on account of a partial or complete withdrawal (within the meaning of
Section 4205 and 4203 of ERISA, respectively) with respect to any
"multi-employer plan" (within the meaning of Section 3(37) of ERISA), (iii) on
account of unpaid contributions to any such multi-employer plan, or (iv) to
provide health benefits or other non-pension benefits to retired or former
employees, except as specifically required by Section 4980B(f) of the Code.
Except as set forth on Schedule 5.19, neither the execution and delivery of
this Agreement by the Company or the consummation of the transactions
contemplated hereby will (i) except to the extent otherwise provided by
applicable law, entitle any current or former employee of the Company to
severance pay, unemployment compensation or any similar payment, (ii) except to
the extent otherwise provided by applicable law, accelerate the time of payment
or vesting, or increase the amount of, any compensation due to any such
employee or former employee, or (iii) directly or indirectly result in any
payment made or to be made to or on behalf of any person to constitute a
"parachute payment" (within the meaning of Section 280G of the Code). For
purposes of this Agreement, "Group Member" shall mean any member of any
"affiliated service group" as defined in Section 414(m) of the Code that
includes the Company, any member of any "controlled group of corporations" as
defined in Section 1563 of the Code that includes the Company or any member of
any group of "trades or businesses under common control" as defined by Section
414(c) of the Code that includes the Company.

5.20 EMPLOYEES; EMPLOYEE RELATIONS.

(a) Schedule 5.20 sets forth (i) the name and current
annual salary (or rate of pay) and other compensation (including,
without limitation, normal bonus, profit-sharing and other
compensation) now payable by the Company to each employee whose
current total annual compensation or estimated compensation is $25,000
or more, (ii) any planned increase of greater than $5,000 per annum to
become effective after the date of this Agreement in the total
compensation or rate of total compensation payable by the Company to
each such person, (iii) any planned increase of greater than $5,000
per annum to become payable after the date of this Agreement by the
Company to employees other than those specified in clause (i) of this
Section 5.20(a), (iv) all presently outstanding loans and advances
(other than routine travel or other similar advances to be repaid or
formally accounted for within sixty (60) days) made by the Company to,
or made to the Company by, any director, officer or employee, (v) all
other transactions between the Company and any director, officer or
employee thereof since December 31, 1995 other than in the ordinary
course, and (vi) all accrued but unpaid vacation pay owing to any
officer or employee that is not disclosed on the Financial Statements.

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(b) Except as disclosed on Schedule 5.20, the Company is
not a party to, or bound by, the terms of any collective bargaining
agreement, and the Company has not experienced any material labor
difficulties during the last five (5) years. Except as set forth on
Schedule 5.20, there are no labor disputes existing, or to the best
knowledge of the Company and the Stockholder, threatened involving, by
way of example, strikes, work stoppages, slowdowns, picketing, or any
other interference with work or production, or any other concerted
action by employees. No charges or proceedings before the National
Labor Relations Board, or similar agency, exist, or to the best
knowledge of the Company and the Stockholder, are threatened.

(c) In the reasonable opinion of the Company and the
Stockholder, the relationships enjoyed by the Company with its
employees are good, and the Company and the Stockholder have not been
advised by any employee that such employee does not intend to continue
in the employ of the Company following the Closing. Except as
disclosed on Schedule 5.20, the Company is not a party to any
employment contract with any individual or employee (other than oral
employment arrangements terminable at will without further obligation
by either party), either express or implied. No legal proceedings,
charges, complaints or similar actions exist under any federal, state
or local laws affecting the employment relationship including, but not
limited to: (i) anti-discrimination statutes such as Title VII of the
Civil Rights Act of 1964, as amended (or similar state or local laws
prohibiting discrimination because of race, sex, religion, national
origin, age and the like); (ii) the Fair Labor Standards Act or other
federal, state or local laws regulating hours of work, wages, overtime
and other working conditions; (iii) requirements imposed by federal,
state or local governmental contracts such as those imposed by
Executive Order 11246; (iv) state laws with respect to tortious
employment conduct, such as slander, false light, invasion of privacy,
negligent hiring or retention, intentional infliction of emotional
distress, assault and battery, or loss of consortium; or (v) the
Occupational Safety and Health Act, as amended, as well as any similar
state laws, or other regulations respecting safety in the workplace;
and to the best knowledge of the Company and the Stockholder, no
proceedings, charges or complaints are threatened under any such laws
or regulations and no facts or circumstances exist that would give
rise to any such proceedings, charges, complaints, or claims, whether
valid or not. The Company is not subject to any settlement or consent
decree with any present or former employee, employee representative or
any government or Agency relating to claims of discrimination or other
claims in respect to employment practices and policies; and no
government or Agency has issued a judgment, order, decree or finding
with respect to the labor and employment practices (including
practices relating to discrimination) of the Company. Since December
31, 1994 the Company has not incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act or similar
state laws; and the Company has not laid off more than ten percent
(10%) of its employees at any single site of employment in any ninety
(90) day period during the twelve (12) month period ending July 31,
1996.

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(d) The Company is in compliance in all respects with the
provisions of the Americans with Disabilities Act, except where the
failure to be in such compliance would not have a Material Adverse
Effect.

5.21 INSURANCE. Schedule 5.21 contains an accurate list of the
policies and contracts (including insurer, named insured, type of coverage,
limits of insurance, required deductibles or co-payments, annual premiums and
expiration date) for fire, casualty, liability and other forms of insurance
maintained by, or for the benefit of, the Company. All such policies are in
full force and effect and by their terms are scheduled to remain in full force
and effect through the Closing Date and, in the reasonable opinion of the
Company and the Stockholder, are adequate for the business engaged in by the
Company. Neither the Company nor the Stockholder has received any notice of
cancellation or non-renewal or of significant premium increases with respect to
any such policy. Except as disclosed on Schedule 5.21, no pending claims made
by or on behalf of the Company under such policies have been denied or are
being defended against third parties under a reservation of rights by an
insurer thereof. All premiums due prior to the date hereof for periods prior
to the date hereof with respect to such policies have been timely paid.

5.22 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. No stockholder,
officer, director or affiliate of the Company possesses, directly or
indirectly, any financial interest in, or is a director, officer, employee or
affiliate of, any corporation, firm, association or business organization that
is a client, supplier, customer, lessor, lessee or competitor of the Company;
provided, however, that the direct interest of the Stockholder in Minnesota
Medical Record Service, Inc. and the indirect interest of the Stockholder in
Texas Medical Record Service, Inc. shall not be deemed a breach of this Section
5.22. Ownership of securities of a corporation whose securities are registered
under the Securities Exchange Act of 1934 not in excess of five percent (5%) of
any class of such securities shall not be deemed to be a financial interest for
purposes of this Section 5.22.

5.23 BUSINESS RELATIONS. Schedule 5.23 contains an accurate list
of all significant customers of the Company (i.e., those customers representing
five percent (5%) or more of the Company's revenues for the twelve (12) months
ended December 31, 1995). Except as set forth on Schedule 5.23, neither the
Company nor the Stockholder has received any written or, to the best knowledge
of the Company and the Stockholder, any other notice or information that any
such customer of the Company will cease to do business therewith after the
consummation of the transactions contemplated hereby, which cessation would
have a Material Adverse Effect. The Company is not required to provide any
bonding or other financial security arrangements in any material amount in
connection with any transactions with any of its customers or suppliers.

5.24 OFFICERS AND DIRECTORS. Set forth on Schedule 5.24 is a list
of the current officers and directors of the Company.

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thereto. Each person holding a power of attorney or similar grant of authority
on behalf of the Company is identified on Schedule 5.25. Except as disclosed
on such Schedule, the Company has not given any revocable or irrevocable powers
of attorney to any person, firm, corporation or organization relating to its
business for any purpose whatsoever.

5.26 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 5.26 or as otherwise contemplated by this Agreement, since December
31, 1995, there has not been (a) any material damage, destruction or casualty
loss to the physical properties of the Company (whether or not covered by
insurance), (b) other than events or circumstances affecting the medical
records release business in general, any event or circumstance in the business,
operations, financial condition or results of operations of the Company that
would have a Material Adverse Effect, (c) any entry into any transaction,
commitment or agreement (including, without limitation, any borrowing) material
to the Company, except transactions, commitments or agreements in the ordinary
course of business consistent with past practice, (d) any declaration, setting
aside or payment of any dividend or other distribution in cash, stock or
property with respect to the capital stock or other securities of the Company,
any repurchase, redemption or other acquisition by the Company of any capital
stock or other securities, or any agreement, arrangement or commitment by the
Company to do so, (e) any increase of greater than $5,000 per annum in the
compensation payable or to become payable by the Company to its officers,
directors, employees or agents or any increase in the rate or terms of any
bonuses, pension or other employee benefit plan, payment or arrangement made
to, for or with any such officers, directors, employees or agents, except as
set forth on Schedule 5.26, (f) any sale, transfer or other disposition of, or
the creation of any Lien upon, any part of the assets of the Company, tangible
or intangible, except for sales of inventory and use of supplies and
collections of accounts receivables in the ordinary course of business
consistent with past practice, or any cancellation or forgiveness of any debts
or claims by the Company, (g) any change in the relations of the Company with
or loss of its customers (other than to the extent set forth in Schedule 5.23)
or suppliers, or any loss of business or increase in the cost of inventory
items or change in the terms offered to customers, which would have a Material
Adverse Effect, or (h) any capital expenditure (including any capital leases)
or commitment therefor by the Company in excess of $10,000.

(B) REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.

The Stockholder represents and warrants that the representations and
warranties in this Section 5(B) as they apply to him are true and correct as of
the date of this Agreement and at the time of the Closing.

5.27 AUTHORITY; OWNERSHIP. The Stockholder has the full legal
right, power and authority to enter into this Agreement. The Stockholder owns
beneficially (subject to any community property interest of his spouse) and of
record the shares of the Company Stock set forth opposite such Stockholder's
name on Annex I and such shares of the Company Stock, together with the other
shares of the Company Stock set forth on Annex I, constitutes all of the
outstanding shares of capital stock of the Company, and, except as set forth on
Schedule 5.27 hereof, such shares of the Company Stock owned by the Stockholder
are

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<PAGE> 26
owned free and clear of all Liens other than standard state and federal
securities laws private offering legends and restrictions or arising under any
buy-sell or stockholders' or similar agreement existing and to which the
Stockholder is a party (each of which shall be terminated on or before the
Closing). The Stockholder has owned the Company Stock since the date set forth
on Annex I.

5.28 PREEMPTIVE RIGHTS. The Stockholder does not have, or hereby
waives, any preemptive or other right to acquire shares of the Company Stock or
FYI Stock, that the Stockholder has or may have had other than rights of the
Stockholder to acquire FYI Stock pursuant to (i) this Agreement or (ii) any
option granted by FYI.

5.29 NO INTENTION TO DISPOSE OF FYI STOCK. The Stockholder
represents that there is no current plan or intention by such Stockholder to
sell, exchange or otherwise dispose of any shares of FYI Stock received by such
Stockholder in the Merger as of the Effective Time of the Merger or otherwise
described in Annex II. For purposes of this representation, shares of the
Company Stock exchanged for cash or other property and shares of the Company
Stock exchanged for cash in lieu of fractional shares of FYI Stock will be
treated as outstanding shares of the Company Stock on the date of the
transaction. Moreover, shares of the Company Stock and shares of FYI Stock
held by the Stockholder and otherwise sold, redeemed, or disposed of prior to
or subsequent to the Closing Date will be considered in making this
representation. In addition, the Stockholder represents that there is not any
current plan or intention by such Stockholder to sell, exchange or otherwise
dispose of FYI Stock, if any, received by such Stockholder pursuant to Section
10.10 hereof.

5.31 NO OTHER REPRESENTATIONS. Except to the extent set forth in
Article 5 of this Agreement, the Company and the Stockholder have made no
representation or warranty whatsoever to FYI or Newco and hereby disclaim all
liability or responsibility for any other representation or warranty made,
communicated or furnished (orally or in writing) to FYI or Newco or their
representatives .

6. REPRESENTATIONS OF FYI AND NEWCO

FYI and Newco severally and jointly represent and warrant that all of
the following representations and warranties in this Section 6 are true and
correct at the time of the Closing.

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<PAGE> 27
failure to be so authorized or qualified would not have a material adverse
effect on its business, operations, affairs, properties, assets or condition
(financial or otherwise).

6.2 FYI STOCK. The FYI Stock to be delivered to the Stockholder
at the Closing Date shall constitute valid and legally issued shares of FYI,
fully paid and nonassessable, and except as set forth in this Agreement, (a)
will be owned free and clear of all Liens created by FYI, and (b) will be
legally equivalent in all respects to the FYI Stock issued and outstanding as
of the date hereof. The shares of FYI Stock to be issued to the Stockholder
pursuant to this Agreement will be registered under the Securities Act of 1933,
as amended (the "1933 Act"), and conform in all material respects to the
information with respect thereto contained in FYI's Registration Statement on
Form S-1 and Prospectus Supplement dated August 12, 1996 described in Section
6.9 hereof.

6.3 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement, the Employment Agreements, the Noncompetition Agreements and the
Lock-Up Agreements by FYI and Newco and the performance by each of FYI and
Newco of the transactions contemplated herein or therein have been duly and
validly authorized by the respective Boards of Directors of FYI and Newco to
the extent that it is a party thereto, and this Agreement, the Employment
Agreements, the Noncompetition Agreements and the Lock-Up Agreements have each
been duly and validly authorized by all necessary corporate action, duly
executed and delivered and are the legal, valid and binding obligations of each
of FYI and Newco to the extent that it is a party thereto, enforceable against
such party thereto in accordance with their respective terms.

6.4 AUTHORIZATION. The representatives of FYI and Newco executing
this Agreement have the corporate authority to enter into and bind FYI and
Newco to the terms of this Agreement and to each of the agreements described in
Section 6.3 hereof to which FYI and/or Newco is to be a party. FYI and Newco,
have the full legal right, power and authority to enter into this Agreement and
the Articles of Merger.

6.5 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated by and the fulfillment of the terms hereof and thereof will not:

(a) Conflict with, or result in a breach or violation of
Certificate of Incorporation or By-laws of either FYI or Newco;

(b) Materially conflict with, or result in a material
default (or would constitute a default but for any requirement of
notice or lapse of time or both) under any document, agreement or
other instrument to which either FYI or Newco is a party, or violate
or result in the creation or imposition of any lien, charge or
encumbrance on any of FYI's or Newco's properties pursuant to (i) any
law or regulation to which either FYI or Newco or any of their
respective property is subject, or (ii) any judgment, order or decree
to which FYI or Newco is bound or any of their respective property is
subject; or

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<PAGE> 28
(c) Result in termination or any impairment of any
material permit, license, franchise, contractual right or other
authorization of FYI or Newco.

6.6 CAPITALIZATION OF FYI AND OWNERSHIP OF FYI STOCK. The
authorized and outstanding capital stock of FYI and Newco is as set forth in
Sections 1.4(c) and 1.4(d) respectively. All issued and outstanding shares of
FYI stock are duly authorized, validly issued, fully paid and nonassessable.
There are no obligations of FYI to repurchase, redeem or otherwise acquire any
shares of FYI capital stock. Except as set forth on Schedule 6.6, there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which FYI is a party or by which it is bound obligating FYI
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of FYI or obligating FYI to grant, register, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. All of the shares of FYI Stock
to be issued to the Stockholder in accordance herewith will be duly authorized,
validly issued, fully paid and nonassessable.

6.7 TRANSACTIONS IN CAPITAL STOCK. There has been no transaction
or action taken with respect to the equity ownership of FYI or Newco in
contemplation of the transactions described in this Agreement that would
prevent FYI from accounting for such transactions on a reorganization
accounting basis.

6.8 SUBSIDIARIES. Set forth on Schedule 6.8 hereto is a list of
the subsidiaries of FYI (each an "FYI Subsidiary" and collectively the "FYI
Subsidiaries"). Newco has no subsidiaries.

6.9 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS; FINANCIAL
INFORMATION. Attached hereto as Schedule 6.9 are FYI's audited historical
financial statements for the year ended December 31, 1995 and its financial
statements as filed on Form 10-Q with the Securities and Exchange Commission
for the quarter ended June 30, 1996. Such FYI financial statements have been
prepared in accordance with GAAP and present fairly the financial position of
FYI as of the indicated dates and for the indicated periods. FYI has provided
the Company and the Stockholders with true, complete and correct copies of its
Registration Statements on Form S-1 (Registration No. 33-98608 and Registration
No. 333-1084) and Prospectus Supplement to Prospectus dated August 12, 1996.
The information scheduled or provided pursuant to this Section 6.9 does not
contain any material misstatements of fact. Newco was formed on August 20,
1996, and has no historical financial statements or information.

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<PAGE> 29
equity, or before or by any Agency having jurisdiction over either of them and
no notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received. FYI (including the FYI Subsidiaries) has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in applicable Federal, state and
local statutes, ordinances, orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing that would have an FYI Material
Adverse Effect.

6.11 NO VIOLATIONS. Copies of the Certificate of Incorporation (as
of the date hereof, certified by the Secretary or an Assistant Secretary of
each of FYI and Newco and by the Secretary of State of the State of Delaware)
and the By-laws (certified by the Secretary or an Assistant Secretary of each
of FYI and Newco), of FYI and Newco (the "FYI Charter Documents") are attached
hereto as Annex III; neither FYI nor Newco is (a) in violation of any FYI
Charter Document or (b) in default, under any material lease, instrument,
agreement, license, permit to which it is a party or by which its properties
are bound (the "FYI Material Documents"); and, (i) the rights and benefits of
FYI (including the FYI Subsidiaries) under the FYI Material Documents will not
be materially and adversely affected by the transactions contemplated hereby
and (ii) the execution of this Agreement and the performance of the obligations
hereunder and the consummation of the transactions contemplated hereby will not
result in any material violation or breach or constitute a default under, any
of the terms or provisions of the FYI Material Documents or the FYI Charter
Documents. Except as set forth on Schedule 6.11, none of the FYI Material
Documents requires notice to, or the consent or approval of, any Agency or
other third party to any of the transactions contemplated hereby to remain in
full force and effect or give rise to any right to termination, cancellation or
acceleration or loss of any right or benefit. The minute books of FYI and of
each FYI Subsidiary as heretofore made available to the Company are true and
correct.

6.12 TAXES.

(a) The fair market value of the FYI stock and other
consideration received by the Stockholder will be approximately equal
to the fair market value of the Company Stock surrendered in the
Merger.

(b) Prior to the Merger, FYI will own all of the
outstanding stock of Newco. At all times prior to the Merger, no
person other than FYI has owned, or will own, any of the outstanding
stock of Newco.

(ii) There were not as of the date of the
Agreement and there will not be at the Closing Date, any
outstanding or authorized options, warrants, convertible
securities, calls, rights, commitments or any other agreements
of any character which Newco is a party to, or may be bound
by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of its capital stock

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<PAGE> 30
or any securities or rights convertible, into, exchangeable
for, evidencing the right to subscribe for or acquire, any
shares of its capital stock.

(iii) As of the date of this Agreement and the
Closing Date, except for obligations or liabilities incurred
in connection with (A) its incorporation or organization and
(B) the transactions contemplated thereby and in the
Agreement, Newco has not and will not have incurred, directly
or indirectly through any subsidiary, any obligations or
liabilities or engaged in any business or activities of any
type or kind whatsoever or entered into any agreement or
arrangements with any person or entity.

(iv) Prior to the Closing Date, Newco did not own
any asset other than an amount of cash necessary to
incorporate Newco and to pay the expenses of the Merger
attributable to Newco and such assets as were necessary to
perform its obligations under this Agreement.

(v) FYI has no plan or intention to cause the
Surviving Corporation to issue additional shares of its stock
that would result in FYI losing control of the Surviving
Corporation within the meaning of Section 368(c) of the Code.

(d) FYI has no plan or intention to reacquire any of its
stock issued in the Merger.

(e) FYI has no plan or intention to liquidate Newco or
merge Newco with or into another corporation (other than as described
in this Agreement); sell or otherwise dispose of the stock of Newco;
or cause Newco or any of its subsidiaries to sell or otherwise dispose
of any of its assets or of any of the assets acquired from the
Company, other than as contemplated by this Agreement, directly or
indirectly, except for (i) dispositions made in the ordinary course of
business, (ii) transfers of assets to a corporation all of whose
outstanding stock is owned directly by Newco or (iii) transfers of
assets by direct or indirect wholly-owned subsidiaries of Newco to
other direct or indirect wholly-owned subsidiaries of Newco.

(f) Any liabilities of the Company assumed by Newco, and
any liabilities to which the transferred assets of the Company are
subject, were incurred by the Company in the ordinary course of
business.

(g) FYI and Newco will each pay their respective
expenses, if any, incurred in connection with the Merger.

(h) There is no intercorporate indebtedness existing
between FYI and the Company or between Newco and the Company that was
issued, acquired, or will be settled at a discount.

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<PAGE> 31
(i) None of the shares of FYI Stock received by the
Stockholder in the Merger will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to
the Stockholder in their capacity as an employee, including but not
limited to amounts paid pursuant to the Employment Agreement described
in Section 7.5, will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.

(j) Neither FYI nor Newco is an investment company as
defined in section 368(a)(2)(F)(iii) and (iv) of the Code.

(k) The fair market value of the FYI stock and other
consideration received by the Stockholder will be approximately equal
to the fair market value of the Company Stock surrendered in the
Merger.

(l) The proposed Merger is effected through the laws of
the United States, or a State or the District of Columbia.

(m) The proposed Merger is being undertaken for reasons
germane to the business of the Company.

(n) Assuming the correctness of the representation
contained in Section 5.8(d) herein, FYI has no plan or intention to
cause the Surviving Corporation immediately after the Closing Date to
hold less than 90% of the fair market value of its net assets and 70%
of the fair market value of the gross assets of the Company
immediately prior to the Closing Date, with such amount determined
based on the same methodology described in Section 5.8(d).

6.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 6.13 or as otherwise contemplated in this Agreement, since July 31,
1996 there has not been any event or circumstance in the business, operations,
financial condition or results of operations of the Company that would have or
constitute an FYI Adverse Effect.

6.14 NO OTHER REPRESENTATIONS. Except to the extent set forth in
Article 6 of this Agreement, FYI and Newco have made no representation or
warranty whatsoever to the Company or the Stockholder and hereby disclaim all
liability or responsibility for any other representation or warranty made,
communicated or finished (orally or in writing) to the Company or the
Stockholder or their representatives.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER AND THE COMPANY

The obligations of the Stockholder and of the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions,
except that no such waiver shall be deemed to affect

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<PAGE> 32
the survival of the representations and warranties of FYI and Newco contained
in Section 6 hereof.

7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of FYI and Newco contained in this
Agreement shall be true and correct as of the Closing Date, except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
in all material respects as of the specified date; and each and all of the
terms, covenants and conditions of this Agreement to be complied with and
performed by FYI and Newco on or before the Closing Date shall have been duly
complied with and performed.

7.2 SATISFACTION. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall be reasonably satisfactory to each of the
Company and the Stockholder and their respective counsel.

7.3 NO LITIGATION. No action or proceeding before a court or any
other Agency shall have been instituted or threatened to restrain or prohibit
the merger of Newco with the Company and no Agency shall have taken any other
action or made any request of the Company as a result of which the management
of the Company deems it inadvisable to proceed with the transactions hereunder.

7.4 OPINION OF COUNSEL. The Company and the Stockholder shall have
received an opinion from Locke Purnell Rain Harrell (A Professional
Corporation), counsel for FYI and Newco, dated the Closing Date, in the form
annexed hereto as Annex IV.

7.5 EMPLOYMENT AGREEMENT. Newco shall have executed and delivered
to the Stockholder the Employment Agreement in substantially the form attached
hereto as Annex V (the "Employment Agreement").

7.6 CONSENTS AND APPROVALS. All necessary consents of and filings
with any Agency relating to the consummation of the transactions contemplated
herein shall have been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit the Merger and no Agency
shall have taken any other action or made any request of the Company as a
result of which the Company deems it inadvisable to proceed with the
transactions hereunder.

7.7 GOOD STANDING CERTIFICATES. FYI and Newco each shall have
delivered to the Company a certificate, dated as of a date not more than
fifteen (15) days prior to the Closing Date, duly issued by the Delaware
Secretary of State and in each state in which FYI or Newco is authorized to do
business, showing that each of FYI and Newco is in good standing and authorized
to do business and that all state franchise and/or income tax returns and taxes
for FYI and Newco, respectively, for all periods prior to the Closing have been
filed and paid.

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<PAGE> 33
7.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall
have occurred that would constitute an FYI Material Adverse Effect.

8. CONDITIONS PRECEDENT TO OBLIGATIONS OF FYI AND NEWCO

The obligations of FYI and Newco with respect to actions to be taken
on the Closing Date are subject to the satisfaction or waiver on or prior to
the Closing Date of all of the following conditions, except that no such waiver
shall be deemed to affect the survival of the representations and warranties of
the Company and the Stockholder contained in Section 5 hereof.

8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of the Stockholder and the Company
contained in this Agreement shall be true and correct as of the Closing Date,
except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct in all material respects as of the specified date; and each
and all of the terms, covenants and conditions of this Agreement to be complied
with and performed by the Stockholder and the Company on or before the Closing
Date shall have been duly complied with and performed.

8.2 SATISFACTION. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall be reasonably satisfactory to each of FYI and
Newco and their counsel.

8.3 NO LITIGATION. No action or proceeding before a court or any
other Agency shall have been instituted or threatened to restrain or prohibit
the merger of the Company with and into Newco and no Agency shall have taken
any other action or made any request of FYI as a result of which the management
of FYI or Newco deems it inadvisable to proceed with the transactions
hereunder.

8.4 REPAYMENT OF INDEBTEDNESS. Prior to the Closing Date, the
Stockholder shall have repaid the Company in full all amounts owing by the
Stockholder to the Company.

8.5 INSURANCE. FYI shall be named as an additional named insured
on all of the insurance policies of the Company.

8.6 STOCKHOLDER RELEASE; RELATED PARTY AGREEMENTS. The
Stockholder shall have delivered to FYI immediately prior to the Closing Date
an instrument dated the Closing Date in a form reasonably satisfactory to FYI
releasing the Company from any and all claims of such Stockholder against the
Company and obligations of the Company to the Stockholder, except for items
specifically identified on Schedule 8.6 as being claims of or obligations to
the Stockholder and continuing obligations to Stockholder relating to his
employment by the Surviving Corporation or arising in connection with or
pursuant to this Agreement. Except as set forth on Schedule 8.6 or as
otherwise disclosed pursuant to this Agreement, all existing agreements between
the Company and the Stockholders or business

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<PAGE> 34
or personal affiliates of the Company or the Stockholders and all existing
bonus and incentive plans and arrangements of the Company shall have been
terminated or cancelled.

8.7 OPINION OF COUNSEL. FYI shall have received an opinion from
Gardere Wynne Sewell & Riggs, L.L.P., counsel to the Company and the
Stockholder, dated the Closing Date, in the form annexed hereto as Annex VI.

8.8 EMPLOYMENT AGREEMENT. The Stockholder shall have executed and
delivered to FYI and Newco the Employment Agreement.

8.9 NONCOMPETITION AGREEMENT. The Stockholder shall have executed
and delivered to FYI and Newco a Noncompetition Agreement with FYI and Newco in
substantially the form attached hereto as Annex VII (the "Noncompetition
Agreement").

8.10 LOCK-UP AGREEMENT. The Stockholder shall have executed and
delivered to FYI and Newco a Lock-Up Agreement in substantially the form
annexed hereto as Annex VIII (the "Lock-Up Agreement") with respect to the
shares of FYI Stock to be acquired thereby pursuant to Section 2 hereof
containing the Stockholder's undertakings as set forth in Section 11.1 hereof.

8.11 CONSENTS AND APPROVALS. All necessary consents of and filings
with any Agency relating to the consummation of the transactions contemplated
herein shall have been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit the Merger and no Agency
shall have taken any other action or made any request of FYI or Newco as a
result of which either FYI or Newco deems it inadvisable to proceed with the
transactions hereunder.

8.12 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall
have occurred that would constitute a Material Adverse Effect.

9. COVENANTS OF THE PARTIES

9.1 [INTENTIONALLY LEFT BLANK].

9.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT.

(a) After the Closing Date, FYI shall not and shall not
permit any of the FYI Subsidiaries to undertake any act that would
jeopardize the tax-free status of the reorganization of the Company,
including, to the extent such action would jeopardize the tax-free
status of the reorganization of the Company:

(i) The retirement or reacquisition, directly or
indirectly, of all or part of the FYI Stock issued in
connection with the transactions contemplated hereby;

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<PAGE> 35
(ii) The entering into of financial arrangements
for the benefit of the Stockholder in his capacity as such;

(iii) The disposition of any material part of the
assets of the Company within the two (2) years following the
Closing Date except in the ordinary course of business or to
eliminate duplicate services or excess capacity;

(iv) The discontinuance of the historic business
of the Company; and

(v) The issuance of additional shares of Newco
stock that would result in FYI losing control of Newco within
the meaning of Section 368(c) of the Code.

(b) Until August 1, 1997 FYI shall maintain the separate
corporate existence of the Surviving Corporation and shall operate the
business of the Company acquired by the Surviving Corporation as a
result of the Merger within the Surviving Corporation and shall
maintain separate books of account and records therefor in order to
calculate accurately the Earnout described in Annex II.

9.3 PREPARATION AND FILING OF TAX RETURNS.

(a) Each party hereto shall, and shall cause its
subsidiaries and affiliates to, provide to each of the other parties
hereto such cooperation and information as any of them reasonably may
request in filing any return, amended return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in
conducting any audit or other proceeding in respect of Taxes. Such
cooperation and information shall include providing copies of all
relevant portions of relevant returns, together with relevant
accompanying schedules and relevant work papers, relevant documents
relating to rulings or other determinations by taxing authorities and
relevant records concerning the ownership and tax basis of property,
which such party may possess. Each party shall make its employees
reasonably available on a mutually convenient basis at its cost to
provide explanation of any documents or information so provided.
Subject to the preceding sentence, each party required to file returns
pursuant to this Agreement shall bear all costs of filing such
returns.

(b) Each of the Company, Newco, FYI and the Stockholder
shall comply with the tax reporting requirements of Section 1.368-3 of
the Treasury Regulations promulgated under the Code, and shall treat
the transaction as a tax-free reorganization under Section 368(a) of
the Code unless otherwise required by law.

9.4 STOCK OPTIONS. No later than September 30, 1996, FYI shall
grant to employees of the Surviving Corporation set forth on Schedule 9.4
nonqualified stock options to acquire an aggregate of five thousand (5,000)
shares of FYI Stock in minimum lots of one thousand shares (1,000) in
accordance with the terms of FYI's 1995 Stock Option Plan (the "Stock Option
Plan"), with such options to have a per share exercise price equal to the Fair

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<PAGE> 36
Market Value (as defined in the Stock Option Plan) per share on the date of
grant and to vest in twenty percent (20%) increments on each of the first
through fifth anniversaries of the date of grant.

10. INDEMNIFICATION

The Stockholder, FYI and Newco each make the following covenants that
are applicable to them, respectively.

10.1 FYI LOSSES.

(a) The Stockholder agrees to indemnify and hold harmless
FYI, Newco and the Surviving Corporation, and their respective
directors, officers, employees, representatives, agents and attorneys
from, against and in respect of any and all FYI Losses (as defined
below) suffered, sustained, incurred or required to be paid by any of
them by reason of (i) any representation or warranty made by the
Company or the Stockholder in or pursuant to this Agreement
(including, without limitation, the representations and warranties
contained in any certificate delivered pursuant hereto) being untrue
or incorrect in any respect; (ii) any liability for warranty claims
arising from the provision of services by the Company through the
Closing Date; (iii) the termination of or withdrawal by the Company or
any Group Member from any employee pension benefit plan, as defined in
Section 3(2)(A) of ERISA that is maintained pursuant to a collective
bargaining agreement under which more than one employer makes
contributions and to which the Company or any Group Member is then
making or accruing an obligation to make contributions or has within
the preceding five (5) plan years made contributions; (iv) the items
described in Schedule 5.16 hereof except in any instance and to the
extent FYI Losses result from the negligence or misconduct of FYI,
Newco or the Surviving Corporation; or (v) any failure by the Company
or the Stockholder to observe or perform its or his covenants and
agreements set forth in this Agreement or (solely with respect to the
Company) in any other agreement or document executed by it in
connection with the transactions contemplated hereby.

(b) "FYI Losses" shall mean all damages (including,
without limitation, amounts paid in settlement pursuant to the
provisions of this Article 10), losses, obligations, liabilities,
claims, deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees), penalties, fines, interest
and monetary sanctions, including, without limitation, reasonable
attorneys' fees and costs incurred to comply with injunctions and
other court and Agency orders, and other costs and expenses incident
to any suit, action, investigation, claim or proceeding or to
establish or enforce the rights of FYI, Newco and the Surviving
Corporation or such other persons to indemnification hereunder.

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<PAGE> 37
10.2 ENVIRONMENTAL INDEMNITY.

(b) The obligations of this Section 10.2 shall include
the obligation to defend the Indemnified Parties (as defined below)
against any claim or demand for Environmental Costs, the obligation to
pay and discharge any Environmental Costs imposed on Indemnified
Parties, and the obligation to reimburse Indemnified Parties for any
Environmental Costs incurred or suffered, provided in each instance
that the claim for Environmental Costs arises in connection with a
matter for which Indemnified Parties are entitled to indemnification
under this Agreement. The obligation to reimburse the Indemnified
Parties shall also include the costs and expenses (including, without
limitation, reasonable attorneys' fees) to establish or enforce the
rights of FYI, Newco and the Surviving Corporation or such other
persons to indemnification hereunder.

(c) "Environmental Costs" shall mean any of the following
that arise in any manner regardless of whether based in contract,
tort, implied or express warranty, strict liability, Environmental
Requirement or otherwise: all liabilities, losses, judgments, damages,
punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, reasonable attorneys' fees
and fees and disbursements of environmental consultants, all costs
related to the performance of any required or necessary assessments,
investigations, remediation, response, containment, closure,
restoration, repair, cleanup or detoxification of any impacted
property, the preparation and implementation of any maintenance,
monitoring, closure, remediation, abatement or other plans required by
any governmental agency or by Environmental Requirements and any other
costs recovered or recoverable under any Environmental Requirement),
fines, penalties, or monetary sanctions. Environmental Costs shall
include without limitation: (i) damages for personal injury or death,
or injury to property or to natural resources; (ii) damage to real
property or damage resulting from the loss of the use of all or any
part of the property, including but not limited to business loss; and
(iii) the cost of any demolition, rebuilding or repair of any property
required by Environmental Requirements or necessary to restore such
property to its condition prior to damage caused by an environmental
condition or by the remediation of an environmental condition.

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<PAGE> 38
10.3 EMPLOYEE COMPENSATION AND BENEFITS.

(a) The Stockholder agrees to indemnify and hold FYI,
Newco and the Surviving Corporation, and their respective directors,
officers, employees, representatives, agents and attorneys harmless
from and against any and all claims made by employees of the Company,
regardless of when made, for wages, salaries, bonuses, pension,
workmen's compensation, medical insurance, disability, vacation,
severance, pay in lieu of notice, sick benefits or other compensation
or benefit arrangements to the extent the same are based on employment
service rendered to the Company prior to the Closing Date or injury or
sickness occurring prior to the Closing Date and the rights so claimed
are not scheduled pursuant to this Agreement or reserved for on the
Financial Statements, or if the claim asserted is based upon or arises
under applicable law rather than an agreement or undertaking by the
Company, then only if the claim asserted arose or is based upon acts
or omissions occurring prior to the Closing Date and was not disclosed
as required by the terms of this Agreement (collectively, "Pre-Closing
Employee Claims").

(b) Each of FYI and Newco jointly and severally agrees to
indemnify and hold the Stockholder and his agents and attorneys
harmless from and against any and all claims made by employees of the
Surviving Corporation, regardless of when made, for wages, salaries,
bonuses, pension, workmen's compensation, medical insurance,
disability, vacation, severance, pay in lieu of notice, sick benefits
or other compensation or benefit arrangements, except as otherwise
expressly provided herein, to the extent the same are based on
employment service rendered to the Surviving Corporation after the
Closing Date or injury or sickness occurring after the Closing Date
(collectively, "Post-Closing Employee Claims").

10.4 STOCKHOLDER LOSSES.

(a) FYI and Newco jointly and severally agree to
indemnify and hold harmless the Stockholder, and his agents and
attorneys, for and in respect of any and all Stockholder Losses (as
defined below) suffered, sustained, incurred or required to be paid by
the Stockholder by reason of (i) any representation or warranty made
by FYI or Newco in or pursuant to this Agreement (including, without
limitation, the representations and warranties contained in any
certificate delivered pursuant hereto) being untrue or incorrect in
any respect; (ii) any failure by FYI or Newco to observe or perform
its covenants and agreements set forth in this Agreement or any other
agreement or document executed by it in connection with the
transactions contemplated hereby; (iii) any liability for warranty
claims arising from the provision of services by the Company
subsequent to the Closing Date; or (iv) any liability of the
Stockholder as a guarantor under any Real Property Lease, except in
any instance and to the extent Stockholder Losses result from the
negligence or misconduct of the Stockholder (with respect to periods
prior to the Closing Date).

(b) "Stockholder Losses" shall mean all damages
(including, without limitation, amounts paid in settlement with the
consent of FYI and Newco, which

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<PAGE> 39
consent may not be reasonably withheld), losses, obligations,
liabilities, claims, deficiencies, costs and expenses (including,
without limitation, reasonable attorneys' fees), penalties, fines,
interest and monetary sanctions, including, without limitation,
reasonable attorneys' fees and costs incurred to comply with
injunctions and other court and Agency orders, and other costs and
expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce the right of the Stockholder or
such other persons to indemnification hereunder.

10.5 INDEMNIFICATION FOR CERTAIN TAX MATTERS. The Stockholder
shall indemnify, defend and hold harmless the Surviving Corporation from and
against the liability of the Company or the Surviving Corporation with respect
to all Taxes, including interest and additions to Taxes, resulting from any
final determination (or settlement) that the Merger of the Company into Newco
fails to qualify as a tax-free transaction as to the Company and/or the
Surviving Corporation pursuant to Section 368(a)(1)(A) and Section 368(a)(2)(D)
of the Code as a result of any breach of a representation, warranty or covenant
of the Company or the Stockholder. FYI and the Surviving Corporation shall
indemnify, defend and hold harmless the Stockholder from and against the
liability of the Stockholder, the Company and the Surviving Corporation with
respect to all Taxes, resulting from any final determination (or settlement)
that the Merger of the Company into Newco, fails to qualify as a tax-free
transaction as to the Stockholder, the Company and/or the Surviving Corporation
pursuant to Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Code as a
result of any breach of a representation, warranty or covenant by FYI or Newco.

10.6 NOTICE OF LOSS. Except to the extent set forth in the next
sentence, a party to the Agreement will not have any liability under the
indemnity provisions of this Agreement with respect to a particular matter
unless a notice setting forth in reasonable detail the breach or other matter
which is asserted has been given to the Indemnifying Party (as defined below)
and, in addition, if such matter arises out of a suit, action, investigation,
proceeding or claim, such notice is given promptly, but in any event within
thirty (30) days after the Indemnified Party (as defined below) is given notice
of the claim or the commencement of the suit, action, investigation or
proceeding. Notwithstanding the preceding sentence, failure of the Indemnified
Party to give notice hereunder shall not release the Indemnifying Party from
its obligations under this Section 10, except to the extent the Indemnifying
Party is actually prejudiced by such failure to give notice. With respect to
FYI Losses, Environmental Costs, Pre-Closing Employee Claims and the matters
described in Section 10.5, the Stockholder shall be the Indemnifying Party and
FYI and Newco and their respective directors, officers, employees,
representatives, agents and attorneys shall be the Indemnified Parties. With
respect to Stockholder Losses, Post-Closing Employee Claims and the matters
described in the second sentence of Section 10.5, FYI and Newco shall be the
Indemnifying Party and the Stockholder and his agents and attorneys shall be
the Indemnified Party.

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<PAGE> 40
settlement thereof at its own cost and expense, and the Indemnified Party must
cooperate in any such defense or other action. The Indemnified Party shall
have the right, but not the obligation, to participate at its own expense in
defense thereof by counsel of its own choosing, but the Indemnifying Party
shall be entitled to control the defense unless the Indemnified Party has
relieved the Indemnifying Party from liability with respect to the particular
matter or the Indemnifying Party fails to assume defense of the matter. In the
event the Indemnifying Party shall fail to defend, contest or otherwise protect
in a timely manner against any such suit, action, investigation, claim or
proceeding, the Indemnified Party shall have the right, but not the obligation,
thereafter to defend, contest or otherwise protect against the same and make
any compromise or settlement thereof and recover the entire cost thereof from
the Indemnifying Party including, without limitation, reasonable attorneys'
fees, disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or the compromise or settlement thereof,
provided, however, that the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise, which
settlement or compromise the Indemnifying Party may reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice. Failure to reject
such notice within such thirty (30) day period shall be deemed an acceptance of
such settlement or compromise. The Indemnified Party shall have the right to
effect a settlement or compromise over the objection of the Indemnifying Party;
provided, that if (i) the Indemnifying Party is contesting such claim in good
faith or (ii) the Indemnifying Party has assumed the defense from the
Indemnified Party, the Indemnified Party waives any right to indemnity.
therefor. If the Indemnifying Party undertakes the defense of such matters,
the Indemnified Party shall not, so long as the Indemnifying Party does not
abandon the defense thereof, be entitled to recover from the Indemnifying Party
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party with the prior written
consent of the Indemnifying Party.

10.8 COOPERATION. Each of FYI Newco, the Surviving Corporation,
the Company and the Stockholder, and each of their affiliates, successors and
assigns shall cooperate with each other in the defense of any suit, action,
investigation, proceeding or claim by a third party and, during normal business
hours, shall afford each other access to their books and records and employees
relating to such suit, action, investigation, proceeding or claim and shall
furnish each other all such further information that they have the right and
power to furnish as may reasonably be necessary to defend such suit, action,
investigation, proceeding or claim, including, without limitation, reports,
studies, correspondence and other documentation relating to Environmental
Protection Agency, Occupational Safety and Health Administration, and Equal
Employment Opportunity Commission matters.

10.9 SATISFACTION OF CLAIMS. FYI and Newco shall first recover
amounts owing thereto pursuant to Sections 10.1, 10.2 and 10.3 for FYI Losses,
Environmental Costs and Pre-Closing Employee Claims first from the funds held
by it as described in Section 3.1(a) and thereafter from the Stockholder.

10.10 LIMITATIONS OF INDEMNIFICATION; PROPORTIONATE PAYMENTS. FYI,
Newco, the Surviving Corporation and the other persons or entities indemnified
pursuant to Sections

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<PAGE> 41
10.1, 10.2 and 10.3 shall not assert any claim for indemnification hereunder
until such time as and solely to the extent that the aggregate of all claims
that such persons may have against the Indemnifying Parties shall exceed $5,000
with respect to a single claim or $11,000 with respect to all claims,
regardless of amount. No Indemnifying Party shall be obligated to indemnify
and hold harmless any Indemnified Party with respect to any claim for
indemnification hereunder exceeding an aggregate of $1,192,325; provided,
however, that the foregoing limitation shall not be applicable to any breach of
the representations and warranties contained in Sections 5.3 and 6.2 hereof.
Any amounts paid for Stockholder Losses pursuant to this Section 10 shall be
paid in the same proportion of FYI Stock, valued at the then-fair market value
thereof, and cash as set forth on Annex II.

10.11 EXCLUSIVE REMEDY. The indemnification provided for in this
Section 10 shall be the exclusive remedy in any action seeking damages or any
other form of monetary relief brought by any party to this Agreement against
another party; provided, that nothing herein shall be construed to limit the
right of a party, in a proper case, to seek injunctive relief for a breach of
this Agreement.

11. SECURITIES ACT REPRESENTATIONS AND TRANSFER RESTRICTIONS

The FYI Stock acquired by the Stockholder pursuant to this Agreement
is being acquired solely for his own account, for investment purposes only, and
with no present intention of distributing, selling or otherwise disposing of it
in connection with a distribution.

11.1 TRANSFER RESTRICTIONS. Except for transfer upon death or to
immediate family members who agree in writing to be bound by the restrictions
set forth below (or trusts for the benefit of the undersigned or family
members, the trustees of which so agree in writing), for a period of two (2)
years from the Closing, the Stockholder shall not (a) sell, assign, exchange,
transfer, distribute or otherwise dispose of (i) any shares of FYI Stock
received by the Stockholder at the Effective Time of the Merger or otherwise
described in Annex II, or (ii) any interest (including, without limitation, an
option to buy or sell) in any such shares of FYI Stock, in whole or in part,
and no such attempted transfer shall be treated as effective for any purpose;
or (b) engage in any transaction, whether or not with respect to any shares of
FYI Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of FYI Stock acquired pursuant to Section 2
hereof (including, by way of example and not limitation, engaging in put, call,
short-sale, straddle or similar market transactions). The certificates
evidencing the FYI Stock delivered to the Stockholder pursuant to Section 3 of
this Agreement will bear a legend substantially in the form set forth below and
containing such other information as FYI may deem necessary or appropriate:

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<PAGE> 42
NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION OR OTHER
DISPOSITION PRIOR TO THE SECOND ANNIVERSARY OF THE CLOSING DATE. UPON
THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED
WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.

The Stockholder will execute and deliver to FYI prior to or at the Closing a
Lock-Up Agreement containing the foregoing agreements. The agreements in this
Section 11.1 shall apply to any FYI Stock to be received by the Stockholder
pursuant to the Earnout (as defined in Annex II).

11.2 ECONOMIC RISK; SOPHISTICATION. The Stockholder represents and
warrants to FYI and Newco that such Stockholder is an "accredited investor" as
defined in Regulation D promulgated under the 1933 Act; that such Stockholder
is able to bear the economic risk of an investment in the FYI Stock acquired
pursuant to this Agreement and can afford to sustain a total loss of such
investment and has such knowledge and experience in financial and business
matters that such Stockholder is capable of evaluating the merits and risks of
the proposed investment in the FYI Stock; and that such Stockholder has had an
adequate opportunity to ask questions and receive answers from the officers of
FYI concerning any and all matters relating to the transactions described
herein including, without limitation, the background and experience of the
current and proposed officers and directors of FYI, and the plans for the
operations of the business of FYI.

12. GENERAL

12.1 COOPERATION. The Company, the Stockholder, FYI and Newco
shall each deliver or cause to be delivered to the other on the Closing Date,
and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement. The Company will cooperate and use its reasonable
efforts to have the present officers, directors and employees thereof cooperate
with FYI on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any Tax return filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing Date.

12.2 SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND
WARRANTIES.

(a) Covenants and Agreements. All covenants and
agreements made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing and shall
continue in full force and effect thereafter according to their terms
without limit as to duration.

(b) Representations and Warranties. All representations
and warranties contained herein shall survive the Closing and shall
continue in full force and effect

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<PAGE> 43
thereafter for a period of two (2) years following the Closing, except
that (a) the representations and warranties contained in Section 5.8
and Section 6.12 hereof shall survive until the earlier of (i) the
expiration of the applicable periods (including any extensions) of the
respective statutes of limitation applicable to the payment of the
Taxes to which such representations and warranties relate without an
assertion of a deficiency in respect thereof by the applicable taxing
authority or (ii) the completion of the final audit and determinations
by the applicable taxing authority and final disposition of any
deficiency resulting therefrom, (b) the representations and warranties
contained in Section 5.19 shall survive until the expiration of the
applicable period of the statutes of limitation applicable to ERISA
matters, and (c) the representations and warranties contained in
Section 5.3 and Section 6.2 shall survive indefinitely.

(c) No Knowledge of Claims. Each of FYI and Newco
represents and warrants to the Company and the Stockholder that at the
date hereof neither FYI nor Newco knows of any breach or inaccuracy of
any representation or warranty made by the Company and the Stockholder
hereunder and of no basis for any claim under Section 10 hereof.

12.3 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of FYI, and the heirs and legal representatives of the Stockholder.

12.4 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholder,
the Company, Newco and FYI, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and this Agreement and the Annexes
hereto may be modified or amended only by a written instrument executed by the
Stockholder, the Company, Newco and FYI, acting through their respective
officers, duly authorized by their respective Boards of Directors.

12.5 COUNTERPARTS. This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same instrument.

12.6 BROKERS AND AGENTS. Except as disclosed on Schedule 12.6,
each party represents and warrants that it employed no broker or agent in
connection with this transaction and agrees to indemnify the other against all
loss, cost, damages or expense arising out of claims for fees or commission of
brokers employed or alleged to have been employed by such indemnifying party.

12.7 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, (i) FYI and Newco will pay the fees, expenses and
disbursements of FYI and

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<PAGE> 44
Newco and their respective agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the
performance and compliance with all conditions to be performed by FYI under
this Agreement. In the event the transactions herein contemplated are
consummated, the Stockholder will pay from personal funds and not from the
funds of the Company, the fees, expenses and disbursements of its agents,
representatives, accountants and counsel (other than with respect to the AA
Financial Statements) incurred in connection with the subject matter of this
Agreement. The Stockholder acknowledges that he, and not the Company or FYI,
will pay all taxes due upon receipt of the consideration payable to the
Stockholder pursuant to Section 2 hereof, and all sales, use, real property
transfer, recording, gains, stock transfer and other similar fees in connection
with the transactions contemplated by this Agreement.

12.8 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) delivering the same
in person to an officer or agent of such party, or (c) telecopying the same
with electronic confirmation of receipt.

(i) If to FYI or Newco, addressed to them at:

F.Y.I. Incorporated
California Medical Record Service Acquisition
Corp.
3232 McKinney Avenue, Suite 900
Dallas, Texas 75204
Telecopy No.: (214) 953-7556
Attn: Margot T. Lebenberg, Esq.

with copies to:

Locke Purnell Rain Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Telecopy No.: (214) 740-8800
Attn: Charles C. Reeder, Esq.

(ii) If to the Stockholder, addressed thereto at
the address set forth on Annex I, with copies to such counsel
as is set forth with respect to the Stockholders on such Annex
I;

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<PAGE> 45

(iii) If to the Company, addressed to:

C.M.R.S. Incorporated
7334 Topanga Canyon Boulevard
Suite 220
Canoga Park, California 91303
Telecopy No.: (818) 887-7352
Attn: Alan D. Simon

and marked "Personal and Confidential"

with copies to:

Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Street
Suite 800
Houston, Texas 77002-4086
Telecopy No.: (713) 308-5555
Attn: Daniel L. Cohen, Esq.

or to such other address or counsel as any party hereto shall specify pursuant
to this Section 12.8 from time to time.

12.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

12.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.

12.11 TIME. Time is of the essence with respect to this Agreement.

12.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.

12.13 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.

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<PAGE> 46
12.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.

12.15 MODIFICATION. It is the intent of the parties that the Company
transaction be structured as a tax-free reorganization under Section 368(a) of
the Code.

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<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

F.Y.I. INCORPORATED
ATTEST:

/s/ Kent Jamison By: /s/ David Lowenstein
- ---------------------------------- -------------------------------
Name: David Lowenstein
Title: Executive Vice President

CALIFORNIA MEDICAL RECORD SERVICE
ACQUISITION CORP.
ATTEST:

/s/ Kent Jamison By: /s/ David Lowenstein
- ---------------------------------- -------------------------------
Name: David Lowenstein
Title: Vice President

C.M.R.S. INCORPORATED
ATTEST:

/s/ Colleen Montes By: /s/ Alan Simon
- ---------------------------------- -------------------------------
Name: Alan Simon
Title: President
<PAGE> 48

THE STOCKHOLDER:

ATTEST:

/s/ Colleen Montes /s/ Alan D. Simon
- ---------------------------------- ----------------------------
Alan D. Simon
<PAGE> 49
ANNEX I

TO THAT CERTAIN
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF AUGUST 30, 1996
BY AND AMONG
F.Y.I. INCORPORATED
CALIFORNIA MEDICAL RECORD SERVICE ACQUISITION CORP.
C.M.R.S. INCORPORATED
AND
THE STOCKHOLDER NAMED THEREIN

STOCKHOLDER OF THE COMPANY:

<TABLE>
<CAPTION>
Number of Shares
Name and Address of Company Stock Date of Acquisition
- ---------------- ---------------- -------------------
<S> <C> <C>
Alan D. Simon 1,000 November 1, 1985
7334 Topanga Canyon Boulevard
Suite 220
Canoga Park, California 91303
</TABLE>
<PAGE> 50
ANNEX II

Aggregate consideration to be paid to the Stockholders:

Cash - $898,685, of which $849,680.00 of such amount shall be paid at
the Closing, and of which $49,005.00 of such amount shall be held by
FYI pursuant to Section 3.1(a) hereof.

Stock - 53,450 shares of FYI Stock, of which 50,536 shares of FYI
Stock shall be delivered at the Closing, and of which 2,914 shares of
FYI Stock shall be held by FYI pursuant to Section 3.1(a) hereof.

Earnout - As a method of reconciling valuation differences, Seller
shall be entitled to receive a "growth" earnout (the "Earnout") equal
to 500% of the amount which the Surviving Corporation's earnings
before interest, taxes, depreciation and amortization ("EBITDA") is in
excess of the following target for the specified twelve- month period:

EBITDA Target

$182,703.00 For the Twelve-Month Period Beginning
August 1, 1996 and Ending July 31, 1997
(the "Twelve-Month Period")

; provided, however, in no event may the Earnout amount exceed
$2,500,000.00. FYI corporate overhead shall not be allocated to the
Surviving Corporation, and (i) expenses related to the transactions
effected pursuant to the Agreement, (ii) reasonable expenses related
to attendance by the Stockholder at the request of FYI at various
conferences such as the AHIMA Conference in October 1996 and (iii)
reasonable expenses related to the planned facility relocation in
California as determined by FYI and the Stockholder shall not be
considered as expenses for purposes of the foregoing calculation. The
Stockholder recognizes and agrees that travel and related expenses
associated with FYI's quarterly management meetings shall be deducted
from such EBITDA calculation.

In the event that the twelve-month capital expenditures of the
Surviving Corporation are in excess of $20,000, the Earnout EBITDA
target will be increased
<PAGE> 51
by an amount equal to the amount of twelve-month capital expenditures
in excess of $20,000 times 10%.

Payment of the Earnout, if earned, will be made by delivery
not later than September 1, 1997 of not more than 49% of the aggregate
Earnout payment in cash payable to the Stockholder, with the balance
payable by delivery of FYI Stock on such date valued at the simple
average closing price thereof on the Nasdaq National Market System for
the ten (10) consecutive business day period ending on August 31, 1997
(the "Closing Price") lessthe amount of Earnout holdback (the "Earnout
Holdback"). The Earnout Holdback will be calculated by multiplying
the net accounts receivable of the Surviving Corporation (the "Net
Accounts Receivable") by five (5). In no event shall the Earnout
Holdback exceed the aggregate Earnout payment, if any, to be made
under this Annex II. The Net Accounts Receivable will be calculated
as follows: Revenues billed by the Surviving Corporation for the
Twelve-Month Period less collections received by the Surviving
Corporation for the Twelve- Month Period less bad debt write-offs
associated with the Twelve-Month Period. The amount of the Earnout
Holdback may be satisfied at the Stockholder's option with FYI Common
Stock or cash or a combination of both; provided, always that the FYI
Stock consideration is not to be less than 51% of the Earnout
Holdback. FYI will release to the Stockholder by September 1, 1998
all or a portion of the Earnout Holdback, in the same proportion of
FYI Stock and cash as comprises the Earnout Holdback, with the FYI
Stock valued at the Closing Price, to be calculated as follows: For
the twelve months beginning August 1, 1997 and ending July 31, 1998,
the actual cash collection of the accounts receivable of the Surviving
Corporation attributable to the Twelve- Month Period multiplied by
five (5). After calculation of the Earnout, the Surviving Corporation
shall provide the Stockholder with copies of all work papers and other
relevant documents to verify the calculation of the Earnout.

FYI agrees that subsequent to the Closing Date and until the
expiration of the period of the Earnout, it shall maintain the
separate corporate existence of the Surviving Corporation and shall
operate the Surviving Corporation as a wholly-owned subsidiary of FYI
with separate books of account and records as shall be necessary to
calculate the Earnout.

The Stockholder shall not sell, assign, exchange or otherwise
transfer his rights to the Earnout amount, in whole or in part, and
any such attempted transfer shall be treated as void and ineffective
for any purposes.

<PAGE> 1

Exhibit 2.15

--------------------------------------------------

AGREEMENT AND PLAN OF REORGANIZATION

dated as of the 30th day of August, 1996

by and among

F.Y.I. INCORPORATED

TEXAS MEDICAL RECORD SERVICE ACQUISITION CORP.

TEXAS MEDICAL RECORD SERVICE, INC.

and

THE STOCKHOLDERS named herein

--------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Delivery and Filing of Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Certificate of Incorporation, By-laws and Board
of Directors of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certain Information With Respect to the Capital
Stock of the Company, FYI and Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. CONVERSION OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Manner of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Calculation of FYI Shares for the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Earnings Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. DELIVERY OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Delivery Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SIMON . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(A) Representations and Warranties of the Company
and Simon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Organization, Existence and Good Standing of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Capital Stock of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7 Permits and Intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Assets and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Real Property Leases; Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.11 Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.15 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 Litigation and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.18 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

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<PAGE> 3
<TABLE>
<S> <C> <C>
5.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.20 Employees; Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.22 Interests in Customers, Suppliers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.23 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.24 Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.25 Bank Accounts and Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.26 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(B) Representations and Warranties of Simon. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.27 Authority; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.28 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.29 No Intention to Dispose of FYI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.30 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.31 No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

6. REPRESENTATIONS OF FYI AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 FYI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Capitalization of FYI and Ownership of FYI Stock . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Transactions in Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Business; Real Property; Material Agreements;
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Conformity with Law and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
STOCKHOLDERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Representations and Warranties; Performance
of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.7 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.8 Lock-Up Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

</TABLE>

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<PAGE> 4
<TABLE>
<S> <C> <C>
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF FYI
AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Representations and Warranties; Performance
of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Repayment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 Stockholder Releases; Related Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . 28
8.7 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Noncompetition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Lock-Up Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

9. COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 [Intentionally Left Blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Preservation of Tax and Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.4 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.5 Automobile Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 FYI Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Employee Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Stockholder Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Indemnification for Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.6 Notice of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7 Right to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.9 Satisfaction of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.10 Limitations of Indemnification; Proportionate
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.11 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

11. SECURITIES ACT REPRESENTATIONS AND TRANSFER
RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2 Economic Risk; Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

12. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Survival of Covenants, Agreements, Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>

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<PAGE> 5
<TABLE>
<S> <C> <C>
12.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.6 Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.10 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.11 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.12 Reformation and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.15 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>

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<PAGE> 6
SCHEDULES AND ANNEXES

<TABLE>
<CAPTION>
SCHEDULES
- ---------
<S> <C>
1.1 Articles of Merger and Plan and Agreement of Merger
1.3(d) Officers of the Surviving Corporation
5.2 Company Charter Documents
5.3 Capital Stock
5.5 Financial Statements and Contingent Liabilities
5.6 Accounts and Notes Receivable
5.7 Permits and Licenses
5.8 Taxes
5.9 Assets and Properties
5.10 Real Property Leases
5.11 Environmental Matters
5.12 Contracts
5.16 Litigation
5.18 Intellectual Property Rights
5.19 Employee Benefit Plans
5.20 Employee Matters
5.21 Insurance
5.23 Business Relations
5.24 Officers and Directors
5.25 Bank Accounts
5.26 Absence of Certain Changes
5.27 Liens on Stock
6.6 FYI Capital Stock
6.8 FYI Subsidiaries
6.9 FYI Financial Information
6.10 FYI Compliance with Laws
6.11 No Violations by FYI
8.6 Continuing Obligations
9.4 Optionees

ANNEXES
- -------

I Stockholders of the Company
II Aggregate Consideration to be paid to the Stockholder
III FYI Charter Documents
IV Opinion of Counsel to FYI and Newco
V Employment Agreement
VI Opinion of Counsel to the Company
VII Noncompetition Agreement
VIII Lock-Up Agreement
</TABLE>

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<PAGE> 7
AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of the 30th day of August, 1996, by and among F.Y.I. INCORPORATED, a
Delaware corporation ("FYI"), TEXAS MEDICAL RECORD SERVICE ACQUISITION CORP., a
Delaware corporation ("Newco"), TEXAS MEDICAL RECORD SERVICE, INC., a Texas
corporation (the "Company"), and CALIFORNIA MEDICAL RECORD SERVICE ACQUISITION
CORP., a Delaware corporation, and KAREN JILL SIMON ("Simon"), each of
California Medical Record Service Acquisition Corp. and Karen Jill Simon
holding shares in the Company in the respective amounts set forth on Annex I
(each a "Stockholder" and collectively the "Stockholders") and constituting all
the stockholders of the Company.

1. THE MERGER

1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause Articles of Merger with respect to the Merger (the
"Articles of Merger") to be signed, verified and delivered to the Secretary of
State of the State of Delaware and, if required, a similar filing to be made
with the relevant authorities in the State of Texas, on or before the Closing
Date (as defined in Section 4). The Articles of Merger and related Plan and
Agreement of Merger are attached hereto as Schedule 1.1.

1.2 EFFECTIVE TIME OF THE MERGER. The "Effective Time of the
Merger" shall be the Closing Date as defined in Section 4. At the Effective
Time of the Merger, the Company shall be merged with and into Newco, in
accordance with the Articles of Merger, the
<PAGE> 8
separate existence of the Company shall cease and the corporate name of Newco
shall be Texas Medical Record Service Acquisition Corp. Newco shall be the
surviving party in the Merger and is hereinafter sometimes referred to as the
"Surviving Corporation." The Merger will be effected in a single transaction.

1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS
OF SURVIVING CORPORATION. At the Effective Time of the Merger:

Ed H. Bowman, Jr.
Thomas C. Walker
David Lowenstein

(a) As of the date of this Agreement, the authorized
capital stock of the Company consists of ten thousand (10,000) shares
of Common Stock, no par value per share (the "Company Stock"), of
which (i) one thousand two-hundred thirty-five (1,235) shares are
issued and outstanding and (ii) one thousand seven-hundred sixty-five
(1,765) shares are held by the Company as treasury shares;

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<PAGE> 9
(b) As of the date of this Agreement, the authorized
capital stock of FYI consists of twenty-six million (26,000,000)
shares of Common Stock, $.01 par value per share ("FYI Stock"), of
which five million five hundred twenty-three thousand one hundred
forty-seven (5,523,147) shares were issued and outstanding at July 31,
1996, and one million (1,000,000) shares of Preferred Stock, $.01 par
value per share, of which no shares are issued and outstanding; and

2. CONVERSION OF STOCK

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<PAGE> 10
As of the Effective Time of the Merger:

All FYI Stock received by the Stockholders as of the Effective Time of
the Merger shall, except for restrictions on resale or transfer described in
Section 11.1 hereof, have the same rights as all of the other shares of
outstanding FYI Stock and shall be registered under the 1933 Act (as
hereinafter defined). All voting rights of such FYI Stock received by the
Stockholders shall be fully exercisable by the Stockholders and the
Stockholders shall not be deprived nor restricted in exercising those rights.
At the Effective Time of the Merger, FYI shall have no class of capital stock
issued and outstanding which, as a class, shall have any rights or preferences
senior to the shares of FYI Stock received by the Stockholders, including,
without limitation, any rights or preferences as to dividends or as to the
assets of FYI upon liquidation or dissolution or as to voting rights.

3. DELIVERY OF SHARES

3.1 DELIVERY PROCEDURE. At or after the Effective Time of the
Merger and at the Closing:

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<PAGE> 11
(a) The Stockholders, as the holders of all outstanding
certificates representing shares of the Company Stock, shall, upon
surrender of such certificates, be entitled to receive the number of
shares of FYI Stock and the amount of cash calculated pursuant to
Section 2.2 above less the sum of $24,502.50 in cash and 1,457 shares
of FYI Stock to be retained by FYI for a period of ninety (90) days
from the date of the Closing as security and as an offset for any
breach of the representations, warranties, covenants and agreements of
the Company and the Stockholders, and for the Stockholders'
indemnification obligations, in the manner and to the extent set forth
herein; and

(b) Until the certificates representing the Company Stock
have been surrendered by the Stockholders and replaced by the FYI
Stock, the certificates for the Company Stock shall, for all corporate
purposes be deemed to evidence the ownership of the number of shares
of FYI Stock and/or cash that such Stockholders are entitled to
receive as a result of the Merger, as set forth in Section 2.2 above,
notwithstanding the number of shares of the Company such certificates
represent.

4. CLOSING

On the Closing Date (as defined below), the parties shall take all
actions necessary (i) to effect the Merger (including, if permitted by
applicable state law, the filing with the appropriate state authorities of the
Articles of Merger) and (ii) to effect the conversion and delivery of shares
referred to in Section 3 hereof (hereinafter referred to as the "Closing").
The Closing shall take place at the offices of Locke Purnell Rain Harrell (A
Professional Corporation), 2200 Ross Avenue, Suite 2200, Dallas, Texas 75201.
The date on which the Closing shall occur shall be referred to as the "Closing
Date." On the Closing Date, the Articles of Merger shall be filed with the
appropriate state authorities, or if already filed shall become effective, and
all transactions contemplated by this Agreement, including the conversion and
delivery of shares, the delivery by wire transfers or by certified checks (at
the option of the Stockholders) in amounts equal to the aggregate cash portion
of the consideration that the Stockholders shall be entitled to receive
pursuant to the Merger referred to in Section 2 hereof, shall occur and be
deemed to be completed. Time is of the essence.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SIMON

(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SIMON

Each of the Company and Simon represent and warrant that all of the
following representations and warranties with respect to the Company and its
business and operations set forth in this Section 5(A) are true and correct at
the time of the Closing. Each of the Company and each Stockholder (with
respect to each Stockholder solely with respect to such Stockholder),
represents and warrants that Sections 5.8 and 5.29 is true and correct at the
time of the Closing. For purposes of this Section 5(A), all references to
Stockholders except for Sections 5.8 and 5.29 shall refer only to Simon.

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5.1 AUTHORIZATION. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of
each such party, enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) the
remedy of specific performance and injunctive relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceedings may be brought and (iii) rights to indemnification hereunder may be
limited under applicable securities laws. The Company has full corporate
power, capacity and authority to execute this Agreement and the Articles of
Merger and all other agreements and documents contemplated hereby.

5.3 CAPITAL STOCK OF THE COMPANY.

(b) The Stockholders (i) own of record and beneficially
(subject to the community property interest of any Stockholder's
spouse) and have good and marketable title to all of the issued and
outstanding shares of the Company Stock, free and clear of any and all
liens, mortgages, security interests, encumbrances, pledges, charges,
adverse claims, options, rights or restrictions of any character
whatsoever other than standard state and federal securities law
private offering legends and restrictions or arising under any
buy-sell or stockholders' or similar agreement existing among the
Stockholders (each of which shall be terminated on or before the
Closing) (collectively, "Liens"), and (ii) have the right to vote the
Company Stock on any matters as to which any shares of the Company
Common Stock are

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<PAGE> 13
entitled to be voted under the laws of the state of incorporation of
the Company and the Company's Articles of Incorporation and By-laws,
free of any right of any other person.

5.5 FINANCIAL STATEMENTS.

(a) The Company has previously furnished to FYI and Newco
the reviewed balance sheet of the Company as of December 31, 1995 and
the related statements of operations, stockholder's equity and cash
flows for the three fiscal years then ended, as reviewed by Richard
Gralitzer & Company, certified public accountants, together with
management's statements of operations and stockholders' equity for the
seven-month period ended July 31, 1996 ("Gralitzer Financial
Statements"). The Company has furnished to FYI the audited balance
sheet of the Company as of July 31, 1996 and the related statements of
operations, stockholders' equity and cash flows for the fiscal year
then ended, as reviewed by Arthur Andersen LLP, independent public
accountants (the "AA Financial Statements," and together with the
Gralitzer Financial Statements, the "Financial Statements"). The
Gralitzer Financial Statements and, to the best knowledge of the
Company and the Stockholders, the AA Financial Statements present
fairly the financial position and results of operations of the Company
as of the indicated dates and for the indicated periods and have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"). The Company has previously permitted
FYI and Newco full access to papers pertaining to the Financial
Statements, including those work papers in the possession of or
prepared by Richard Gralitzer & Company and Arthur Andersen LLP.

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<PAGE> 14
Stockholders. The Company shall provide FYI with an aging of all accounts and
notes receivable through July 31, 1996 showing amounts due in 30-day aging
categories. Except to the extent reflected on Schedule 5.6, all such accounts
and notes are legal, valid and binding obligations of the obligors collectible
in the amount shown on Schedule 5.6, net of reserves reflected in such balance
sheet.

5.8 TAX MATTERS.

(a) The Company has filed all income tax returns required
to be filed thereby and all returns of other Taxes (as defined below)
required to be filed thereby and has paid or provided for all Taxes
shown to be due on such returns and all such returns are accurate and
correct in all material respects. Except as set forth on Schedule
5.8, (i) no action or proceeding for the assessment or collection of
any Taxes is pending against the Company; (ii) no deficiency,
assessment or other formal claim for any Taxes has been asserted or
made against the Company that has not been fully paid or finally
settled; and (iii) no issue has been formally raised by any taxing
authority in connection with an audit or examination of any return of
Taxes. To the best knowledge of the Company and the Stockholders, no
federal, state or foreign income tax returns of the Company have been
examined, and there are no outstanding agreements or waivers extending
the applicable statutory periods of limitation for such Taxes for any
period. All Taxes that the Company has been required to collect or
withhold have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority. No Taxes
will be assessed on or after the Closing Date against the Company for
any tax period ending on or prior to July 31, 1996, or for any period
ending after July 31, 1996 with respect

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<PAGE> 15
to any portion of such tax period that includes or is prior to July
31, 1996 other than for Taxes disclosed on Schedule 5.8. For purposes
of this Agreement, "Taxes" shall mean all taxes, charges, fees, levies
or other assessments including, without limitation, income, excise,
property, withholding, sales and franchise taxes, imposed by the
United States, or any state, county, local or foreign government or
subdivision or agency thereof, and including any interest, penalties
or additions attributable thereto.

(b) The Company is not a party to any Tax allocation or
sharing agreement.

(f) The Company is not an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.

(g) The fair market value of the assets of the Company
exceeds the sum of its liabilities, plus the amount of liabilities, if
any, to which the assets are subject.

(h) The Company is not under jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of
the Code.

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<PAGE> 16
(i) The liabilities of the Company to be assumed by Newco
and the liabilities to which the transferred assets are subject were
incurred by the Company in the ordinary course of its trade or
business.

(j) The fair market value of the FYI stock and other
consideration received by the Stockholders will be approximately equal
to the fair market value of the Company Stock surrendered in the
Merger.

(k) There is no plan or intention by any Stockholder to
sell, exchange, or otherwise dispose of any shares of FYI Stock
received by such Stockholder in the Merger as of the Effective Time of
the Merger or otherwise described in Annex II. For purposes of this
representation, shares of the Company Stock exchanged for cash or
other property and shares of the Company Stock exchanged for cash in
lieu of fractional shares of FYI Stock will be treated as outstanding
shares of the Company Stock on the date of the transaction. Moreover,
shares of the Company Stock and shares of FYI stock held by the
Stockholders and otherwise sold, redeemed, or disposed of prior to or
subsequent to the Closing Date will be considered in making this
representation. In addition, there is no plan or intention by any
Stockholder to sell, exchange or otherwise dispose of FYI Stock
received by such Stockholder pursuant to Section 10.10.

(l) The Company and the Stockholders will each pay their
respective expenses, if any, incurred in connection with the Merger.

(m) There is no intercorporate indebtedness existing
between FYI and the Company or between Newco and the Company that was
issued, acquired, or will be settled at a discount.

(n) None of the shares of FYI Stock received by the
Stockholders in the Merger will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to
the Stockholders in their capacity as an employee, including but not
limited to amounts paid pursuant to the Employment Agreement described
in Section 7.5, will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.

(o) The Company is a C corporation within the meaning of
Subchapter C of the Code. The Company presently files its federal
income tax returns on a cash basis of accounting.

5.9 ASSETS AND PROPERTIES.

(a) REAL PROPERTY. The Company does not own or hold any
interest in real property other than as set forth in Schedule 5.10.

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<PAGE> 17
(b) PERSONAL PROPERTY. Except as set forth on Schedule
5.9 and except for inventory and supplies disposed of or consumed, and
accounts receivable collected or written off, and cash utilized, all
in the ordinary course of business consistent with past practice, the
Company owns all of its inventory, equipment and other personal
property (both tangible and intangible) reflected on the latest
balance sheet included in the Financial Statements or acquired since
December 31, 1995, free and clear of any Liens, except for statutory
Liens for current taxes, assessments or governmental charges or levies
on property not yet due and payable and such imperfections of title
and encumbrances as would not detract in any material respect from the
value of the property encumbered (collectively, the "Permitted
Liens").

(c) CONDITION OF PROPERTIES. Except as set forth on
Schedule 5.9, the leasehold estates the subject of the Real Property
Leases (as defined in Section 5.10) and the tangible personal property
owned or leased by the Company are in good operating condition and
repair, ordinary wear and tear excepted; and neither the Company nor
the Stockholders have any knowledge of any condition not disclosed
herein of any such leasehold estate that would materially affect the
fair market value, use or operation of any leasehold estate or
otherwise have a Material Adverse Effect.

(d) COMPLIANCE. The continued use and occupancy of the
leasehold estates the subject of the Real Property Leases as currently
operated, used and occupied will not violate any zoning, building,
health, flood control, fire or other law, ordinance, order or
regulation or any restrictive covenant the violation of which would
have a Material Adverse Effect. To the best knowledge of the
Stockholders, there are no violations of any federal, state, county or
municipal law, ordinance, order, regulation or requirement affecting
any portion of the leasehold estates and no written notice of any such
violation has been issued by any governmental authority, the violation
of which would have a Material Adverse Effect.

5.10 REAL PROPERTY LEASES; OPTIONS. Schedule 5.10 sets forth a
list of (i) all leases and subleases under which the Company is lessor or
lessee or sublessor or sublessee of any real property, together with all
amendments, supplements, nondisturbance agreements, brokerage and commission
agreements and other agreements pertaining thereto ("Real Property Leases");
(ii) all material options held by the Company or contractual obligations on the
part of the Company to purchase or acquire any interest in real property; and
(iii) all options granted by the Company or contractual obligations on the part
of the Company to sell or dispose of any material interest in real property.
Copies of all Real Property Leases and such options and contractual obligations
have been delivered to FYI and Newco. The Company has not assigned any Real
Property Leases or any such options or obligations. There are no liens on the
interest of the Company in the Real Property Leases, subject only to (i)
Permitted Liens and (ii) those matters set forth on Schedule 5.10. The Real
Property Leases and options and contractual obligations listed on Schedule 5.10
are in full force and effect and constitute binding obligations of the Company
and the other parties thereto, and (x) there are no defaults thereunder by the
Company or, to the best knowledge of the Company and the Stockholders, by any
other party thereto, and (y) no event has occurred that with notice, lapse of
time or both would constitute a default by the Company or, to the

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<PAGE> 18
best knowledge of the Company and the Stockholders, by any other party thereto,
except where any such default would not have a Material Adverse Effect.

5.11 ENVIRONMENTAL LAWS AND REGULATIONS.

(a) (i) During the occupancy and operation of the
"Subject Property" (as defined below) by the Company and, to the best
knowledge of the Company and the Stockholders, prior to its occupancy
and operation, the operations of the Subject Property, and any use,
storage, treatment, disposal or transportation of "Hazardous
Substances" (as defined below) that has occurred in or on the Subject
Property prior to the date of this Agreement have been in compliance
with "Environmental Requirements" (as defined below); (ii) during the
occupancy and operation of the Subject Property by the Company and, to
the best knowledge of the Company and the Stockholders, prior to its
occupancy or operation, no release, leak, discharge spill, disposal or
emission of Hazardous Substances has occurred in, on or under the
Subject Property in a quantity or manner that materially violates or
requires remediation under Environmental Requirements; (iii) to the
best knowledge of the Company and the Stockholders, the Subject
Property is free of Hazardous Substances as of the date of this
Agreement, except for the presence of small quantities of Hazardous
Substances utilized by the Company or other tenants of the Subject
Property in the ordinary course of their business; (iv) there is no
pending or, to the best knowledge of the Company and the Stockholders,
threatened litigation or administrative investigation or proceeding
concerning the Subject Property involving Hazardous Substances or
Environmental Requirements; (v) to the best knowledge of the Company
and the Stockholders, there are no above-ground or underground storage
tank systems located at the Subject Property; and (vi), except as set
forth on Schedule 5.11, the Company has never owned, operated, or
leased any real property other than the Subject Property.

(b) DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:

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<PAGE> 19
or are currently classified or considered to be pollutants, hazardous
or toxic under Environmental Requirements.

"Subject Property" means all property subject to the Real
Property Leases.

5.12 CONTRACTS.

(b) Except as set forth on Schedule 5.12, each Contract
is in full force and effect on the date hereof, the Company is not in
default under any Contract, the Company has not given or received
notice of any default under any Contract, and, to the knowledge of the
Company and the Stockholders, no other party to any Contract is in
default thereunder, except in all cases where any such default would
not have a Material Adverse Effect.

5.13 NO VIOLATIONS. A certified copy of the Articles of
Incorporation and a true, correct and complete copy of the By-laws, both as
amended to date, of the Company (the "Charter Documents") have been delivered
to FYI. The execution, delivery and performance of this Agreement and the
other agreements and documents contemplated hereby by the Company and the
Stockholders and the consummation of the transactions contemplated hereby will
not (i) violate any provision of any Charter Document, (ii) except as set forth
on Schedule 5.8, violate any statute, rule, regulation, order or decree of any
public body or authority by which the Company or the Stockholders or its or
their respective properties or assets are bound, or (iii) result in a violation
or breach of, or constitute a default under, or result in the creation of any
encumbrance upon, or create any rights of termination, cancellation or
acceleration in any person with respect to any Contract or any material
license, franchise or permit of the Company or any other agreement, contract,
indenture, mortgage or instrument to which the Company is a party or by which
any of its

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<PAGE> 20
properties or assets is bound, in each event except where such breach or
violation would not have a Material Adverse Effect.

5.14 GOVERNMENT CONTRACTS. The Company is not now a party to any
governmental contracts subject to price redetermination or renegotiation.

5.15 CONSENTS. Except as set forth on Schedule 5.15, no consent,
approval or other authorization of any governmental authority or under any
Contract or other agreement or commitment to which the Company or the
Stockholders are parties or by which its or their respective assets are bound
is required as a result of or in connection with the execution or delivery of
this Agreement and the other agreements and documents to be executed by the
Company and the Stockholders or the consummation by the Company and the
Stockholders of the transactions contemplated hereby, except where the failure
to obtain any such consent, approval or other authorization would not have a
Material Adverse Effect.

5.16 LITIGATION AND RELATED MATTERS. Set forth on Schedule 5.8 and
Schedule 5.16 is a list of all actions, suits, proceedings, investigations or
grievances pending against the Company or, to the best knowledge of the Company
and the Stockholders, threatened against the Company, the business or any
property or rights of the Company, at law or in equity, before or by any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign ("Agencies").
None of the actions, suits, proceedings or investigations listed on Schedule
5.8 and Schedule 5.16 either (i) results or would, if adversely determined,
have a Material Adverse Effect or (ii) affects or would, if adversely
determined, affect the right or ability of the Company to carry on its business
substantially as now conducted. The Company is not subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to
its business, operations or assets or its employees, nor in default with
respect to any order, writ, injunction or decree of any court or Agency with
respect to its assets, business, operations or employees. Schedule 5.16 lists
(x) all worker's compensation claims outstanding against the Company as of the
date hereof and (y) all actions, suits or proceedings filed by or against the
Company since December 31, 1995.

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<PAGE> 21
(ii) whether each item of Intellectual Property is owned or licensed by the
Company, and if licensed, the licensor and the license fees therefor. Unless
otherwise indicated on Schedule 5.18, the Company has the right to use and
license the Intellectual Property, and the consummation of the transactions
contemplated hereby will not result in the loss or material impairment of any
rights of the Company in the Intellectual Property. Each item constituting
part of the Intellectual Property has been, to the extent indicated on Schedule
5.18, registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office or such other government entity, domestic or
foreign, as is indicated on Schedule 5.18; all such registrations, filings and
issuances remain in full force and effect; and all fees and other charges with
respect thereto are current. Except as stated on Schedule 5.18, there are no
pending proceedings or adverse claims made or, to the best knowledge of the
Company and the Stockholders, threatened against the Company with respect to
the Intellectual Property; there has been no litigation commenced or threatened
in writing within the past five (5) years with respect to the Intellectual
Property or the rights of the Company therein; and the Company and the
Stockholders have no knowledge that (i) the Intellectual Property or the use
thereof by the Company conflicts with any trade names, trademarks, service
marks, trademark or service mark registrations or applications, patents, patent
applications, patent licenses or copyright registrations or applications of
others ("Third Party Intellectual Property"), or (ii) such Third Party
Intellectual Property or its use by others or any other conduct of a third
party conflicts with or infringes upon the Intellectual Property or its use by
the Company.

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<PAGE> 22
(within the meaning of Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in connection with any
Plan that could be expected to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA
or a tax pursuant to Section 4975(a) of the Code. No material claim, action,
proceeding, or litigation has been made, commenced or, to the knowledge of the
Company and the Stockholders, threatened with respect to any Plan (other than
for benefits payable in the ordinary course and PBGC insurance premiums). No
Plan or related trust owns any securities in violation of Section 407 of ERISA.
Neither the Company nor any Group Member has incurred any liability or taken
any action, or has any knowledge of any action or event, that could cause it to
incur any liability (i) under Section 412 of the Code or Title IV of ERISA with
respect to any "single employer plan" (within the meaning of Section
4001(a)(15) of ERISA), (ii) on account of a partial or complete withdrawal
(within the meaning of Section 4205 and 4203 of ERISA, respectively) with
respect to any "multi-employer plan" (within the meaning of Section 3(37) of
ERISA), (iii) on account of unpaid contributions to any such multi-employer
plan, or (iv) to provide health benefits or other non-pension benefits to
retired or former employees, except as specifically required by Section
4980B(f) of the Code. Except as set forth on Schedule 5.19, neither the
execution and delivery of this Agreement by the Company or the consummation of
the transactions contemplated hereby will (i) except to the extent otherwise
provided by applicable law, entitle any current or former employee of the
Company to severance pay, unemployment compensation or any similar payment,
(ii) except to the extent otherwise provided by applicable law, accelerate the
time of payment or vesting, or increase the amount of, any compensation due to
any such employee or former employee, or (iii) directly or indirectly result in
any payment made or to be made to or on behalf of any person to constitute a
"parachute payment" (within the meaning of Section 280G of the Code). For
purposes of this Agreement, "Group Member" shall mean any member of any
"affiliated service group" as defined in Section 414(m) of the Code that
includes the Company, any member of any "controlled group of corporations" as
defined in Section 1563 of the Code that includes the Company or any member of
any group of "trades or businesses under common control" as defined by Section
414(c) of the Code that includes the Company.

5.20 EMPLOYEES; EMPLOYEE RELATIONS.

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<PAGE> 23
officer or employee thereof since December 31, 1995 other than in the
ordinary course, and (vi) all accrued but unpaid vacation pay owing to
any officer or employee that is not disclosed on the Financial
Statements.

(b) Except as disclosed on Schedule 5.20, the Company is
not a party to, or bound by, the terms of any collective bargaining
agreement, and the Company has not experienced any material labor
difficulties during the last five (5) years. Except as set forth on
Schedule 5.20, there are no labor disputes existing, or to the best
knowledge of the Company and the Stockholders, threatened involving,
by way of example, strikes, work stoppages, slowdowns, picketing, or
any other interference with work or production, or any other concerted
action by employees. No charges or proceedings before the National
Labor Relations Board, or similar agency, exist, or to the best
knowledge of the Company and the Stockholders, are threatened.

(c) In the reasonable opinion of the Company and the
Stockholders, the relationships enjoyed by the Company with its
employees are good, and the Company and the Stockholders have not been
advised by any employee that such employee does not intend to continue
in the employ of the Company following the Closing. Except as
disclosed on Schedule 5.20, the Company is not a party to any
employment contract with any individual or employee (other than oral
employment arrangements terminable at will without further obligation
by either party), either express or implied. No legal proceedings,
charges, complaints or similar actions exist under any federal, state
or local laws affecting the employment relationship including, but not
limited to: (i) anti-discrimination statutes such as Title VII of the
Civil Rights Act of 1964, as amended (or similar state or local laws
prohibiting discrimination because of race, sex, religion, national
origin, age and the like); (ii) the Fair Labor Standards Act or other
federal, state or local laws regulating hours of work, wages, overtime
and other working conditions; (iii) requirements imposed by federal,
state or local governmental contracts such as those imposed by
Executive Order 11246; (iv) state laws with respect to tortious
employment conduct, such as slander, false light, invasion of privacy,
negligent hiring or retention, intentional infliction of emotional
distress, assault and battery, or loss of consortium; or (v) the
Occupational Safety and Health Act, as amended, as well as any similar
state laws, or other regulations respecting safety in the workplace;
and to the best knowledge of the Company and the Stockholders, no
proceedings, charges or complaints are threatened under any such laws
or regulations and no facts or circumstances exist that would give
rise to any such proceedings, charges, complaints, or claims, whether
valid or not. The Company is not subject to any settlement or consent
decree with any present or former employee, employee representative or
any government or Agency relating to claims of discrimination or other
claims in respect to employment practices and policies; and no
government or Agency has issued a judgment, order, decree or finding
with respect to the labor and employment practices (including
practices relating to discrimination) of the Company. Since December
31, 1994 the Company has not incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act or similar
state laws; and the Company has not laid off

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more than ten percent (10%) of its employees at any single site of
employment in any ninety (90) day period during the twelve (12) month
period ending July 31, 1996.

(d) The Company is in compliance in all respects with the
provisions of the Americans with Disabilities Act, except where the
failure to be in such compliance would not have a Material Adverse
Effect.

5.21 INSURANCE. Schedule 5.21 contains an accurate list of the
policies and contracts (including insurer, named insured, type of coverage,
limits of insurance, required deductibles or co-payments, annual premiums and
expiration date) for fire, casualty, liability and other forms of insurance
maintained by, or for the benefit of, the Company. All such policies are in
full force and effect and by their terms are scheduled to remain in full force
and effect through the Closing Date and, in the reasonable opinion of the
Company and the Stockholders, are adequate for the business engaged in by the
Company. Neither the Company nor the Stockholders have received any notice of
cancellation or non-renewal or of significant premium increases with respect to
any such policy. Except as disclosed on Schedule 5.21, no pending claims made
by or on behalf of the Company under such policies have been denied or are
being defended against third parties under a reservation of rights by an
insurer thereof. All premiums due prior to the date hereof for periods prior
to the date hereof with respect to such policies have been timely paid.

5.22 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. No stockholder,
officer, director or affiliate of the Company possesses, directly or
indirectly, any financial interest in, or is a director, officer, employee or
affiliate of, any corporation, firm, association or business organization that
is a client, supplier, customer, lessor, lessee or competitor of the Company;
provided, however, that the interests of the Stockholders in C.M.R.S.
Incorporated and Minnesota Medical Record Service, Inc. shall not be deemed a
breach of this Section 5.22. Ownership of securities of a corporation whose
securities are registered under the Securities Exchange Act of 1934 not in
excess of five percent (5%) of any class of such securities shall not be deemed
to be a financial interest for purposes of this Section 5.22.

5.23 BUSINESS RELATIONS. Schedule 5.23 contains an accurate list
of all significant customers of the Company (i.e., those customers representing
five percent (5%) or more of the Company's revenues for the twelve (12) months
ended December 31, 1995). Except as set forth on Schedule 5.23, neither the
Company nor any Stockholder has received any written or, to the best knowledge
of the Company and the Stockholders, any other notice or information that any
such customer of the Company will cease to do business therewith after the
consummation of the transactions contemplated hereby, which cessation would
have a Material Adverse Effect. The Company is not required to provide any
bonding or other financial security arrangements in any material amount in
connection with any transactions with any of its customers or suppliers.

5.24 OFFICERS AND DIRECTORS. Set forth on Schedule 5.24 is a list
of the current officers and directors of the Company.

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5.25 BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 5.25 sets
forth each bank, savings institution and other financial institution with which
the Company has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Each person holding a
power of attorney or similar grant of authority on behalf of the Company is
identified on Schedule 5.25. Except as disclosed on such Schedule, the Company
has not given any revocable or irrevocable powers of attorney to any person,
firm, corporation or organization relating to its business for any purpose
whatsoever.

(B) REPRESENTATIONS AND WARRANTIES OF SIMON.

Simon represents and warrants that the representations and warranties
in this Section 5(B) as they apply to her are true and correct as of the date
of this Agreement and at the time of the Closing. For purposes of this Section
5(B), all references to Stockholders shall refer only to Simon.

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Stock set forth opposite such Stockholder's name on Annex I and such shares of
the Company Stock, together with the other shares of the Company Stock set
forth on Annex I, constitutes all of the outstanding shares of capital stock of
the Company, and, except as set forth on Schedule 5.27 hereof, such shares of
the Company Stock owned by the Stockholder is owned free and clear of all Liens
other than standard state and federal securities laws private offering legends
and restrictions or arising under any buy-sell or stockholders' or similar
agreement existing among the Stockholders (each of which shall be terminated on
or before the Closing). The Stockholder has owned the Company Stock since the
date set forth on Annex I.

5.29 NO INTENTION TO DISPOSE OF FYI STOCK. Each Stockholder
represents that there is no current plan or intention by such Stockholder to
sell, exchange or otherwise dispose of any shares of FYI Stock received by such
Stockholder in the Merger as of the Effective Time of the Merger. For purposes
of this representation, shares of the Company Stock exchanged for cash or other
property and shares of the Company Stock exchanged for cash in lieu of
fractional shares of FYI Stock will be treated as outstanding shares of the
Company Stock on the date of the transaction. Moreover, shares of the Company
Stock and shares of FYI Stock held by the Stockholder and otherwise sold,
redeemed, or disposed of prior to or subsequent to the Closing Date will be
considered in making this representation. In addition, each Stockholder
represents that there is not any current plan or intention by such Stockholder
to sell, exchange or otherwise dispose of FYI Stock, if any, received by such
Stockholder pursuant to Section 10.10 hereof.

5.30 VALIDITY OF OBLIGATIONS. This Agreement, the Employment
Agreement, the Noncompetition Agreement and the Lock-Up Agreement have each
been duly executed and delivered and are the legal, valid and binding
obligations of the Stockholder that is a party thereto in accordance with their
respective terms (it being understood and agreed by the parties hereto that
each Stockholder is making this representation and warranty solely with respect
to such Stockholder alone and not with respect to any other Stockholder).

5.31 NO OTHER REPRESENTATIONS. Except to the extent set forth in
Article 5 of this Agreement, the Company and the Stockholders have made no
representation or warranty whatsoever to FYI or Newco and hereby disclaim all
liability or responsibility for any other representation or warranty made,
communicated or furnished (orally or in writing) to FYI or Newco or their
representatives .

6. REPRESENTATIONS OF FYI AND NEWCO

FYI and Newco severally and jointly represent and warrant that all of
the following representations and warranties in this Section 6 are true and
correct at the time of the Closing.

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6.1 DUE ORGANIZATION. Each of FYI and Newco is duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly authorized and qualified under all applicable laws, regulations,
and ordinances of public authorities to carry on its businesses in the places
and in the manner as now conducted except for where the failure to be so
authorized or qualified would not have a material adverse effect on its
business, operations, affairs, properties, assets or condition (financial or
otherwise).

6.2 FYI STOCK. The FYI Stock to be delivered to the Stockholders
at the Closing Date shall constitute valid and legally issued shares of FYI,
fully paid and nonassessable, and except as set forth in this Agreement, (a)
will be owned free and clear of all Liens created by FYI, and (b) will be
legally equivalent in all respects to the FYI Stock issued and outstanding as
of the date hereof. The shares of FYI Stock to be issued to the Stockholders
pursuant to this Agreement will be registered under the Securities Act of 1933,
as amended (the "1933 Act"), and conform in all material respects to the
information with respect thereto contained in FYI's Registration Statement on
Form S-1 and Prospectus Supplement dated August 12, 1996 described in Section
6.9 hereof.

(a) Conflict with, or result in a breach or violation of
Certificate of Incorporation or By-laws of either FYI or Newco;

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regulation to which either FYI or Newco or any of their respective
property is subject, or (ii) any judgment, order or decree to which
FYI or Newco is bound or any of their respective property is subject;
or

(c) Result in termination or any impairment of any
material permit, license, franchise, contractual right or other
authorization of FYI or Newco.

6.6 CAPITALIZATION OF FYI AND OWNERSHIP OF FYI STOCK. The
authorized and outstanding capital stock of FYI and Newco is as set forth in
Sections 1.4(c) and 1.4(d) respectively. All issued and outstanding shares of
FYI stock are duly authorized, validly issued, fully paid and nonassessable.
There are no obligations of FYI to repurchase, redeem or otherwise acquire any
shares of FYI capital stock. Except as set forth on Schedule 6.6, there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which FYI is a party or by which it is bound obligating FYI
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of FYI or obligating FYI to grant, register, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. All of the shares of FYI Stock
to be issued to the Stockholders in accordance herewith will be duly
authorized, validly issued, fully paid and nonassessable.

6.8 SUBSIDIARIES. Set forth on Schedule 6.8 hereto is a list of
the subsidiaries of FYI (each an "FYI Subsidiary" and collectively the "FYI
Subsidiaries"). Newco has no subsidiaries.

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operations, affairs, properties, assets or condition (financial or otherwise)
of FYI and the FYI Subsidiaries taken as a whole (an "FYI Material Adverse
Effect"). Except as set forth on Schedule 6.10, there are no claims, actions,
suits or proceedings, pending or, to the knowledge of FYI or Newco, threatened,
against or affecting FYI or Newco, at law or in equity, or before or by any
Agency having jurisdiction over either of them and no notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received.
FYI (including the FYI Subsidiaries) has conducted and is conducting its
business in compliance with the requirements, standards, criteria and
conditions set forth in applicable Federal, state and local statutes,
ordinances, orders, approvals, variances, rules and regulations and is not in
violation of any of the foregoing that would have an FYI Material Adverse
Effect.

6.12 TAXES.

(a) The fair market value of the FYI stock and other
consideration received by the Stockholders will be approximately equal
to the fair market value of the Company Stock surrendered in the
Merger.

(b) Prior to the Merger, FYI will own all of the
outstanding stock of Newco. At all times prior to the Merger, no
person other than FYI has owned, or will own, any of the outstanding
stock of Newco.

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(ii) There were not as of the date of the
Agreement and there will not be at the Closing Date, any
outstanding or authorized options, warrants, convertible
securities, calls, rights, commitments or any other agreements
of any character which Newco is a party to, or may be bound
by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of its capital stock or any securities or
rights convertible, into, exchangeable for, evidencing the
right to subscribe for or acquire, any shares of its capital
stock.

(d) FYI has no plan or intention to reacquire any of its
stock issued in the Merger.

(f) Any liabilities of the Company assumed by Newco, and
any liabilities to which the transferred assets of the Company are
subject, were incurred by the Company in the ordinary course of
business.

(g) FYI and Newco will each pay their respective
expenses, if any, incurred in connection with the Merger.

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(h) There is no intercorporate indebtedness existing
between FYI and the Company or between Newco and the Company that was
issued, acquired, or will be settled at a discount.

(i) None of the shares of FYI Stock received by the
Stockholder in the Merger will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to
the Stockholder in their capacity as an employee, including but not
limited to amounts paid pursuant to the Employment Agreement described
in Section 7.5, will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.

(j) Neither FYI nor Newco is an investment company as
defined in section 368(a)(2)(F)(iii) and (iv) of the Code.

(k) The fair market value of the FYI stock and other
consideration received by the Stockholder will be approximately equal
to the fair market value of the Company Stock surrendered in the
Merger.

(l) The proposed Merger is effected through the laws of
the United States, or a State or the District of Columbia.

(m) The proposed Merger is being undertaken for reasons
germane to the business of the Company.

6.14 NO OTHER REPRESENTATIONS. Except to the extent set forth in
Article 6 of this Agreement, FYI and Newco have made no representation or
warranty whatsoever to the Company or the Stockholders and hereby disclaim all
liability or responsibility for any other representation or warranty made,
communicated or finished (orally or in writing) to the Company or the
Stockholders or their representatives.

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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS AND THE
COMPANY

The obligations of the Stockholders and of the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions,
except that no such waiver shall be deemed to affect the survival of the
representations and warranties of FYI and Newco contained in Section 6 hereof.

7.4 OPINION OF COUNSEL. The Company and the Stockholders shall
have received an opinion from Locke Purnell Rain Harrell (A Professional
Corporation), counsel for FYI and Newco, dated the Closing Date, in the form
annexed hereto as Annex IV.

7.5 EMPLOYMENT AGREEMENT. Newco shall have executed and delivered
to Karen Jill Simon the Employment Agreement in substantially the form attached
hereto as Annex V (the "Employment Agreement").

7.7 GOOD STANDING CERTIFICATES. FYI and Newco each shall have
delivered to the Company a certificate, dated as of a date not more than
fifteen (15) days prior to the

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Closing Date, duly issued by the Delaware Secretary of State and in each state
in which FYI or Newco is authorized to do business, showing that each of FYI
and Newco is in good standing and authorized to do business and that all state
franchise and/or income tax returns and taxes for FYI and Newco, respectively,
for all periods prior to the Closing have been filed and paid.

7.8 LOCK-UP AGREEMENT. California Medical Record Service
Acquisition Corp. shall have executed and delivered to FYI and Newco a Lock-Up
Agreement in substantially the form annexed hereto as Annex VIII (the "Lock-Up
Agreement") with respect to the shares of FYI Stock to be acquired thereby
pursuant to Section 2 hereof containing the Stockholder's undertakings as set
forth in Section 11.1 hereof.

7.9 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall
have occurred that would constitute an FYI Material Adverse Effect.

8. CONDITIONS PRECEDENT TO OBLIGATIONS OF FYI AND NEWCO

8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of the Stockholders and the Company
contained in this Agreement shall be true and correct as of the Closing Date,
except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct in all material respects as of the specified date; and each
and all of the terms, covenants and conditions of this Agreement to be complied
with and performed by the Stockholders and the Company on or before the Closing
Date shall have been duly complied with and performed.

8.4 REPAYMENT OF INDEBTEDNESS. Prior to the Closing Date, the
Stockholders shall have repaid the Company in full all amounts owing by the
Stockholders to the Company.

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8.5 INSURANCE. FYI shall be named as an additional named insured
on all of the insurance policies of the Company.

8.6 STOCKHOLDER RELEASES; RELATED PARTY AGREEMENTS. Each of the
Stockholders shall have delivered to FYI immediately prior to the Closing Date
an instrument dated the Closing Date in a form reasonably satisfactory to FYI
releasing the Company from any and all claims of such Stockholder against the
Company and obligations of the Company to the Stockholder, except for items
specifically identified on Schedule 8.6 as being claims of or obligations to
the Stockholder and continuing obligations to Stockholder relating to his or
her employment by the Surviving Corporation or arising in connection with or
pursuant to this Agreement. Except as set forth on Schedule 8.6 or as
otherwise disclosed pursuant to this Agreement, all existing agreements between
the Company and the Stockholders or business or personal affiliates of the
Company or the Stockholders and all existing bonus and incentive plans and
arrangements of the Company shall have been cancelled or terminated.

8.7 OPINIONS OF COUNSEL. FYI shall have received an opinion from
Gardere Wynne Sewell & Riggs, L.L.P., counsel to the Company and Simon, dated
the Closing Date, in the form annexed hereto as Annex VI.

8.8 EMPLOYMENT AGREEMENT. Karen Jill Simon shall have executed
and delivered to FYI and Newco the Employment Agreement.

8.9 NONCOMPETITION AGREEMENTS. Simon shall have executed and
delivered to FYI and Newco a Noncompetition Agreement with FYI and Newco in
substantially the form attached hereto as Annex VII (the "Noncompetition
Agreement").

8.10 LOCK-UP AGREEMENT. Simon shall have executed and delivered to
FYI and Newco a Lock-Up Agreement in substantially the form annexed hereto as
Annex VIII with respect to the shares of FYI Stock to be acquired thereby
pursuant to Section 2 hereof containing the Stockholder's undertakings as set
forth in Section 11.1 hereof.

8.12 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall
have occurred that would constitute a Material Adverse Effect.

9. COVENANTS OF THE PARTIES

9.1 [INTENTIONALLY LEFT BLANK].

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9.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. After the
Closing Date, FYI shall not and shall not permit any of the FYI Subsidiaries to
undertake any act that would jeopardize the tax-free status of the
reorganization of the Company, including, to the extent such action would
jeopardize the tax-free status of the reorganization of the Company:

(a) The retirement or reacquisition, directly or
indirectly, of all or part of the FYI Stock issued in connection with
the transactions contemplated hereby;

(b) The entering into of financial arrangements for the
benefit of the Stockholders in their capacities as such;

(c) The disposition of any material part of the assets of
the Company within the two (2) years following the Closing Date except
in the ordinary course of business or to eliminate duplicate services
or excess capacity;

(d) The discontinuance of the historic business of the
Company; and

(e) The issuance of additional shares of Newco stock that
would result in FYI losing control of Newco within the meaning of
Section 368(c) of the Code.

9.3 PREPARATION AND FILING OF TAX RETURNS.

(b) Each of the Company, Newco, FYI and the Stockholders
shall comply with the tax reporting requirements of Section 1.368-3 of
the Treasury Regulations promulgated under the Code, and shall treat
the transaction as a tax-free reorganization under Section 368(a) of
the Code unless otherwise required by law.

9.4 STOCK OPTIONS. No later than September 30, 1996, FYI shall
grant to employees of the Surviving Corporation as set forth on Schedule 9.4
nonqualified stock options to acquire an aggregate of four thousand (4,000)
shares of FYI Stock in minimum lots of one thousand shares (1,000) in
accordance with the terms of FYI's 1995 Stock Option Plan (the "Stock Option
Plan"), with such options to have a per share exercise price equal

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to the Fair Market Value (as defined in the Stock Option Plan) per share on the
date of grant and to vest in twenty percent (20%) increments on each of the
first through fifth anniversaries of the date of grant.

9.5 AUTOMOBILE OBLIGATIONS. Simon covenants that from and after
the Closing Date she will assume full responsibility for the automobile lease
payments with respect to the 1992 Lexus LS400 presently described on the
schedules to this Agreement.

10. INDEMNIFICATION

Simon, FYI and Newco each make the following covenants that are
applicable to them, respectively. For purposes of this Article 10, all
references to Stockholders shall refer only to Simon.

10.1 FYI LOSSES.

(a) Each of the Stockholders jointly (except to the
extent set forth in Article 5(B)) and severally agrees to indemnify
and hold harmless FYI, Newco and the Surviving Corporation, and their
respective directors, officers, employees, representatives, agents and
attorneys from, against and in respect of any and all FYI Losses (as
defined below) suffered, sustained, incurred or required to be paid by
any of them by reason of (i) any representation or warranty made by
the Company or the Stockholders in or pursuant to this Agreement
(including, without limitation, the representations and warranties
contained in any certificate delivered pursuant hereto) being untrue
or incorrect in any respect; (ii) any liability for warranty claims
arising from the provision of services by the Company through the
Closing Date; (iii) the termination of or withdrawal by the Company or
any Group Member from any employee pension benefit plan, as defined in
Section 3(2)(A) of ERISA that is maintained pursuant to a collective
bargaining agreement under which more than one employer makes
contributions and to which the Company or any Group Member is then
making or accruing an obligation to make contributions or has within
the preceding five (5) plan years made contributions; (iv) the items
described in Schedule 5.16 hereof except in any instance and to the
extent FYI Losses result from the negligence or misconduct of FYI,
Newco or the Surviving Corporation; or (v) any failure by the Company
or the Stockholders to observe or perform its or his or her covenants
and agreements set forth in this Agreement or (solely with respect to
the Company) in any other agreement or document executed by it in
connection with the transactions contemplated hereby.

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or enforce the rights of FYI, Newco and the Surviving Corporation or
such other persons to indemnification hereunder.

10.2 ENVIRONMENTAL INDEMNITY.

(a) Each of the Stockholders jointly and severally agrees
to indemnify and hold harmless FYI, Newco and the Surviving
Corporation, and their respective directors, officers, employees,
representatives, agents and attorneys from, against and in respect of
any and all Environmental Costs (as defined below), arising in any
manner in connection with: (i) the release, leak, discharge, spill,
disposal, migration or emission of Hazardous Substances from any
property owned, leased or operated by the Company on or prior to the
Closing Date; or (ii) the failure of the Company to comply with any
applicable Environmental Requirements prior to the Closing Date. This
Section 10.2 is intended to indemnify FYI, Newco and the Surviving
Corporation and their respective directors, officers, employees,
representatives, agents and attorneys from the results of their own
negligence.

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necessary to restore such property to its condition prior to damage
caused by an environmental condition or by the remediation of an
environmental condition.

10.3 EMPLOYEE COMPENSATION AND BENEFITS.

(a) Each of the Stockholders jointly and severally agrees
to indemnify and hold FYI, Newco and the Surviving Corporation, and
their respective directors, officers, employees, representatives,
agents and attorneys harmless from and against any and all claims made
by employees of the Company, regardless of when made, for wages,
salaries, bonuses, pension, workmen's compensation, medical insurance,
disability, vacation, severance, pay in lieu of notice, sick benefits
or other compensation or benefit arrangements to the extent the same
are based on employment service rendered to the Company prior to the
Closing Date or injury or sickness occurring prior to the Closing Date
and the rights so claimed are not scheduled pursuant to this Agreement
or reserved for on the Financial Statements, or if the claim asserted
is based upon or arises under applicable law rather than an agreement
or undertaking by the Company, then only if the claim asserted arose
or is based upon acts or omissions occurring prior to the Closing Date
and was not disclosed as required by the terms of this Agreement
(collectively, "Pre-Closing Employee Claims").

(b) Each of FYI and Newco jointly and severally agrees to
indemnify and hold the Stockholders and their respective directors,
officers, employees, representatives, agents and attorneys harmless
from and against any and all claims made by employees of the Surviving
Corporation, regardless of when made, for wages, salaries, bonuses,
pension, workmen's compensation, medical insurance, disability,
vacation, severance, pay in lieu of notice, sick benefits or other
compensation or benefit arrangements, except as otherwise expressly
provided herein, to the extent the same are based on employment
service rendered to the Surviving Corporation after the Closing Date
or injury or sickness occurring after the Closing Date (collectively,
"Post-Closing Employee Claims").

10.4 STOCKHOLDER LOSSES.

(a) FYI and Newco jointly and severally agree to
indemnify and hold harmless the Stockholders, and their respective
agents and attorneys, for and in respect of any and all Stockholder
Losses (as defined below) suffered, sustained, incurred or required to
be paid by any of the Stockholders by reason of (i) any representation
or warranty made by FYI or Newco in or pursuant to this Agreement
(including, without limitation, the representations and warranties
contained in any certificate delivered pursuant hereto) being untrue
or incorrect in any respect; (ii) any failure by FYI or Newco to
observe or perform its covenants and agreements set forth in this
Agreement or any other agreement or document executed by it in
connection with the transactions contemplated hereby; (iii) any
liability for warranty claims arising from the provision of services
by the Company subsequent to the Closing Date; or (iv) any liability
of a Stockholder as a guarantor under any Real

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Property Lease, except in any instance and to the extent Stockholder
Losses result from the negligence or misconduct of the Stockholders or
any of them (with respect to periods prior to the Closing Date).

(b) "Stockholder Losses" shall mean all damages
(including, without limitation, amounts paid in settlement with the
consent of FYI and Newco, which consent may not be reasonably
withheld), losses, obligations, liabilities, claims, deficiencies,
costs and expenses (including, without limitation, reasonable
attorneys' fees), penalties, fines, interest and monetary sanctions,
including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and Agency orders,
and other costs and expenses incident to any suit, action,
investigation, claim or proceeding or to establish or enforce the
right of the Stockholders or such other persons to indemnification
hereunder.

10.5 INDEMNIFICATION FOR CERTAIN TAX MATTERS. The Stockholders
shall indemnify, defend and hold harmless the Surviving Corporation from and
against the liability of the Company or the Surviving Corporation with respect
to all Taxes, including interest and additions to Taxes, resulting from any
final determination (or settlement) that the Merger of the Company into Newco
fails to qualify as a tax-free transaction as to the Company and/or the
Surviving Corporation pursuant to Section 368(a)(1)(A) and Section 368(a)(2)(D)
of the Code as a result of any breach of a representation, warranty or covenant
of the Company or a Stockholder. FYI and the Surviving Corporation shall
indemnify, defend and hold harmless the Stockholders from and against the
liability of the Stockholders, the Company and the Surviving Corporation with
respect to all Taxes, resulting from any final determination (or settlement)
that the Merger of the Company into Newco, fails to qualify as a tax-free
transaction as to the Stockholders, the Company and/or the Surviving
Corporation pursuant to Section 368(a)(1)(A) and Section 368(a)(2)(D) of the
Code as a result of any breach of a representation, warranty or covenant by FYI
or Newco.

10.6 NOTICE OF LOSS. Except to the extent set forth in the next
sentence, a party to the Agreement will not have any liability under the
indemnity provisions of this Agreement with respect to a particular matter
unless a notice setting forth in reasonable detail the breach or other matter
which is asserted has been given to the Indemnifying Party (as defined below)
and, in addition, if such matter arises out of a suit, action, investigation,
proceeding or claim, such notice is given promptly, but in any event within
thirty (30) days after the Indemnified Party (as defined below) is given notice
of the claim or the commencement of the suit, action, investigation or
proceeding. Notwithstanding the preceding sentence, failure of the Indemnified
Party to give notice hereunder shall not release the Indemnifying Party from
its obligations under this Section 10, except to the extent the Indemnifying
Party is actually prejudiced by such failure to give notice. With respect to
FYI Losses, Environmental Costs, Pre-Closing Employee Claims and the matters
described in Section 10.5, the Stockholders shall be the Indemnifying Party and
FYI and Newco and their respective directors, officers, employees,
representatives, agents and attorneys shall be the Indemnified Parties. With
respect to Stockholder Losses, Post-Closing Employee Claims and the matters
described in the second sentence of Section 10.5, FYI and

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Newco shall be the Indemnifying Party and the Stockholders and their respective
agents and attorneys shall be the Indemnified Party.

10.7 RIGHT TO DEFEND. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed
by an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against any such suit, action, investigation,
claim or proceeding and to make any compromise or settlement thereof at its own
cost and expense, and the Indemnified Party must cooperate in any such defense
or other action. The Indemnified Party shall have the right, but not the
obligation, to participate at its own expense in defense thereof by counsel of
its own choosing, but the Indemnifying Party shall be entitled to control the
defense unless the Indemnified Party has relieved the Indemnifying Party from
liability with respect to the particular matter or the Indemnifying Party fails
to assume defense of the matter. In the event the Indemnifying Party shall
fail to defend, contest or otherwise protect in a timely manner against any
such suit, action, investigation, claim or proceeding, the Indemnified Party
shall have the right, but not the obligation, thereafter to defend, contest or
otherwise protect against the same and make any compromise or settlement
thereof and recover the entire cost thereof from the Indemnifying Party
including, without limitation, reasonable attorneys' fees, disbursements and
all amounts paid as a result of such suit, action, investigation, claim or
proceeding or the compromise or settlement thereof, provided, however, that the
Indemnified Party must send a written notice to the Indemnifying Party of any
such proposed settlement or compromise, which settlement or compromise the
Indemnifying Party may reject, in its reasonable judgment, within thirty (30)
days of receipt of such notice. Failure to reject such notice within such
thirty (30) day period shall be deemed an acceptance of such settlement or
compromise. The Indemnified Party shall have the right to effect a settlement
or compromise over the objection of the Indemnifying Party; provided, that if
(i) the Indemnifying Party is contesting such claim in good faith or (ii) the
Indemnifying Party has assumed the defense from the Indemnified Party, the
Indemnified Party waives any right to indemnity. therefor. If the Indemnifying
Party undertakes the defense of such matters, the Indemnified Party shall not,
so long as the Indemnifying Party does not abandon the defense thereof, be
entitled to recover from the Indemnifying Party any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than the reasonable costs of investigation undertaken by the
Indemnified Party with the prior written consent of the Indemnifying Party.

10.8 COOPERATION. Each of FYI Newco, the Surviving Corporation,
the Company and the Stockholders, and each of their affiliates, successors and
assigns shall cooperate with each other in the defense of any suit, action,
investigation, proceeding or claim by a third party and, during normal business
hours, shall afford each other access to their books and records and employees
relating to such suit, action, investigation, proceeding or claim and shall
furnish each other all such further information that they have the right and
power to furnish as may reasonably be necessary to defend such suit, action,
investigation, proceeding or claim, including, without limitation, reports,
studies, correspondence and other documentation relating to Environmental
Protection Agency, Occupational Safety and Health Administration, and Equal
Employment Opportunity Commission matters.

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10.9 SATISFACTION OF CLAIMS. FYI and Newco shall first recover
amounts owing thereto pursuant to Sections 10.1, 10.2 and 10.3 for FYI Losses,
Environmental Costs and Pre-Closing Employee Claims first from the funds held
by it as described in Section 3.1(a) and thereafter from the Stockholders.

10.10 LIMITATIONS OF INDEMNIFICATION; PROPORTIONATE PAYMENTS. FYI,
Newco, the Surviving Corporation and the other persons or entities indemnified
pursuant to Sections 10.1, 10.2 and 10.3 shall not assert any claim for
indemnification hereunder until such time as and solely to the extent that the
aggregate of all claims that such persons may have against the Indemnifying
Parties shall exceed $5,000 with respect to a single claim or $13,000 with
respect to all claims, regardless of amount. No Indemnifying Party shall be
obligated to indemnify and hold harmless any Indemnified Party with respect to
any claim for indemnification hereunder exceeding an aggregate of the Purchase
Price; provided, however, that the foregoing limitation shall not be applicable
to any breach of the representations and warranties contained in Sections 5.3
and 6.2 hereof. Any amounts paid for Stockholder Losses pursuant to this
Section 10 shall be paid in the same proportion of FYI Stock, valued at the
then-fair market value thereof, and cash as set forth on Annex II.

11. SECURITIES ACT REPRESENTATIONS AND TRANSFER RESTRICTIONS

The FYI Stock acquired by the Stockholders pursuant to this Agreement
is being acquired solely for their own accounts, for investment purposes only,
and with no present intention of distributing, selling or otherwise disposing
of it in connection with a distribution.

11.1 TRANSFER RESTRICTIONS. Except for transfer upon death or to
immediate family members who agree in writing to be bound by the restrictions
set forth below (or trusts for the benefit of the undersigned or family
members, the trustees of which so agree in writing), for a period of two (2)
years from the Closing, no Stockholder shall (a) sell, assign, exchange,
transfer, distribute or otherwise dispose of (i) any shares of FYI Stock
received by the Stockholder at the Effective Time of the Merger or otherwise
described in Annex II, or (ii) any interest (including, without limitation, an
option to buy or sell) in any such shares of FYI Stock, in whole or in part,
and no such attempted transfer shall be treated as effective for any purpose;
or (b) engage in any transaction, whether or not with respect to any shares of
FYI Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of FYI Stock acquired pursuant to Section 2
hereof (including, by way of example and not limitation, engaging in put, call,
short-sale, straddle or similar market transactions). The certificates
evidencing the FYI Stock delivered to the Stockholders pursuant to Section 3 of
this Agreement will bear a legend substantially in the form set forth below and
containing such other information as FYI may deem necessary or appropriate:

-35-
<PAGE> 42
EXCEPT FOR TRANSFER UPON DEATH OR TO IMMEDIATE FAMILY MEMBERS WHO
AGREE IN WRITING TO BE BOUND BY THE RESTRICTIONS SET FORTH BELOW (OR
TRUSTS FOR THE BENEFIT OF THE UNDERSIGNED OR FAMILY MEMBERS, THE
TRUSTEES OF WHICH SO AGREE IN WRITING), THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
DISTRIBUTED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE,
TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION OR OTHER DISPOSITION PRIOR
TO THE SECOND ANNIVERSARY OF THE CLOSING DATE. UPON THE WRITTEN
REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE
THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE.

Each of the Stockholders will execute and deliver to FYI prior to or at the
Closing a Lock-Up Agreement containing the foregoing agreements.

11.2 ECONOMIC RISK; SOPHISTICATION. Each of the Stockholders
represents and warrants to FYI and Newco that such Stockholder is an
"accredited investor" as defined in Regulation D promulgated under the 1933
Act; that such Stockholder is able to bear the economic risk of an investment
in the FYI Stock acquired pursuant to this Agreement and can afford to sustain
a total loss of such investment and has such knowledge and experience in
financial and business matters that such Stockholder is capable of evaluating
the merits and risks of the proposed investment in the FYI Stock; and that such
Stockholder has had an adequate opportunity to ask questions and receive
answers from the officers of FYI concerning any and all matters relating to the
transactions described herein including, without limitation, the background and
experience of the current and proposed officers and directors of FYI, and the
plans for the operations of the business of FYI.

12. GENERAL

12.1 COOPERATION. The Company, the Stockholders, FYI and Newco
shall each deliver or cause to be delivered to the other on the Closing Date,
and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement. The Company will cooperate and use its reasonable
efforts to have the present officers, directors and employees thereof cooperate
with FYI on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any Tax return filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing Date.

12.2 SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND
WARRANTIES.

(a) Covenants and Agreements. All covenants and
agreements made hereunder or pursuant hereto or in connection with the
transactions contemplated

-36-
<PAGE> 43
hereby shall survive the Closing and shall continue in full force and
effect thereafter according to their terms without limit as to
duration.

(b) Representations and Warranties. All representations
and warranties contained herein shall survive the Closing and shall
continue in full force and effect thereafter for a period of two (2)
years following the Closing, except that (a) the representations and
warranties contained in Section 5.8 and Section 6.12hereof shall
survive until the earlier of (i) the expiration of the applicable
periods (including any extensions) of the respective statutes of
limitation applicable to the payment of the Taxes to which such
representations and warranties relate without an assertion of a
deficiency in respect thereof by the applicable taxing authority or
(ii) the completion of the final audit and determinations by the
applicable taxing authority and final disposition of any deficiency
resulting therefrom, (b) the representations and warranties contained
in Section 5.19 shall survive until the expiration of the applicable
period of the statutes of limitation applicable to ERISA matters, and
(c) the representations and warranties contained in Section 5.3 and
Section 6.2 shall survive indefinitely.

(c) No Knowledge of Claims. Each of FYI and Newco
represents and warrants to the Company and the Stockholders that at
the date hereof neither FYI nor Newco knows of any breach or
inaccuracy of any representation or warranty made by the Company and
the Stockholders hereunder and of no basis for any claim under Section
10 hereof.

12.4 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the
Stockholders, the Company, Newco and FYI, and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This
Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and this Agreement and
the Annexes hereto may be modified or amended only by a written instrument
executed by the Stockholders, the Company, Newco and FYI, acting through their
respective officers, duly authorized by their respective Boards of Directors.

-37-
<PAGE> 44
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.

12.7 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, (i) FYI and Newco will pay the fees, expenses and
disbursements of FYI and Newco and their respective agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments thereto, including all costs and expenses incurred
in the performance and compliance with all conditions to be performed by FYI
under this Agreement. In the event the transactions herein contemplated are
consummated, the Stockholders will pay from personal funds and not from the
funds of the Company, the fees, expenses and disbursements of their respective
agents, representatives, accountants and counsel (other than with respect to
the AA Financial Statements) incurred in connection with the subject matter of
this Agreement. The Stockholders acknowledge that they, and not the Company or
FYI, will pay all taxes due upon receipt of the consideration payable to the
Stockholders pursuant to Section 2 hereof, and all sales, use, real property
transfer, recording, gains, stock transfer and other similar fees in connection
with the transactions contemplated by this Agreement.

(i) If to FYI or Newco, addressed to them at:

F.Y.I. Incorporated
Texas Medical Record Service Acquisition Corp.
3232 McKinney Avenue, Suite 900
Dallas, Texas 75204
Telecopy No.: (214) 953-7556
Attn: Margot T. Lebenberg, Esq.

with copies to:

Locke Purnell Rain Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Telecopy No.: (214) 740-8800
Attn: Charles C. Reeder, Esq.

(ii) If to the Stockholders, addressed thereto at
the address set forth on Annex I, with copies to such counsel
as is set forth with respect to the Stockholders on such Annex
I;

-38-
<PAGE> 45
(iii) If to the Company, addressed to:

Texas Medical Record Service, Inc.
10878 Westheimer
Suite 109
Houston, Texas 77042
Telecopy No.: (713) 266-5164
Attn: Karen Jill Simon

and marked "Personal and Confidential"

with copies to:

Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Street
Suite 800
Houston, Texas 77002-4086
Telecopy No.: (713) 308-5555
Attn: Daniel L. Cohen, Esq.

or to such other address or counsel as any party hereto shall specify pursuant
to this Section 12.8 from time to time.

12.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

12.11 TIME. Time is of the essence with respect to this Agreement.

12.15 MODIFICATION. It is the intent of the parties that the Company
transaction be structured as a tax-free reorganization under Section 368(a) of
the Code.

-40-
<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

F.Y.I. INCORPORATED
ATTEST:

/s/ Kent Jamison By: /s/ David Lowenstein
- ------------------------------ -----------------------------------
Name: David Lowenstein
Title: Executive Vice President

TEXAS MEDICAL RECORD SERVICE
ACQUISITION CORP.
ATTEST:

/s/ Kent Jamison By: /s/ David Lowenstein
- ------------------------------ -----------------------------------
Name: David Lowenstein
Title: Vice President

TEXAS MEDICAL RECORD SERVICE, INC.
ATTEST:

/s/ William Mark Young By: /s/ Karen J. Simon
- ------------------------------ -----------------------------------
Name: Karen J. Simon
Title: President
<PAGE> 48
THE STOCKHOLDERS:
ATTEST:

/s/ William Mark Young /s/ Karen Jill Simon
- ------------------------------ --------------------------------------
Karen Jill Simon

CALIFORNIA MEDICAL RECORD SERVICE
ACQUISITION CORP.
ATTEST:

/s/ Kent Jamison By: /s/ David Lowenstein
- ------------------------------ -----------------------------------
Name: David Lowenstein
Title: Vice President
<PAGE> 49
ANNEX I

TO THAT CERTAIN
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF AUGUST 30, 1996
BY AND AMONG
F.Y.I. INCORPORATED
TEXAS MEDICAL RECORD SERVICE ACQUISITION CORP.
TEXAS MEDICAL RECORD SERVICE, INC.
AND
THE STOCKHOLDERS NAMED THEREIN

STOCKHOLDERS OF THE COMPANY:

<TABLE>
<CAPTION>
Number of Shares
Name and Address of Company Stock Date of Acquisition
- ---------------- ---------------- -------------------
<S> <C> <C>
California Medical Record 605 August 30, 1996
Service Acquisition Corp.
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204

Karen Jill Simon 630 August 8, 1986
10878 Westheimer
Suite 109
Houston, Texas 77042
</TABLE>
<PAGE> 50
ANNEX II

Aggregate consideration to be paid to the Stockholders:

California Medical Record Service Acquisition Corp.

Stock - 36,670 shares of FYI Stock, all of which shares of FYI Stock
shall be delivered at the Closing.

Karen Jill Simon

Stock - 19,465 shares of FYI Stock, of which 18,008 shares of FYI
Stock shall be delivered at the Closing, and of which 1,457 shares of
FYI Stock shall be held by FYI pursuant to Section 3.1(a) hereof.

Cash - $327,291.50, of which $302,789 of such amount shall be paid at
the Closing, and of which $24,502.50 of such amount shall be held by
FYI pursuant to Section 3.1(a) hereof.

<PAGE> 1
Exhibit 2.16

------------------------------------------

AGREEMENT AND PLAN OF REORGANIZATION

dated as of the 30th day of August, 1996

by and among

F.Y.I. INCORPORATED

MINNESOTA MEDICAL RECORD SERVICE ACQUISITION CORP.

MINNESOTA MEDICAL RECORD SERVICE, INC.

and

THE STOCKHOLDER named herein

------------------------------------------

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Delivery and Filing of Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Certificate of Incorporation, By-laws and
Board of Directors of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certain Information With Respect to the Capital
Stock of the Company, FYI and Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(A) Representations and Warranties of the Company
and the Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Organization, Existence and Good Standing of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Capital Stock of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7 Permits and Intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Assets and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Real Property Leases; Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.11 Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.15 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 Litigation and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.18 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.20 Employees; Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.22 Interests in Customers, Suppliers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.23 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.24 Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.25 Bank Accounts and Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.26 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(B)Representations and Warranties of the Stockholder.. . . . . . . . . . . . . . . . . . . . . . . . 19
5.27 Authority; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.28 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.29 No Intention to Dispose of FYI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.30 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.31 No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
STOCKHOLDER AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Representations and Warranties; Performance
of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

8. CONDITIONS PRECEDENT TO OBLIGATIONS OF FYI
AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Representations and Warranties; Performance
of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>

-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
8.2 Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Repayment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 Stockholder Release; Related Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Lock-Up Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 FYI Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 Employee Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.4 Stockholder Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.5 Indemnification for Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.6 Notice of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7 Right to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.9 Satisfaction of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.10 Limitations of Indemnification; Proportionate
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.11 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
12.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.10 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.11 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.12 Reformation and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.15 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>

-iv-
<PAGE> 6
SCHEDULES AND ANNEXES

SCHEDULES

ANNEXES

I Stockholder of the Company
II Aggregate Consideration to be paid to the Stockholder
III FYI Charter Documents
IV Opinion of Counsel to FYI and Newco
V Opinion of Counsel to the Company
VI Noncompetition Agreement
VII Lock-Up Agreement

-v-
<PAGE> 7
AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of the 30th day of August, 1996, by and among F.Y.I. INCORPORATED, a
Delaware corporation ("FYI"), MINNESOTA MEDICAL RECORD SERVICE ACQUISITION
CORP., a Delaware corporation ("Newco"), MINNESOTA MEDICAL RECORD SERVICE,
INC., a Minnesota corporation (the "Company"), and ALAN D. SIMON, holding
shares in the Company in the amount set forth on Annex I (the "Stockholder")
and constituting the sole stockholder of the Company.

1. THE MERGER

1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause Articles of Merger with respect to the Merger (the
"Articles of Merger") to be signed, verified and delivered to the Secretary of
State of the State of Delaware and, if required, a similar filing to be made
with the relevant authorities in the State of Minnesota, on or before the
Closing Date (as defined in Section 4). The Articles of Merger and related
Plan and Agreement of Merger are attached hereto as Schedule 1.1.

1.2 EFFECTIVE TIME OF THE MERGER. The "Effective Time of the
Merger" shall be the Closing Date as defined in Section 4. At the Effective
Time of the Merger, the Company shall be merged with and into Newco, in
accordance with the Articles of Merger, the separate existence of the Company
shall cease and the corporate name of Newco shall be Minnesota Medical Record
Service Acquisition Corp. Newco shall be the surviving party in
<PAGE> 8
the Merger and is hereinafter sometimes referred to as the "Surviving
Corporation." The Merger will be effected in a single transaction.

1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS
OF SURVIVING CORPORATION. At the Effective Time of the Merger:

Ed H. Bowman, Jr.
Thomas C. Walker
David Lowenstein

(a) As of the date of this Agreement, the authorized
capital stock of the Company consists of one thousand (1,000) shares
of Common Stock, no par value per share (the "Company Stock"), of
which one thousand (1,000) shares are issued and outstanding and held
by the Stockholder;

(b) As of the date of this Agreement, the authorized
capital stock of FYI consists of twenty-six million (26,000,000)
shares of Common Stock, $.01 par value

2. CONVERSION OF STOCK

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As of the Effective Time of the Merger:

3. DELIVERY OF SHARES

3.1 DELIVERY PROCEDURE. At or after the Effective Time of the
Merger and at the Closing:

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(a) The Stockholder, as the holder of all outstanding
certificates representing shares of the Company Stock, shall, upon
surrender of such certificates, be entitled to receive the number of
shares of FYI Stock and the amount of cash calculated pursuant to
Section 2.2 above less the sum of $122,495.00 in cash and 7,286 shares
of FYI Stock to be retained by FYI for a period of ninety (90) days
from the date of the Closing as security and as an offset for any
breach of the representations, warranties, covenants and agreements of
the Company and the Stockholder, and for the Stockholder's
indemnification obligations, in the manner and to the extent set forth
herein; and