<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-27444
F.Y.I. INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 75-2560895
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3232 MCKINNEY AVE., SUITE 900, DALLAS, TEXAS 75204
(Address of principal executive offices) (zip code)
</TABLE>
(214) 953-7555
(Registrant's telephone number,
including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. YES [X] NO [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant as of February 19, 1998 was $241,718,354, based on the last sale
price ($25.125) of the Registrant's Common Stock, $.01 par value per share, on
the Nasdaq National Market on February 19, 1998.
As of February 19, 1998, 11,377,332 shares of the Registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders
to be filed with the Securities and Exchange Commission not later than 120 days
after the end of the Company's fiscal year ended December 31, 1997 are
incorporated by reference into Part III of this Form 10-K.
================================================================================
<PAGE> 2
F.Y.I. INCORPORATED
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 14
Item 3. Legal Proceedings........................................... 14
Item 4. Submission of Matters to a Vote of Security Holders......... 14
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 15
Item 6. Selected Financial Data..................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 18
Item 8. Financial Statements and Supplementary Data................. 23
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 43
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 44
Item 11. Executive Compensation...................................... 44
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 44
Item 13. Certain Relationships and Related Transactions.............. 44
PART IV
Item 14. Exhibits, Financial Statements Schedules, and Reports on
Form 8-K.................................................... 44
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL
F.Y.I. Incorporated ("F.Y.I." or the "Company") was founded in September
1994 to create a national, single source provider of document and information
outsourcing solutions to document and information intensive industries,
including: healthcare, law, banking, insurance, retailing, manufacturing and
government. The Company's primary strategy is to acquire, integrate and operate
companies in the highly fragmented document and information outsourcing
solutions industry. In January 1996, F.Y.I. acquired, simultaneously with the
closing of its initial public offering (the "IPO"), seven document management
services businesses (the "Founding Companies"). Since the IPO, and through
December 31, 1997, the Company acquired 29 additional companies (the "Subsequent
Acquisitions"). Since December 31, 1997, the Company has acquired five
additional companies, for a total of 41 acquisitions since the Company's
inception. The Company intends to continue to aggressively pursue strategic
acquisitions in existing and new markets, cross-sell its full range of services
to its current customer base and expand the marketing of its services to new
customers.
An estimated four trillion documents are generated annually in the United
States. A significant portion of the processing, management and storage of these
documents is outsourced to small service companies. Further, the Company
believes that the document and information outsourcing solutions market is
growing due to several factors, including: (i) government regulations that
require lengthy document retention periods and rapid accessibility for many
types of records; (ii) increased customer expectations of low cost access to
records on short notice and, in many instances, at disparate locations; (iii)
the increasing litigiousness of society, necessitating access to relevant
documents and records for extended periods; and (iv) continuing advancements in
computer, networking, facsimile, printing and other technologies which have
greatly facilitated the production and wide distribution of documents.
The Company's target clients generate large volumes of documents and
require specialized processing, distribution, storage and retrieval of these
documents and the information they contain. The Company believes that these
clients will continue to increase their outsourcing of document and information
management in order to maintain their focus on core operating competencies and
revenue generating activities; reduce fixed costs, including labor and equipment
costs; and gain access to new technologies without incurring the expense and
risk of near-term obsolescence of such technologies.
The document and information outsourcing solutions business is highly
fragmented. The Company believes that many small document management services
businesses: (i) have insufficient capital for expansion; (ii) cannot keep
abreast of rapidly changing technologies; (iii) lack effective marketing
programs; and (iv) are unable to meet the needs of large, geographically
dispersed clients. In addition, there are a limited number of options for owners
of such businesses to obtain liquidity by selling their businesses. As a result,
the Company believes that many owners of such businesses will continue to be
receptive to its acquisition program.
BUSINESS STRATEGY
The Company's goal is to become a national, single source provider of
document and information outsourcing solutions to information and document
intensive industries, including: healthcare, law, banking, insurance, retailing,
manufacturing and government. In order to achieve this goal, the Company is
implementing its focused business strategy based on the following key
principles:
Establish Full Service Operations in Multiple Metropolitan Areas. The
Company intends to establish a full range of document management operations to
meet the diverse needs of targeted metropolitan areas by implementing its
"fill-in-the-grid" strategy through selected acquisitions and expansion of
existing businesses. Ultimately, the Company will seek to achieve a national
scope of coverage so that it can implement a national sales and service policy.
3
<PAGE> 4
Capitalize on Cross-Selling Opportunities. The Company intends to continue
to cross-sell in two primary ways. First, the Company intends to sell its
existing clients additional document and information solutions provided by the
Company's other businesses. Second, the Company intends to use its knowledge
with respect to specific industry segments to sell such services to new clients.
Achieve Cost Savings Through Consolidation and Economies of Scale. The
Company believes that it will be able to achieve significant savings by
combining a number of general and administrative functions at the corporate
level, by reducing or eliminating redundant functions and facilities, and by
implementing corporate purchasing programs. For example, the Company has
implemented an insurance plan, employee benefits programs and purchasing plans
for certain items, such as paper, microfilm and storage racks for the Company
and its subsidiaries, on a combined basis. To the extent that the Company is
able to expand through the acquisition of additional document and information
management businesses, the Company believes that such cost savings will continue
to accrue.
Operate With a Decentralized Management Strategy. The Company believes that
the experienced local management teams of its acquired businesses have a
valuable understanding of their respective markets and businesses and have
existing client relationships upon which they may capitalize. Accordingly, the
Company is operating and expects to continue to operate with a decentralized
management strategy. Local management will remain empowered to make most of the
day-to-day operating decisions at each location and will be primarily
responsible for the profitability and growth of that location. Although the
Company intends to have local management operate with a high degree of autonomy,
the Company believes that regular communication between the individual
businesses and the Company's executive management team will be integral to
realizing the benefits afforded by the consolidation of these businesses into a
single company. The Company is organized around strategic business units
focusing on common services to common customer bases enabling synergies and
cross-selling opportunities.
ACQUISITION STRATEGY
Since the Company's inception, it has acquired 41 companies. The Company
believes that there are significant opportunities to consolidate the
capabilities and resources of a number of additional existing document and
information outsourcing solutions businesses with the intent of providing
customers with a single source document and information outsourcing solution.
Accordingly, the Company is pursuing a "fill-in-the-grid" strategy aimed at
providing comprehensive document and information outsourcing solutions services
based on the demands of the given geographical market. The Company has
implemented an aggressive, three-tiered acquisition program consisting of
"beachhead acquisitions" to enter additional geographic markets, "service
expansion acquisitions" to acquire additional service capabilities within such
markets and "tuck-in" acquisitions to gain market share.
In order to enter a new geographic market, the Company makes "beachhead"
acquisitions of leading document and information outsourcing solutions companies
with strong market positions. In analyzing beachhead acquisition candidates, the
Company focuses on acquiring businesses that have one or more of the following
characteristics: (i) experienced and high quality management; (ii) multiple
locations, preferably with operations in two to three contiguous markets; (iii)
a strong customer franchise; and (iv) a history of profitability.
The second tier of the Company's acquisition program involves the
acquisition of related document and information outsourcing solutions services
companies that will increase the Company's offered services in a particular
region. In making such "service expansion" acquisitions, the Company assesses
the services required by the specific market's customer base and then seeks to
acquire leading providers of such services within that geographic area.
Finally, in order to increase its market share and realize economies of
scale, the third tier of the Company's acquisition program is the acquisition of
smaller "tuck-in" businesses that can be easily assimilated into the operations
of the Company's existing businesses. Such tuck-in businesses are intended to
enable the Company to benefit from the operating leverage of its existing
businesses by acquiring additional market share and revenue while eliminating or
reducing certain general, administrative and operating costs
4
<PAGE> 5
previously associated with such revenue. Accordingly, the Company targets
tuck-in businesses with strong customer relationships.
The Company believes that it will continue to be a successful acquiror of
other document and information outsourcing solutions companies due to its
strategy of retaining selected owners and management of acquired companies, its
access to growth capital and its ability to offer sellers cash for their
business as well as an ongoing equity stake in the Company. Nevertheless, there
are numerous risks associated with the Company's acquisition program. See
"-- Risk Factors -- Acquisition Strategy," "-- Reliance on Key Personnel" and
"-- Need for Additional Financing to Continue Acquisition Strategy."
SERVICES OFFERED
The Company provides a wide variety of document and information outsourcing
solutions and draws upon its available services to develop solutions for its
clients based on their specific needs. The current document and information
outsourcing solutions that are provided in certain geographic locations include:
Document Management and Related Services
Document and Data Conversion Services include electronic imaging services
and micrographic services.
Electronic imaging services involve the conversion of paper or microfilm
documents into digitized information through optical scanners. Digitized
information can be stored as an image or converted to code through optical
character recognition (OCR) or digital imaging storage and retrieval
technologies. Conversion to code provides additional processing capabilities,
such as manipulation of data. In both cases, the digitized information can be
stored on either a magnetic medium, such as a computer diskette, or on optical
laser disks, such as compact disks. Electronic imaging is generally used because
of the storage media's high speed of retrieval, its multiple indexing and text
search formatting capabilities and its ability to be used to distribute output
to multiple locations. Electronic imaging services are typically billed on a
job-by-job basis, based on the number of images and complexity of the retrieval
applications.
Micrographics services involve: (i) the conversion of paper documents into
microfilm images; (ii) film processing; and (iii) computer-based indexing and
formatting. Typically, customers select micrographic services: (i) as a
cost-competitive technology to reduce the physical size of stored records; (ii)
for their long-term (over 100 years) archival capabilities; and (iii) as an
intermediate step in certain imaging or reprographic applications.
Data Capture and Database Management Services involve data capture
(manually or through scanning or other electronic media), data consolidation and
elimination, storage, maintenance, formatting and report creation. Data capture
includes the conversion of text and handwritten paper media into digital files.
An advantage of digital files is the ability to manipulate large amounts of data
quickly and efficiently. In some cases, database services include statistical
analysis of data.
Direct Mail includes direct mail and fulfillment services. Direct mail and
fulfillment services provide customers with rapid, reliable and cost-effective
methods for making large-scale distributions of statements, reports and letters
to consumers and other target audiences.
Records Management Services consist of active or open shelf storage and
archival storage of inactive documents. Active or open shelf storage services
involve the storage, processing (i.e., indexing and formatting), retrieval,
delivery and return to storage of documents on a rapid time frame. Many of such
services are provided electronically. Representative uses for open shelf storage
include active medical and legal case files. In many instances, open shelf
storage is offered as an outsourced file room service, where documents are
requested and retrieved frequently and, often, transmitted via facsimile or
electronically due to the urgency of the request. Service fees generally include
a monthly fee based on activity levels and volumes stored, with extra billing
for specialized requests.
The archiving of inactive documents involves storage for extended periods
of time with a lesser emphasis on service or accessibility to stored documents.
Typical uses for archival storage of inactive documents include
5
<PAGE> 6
storage of closed files for professional services firms and documents that may
be required by law to be maintained by hospitals, other healthcare institutions
and financial institutions for extended periods. Service fees generally include
billing for storage space, plus activity charges for each retrieval, delivery
and return to storage, and ultimately for document destruction.
Industry Specific Services
The Company has developed industry specific services in order to address
the document and information management needs of its particular clients. These
industry specific services include:
Healthcare Services. Healthcare services include medical records release
services or processing a request for a patient's medical records from a
physician, insurance company, attorney, healthcare institution or individual.
The medical records release service provider initially verifies that the release
is properly authorized, coordinates the retrieval of the record, determines the
relevant parts of the record to be copied and delivers the copied records (or
portions thereof) to the requesting party. Medical records release services are
provided on-site and off-site pursuant to contracts with hospitals, other large
healthcare institutions and insurance companies. The medical records release
service provider bills the recipient directly and sometimes pays a fee to the
hospital. Additional services include archival records storage and management,
and document and data conversion. Recently, the Company acquired companies which
provide attending physician statements (APS) for life and health insurance
underwriting and image processing services for handling state government
disability and workers' compensation claims.
Litigation Support. Litigation often involves the production (i.e.,
delivery to opposing counsel) and management of thousands of pages of documents,
extracted in their current working form from the offices and files of litigating
parties and their experts, advisors and legal counsel. Litigation support
services include managing the logistics of high volume document production,
microfilming and/or electronic imaging, document coding, computer indexing,
automated document retrieval and high speed, multiple-set reproduction of
documents. Additional litigation support services include subpoena of business
documents and service of process, deposition reporting services, discovery
assistance, document coding, forensic analysis and other trial support services
to law firms, corporations and regulated entities. These clients typically look
to litigation support companies to augment their internal operations and
capabilities on an as-needed, job-by-job basis. Clients are generally billed on
a per unit basis.
Employee and Investor Services. Employee and investor services include
administration, record keeping and information processing services. Our services
maintain detailed employee and/or investor records on behalf of (i) general
partners to service their investors in limited partnerships, REITs and master
limited partnerships; (ii) corporations to provide turn-key outsourced
administration of employee stock purchase plans and employee stock option plans;
and (iii) banks and broker/dealers to provide complete record keeping and
administration services for additional brokerage and IRA accounts.
Product Sales
The Company acts as a distributor of a wide range of microfilm and business
imaging supplies as well as filing and shelving supplies, software, and earns
commissions on the sales of imaging systems and equipment.
Material Contract. In February 1998, the Company was preliminarily awarded a
five year, $30 million contract by New York State to provide document imaging
services to the New York Workers' Compensation Board in support of processing
workers' compensation claims for the entire State. There can be no assurance
that New York State will approve the final contract.
SALES AND MARKETING
The Company has a broad customer base, and none of the Company's customers
accounted for more than 5.0% of revenue for the year ended December 31, 1997.
Historically, the Company's sales efforts have been implemented on a
location-by-location basis and typically have been coordinated either through
separate sales personnel or as part of the local management's responsibilities.
The Company's existing local sales efforts
6
<PAGE> 7
are supplemented through local sales representatives. The Company strives to
increase its client base by attracting customers away from small, single
business operators as a result of its ability to offer a broader range of
solutions for its clients' document management needs. In addition, the Company
intends to continue to focus on increasing revenue from its existing clients by
cross-selling its services and broadening its product offerings. Once the
Company gains critical mass in a number of metropolitan areas, it will seek to
augment local sales and marketing efforts through the implementation of a
national sales/account program.
COMPETITION
The document and information outsourcing solutions businesses in which the
Company competes and expects to compete are highly competitive. A significant
source of competition is the in-house document handling capability of the
Company's target client base. There can be no assurance that these businesses
will outsource more of their document management needs or that such businesses
will not bring in-house services that they currently outsource. In addition,
certain of the Company's competitors are larger businesses and have greater
financial resources than the Company. Certain of these competitors operate in
broader geographic areas than the Company, and others may choose to enter the
Company's areas of operation in the future. In addition, the Company intends to
continue to enter new geographic areas through internal growth and by acquiring
existing companies and expects to encounter significant competition from
established competitors in each of such new areas. As a result of this highly
competitive environment, the Company may lose customers or have difficulty in
acquiring new customers and new companies and its results of operations may be
adversely affected.
The Company believes that the principal competitive factors in document and
information outsourcing solutions services include accuracy, reliability and
security of service, client segment specific knowledge and price. The Company
competes primarily on the basis of quality of service and client segment
specific knowledge, and believes that it competes favorably with respect to
these factors.
EMPLOYEES
As of December 31, 1997, the Company had approximately 2,900 full-time and
990 part-time employees. As of such date, the Company had approximately 160
employees represented by labor unions. The Company considers its relations with
its employees to be good.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning each of the
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas C. Walker............... 65 Chairman of the Board and Chief Development
Officer
Ed H. Bowman, Jr............... 51 President and Chief Executive Officer;
Director
David Lowenstein............... 36 Executive Vice President -- Corporate
Development and Treasurer; Director
Timothy J. Barker.............. 35 Senior Vice President and Chief Financial
Officer
Gregory R. Melanson............ 44 Senior Vice President and Director
Joe A. Rose.................... 47 Senior Vice President
Ronald Zazworsky............... 53 Senior Vice President
John D. Kearney, Sr............ 44 Vice President -- Corporate Development
Margot T. Lebenberg............ 30 Vice President, General Counsel and Secretary
Gary Patton.................... 44 Vice President of Human Resources & Director
of Corporate Programs
</TABLE>
Thomas C. Walker has been Chairman of the Board of F.Y.I. since its
inception in September 1994 and has been Chief Development Officer of F.Y.I.
since November 1995. From September 1994 until Novem-
7
<PAGE> 8
ber 1995, Mr. Walker held the positions of President and Chief Executive
Officer. From August 1991 to December 1994, Mr. Walker was Vice President,
Corporate Development, of Laidlaw Waste Systems, Inc., a subsidiary of Laidlaw,
Inc., a waste management company, where he was responsible for its acquisition
and divestiture program in the United States and Mexico. From May 1989 until he
joined Laidlaw Waste Systems, Inc., Mr. Walker was President of Thomas C. Walker
Associates, Inc., a company providing merger, acquisition and financial
consulting services focusing on the waste management industry. During his
career, Mr. Walker has been responsible for the acquisition or divestiture of
over 150 businesses over a 30-year period. Mr. Walker holds a B.S. in Industrial
Engineering from Lafayette College.
In May 1989, Mr. Walker resigned from a senior executive position with a
former employer and received a severance payment under the terms of his
employment agreement. In July 1989, such employer commenced a proceeding in
bankruptcy, and, after emerging from such proceeding and in connection with its
liquidation, sought to recover Mr. Walker's severance payment as a preference
claim. Mr. Walker litigated this claim but ultimately entered into a judgment
requiring him to make significant payments to his former employer. In April
1993, Mr. Walker filed a voluntary petition in bankruptcy in order to discharge
such judgment and two mortgage notes relating to two condominiums in Dallas, the
holders of which were unwilling to renegotiate the terms of the mortgages. Mr.
Walker did not seek any other relief from creditors, and the bankruptcy was
discharged in February 1994.
Ed H. Bowman, Jr. has been President and Chief Executive Officer and a
Director of F.Y.I. since November 1995. From May 1993 to June 1995, Mr. Bowman
was Executive Vice President and Chief Operating Officer of the Health Systems
Group of First Data Corporation, a financial services company. Mr. Bowman was
responsible for the day-to-day operations of research and development, marketing
and customer service. From 1983 to 1993, Mr. Bowman served in a number of
executive positions with HBO & Co. ("HBO"), including VP -- International,
VP -- Marketing, Senior VP -- Customer Services, Group Senior VP -- Research and
Development, and last serving as Executive Vice President and Chief Operating
Officer of the Star Business Unit with responsibility for domestic operations.
Prior to joining HBO, Mr. Bowman was with Andersen Consulting for 10 years,
where he was elected a Partner. Mr. Bowman became a C.P.A. in 1973 and holds an
M.S. from Georgia Institute of Technology and a B.B.A. from Georgia State
University. Mr. Bowman is an investor and former board member of several
early-stage, high-technology companies.
David Lowenstein has been Executive Vice President -- Corporate Development
and Acquisitions and a Director of F.Y.I. since February 1995. In November 1997,
Mr. Lowenstein was named Treasurer. From July 1996 through November 1997, Mr.
Lowenstein held the additional position of Chief Financial Officer. Prior to
joining the Company, Mr. Lowenstein served, since February 1994, as Vice
President, Business Development of Laidlaw Waste Systems, Inc., with overall
responsibility for Laidlaw Waste System's acquisition and divestiture program in
North America. From April 1990 until February 1994, Mr. Lowenstein served in a
variety of capacities, including Director -- Corporate Development, for Laidlaw,
Inc. From November 1988 to March 1990, he served as a business analyst for
Tricil, Ltd., a solid and hazardous waste company that was acquired by Laidlaw,
Inc. in 1990. Mr. Lowenstein has been responsible for the acquisition or
divestiture of over 75 businesses in North America and Europe. Mr. Lowenstein
holds a B.A. in Economics from Sir Wilfred Laurier University and an M.S. in
Public and Business Administration from Carnegie Mellon University. Mr.
Lowenstein is a citizen of the Dominion of Canada residing in the United States.
Timothy J. Barker has been Senior Vice President and Chief Financial
Officer of F.Y.I. since November 1997. From November 1995 to November 1997, Mr.
Barker held the positions of Chief Accounting Officer and Controller of F.Y.I.
Prior to joining F.Y.I. as a full-time consultant in June 1995, Mr. Barker was a
manager with Arthur Andersen LLP, where he served in various capacities over a
nine-year period. Mr. Barker served as Vice President of Financial Planning and
Analysis for Sunbelt National Mortgage Corporation from June 1993 to October
1994. Mr. Barker holds a B.A. in Accounting from Texas Tech University and has
been a C.P.A. since 1985.
Greg Melanson has been Senior Vice President since February 1998 and a
Director of the Company and the Chairman of the Board, President and Chief
Executive Officer of Researchers Acquisition Corp.
8
<PAGE> 9
("Researchers"), a wholly-owned subsidiary of the Company, since the closing of
the IPO. Prior to the IPO and since 1978, Mr. Melanson held such offices with
the predecessor of Researchers. Mr. Melanson has been in the litigation support
services business since 1975. Mr. Melanson holds a B.A. from the University of
Southern California.
Joe A. Rose has been Senior Vice President of F.Y.I. since July 1997. From
May 1995 through January 1997, Mr. Rose was President and CEO of FormMaker
Software, Inc. From May 1993 through May 1995, Mr. Rose was Corporate Vice
President with John H. Harland Company and President and CEO of its subsidiary,
Formation Technology, Inc. From July 1988 through May 1993, Mr. Rose served as
Executive Vice President with National Data Corporation. Mr. Rose holds a B.A.
from Texas Tech University.
Ronald Zazworsky has been Senior Vice President of F.Y.I. since October
1997. From February 1994 until July 1997, Mr. Zazworsky was Senior Vice
President at Medaphis Corporation. From April 1992 to February 1994, Mr.
Zazworsky was President and CEO at Habersham Banking Solutions, Inc. Prior to
1992, Mr. Zazworsky was employed at HBO as Regional Vice President for eight
years. Previously, Mr. Zazworsky held various sales, marketing and management
positions at IBM. Mr. Zazworsky holds a B.A. from Gettysburg College and an
M.B.A. from Emory University.
John D. Kearney, Sr. has been Vice President of Corporate Development of
F.Y.I. since January 1998. From July 1995 until joining the Company, Mr. Kearney
was a Managing Director and Senior Vice President of Corporate Finance at
Rauscher Pierce Refsnes, Inc. where he directed the firm's information
technology investment banking team. From September 1991 until July 1995, Mr.
Kearney was a Senior Vice President of Corporate Finance at Raymond James &
Associates, Inc. Mr. Kearney holds a B.A. in Political Science from the State
University of New York at Oneonta and a J.D. and M.B.A. from Duke University.
Margot T. Lebenberg has been Vice President, General Counsel and Secretary
of F.Y.I. since May 1996. From 1992 until joining the Company, Ms. Lebenberg was
an attorney with Morgan, Lewis & Bockius LLP in New York, where she practiced
law primarily in the areas of securities and mergers and acquisitions,
specializing in consolidation transactions. Ms. Lebenberg holds a B.A. in
Economics and History from the State University of New York at Binghamton and a
J.D. from Fordham University School of Law.
Gary Patton has been Vice President of Human Resources and Director of
Corporate Programs of F.Y.I. since November 1997 and Director of Corporate
Programs since October 1996. From 1992 until joining the Company, Mr. Patton was
Vice President of Human Resources at Sunbelt Corporation. From 1987 until 1992,
Mr. Patton was Vice President of Human Resources at International Claim Service
Corporation. Mr. Patton holds a B.A. degree from University of North Texas.
9
<PAGE> 10
RISK FACTORS
LIMITED OPERATING HISTORY; RISKS OF INTEGRATION; ABILITY TO MANAGE GROWTH
F.Y.I. was founded in September 1994 and conducted no operations prior to
the consummation of the IPO. F.Y.I. acquired the Founding Companies
simultaneously with the closing of the IPO and has acquired 34 additional
companies since that time (together with the Founding Companies, the "Operating
Companies"). Prior to their acquisition, the Operating Companies operated as
separate independent entities. Currently, the Company has a decentralized
financial reporting system and relies on the existing reporting systems of the
Operating Companies. The success of the Company will depend, in part, on the
Company's ability to integrate the operations of the Operating Companies,
including centralizing certain functions to achieve cost savings and developing
programs and processes that will promote cooperation and the sharing of
opportunities and resources. There can be no assurance that the management group
will effectively be able to oversee the combined entity and implement the
Company's operating or growth strategies. The resulting growth of the
acquisition strategy of the Company places significant demands on management and
on the Company's internal systems and controls. There can be no assurance that
the management group will effectively be able to direct the Company through
periods of significant growth. In addition, no assurance can be given that the
Company's current systems will be adequate for its future needs or that the
Company will be successful in implementing new systems.
A number of the Operating Companies offer different services, utilize
different capabilities and technologies and target different geographic markets
and client segments. While the Company believes that there are substantial
opportunities in integrating these businesses, these differences increase the
risk inherent in successfully completing such integration. Further, there can be
no assurance that the Company's strategy to establish a single source provider
for document management services will be successful, or that the Company's
target client segments will accept the Company as a provider of such services.
In addition, there can be no assurance that the operating results of the Company
will match or exceed the combined individual operating results achieved by the
Operating Companies prior to their acquisition.
ACQUISITION STRATEGY
The Company's primary growth strategy is the acquisition of additional
document and information outsourcing solutions businesses that will complement
its existing businesses. There can be no assurance that the Company will be able
to identify or reach mutually agreeable terms with acquisition candidates and
their owners, or that the Company will be able to profitably manage additional
businesses or successfully integrate such additional businesses into the Company
without substantial costs, delays or other problems. Acquisitions may involve a
number of special risks including: (i) adverse short-term effects on the
Company's reported operating results; (ii) diversion of management's attention;
(iii) dependence on retention, hiring and training of key personnel; (iv) risks
associated with unanticipated problems or legal liabilities; and (v)
amortization of acquired intangible assets. Some or all of these risks could
have a material adverse effect on the Company's operations and financial
performance. In addition, to the extent that consolidation becomes more
prevalent in the industry, the prices for attractive acquisition candidates may
be bid up to higher levels. In any event, there can be no assurance that
businesses acquired in the future will achieve sales and profitability that
justify the investment therein. Unfavorable developments at an acquired company
could have a material adverse impact on the reputation and business of the
Company as a whole.
The Company is regularly in discussions with additional acquisition
candidates and may from time to time enter into letters of intent with respect
to the acquisition of such businesses. No assurance can be given, however, that
the Company will acquire any additional businesses.
NEED FOR ADDITIONAL FINANCING TO CONTINUE ACQUISITION STRATEGY
The Company currently intends to finance future acquisitions by using cash
and its Common Stock for all or a portion of the consideration to be paid. The
Company's Registration Statement on Form S-4 (Registration No. 333-24015) (the
"Acquisition Shelf") relates to the offering of 2,500,000 shares of
10
<PAGE> 11
Common Stock to be used as consideration for acquisitions by the Company, of
which 1,810,437 shares remained available as of December 31, 1997. In the event
that the Company's Common Stock does not maintain sufficient value, or potential
acquisition candidates are unwilling to accept the Company's Common Stock as
consideration for the sale of their businesses, the Company may be required to
utilize more of its cash resources, if available, in order to continue its
acquisition program. If the Company does not have sufficient cash resources, its
growth could be limited unless it is able to obtain capital through additional
debt or equity financings. Under the Company's amended and restated line of
credit with Banque Paribas and Bank of America Texas, N.A., as co-agents and the
lenders named therein, (the "1998 Credit Agreement"), the Company and its
subsidiaries can borrow, on a revolving credit basis, loans in an aggregate
outstanding principal amount of $50 million for acquisitions, working capital
and general corporate purposes subject to certain restrictions in the 1998
Credit Agreement. As of February 19, 1998, the availability under the 1998
Credit Agreement was $31.2 million. There can be no assurance, however, that
funds available under the 1998 Credit Agreement will be sufficient for the
Company's needs.
EFFECT OF POTENTIAL FLUCTUATIONS IN OPERATING RESULTS ON PRICE OF COMMON STOCK;
VOLATILITY OF STOCK PRICE
Results for any quarter are not necessarily indicative of the results that
the Company may achieve for any subsequent quarter or a full fiscal year.
Quarterly results may vary materially as a result of the timing and structure of
acquisitions, the timing and magnitude of costs related to such acquisitions,
the gain or loss of material client relationships and variations in the prices
charged by the Company for the services it provides. In addition, since a
significant portion of the Company's revenue is generated on a
project-by-project basis, the timing or completion of material projects could
result in fluctuations in the Company's results of operations for particular
quarterly periods. Such fluctuations in operating results may adversely affect
the market price of the Company's Common Stock. The market price for the
Company's shares may also fluctuate in response to material announcements by the
Company or significant clients or competitors of the Company, changes in the
economic or other conditions impacting the Company's targeted client segments or
changes in general economic conditions. Further, the securities markets have
experienced significant price and volume fluctuations from time to time that
have often been unrelated or disproportionate to the operating performance of
particular companies. These broad fluctuations may adversely affect the market
price of the Common Stock.
DEPENDENCE ON CERTAIN CLIENT SEGMENTS AND TECHNOLOGY
The Company derives its revenue primarily from information and document
intensive industries. Fundamental changes in the business practices of any of
these client segments, whether due to regulatory, technological or other
developments, could cause a material reduction in demand by such clients for the
services offered by the Company. Any such reduction in demand would have a
material adverse effect on the results of operations of the Company. The
document and information outsourcing solutions industry is characterized by
technological change, evolving customer needs and emerging technical standards.
Although the Company believes that it will be able to continue to offer services
based on the newest technologies, there can be no assurance that the Company
will be able to obtain the rights to use any such technologies, that it will be
able to effectively implement such technologies on a cost-effective or timely
basis or that such technologies will not render obsolete the Company's role as a
third party provider of document management services.
COMPETITION
The document and information outsourcing solutions businesses in which the
Company competes and expects to compete are highly competitive. A significant
source of competition is the in-house document handling capability of the
Company's targeted client base. There can be no assurance that these businesses
will outsource more of their document and information needs or that such
businesses will not bring in-house, services that they currently outsource. In
addition, certain of the Company's competitors are larger businesses and have
greater financial resources than the Company. Certain of these competitors
operate in broader geographic areas than the Company, and others may choose to
enter the Company's areas of operation in the future. In addition, the Company
intends to enter new geographic areas through internal growth and
11
<PAGE> 12
acquisitions and expects to encounter significant competition from established
competitors in each of such new areas. As a result of this highly competitive
environment, the Company may lose customers or have difficulty in acquiring new
customers and new companies, and its results of operations may be adversely
affected.
RELIANCE ON KEY PERSONNEL
The Company's operations are dependent on the continued efforts of its
executive officers and on senior management of the Operating Companies.
Furthermore, the Company will likely depend on the senior management of
businesses acquired in the future. If any of these people is unable or unwilling
to continue in his or her present role, or if the Company is unable to attract
and retain other skilled employees, the Company's business could be adversely
affected. The Company does not currently have key person life insurance covering
any of its executive officers or other members of senior management.
POTENTIAL LIABILITY FOR BREACH OF CONFIDENTIALITY
A substantial portion of the Company's business involves the handling of
documents containing confidential and other sensitive information. Although the
Company has established procedures intended to prevent any unauthorized
disclosure of confidential information and, in some cases, has contractually
limited its potential liability for unauthorized disclosure of such information,
there can be no assurance that unauthorized disclosures will not result in
material liability to the Company.
CASUALTY; RISK OF BUSINESS INTERRUPTIONS
The Company believes that its future results of operations will be
dependent in large part upon its ability to provide prompt and efficient
services to its customers. Certain of the Company's operations are performed at
a single location and are dependent on continuous computer, electrical and
telephone service. As a result, any disruption of the Company's day-to-day
operations could have a material adverse effect upon the Company. There can be
no assurance that a fire, flood, earthquake, power loss, telephone service loss
or other event affecting one or more of the Company's facilities would not
disable these services. Any significant damage to any such facility or other
failure that causes significant interruptions in the Company's operations may
not be covered by insurance. Any uninsured or underinsured loss could have a
material adverse effect on the Company's business, financial condition or
results of operations.
PUBLIC SECTOR MARKET AND CONTRACTING RISKS
A portion of the Company's present business involves public sector
contracts, and the Company anticipates a growing portion of its business coming
from local, state and federal government agencies. Public sector contracts are
subject to detailed regulatory requirements and public policies, as well as to
funding priorities. Contracts with public sector customers may be conditioned
upon the continuing availability of public funds, which in turn depends upon
lengthy and complex budgetary procedures, and may be subject to certain pricing
constraints. Moreover, public sector contracts may generally be terminated for a
variety of factors, including when it is in the best interests of the respective
governmental entity. There can be no assurance that these factors or others
unique to contracts with governmental entities will not have a material adverse
effect on the Company's future business, financial condition and results of
operations.
CONTROL BY MANAGEMENT
As of February 19, 1998, the directors and executive officers of the
Company beneficially owned approximately 18.6% of the outstanding shares of
Common Stock and exercise substantial control over the Company's affairs. These
stockholders acting together would likely be able to elect a sufficient number
of directors to control the Board of Directors and to approve or disapprove any
matter submitted to a vote of stockholders.
12
<PAGE> 13
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK
The market price of the Common Stock of the Company could be adversely
affected by the sale of substantial amounts of Common Stock of the Company in
the public market. In addition, many shares are subject to contractual
restrictions on resale which generally expire two years from the date of
issuance.
The Company has an aggressive acquisition program under which it recently
completed, and expects to continue to pursue, acquisitions that are accounted
for under the pooling-of-interests method of accounting. Under the
pooling-of-interests method of accounting, the affiliates of the acquired
companies, which are generally all of the stockholders of the companies acquired
by the Company, must be free to sell or otherwise transfer shares of the Common
Stock received in the acquisition, subject to their compliance with federal
securities laws, as soon as the Company releases results of operations that
reflect the combined operations of the Company and the acquired company for a
minimum of 30 days. If a significant number of shares of Common Stock are issued
in acquisitions that are consummated in close proximity to each other, such
shares will become freely tradable at the same time. If a large number of shares
are sold by stockholders in the market as soon as their shares became freely
transferable, the price of the Common Stock could be adversely affected.
The Company has reserved for issuance under the Company's 1995 Stock Option
Plan (the "Plan") an aggregate of 650,000 shares of Common Stock, or 16% of the
aggregate number of shares of the Common Stock outstanding, whichever is
greater. The Company has registered the shares issuable upon exercise of options
granted under the Plan, and such shares will be eligible for resale in the
public market. As of February 19, 1998, the Company had options to purchase
1,578,291 shares of Common Stock outstanding under the Plan.
IMPACT OF THE YEAR 2000 ISSUE
The "Year 2000 Issue" describes the use of two digits rather than four
digits to define the applicable year in certain computer programs. With the
coming millennium, any of the Company's computer programs that have two digit
date-sensitive software may interpret a date of "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
Management is in the process of evaluating the effect of the Year 2000
Issue on the Company. Based on preliminary findings, the total cost of
addressing the Year 2000 Issue is not expected to have a material adverse effect
on the Company's business, financial condition or results of operations.
However, management is in the process of completing its assessment of the
potential impact of the Year 2000 Issue on the Company and the potential
exposure of the Company to related problems of its customers and suppliers.
There can be no assurance that such exposure or the costs of remediating any
problems associated therewith will not materially adversely affect the Company's
future business, financial condition or results of operations.
ENVIRONMENTAL MATTERS
The Company is subject to regulations and ordinances that govern activities
or operations that may have adverse environmental effects, such as discharges to
air and water.
The Company is not aware of any environmental conditions relating to
present or past waste generation at or from these facilities that would be
likely to have a material adverse effect on the business, financial condition or
results of operations of the Company. However, there can be no assurance that
environmental liabilities in the future will not have a material adverse effect
on the business, financial condition or results of operations of the Company.
13
<PAGE> 14
EFFECT OF CERTAIN CHARTER PROVISIONS
The Board of Directors of the Company is empowered to issue preferred stock
without stockholder action. The existence of this "blank-check" preferred could
render more difficult or discourage an attempt to obtain control of the Company
by means of a tender offer, merger, proxy contest or otherwise.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Report contains certain forward-looking statements such as the
Company's or management's intentions, hopes, beliefs, expectations, strategies,
predictions or any other variation thereof or comparable phraseology of the
Company's future activities or other future events or conditions within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, which are intended to be covered by the safe
harbors created thereby. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation,
variations in quarterly results, volatility of the Company's stock price,
development by competitors of new or superior products or services, or entry
into the market of new competitors, the sufficiency of the Company's working
capital and the ability of the Company to realize benefits from consolidating
certain general and administrative functions, to assimilate and integrate
acquisitions, to continue its aggressive acquisition program, to retain
management, to implement its focused business strategy to expand its document
management services geographically, to retain customers or attract customers
from other businesses, to increase revenue by cross-selling services and to
successfully defend itself in ongoing and future litigation. Although the
Company believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate,
and, therefore, there can be no assurance that the forward-looking statements
included in this Report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved.
ITEM 2. PROPERTIES
As of December 31, 1997, the Company operated in excess of 110 document
management service facilities in 32 states. Except for the two facilities owned
by the Company, these facilities are leased and are principally used for
operations and general administrative functions. See Note 8 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries for
further information relating to these leases. In March 1996, the Company moved
into its current corporate headquarters in Dallas, Texas.
As of December 31, 1997, the Company also operated on-site at over 450
client locations and from time to time at many other client locations for
specific projects.
In order to secure its obligations under the 1998 Credit Agreement, the
Company granted to Banque Paribas and Bank of America Texas, N.A., as co-agents
for the Company's lenders, a lien on substantially all of the Company's
properties and other assets. See "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
The Company believes that its properties are generally well maintained, in
good condition and adequate for its present needs. Furthermore, the Company
believes that suitable additional or replacement space will be available when
required.
ITEM 3. LEGAL PROCEEDINGS
The Company is, from time to time, a party to litigation arising in the
normal course of its business. Management believes that none of these actions
will have a material adverse effect on the financial condition or results of
operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the year ended December 31, 1997, no matters
were submitted to a vote of the security holders.
14
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's Common Stock trades on The Nasdaq Stock Market under the
symbol "FYII." The Company completed its IPO in January 1996 at a price of
$13.00 per share. The following table sets forth, for the Company's fiscal
periods indicated, the range of high and low last reported sale prices for the
Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR 1996
First Quarter (from January 23, 1996)..................... $20.00 $13.00(1)
Second Quarter............................................ $22.00 $16.00
Third Quarter............................................. $23.00 $17.00
Fourth Quarter............................................ $23.00 $20.00
FISCAL YEAR 1997
First Quarter............................................. $26.25 $20.63
Second Quarter............................................ $25.31 $16.75
Third Quarter............................................. $26.25 $23.00
Fourth Quarter............................................ $26.25 $21.75
FISCAL YEAR 1998
First Quarter (through February 19, 1998)................. $26.25 $24.00
</TABLE>
- ---------------
(1) Represents the initial public offering price.
HOLDERS
On February 19, 1998, the last reported sale price of the Common Stock on
The Nasdaq Stock Market was $25.125 per share. At February 19, 1998, there were
121 holders of record of the Company's Common Stock, although the Company
believes the number of beneficial holders is substantially greater.
DIVIDENDS
The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future and intends to retain its earnings, if any, to
finance the expansion of its business and for general corporate purposes. Any
payment of future dividends will be at the discretion of the Board of Directors
and will depend upon, among other things, the Company's earnings, financial
condition, capital requirements, level of indebtedness, contractual restrictions
and other factors that the Company's Board of Directors deems relevant.
15
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
F.Y.I. was founded in September 1994 and effectively began its operations
on February 1, 1996 following the completion of the IPO. F.Y.I. acquired,
simultaneously with and as a condition to the closing of the IPO, the seven
Founding Companies (the "Acquisitions"). The Acquisitions have been accounted
for in accordance with generally accepted accounting principles ("GAAP") as a
combination of the Founding Companies at historical cost. For accounting
purposes and for the purposes of the presentation of the financial data herein,
January 31, 1996 has been used as the effective date of the Acquisitions.
Since the IPO and through December 31, 1997, the Company acquired four
companies in transactions that were accounted for as poolings-of-interests: (i)
The Rust Consulting Group, Inc. ("Rust") in December 1996; (ii) MAVRICC
Management Systems, Inc. and a related company, MMS Escrow and Transfer Agency,
Inc. (collectively, "MAVRICC") in March 1997; (iii) Input of Texas, Inc.
("Input") in March 1997; and (iv) Micro Publishing Systems, Inc. ("MPS") in
December 1997 (collectively, the "Pooled Companies"). The consolidated financial
statements for all periods presented have been restated to include the accounts
of MAVRICC and Input. As a result, F.Y.I. is reporting financial results in
periods prior to the Company's inception. The consolidated financial statements
of the Company were not restated for the Rust and MPS acquisitions for the
periods prior to January 1, 1996 and 1997, respectively, due to their financial
immateriality. The Pooled Companies and the Company were not under common
control or management during the periods prior to their respective mergers. The
results of operations for the periods presented may not be indicative of the
results in the future because of (i) the impact of acquisitions recorded as
purchases, whose results are only included subsequent to the purchase date; and
(ii) the impact of acquisitions recorded as poolings-of-interests, whose
predecessor companies were not under common control or management.
Subsequent to the IPO and through December 31, 1997, the Company acquired
25 additional companies in transactions accounted for as purchases. The
Company's results of operations include the results of these acquisitions from
the date of their respective acquisition.
The Selected Financial Data for the years ended December 31, 1995, 1996 and
1997 have been derived from the Consolidated Financial Statements of F.Y.I.
Incorporated and Subsidiaries that have been audited by Arthur Andersen LLP and
that appear elsewhere in this Report. The Selected Financial Data for the years
ended December 31, 1993 and 1994 have been derived from financial statements of
MAVRICC and Input not included elsewhere in this Report. The Selected Financial
Data are based on available information and certain assumptions described in the
footnotes set forth below, all of which the Company believes are reasonable.
The Selected Financial Data provided below should be read in conjunction
with the historical financial statements of F.Y.I., including the related notes
thereto, and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" that appear elsewhere in this Report.
16
<PAGE> 17
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1993(1) 1994 1995 1996 1997
------- ------ ------ -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service revenue................................ $6,752 $7,548 $9,040 $ 81,775 $145,824
Product and other revenue...................... -- -- -- 7,043 8,318
------ ------ ------ -------- --------
Total revenue........................ 6,752 7,548 9,040 88,818 154,142
Cost of services............................... 4,005 4,487 5,369 50,672 92,194
Cost of products sold.......................... -- -- -- 4,898 5,949
Depreciation................................... 152 111 145 1,766 3,269
------ ------ ------ -------- --------
Gross profit......................... 2,595 2,950 3,526 31,482 52,730
Selling, general and administrative
expenses(2).................................. 1,556 2,402 2,000 20,653 33,379
Amortization................................... -- -- -- 599 1,835
------ ------ ------ -------- --------
Operating income(2).................. 1,039 548 1,526 10,230 17,516
Interest and other expense (income), net(3).... (29) 18 (31) 782 1,382
------ ------ ------ -------- --------
Income before income taxes(2)(3)............... 1,068 530 1,557 9,448 16,134
Provision for income taxes(4).................. 530 248 530 3,849 6,554
------ ------ ------ -------- --------
Net income(2)(3)(4)............................ $ 538 $ 282 $1,027 $ 5,599 $ 9,580
====== ====== ====== ======== ========
Net income per common share
Basic (2)(3)(4).............................. $ 0.32 $ 0.17 $ 0.60 $ 0.81 $ 0.92
Diluted (2)(3)(4)............................ 0.32 0.17 $ 0.60 $ 0.79 $ 0.90
Weighted average common shares outstanding
Basic........................................ 1,687 1,687 1,717 6,924 10,438
Diluted...................................... 1,687 1,687 1,717 7,052 10,616
BALANCE SHEET DATA:
Working capital................................ $ 150 $ 548 $ (904) $ 21,928 $ 22,105
Total assets................................... 1,458 2,680 4,530 102,119 126,238
Long-term obligations, net of current
maturities................................... 15 6 443 4,662 5,692
Stockholders' equity........................... 452 1,059 1,280 76,541 100,516
</TABLE>
- ---------------
(1) Input previously reported on a fiscal year ending March 31. The results of
Input for the fiscal year ending March 31, 1994 have been combined with the
results of MAVRICC for the year ended December 31, 1993. The results of
Input for all other years presented have been restated to reflect a calendar
year.
(2) Gives effect to the Compensation Differential. See Note 2 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(3) Interest expense for the year ended December 31, 1997 includes the write-off
of approximately $1.2 million ($0.7 million, net of taxes, and $0.07 per
share) of unamortized debt issuance costs related to the Company's 1996
Credit Agreement. See Note 7 of Notes to Consolidated Financial Statements
of F.Y.I. Incorporated and Subsidiaries.
(4) Gives effect to certain tax adjustments related to the taxation of certain
Founding and Pooled Companies as S corporations or sole proprietorships
prior to the consummation of the Acquisitions and the tax impact of the
Compensation Differential in each period. See Note 2 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
17
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements of the Company and the related notes thereto and "Item 6. Selected
Financial Data" appearing elsewhere in this Report. Additional information
concerning factors that could cause results to differ materially from those in
the forward-looking statements is contained under "Item 1. Business -- Risk
Factors."
INTRODUCTION
F.Y.I. was founded in September 1994 to create a national, single source
provider of document and information outsourcing solutions. In January 1996,
F.Y.I. acquired, simultaneously with the closing of the IPO, the Founding
Companies. The Acquisitions have been accounted for in accordance with GAAP as a
combination of the Founding Companies at historical cost, and January 31, 1996
has been used as the effective date of the Acquisitions. Between September 1994
and the consummation of the IPO, F.Y.I. did not conduct any operations.
Accordingly, the actual operating results of the Company included in the
Statement of Operations for the year ended December 31, 1996 include the 11
months of operations subsequent to the consummation of the Acquisitions and the
IPO. During the period prior to the IPO, F.Y.I. incurred various legal,
accounting, marketing, travel and other costs in connection with the
Acquisitions and the IPO which were funded by the issuance of equity securities.
Additional costs associated with the Acquisitions and the IPO were paid with
proceeds of the IPO.
Since the IPO and through December 31, 1997, the Company acquired four
companies in transactions that were accounted for as poolings-of-interests: (i)
Rust in December 1996; (ii) MAVRICC in March 1997; (iii) Input in March 1997;
and (iv) MPS in December 1997. The consolidated financial statements for all
periods presented have been restated to include the accounts of MAVRICC and
Input. As a result, F.Y.I. is reporting financial results in periods prior to
the Company's inception. The consolidated financial statements of the Company
were not restated for the Rust and MPS acquisitions for the periods prior to
January 1, 1996 and 1997, respectively, due to their financial immateriality.
The Pooled Companies and the Company were not under common control or management
during the periods prior to their respective mergers. The results of operations
for the periods presented may not be indicative of the results in the future
because of (i) the impact of acquisitions recorded as purchases, whose results
are only included subsequent to the purchase date; and (ii) the impact of
acquisitions recorded as poolings-of-interests, whose predecessor companies were
not under common control or management.
Subsequent to the IPO and through December 31, 1997, the Company acquired
25 additional companies in transactions accounted for as purchases. In
accordance with GAAP, the Company's results of operations include the results of
these acquisitions from the date of their respective acquisition.
The Company's revenue is classified as service revenue and product and
other revenue. Service revenue relates to the following document management
services: (i) document and data conversion services; (ii) data capture services;
(iii) direct marketing services; (iv) records management services; (v)
healthcare services; (vi) litigation support services; and (vi) employee and
investor services. Product revenue and other revenue represents sales of
micrographic and business imaging supplies and equipment, primarily in
conjunction with film processing and other micrographic services, sales of
filing supplies, shelving and software, commissions on the sales of imaging
systems and equipment and franchising fees.
Cost of services consists primarily of compensation and benefits to
non-administrative employees, occupancy costs, equipment costs and supplies.
Cost of products sold relates to micrographics and business imaging supplies and
equipment, filing supplies, shelving and software.
Selling, general and administrative expenses ("SG&A") consist primarily of:
(i) compensation and related benefits to the sales and marketing, executive
management, accounting, human resources and other administrative employees of
the Company; (ii) other sales and marketing costs; (iii) communications costs;
(iv) insurance costs; and (v) legal and accounting professional fees and
expenses.
18
<PAGE> 19
RESULTS OF OPERATIONS
The following table sets forth certain items expressed as a percentage of
total revenue for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Service revenue........................................... 100.0% 92.1% 94.6%
Product and other revenue................................. 0.0 7.9 5.4
----- ----- -----
Total revenue................................... 100.0 100.0 100.0
Cost of services.......................................... 59.4 57.1 59.8
Cost of products sold..................................... 0.0 5.5 3.9
Depreciation.............................................. 1.6 2.0 2.1
----- ----- -----
Gross profit.................................... 39.0 35.4 34.2
Selling, general and administrative expenses(1)........... 22.1 23.3 21.6
Amortization.............................................. 0.0 0.6 1.2
----- ----- -----
Pro forma operating income(1)................... 16.9 11.5 11.4
Interest and other expense (income), net(2)............... (0.3) 0.9 0.9
----- ----- -----
Income before income taxes(1)(2).......................... 17.2 10.6 10.5
Provision for income taxes(3)............................. 5.8 4.3 4.3
----- ----- -----
Net income(1)(2)(3)....................................... 11.4% 6.3% 6.2%
===== ===== =====
</TABLE>
- ---------------
(1) Adjusted for the Compensation Differential. See Note 2 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(2) Includes the write off of unamortized debt issuance costs of 0.8% of total
revenue, or 0.5% net of the associated income tax effect. See Note 7 of
Notes to Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
(3) Gives effect to certain tax adjustments related to the taxation of certain
Founding Companies and Pooled Companies as S corporations or sole
proprietorships prior to the consummation of the Acquisitions and the tax
impact of the Compensation Differential in each period. See Note 2 of Notes
to Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenue
Total revenue. Total revenue increased 73.5%, from $88.8 million for the
year ended December 31, 1996 to $154.1 million for the year ended December 31,
1997. This increase was comprised of a 78.3% increase in service revenue and a
18.1% increase in product and other revenue.
Service revenue. Service revenue increased $64.0 million, from $81.8
million for the year ended December 31, 1996 to $145.8 million for the year
ended December 31, 1997. This increase was largely due to: (i) revenue from the
acquisitions completed subsequent to December 31, 1996 accounted for under the
purchase method of accounting; (ii) internal growth of 9.0% in service revenue
at the Founding Companies and the companies acquired and accounted for under the
purchase method of accounting consummated prior to December 31, 1996; and (iii)
internal growth of 6.3% at the Pooled Companies acquired prior to December 1997.
The internal growth of the Founding Companies and purchased companies was
primarily attributable to: (i) an increase in medical records release revenue of
$1.9 million, primarily attributable to the expansion into 28 additional
healthcare institutions in the Eastern United States and Texas during 1997 and
due to increased production volumes at facilities contracted during 1996; (ii)
an increase in litigation support revenue of $3.0 million primarily due to
increased overnight document production and increased medical records subpoena
and service of process requests; and (iii) an increase in records management
revenue of
19
<PAGE> 20
$2.3 million due to expansion into additional healthcare institutions in
California and storage facilities in Michigan.
Product and other revenue. Product and other revenue increased
approximately $1.3 million, from $7.0 million for the year ended December 31,
1996 to $8.3 million for the year ended December 31, 1997. This increase
primarily resulted from increased sales of filing and shelving supplies
associated with the acquisition of Information Management Corporation in June
1997. This increase in product revenue was partially offset by: (i) a decline in
commissions on the sales of micrographics equipment; (ii) a decline in franchise
fee revenue; and (iii) a decrease in software sales.
Gross profit
Gross profit increased 67.5%, from $31.5 million for the year ended
December 31, 1996 to $52.7 million for the year ended December 31, 1997, largely
due to the increases in revenue discussed above. Gross profit as a percentage of
revenue decreased from 35.4% for the year ended December 31, 1996 to 34.2% for
the year ended December 31, 1997, primarily due to a reduction in the percentage
of revenue from the Pooled Companies from 1996 to 1997.
Selling, general and administrative expenses
SG&A increased 43.8%, from $23.9 million, or 27.0% of revenue, for the year
ended December 31, 1996 to $34.4 million, or 22.3% of revenue, for the year
ended December 31, 1997, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1996. After giving effect to the Compensation
Differential in each period, SG&A increased 61.6%, from $20.7 million, or 23.3%
of revenue, for the year ended December 31, 1996 to $33.4 million, or 21.6% of
revenue, for the year ended December 31, 1997. This decrease as a percentage of
revenue was a result of a decrease in SG&A as a percentage of revenue at the
Founding and Pooled Companies from 21.4% for the year ended December 31, 1996 to
18.7% for the year ended December 31, 1997, primarily due to spreading the
companies' fixed costs over a larger revenue base.
Pro forma operating income
Pro forma operating income adjusted for the Compensation Differential
increased 71.2%, from $10.2 million, or 11.5% of revenue, for the year ended
December 31, 1996 to $17.5 million, or 11.4% of revenue, for the year ended
December 31, 1997.
Interest Expense
Interest expense increased 60.1% from $1.2 million for the year ended
December 31, 1996 to $1.9 million for the year ended December 31, 1997,
primarily due to the write-off of unamortized debt issue costs related to the
Company's credit agreement entered into in April 1996, with Banque Paribas, as
agent, and the lenders named therein (the "1996 Credit Agreement"). Interest on
borrowings decreased $0.5 million, from $0.9 million in 1996 to $0.4 million in
1997, as the Company entered 1997 with minimal debt and $21.4 million in cash.
Pro forma income before income taxes and pro forma net income
Pro forma income before income taxes adjusted for the Compensation
Differential increased 70.8%, from $9.4 million for the year ended December 31,
1996 to $16.1 million for the year ended December 31, 1997, and pro forma net
income adjusted for both the Compensation Differential and pro forma provision
for taxes increased 71.1%, from $5.6 million for the year ended December 31,
1996 to $9.6 million for the year ended December 31, 1997, largely attributable
to the factors discussed above.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
For the year ended December 31, 1996, revenue increased from $9.0 million
for the year ended December 31, 1995 to $88.8 million for the year ended
December 31, 1996. Gross profit increased from
20
<PAGE> 21
$3.5 million for the year ended December 31, 1995 to $31.5 million for the year
ended December 31, 1996. Operating income increased from $(59,000) for the year
ended December 31, 1995 to $6.9 million for the year ended December 31, 1996.
Net income increased from $30,000 for the year ended December 31, 1995, to $3.3
million for the year ended December 31, 1996. As previously mentioned, the
financial statements for 1995 have been restated to include the accounts of
MAVRICC and Input, two companies acquired in transactions accounted for as
poolings-of-interests. The Pooled Companies and the Company were not under
common control or management during the periods presented prior to their
respective mergers. The Company acquired 25 companies in 1996, including the
Founding Companies, whose results were included in the Company's results for the
period after the effective date of the respective acquisition, thereby resulting
in the increases discussed above. For further discussion of the 1996 operations
versus the operations of the Founding Companies for 1995, see the Company's 1996
Annual Report on Form 10-K.
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
Revenue from the Company's services shows no significant seasonal
variations. However, service revenue can vary from period to period due to the
impact of specific projects, primarily in litigation support and data capture
and document and data conversion. Quarterly results may also vary as a result of
the timing of acquisitions and the timing and magnitude of costs related to such
acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had $22.1 million of working capital and
$6.9 million of cash. Cash flows provided by operating activities for the year
ended December 31, 1997 were $6.6 million. Net cash provided by operating
activities for the year ended December 31, 1997 was primarily impacted by: (i)
an increase in revenue and a corresponding increase in accounts receivable; and
(ii) a decrease in accounts payable and accrued liabilities associated primarily
with the payment of 1996 income taxes and 1997 estimated taxes. Net cash used in
investing activities was $14.6 million for the year ended December 31, 1997, and
was primarily used for the purchase of property, plant and equipment and
payments of $8.0 million for acquisitions, net of cash acquired. Net cash used
in financing activities was $6.4 million, as the Company assumed and
subsequently retired $8.0 million of debt in acquisitions and paid $2.3 million
for other long-term obligations. These uses were offset in part by proceeds from
employee stock option exercises and an advance in the fourth quarter from the
Company's line of credit.
During the year ended December 31, 1996, net cash provided by operating
activities was $5.5 million. Net cash used for investing activities was $40.6
million, as the Company paid $37.2 million for acquisitions, net of cash
acquired. Net cash provided by financing activities was $56.4 million, primarily
due to the Company's IPO in January 1996 and the follow-on public offering in
December 1996 (the "December Offering"), which raised $68.2 million, net of
underwriting discounts and other costs associated with the offerings. The
Company assumed $8.5 million of debt in the acquisitions of the Founding
Companies, of which $7.7 million was subsequently retired with the proceeds of
the IPO. In April 1996, the Company entered into a $35.0 million Line of Credit
(the "1996 Credit Agreement"). During the year ended December 31, 1996, the
Company borrowed $22.8 million under the 1996 Credit Agreement to help fund the
acquisition program, all of which was subsequently repaid with cash from
operations and the proceeds of the December Offering. As of December 31, 1997,
no proceeds were remaining from the December Offering. The Company assumed $4.0
million of debt in other 1996 acquisitions, of which $1.0 million was retired.
The Company anticipates that cash on hand, cash from operations, additional
bank financing available under the 1998 Credit Agreement and shares of Common
Stock available under the Acquisition Shelf (as defined below) will provide
sufficient liquidity to execute the Company's acquisition and internal growth
plans for approximately the next 12 months. In February 1998, F.Y.I. entered
into the 1998 Credit Agreement. Under the 1998 Credit Agreement, the Company and
its subsidiaries can borrow on a revolving credit basis loans in an aggregate
outstanding principal amount up to $50.0 million, subject to certain customary
borrowing capacity requirements. The availability under the 1998 Credit
Agreement as of February 19, 1998 was $31.2 million for acquisitions, working
capital and general corporate purposes. Should the Company accelerate its
acquisition program, the Company may need to seek additional financing through
the public or private sale
21
<PAGE> 22
of equity or debt securities. There can be no assurance that the Company could
secure such financing if and when it is needed or on terms the Company deems
acceptable. As of December 31, 1997, 1,810,437 shares were available on the
Company's Acquisition Shelf.
IMPACT OF THE YEAR 2000 ISSUE
The "Year 2000 Issue" describes the use of two digits rather than four
digits to define the applicable year in certain computer programs. With the
coming millennium, any of the Company's computer programs that have two digit
date-sensitive software may interpret a date of "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
Management is in the process of evaluating the effect of the Year 2000
Issue on the Company. Based on preliminary findings, the total cost of
addressing the Year 2000 Issue is not expected to have a material adverse effect
on the Company's business, financial condition or results of operations.
However, management is in the process of completing its assessment of the
potential impact of the Year 2000 Issue on the Company and the potential
exposure of the Company to related problems of its customers and suppliers.
There can be no assurance that such exposure or the costs of remediating any
problems associated therewith will not materially adversely affect the Company's
future business, financial condition or results of operations.
22
<PAGE> 23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
F.Y.I. INCORPORATED AND SUBSIDIARIES
Report of Independent Public Accountants.................. 24
Consolidated Balance Sheets............................... 25
Consolidated Statements of Operations..................... 26
Consolidated Statements of Stockholders' Equity........... 27
Consolidated Statements of Cash Flows..................... 28
Notes to Consolidated Financial Statements................ 29
</TABLE>
23
<PAGE> 24
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To F.Y.I. Incorporated:
We have audited the accompanying consolidated balance sheets of F.Y.I.
Incorporated (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1996 and 1997 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
F.Y.I. Incorporated and subsidiaries as of December 31, 1996 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
Dallas, Texas, ARTHUR ANDERSEN LLP
February 20, 1998
24
<PAGE> 25
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................... $ 21,352 $ 6,926
Accounts receivable and notes receivable, less allowance for
doubtful accounts of $1,240 and $3,122, respectively...... 19,665 29,468
Inventory................................................... 522 1,675
Notes receivable, shareholders -- short term................ 30 351
Prepaid expenses and other current assets................... 924 2,134
-------- --------
Total current assets.............................. 42,493 40,554
PROPERTY, PLANT AND EQUIPMENT, net.......................... 13,303 19,888
GOODWILL AND OTHER INTANGIBLES, net of amortization of $690
and $2,530, respectively.................................. 43,235 64,278
NOTES RECEIVABLE, SHAREHOLDERS -- LONG TERM................. 643 321
OTHER NONCURRENT ASSETS..................................... 2,445 1,197
-------- --------
Total assets...................................... $102,119 $126,238
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities.................... $ 15,219 $ 12,962
Short-term obligations...................................... 250 --
Current maturities of long-term obligations................. 585 856
Unearned revenue............................................ 1,087 1,991
Income taxes payable........................................ 2,665 1,660
Current portion of deferred income taxes.................... 759 980
-------- --------
Total current liabilities......................... 20,565 18,449
LONG-TERM OBLIGATIONS, net of current maturities............ 4,662 5,692
DEFERRED INCOME TAXES, net of current portion............... 351 874
OTHER LONG-TERM OBLIGATIONS................................. -- 707
-------- --------
Total liabilities................................. 25,578 25,722
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, 0 shares issued and outstanding............... -- --
Common stock, $.01 par value, 26,000,000 shares authorized,
9,728,726 and 10,946,286 shares issued and outstanding at
December 31, 1996 and December 31, 1997, respectively..... 97 109
Additional paid-in-capital.................................. 74,191 89,541
Retained earnings........................................... 2,754 11,367
-------- --------
77,042 101,017
Less -- Treasury stock, $.01 par value, 36,670 shares at
December 31, 1996 and 1997................................ (501) (501)
-------- --------
Total stockholders' equity........................ 76,541 100,516
-------- --------
Total liabilities and stockholders' equity........ $102,119 $126,238
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 26
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------ ------- --------
<S> <C> <C> <C>
REVENUE:
Service revenue........................................... $9,040 $81,775 $145,824
Product and other revenue................................. -- 7,043 8,318
------ ------- --------
Total revenue.......................................... 9,040 88,818 154,142
COST OF SERVICES............................................ 5,369 50,672 92,194
COST OF PRODUCTS SOLD....................................... -- 4,898 5,949
DEPRECIATION................................................ 145 1,766 3,269
------ ------- --------
Gross profit.............................................. 3,526 31,482 52,730
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 3,585 23,941 34,423
AMORTIZATION................................................ -- 599 1,835
------ ------- --------
Operating (loss) income................................... (59) 6,942 16,472
OTHER (INCOME) EXPENSE:
Interest expense.......................................... 163 1,156 1,851
Interest income........................................... (11) (286) (508)
Other (income) expense, net............................... (183) (88) 39
------ ------- --------
(Loss) income before income taxes...................... (28) 6,160 15,090
(BENEFIT) PROVISION FOR INCOME TAXES........................ (58) 2,865 6,083
------ ------- --------
NET INCOME.................................................. $ 30 $ 3,295 $ 9,007
====== ======= ========
PRO FORMA DATA (Unaudited -- See Note 2):
Historical net income..................................... $ 30 $ 3,295 $ 9,007
Pro forma compensation differential....................... 1,585 3,288 1,044
Pro forma provision for income taxes...................... 588 984 471
------ ------- --------
PRO FORMA NET INCOME........................................ $1,027 $ 5,599 $ 9,580
====== ======= ========
NET INCOME PER COMMON SHARE
BASIC..................................................... $ 0.02 $ 0.48 $ 0.86
====== ======= ========
DILUTED................................................... $ 0.02 $ 0.47 $ 0.85
====== ======= ========
PRO FORMA NET INCOME PER COMMON SHARE
BASIC..................................................... $ 0.60 $ 0.81 $ 0.92
====== ======= ========
DILUTED................................................... $ 0.60 $ 0.79 $ 0.90
====== ======= ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC..................................................... 1,717 6,924 10,438
====== ======= ========
DILUTED................................................... 1,717 7,052 10,616
====== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 27
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK TREASURY STOCK
------------------- --------------- --------------- TOTAL
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT APIC R/E S/E
---------- ------ ------ ------ ------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994... 1,686,477 $ 17 9,000 $ -- -- $ -- $ 901 $ 141 $ 1,059
Stock offering............... 39,185 1 -- -- -- 322 -- 323
Stock issued in exchange for
services................... 21,099 -- -- -- -- -- 35 -- 35
Dividends to shareholders of
pooled companies........... -- -- -- -- -- -- -- (167) (167)
Net income................... -- -- -- -- -- -- -- 30 30
---------- ---- ------ ---- ------ ----- ------- ------- --------
Balance, December 31, 1995... 1,746,761 18 9,000 -- -- -- 1,258 4 1,280
Pooling-of-interests
adjustments at January 1,
1996....................... 110,000 1 -- -- -- -- 242 83 326
Initial public offering, net
of costs................... 2,185,000 22 -- -- -- -- 21,830 -- 21,852
Conversion of preferred stock
into common stock.......... 542,557 5 (9,000) -- -- -- (5) -- --
Issuance of common stock for
Founding Companies......... 1,878,933 19 -- -- -- -- (4,586) -- (4,567)
S corporation to C
corporation conversion for
Founding Companies......... -- -- -- -- -- -- (691) -- (691)
Common stock issued in
connection with
acquisitions............... 856,735 9 -- -- -- -- 11,827 -- 11,836
Treasury stock re-acquired in
connection with
acquisitions............... -- -- -- -- 36,670 (501) -- -- (501)
Exercise of options, net..... 45,740 -- -- -- -- -- 711 -- 711
Secondary offering, net of
costs...................... 2,363,000 23 -- -- -- -- 43,605 -- 43,628
Dividends to shareholders of
pooled companies........... -- -- -- -- -- -- -- (628) (628)
Net income................... -- -- -- -- -- -- -- 3,295 3,295
---------- ---- ------ ---- ------ ----- ------- ------- --------
Balance, December 31, 1996... 9,728,726 97 -- -- 36,670 (501) 74,191 2,754 76,541
Pooling-of-interests
adjustments at January 1,
1997....................... 326,506 3 -- -- -- -- 608 (294) 317
Common stock issued in
connection with
acquisitions............... 804,128 8 -- -- -- -- 13,209 -- 13,217
Dividends to shareholders of
pooled companies........... -- -- -- -- -- -- -- (100) (100)
Exercise of options, net..... 86,926 1 -- -- -- -- 1,533 -- 1,534
Net income................... -- -- -- -- -- -- -- 9,007 9,007
---------- ---- ------ ---- ------ ----- ------- ------- --------
Balance, December 31, 1997... 10,946,286 $109 -- $ -- 36,670 $(501) $89,541 $11,367 $100,516
========== ==== ====== ==== ====== ===== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 28
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 30 $ 3,295 $ 9,007
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 145 2,365 5,104
Deferred tax (benefit) provision.......................... (18) (219) 289
Change in operating assets and liabilities:
Accounts receivable and notes receivable.................. (239) (639) (4,915)
Inventory................................................. -- 4 (427)
Prepaid expenses and other assets......................... (91) (642) 953
Accounts payable and accrued liabilities.................. 163 893 (4,063)
Unearned revenue.......................................... -- 414 681
------- -------- --------
Net cash (used in) provided by operating
activities...................................... (10) 5,471 6,629
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment................. (172) (3,534) (6,723)
Distribution from partnership............................. -- 86 60
Cash paid for acquisitions, net of cash acquired.......... -- (37,200) (7,956)
------- -------- --------
Net cash used for investing activities............ (172) (40,648) (14,619)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance, net of underwriting
discounts and other costs.............................. (741) 68,227 814
Proceeds from preferred stock issuance.................... 135 -- --
Proceeds from short-term obligations...................... 1,990 7,808 446
Proceeds from long-term obligations....................... 936 19,133 3,000
Cash paid for debt issuance costs......................... -- (1,627) --
Dividends paid to shareholders of pooled companies........ (167) (100) (100)
Principal payments on short-term obligations.............. (2,163) (9,568) (262)
Principal payments on long-term obligations............... (398) (27,516) (10,334)
------- -------- --------
Net cash (used in) provided by financing
activities...................................... (408) 56,357 (6,436)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (590) 21,180 (14,426)
CASH AND CASH EQUIVALENTS, beginning of period.............. 762 172 21,352
------- -------- --------
CASH AND CASH EQUIVALENTS, end of period.................... $ 172 $ 21,352 $ 6,926
======= ======== ========
SUPPLEMENTAL DATA:
Cash paid for:
Income taxes.............................................. $ -- $ 1,731 $ 7,106
Interest.................................................. $ 150 $ 934 $ 400
NONCASH FINANCING TRANSACTIONS:
Debt assumed in acquisitions.............................. $ -- $ 12,485 $ 8,030
Equipment acquired via capital lease...................... $ -- $ 863 $ 171
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 29
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
F.Y.I. Incorporated (the "Company" or "F.Y.I.") was founded in September
1994 to create a national, single source provider of document and information
outsourcing solutions to document and information intensive industries,
including: healthcare, law, banking, insurance, retailing, manufacturing and
government. In January 1996, F.Y.I. acquired (the "Acquisitions") simultaneously
with the closing of its initial public offering (the "IPO") on January 26, 1996,
seven document management services businesses (the "Founding Companies"). The
consideration for the Founding Companies consisted of a combination of cash and
common stock (the "Common Stock") of F.Y.I.
Between September 1994 and the consummation of the IPO and the
Acquisitions, F.Y.I. did not conduct any operations. For accounting purposes and
for the purposes of the presentation of the financial statements herein, January
31, 1996 has been used as the effective date of the Acquisitions. Accordingly,
the actual operating results of the Company included in the Statement of
Operations for the twelve months ended December 31, 1996 include the eleven
months of operations subsequent to the consummation of the Acquisitions.
Since the IPO, the Company acquired four companies in transactions that
were accounted for as poolings-of-interests: (i) The Rust Consulting Group, Inc.
("Rust") in December 1996; (ii) MAVRICC Management Systems, Inc. and a related
company, MMS Escrow and Transfer Agency, Inc. (collectively, "MAVRICC") in March
1997; (iii) Input of Texas, Inc. ("Input") in March 1997; and (iv) Micro
Publishing Systems, Inc. ("MPS") in December 1997 (collectively, the "Pooled
Companies"). The consolidated financial statements for all periods presented
have been restated to include the accounts of MAVRICC and Input. As a result,
F.Y.I. is reporting financial results in periods prior to the Company's
inception. The consolidated financial statements of the Company were not
restated for the Rust and MPS acquisitions for the periods prior to January 1,
1996 and 1997, respectively, due to their financial immateriality. The Pooled
Companies and the Company were not under common control or management during the
periods prior to their respective mergers. The results of operations for the
periods presented may not be indicative of the results in the future because of
(i) the impact of acquisitions recorded as purchases, whose results are only
included subsequent to the purchase date; and (ii) the impact of acquisitions
recorded as poolings-of-interests, whose predecessor companies were not under
common control or management.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash and Cash Equivalents
The Company considers highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value.
Inventory
Inventory is stated at the lower of cost or market with cost determined on
a first-in, first-out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is
computed using straight-line and accelerated methods over the estimated useful
lives of the assets. Leasehold improvements are depreciated over the lesser of
the estimated useful life or the term of the lease.
29
<PAGE> 30
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Intangible Assets
Intangible assets consist primarily of excess purchase price over net
assets, which are amortized over 30 years. In conformance with Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Company's
management continually evaluates whether events and circumstances indicate the
remaining estimated useful life of intangible assets may warrant revisions or
that the remaining balance of intangibles or other long-lived assets may not be
recoverable. To make this evaluation, management uses an estimate of
undiscounted net income over the remaining life of the intangibles or other
long-lived assets.
Revenue Recognition
Revenue is recognized when the services are rendered, or products are
shipped, to the Company's customers. Microfilm processing revenue is recognized
on a percentage-of-completion basis. Unearned revenue represents customer
storage and certain services which are billed in advance.
Income Taxes
Income taxes are provided based upon the provisions of SFAS No. 109,
"Accounting for Income Taxes," which requires recognition of deferred income
taxes under the asset and liability method.
Deferred income taxes are provided for temporary differences in the
recognition of revenue and expenses for tax and financial reporting purposes.
Temporary differences result primarily from accelerated depreciation and
amortization for tax purposes, deferred contract revenue being taxed when
billed, and various accruals and reserves being deductible for tax purposes in
different periods.
Net Income Per Share
Net income per common share has been computed in accordance with SFAS No.
128, "Earnings Per Share," which requires the disclosure of basic and diluted
net income per share. Basic net income per share has been computed by dividing
net income by the weighted average number of common shares outstanding for the
period. Diluted net income per share has been computed by dividing net income by
the weighted average number of common shares and common stock equivalents
outstanding for the period. Net income per share has been restated for all
periods presented in accordance with SFAS No. 128.
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of certain assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain prior year amounts have been reclassified to make their
presentation consistent with the current year.
Consolidation
The accompanying financial statements and related notes to consolidated
financial statements include the accounts of F.Y.I. Incorporated and its
subsidiaries, which consist of the results of: (i) F.Y.I. Incorporated; (ii) the
Founding Companies acquired simultaneously with the closing of F.Y.I.'s IPO on
January 23, 1996
30
<PAGE> 31
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
based on an effective date of January 31, 1996; (iii) the companies acquired in
business combinations accounted for under the purchase method of accounting from
their respective acquisition dates; and (iv) the companies acquired in business
combinations accounted for under the pooling-of-interests method of accounting
for all periods presented. All significant intercompany balances and
transactions have been eliminated.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public company's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the Company's fiscal year ended December 31,
1998, with earlier application permitted. The effect of adoption of these
statements will be limited to the form and content of the Company's disclosures
and will not impact the Company's results of operations, cash flow or financial
position.
Pro Forma Net Income (Unaudited)
The Company acquired Rust in December 1996, MAVRICC in March 1997, Input in
March 1997, and MPS in December 1997, all in transactions that were accounted
for as poolings-of-interests. The Pooled Companies were managed through their
acquisition dates as independent private companies and represent a variety of
tax structures. Therefore, selling, general and administrative expenses for the
historical periods reflect compensation and related benefits that the former
owners have received from the business during those periods. In connection with
the acquisition, the owners have entered into employment agreements that provide
for compensation and benefits at levels lower than the historical amounts (the
"Compensation Differential"). The unaudited pro forma data present compensation
at the level the owners have agreed to receive subsequent to the acquisition. In
addition, the pro forma data present the incremental provision for income taxes
as if all entities had been subject to federal and state income taxes and the
related income tax impact of the Compensation Differential discussed above.
3. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND NOTES RECEIVABLE:
The activity in the allowance for doubtful accounts and notes receivable is
as follows (in thousands):
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING BALANCE COSTS AND END OF
OF PERIOD ACQUIRED EXPENSES WRITE-OFFS PERIOD
---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Twelve months ended December 31,
1996................................. $ 22 $1,038 $1,017 $ 837 $1,240
====== ====== ====== ====== ======
Twelve months ended December 31,
1997................................. $1,240 $2,046 $1,631 $1,795 $3,122
====== ====== ====== ====== ======
</TABLE>
31
<PAGE> 32
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES -----------------
YEARS 1996 1997
------------ ------- -------
<S> <C> <C> <C>
Land................................................... N/A $ 602 $ 602
Buildings and improvements............................. 7--18 2,335 2,691
Leasehold improvements................................. 5--10 792 1,194
Vehicles............................................... 5--7 1,253 1,990
Machinery and equipment................................ 5--15 14,705 18,062
Computer equipment..................................... 3--7 3,769 9,320
Furniture and fixtures................................. 5--15 999 2,493
------- -------
24,455 36,352
Less -- Accumulated depreciation and amortization...... 11,152 16,464
------- -------
$13,303 $19,888
======= =======
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Accounts payable and accrued liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
Accounts payable and accrued liabilities.................... $ 4,968 $ 5,182
Accrued compensation and benefits........................... 2,819 4,698
Customer deposits........................................... 883 1,129
Accrued liabilities from acquisitions....................... 5,211 1,344
Accrued professional fees................................... 1,035 176
Other....................................................... 303 433
------- -------
$15,219 $12,962
======= =======
</TABLE>
6. BUSINESS COMBINATIONS:
1997 Acquisitions
During 1997, the Company acquired 11 additional document management
businesses, eight of which were accounted for as purchases (the "Purchased
Companies") and three of which were accounted for under the pooling-of-interests
method. The eight acquisitions accounted for as purchases were Acadian
Consultants, Inc. ("Acadian"), Computer Central Corporation ("CCC"), Deliverex
of San Francisco ("Deliverex San Francisco"), Information Management Corporation
("IMC"), Major Legal Services ("Major"), Quality Copy Service, QCSInet, Inc. and
affiliates (collectively, "QCS"), APS Services ("APS"), and ZipShred, Inc. and
ZipShred of America, LLC (collectively, "ZipShred"). The aggregate consideration
paid for the Purchased Companies consisted of $5.8 million in cash and 724,572
shares of Common Stock. The preliminary allocation of the purchase price is set
forth below (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Consideration Paid.......................................... $17,950
Estimated Fair Value of Tangible Assets..................... 8,153
Estimated Fair Value of Liabilities......................... 11,772
Goodwill.................................................... 21,569
</TABLE>
32
<PAGE> 33
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The weighted average fair market values of the shares of Common Stock used
in calculating the consideration paid was $16.79, which represents a 30% to 35%
discount from the average trading price of the Common Stock based on the length
and type of restrictions in the purchase agreements.
The estimated fair market values reflected above are based on preliminary
estimates and assumptions and are subject to revision. In management's opinion,
the preliminary allocations are not expected to be materially different than the
final allocations. Certain of the acquisitions are subject to additional
consideration based upon achievement of specified earning targets over a one or
two year period.
The acquisitions of MAVRICC and Input in March 1997 for 820,000 and 263,636
shares of Common Stock, respectively, were accounted for as
poolings-of-interests. The consolidated financial statements for all periods
presented have been restated to include the accounts of MAVRICC and Input. The
separate and combined results of F.Y.I., MAVRICC and Input for the periods
preceding the acquisition were as follows (in thousands):
<TABLE>
<CAPTION>
F.Y.I. MAVRICC INPUT CONSOLIDATED
------- ------- ------ ------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Total revenue................................. $ -- $6,456 $2,584 $ 9,040
Net income (loss)............................. -- 177 (147) 30
Pro forma net income.......................... -- 1,049 (22) 1,027
Diluted weighted average common shares........ 633 820 264 1,717
Year ended December 31, 1996:
Total revenue................................. 75,722 8,793 4,303 88,818
Net income (loss)............................. 4,031 (829) 93 3,295
Pro forma net income.......................... 4,172 1,028 399 5,599
Diluted weighted average common shares........ 5,968 820 264 7,052
</TABLE>
The acquisition of MPS in December 1997 for 326,506 shares of Common Stock
was accounted for as a pooling-of-interests. The consolidated financial
statements of the Company were not restated for periods prior to January 1, 1997
due to the financial immateriality of MPS. The interim results of the Company
for the period from January 1, 1997 through September 30, 1997 have been
restated for the MPS acquisition. Restated total revenue, net income, pro forma
net income and weighted average shares outstanding after giving effect to the
pooling-of-interests with MPS are summarized below. Pro forma net income
reflects adjustments for the Compensation Differential and the related income
tax effect.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997
----------------------------
AS PREVIOUSLY
AS RESTATED REPORTED
----------- -------------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Total revenue............................................... $109,893 $105,176
Net income.................................................. 6,645 6,843
Net income per common share(1).............................. $ 0.63 $ 0.67
Pro forma net income........................................ 7,202 6,920
Pro forma net income per common share(1).................... $ 0.69 $ 0.68
Weighted average common shares outstanding(1)............... 10,486 10,159
</TABLE>
- ---------------
(1) Net income per common share has been restated in accordance with SFAS 128.
33
<PAGE> 34
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1996 Acquisitions
Since the IPO and through December 31, 1996, the Company acquired 18
additional businesses (the "1996 Acquisitions") that provide document management
services, of which 17 were accounted for as purchases and one was accounted for
as a pooling-of-interests. The 1996 Acquisitions consist of: Sacramento Valley
Records Management, Inc. ("Sacramento"); Microfilm Associates, Ltd.
("Microfilm"); B&B Information and Image Management, Inc. ("B&B"); Premier
Document Management, Inc. and PDM Services, Inc. ("Premier"); Robert A. Cook and
Staff, Inc. and RAC Services, Inc. ("Cook"); Octo, Inc. ("Octo"); Domor Data
Processing ("Domor"); Index Record Management ("Index"); Rushmore Legal Support
("Rushmore"); C.M.R.S. Incorporated ("CMRS"), Minnesota Medical Record Service,
Inc. ("Minnesota Medical Record"), and Texas Medical Record Service, Inc.
("Texas Medical Record") (collectively "Medical Record"); ZIA Information
Analysis Group ("ZIA"); Carton Hodgson, Inc. and CH Direct, Inc. (collectively
"Carton"); Data Input Services Corporation ("DISC"); Deliverex of Seattle
("Deliverex Seattle"); Researchers Litigation Support, L.L.C. ("Researchers
LLC"); and Rust. The aggregate consideration paid for the 17 acquisitions
accounted for as purchases consisted of $32.3 million in cash, 820,065 shares of
Common Stock net of stock repurchased by the Company, and future contingent
payment estimates of $2,664,000 to be paid in cash and stock. The preliminary
allocation of the purchase price is set forth below (in thousands):
<TABLE>
<S> <C>
Consideration Paid.......................................... $46,523
Estimated Fair Value of Tangible Assets..................... 15,134
Estimated Fair Value of Liabilities......................... 12,994
Goodwill.................................................... 44,383
</TABLE>
The fair market value of the shares of Common Stock used in calculating the
consideration paid ranged from $13.65 to $16.35, which is based on approximately
a 20-39% discount from the average trading price of the Common Stock based on
the length and type of stock resale restrictions outlined in the purchase
agreements.
The acquisition of Rust in December 1996 for 110,000 shares of Common Stock
was accounted for as a pooling-of-interests. The consolidated financial
statements of the Company were not restated for periods prior to January 1, 1996
due to the financial immateriality of Rust.
Acquisitions of the Founding Companies
Simultaneously with the closing of the IPO, the Company acquired the
Founding Companies. The aggregate consideration paid by F.Y.I. to acquire the
Founding Companies was approximately $35 million, consisting of: (i) $7,059,000
in cash; (ii) 1,878,933 shares of Common Stock; (iii) the assumption and
repayment of approximately $191,000 of indebtedness owed by a Founding Company
stockholder; and (iv) the distribution of cash and certain receivables to
certain Founding Company stockholders of S corporations in the amount of
$3,450,000, representing the undistributed retained earnings of S corporations,
upon which taxes have been paid by the stockholders.
The Acquisitions have been accounted for in accordance with GAAP as a
combination of F.Y.I. and the Founding Companies at historical cost, because:
(i) the Founding Companies' stockholders transferred assets to F.Y.I. in
exchange for Common Stock and cash simultaneously, with the IPO; (ii) the nature
of future operations of the Company will be substantially identical to the
combined operations of the Founding Companies; and (iii) no former stockholder
group of any of the Founding Companies obtained a majority of the outstanding
voting shares of the Company.
34
<PAGE> 35
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Intangible Assets
All intangibles are considered enterprise goodwill. Based on the historical
profitability of the purchased companies and trends in the legal, healthcare and
other industries to outsource document management functions in the foreseeable
future, the enterprise goodwill is being amortized over a period of 30 years.
Management continually evaluates whether events and circumstances indicate that
the remaining estimated useful life of intangible assets may warrant revisions
or that the remaining balance of intangibles or other long-lived assets may not
be recoverable. To make this evaluation, management uses an estimate of
undiscounted net income over the remaining life of the intangibles or other
long-lived assets. The goodwill associated with the B&B, Premier, Medical
Record, ZIA, Carton, DISC, Acadian, CCC, Deliverex San Francisco, IMC, Major,
QCS and APS acquisitions is not deductible for income tax purposes.
Pro Forma Financial Data
Set forth below are unaudited pro forma financial data for the years ended
December 31, 1996 and December 31, 1997. The unaudited pro forma data give
effect to: (i) the acquisitions of B&B, Premier, Cook, Medical Record, ZIA,
Carton, DISC, Acadian, CCC, IMC, Major, QCS, APS and MPS; (ii) the acquisitions
of the Founding Companies; and (iii) compensation and tax adjustments for all
transactions as if these transactions had occurred on January 1, 1996. The
acquisitions of Sacramento, Microfilm, Octo, Domor, Rushmore, Index, Deliverex
Seattle, Researchers LLC, Deliverex San Francisco and ZipShred have not been
included in the pro forma financial statements for periods prior to their
acquisition date as the effect is immaterial.
<TABLE>
<CAPTION>
PRO FORMA YEAR ENDED
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
(UNAUDITED, IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Revenue..................................................... $162,677 $176,128
Income before income taxes.................................. 10,328 15,969
Net income.................................................. 6,197 9,581
Net income per common share
Basic..................................................... $ 0.75 $ 0.88
Diluted................................................... $ 0.74 $ 0.87
Weighted average common shares outstanding
Basic..................................................... 8,298 10,839
Diluted................................................... 8,426 11,017
</TABLE>
The pro forma financial data are provided for informational purposes only
and do not purport to present the results of operations of the Company had the
transactions assumed therein occurred on or as of the dates indicated, nor are
they necessarily indicative of the results of operations which may be achieved
in the future.
Subsequent to December 31, 1997, the Company acquired five additional
businesses.
35
<PAGE> 36
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. CREDIT FACILITIES:
Short-Term Obligations
Short-term obligations consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1996 1997
---- ----
<S> <C> <C>
Line of credit, expiring at December 1997, interest at prime
plus 0.5% (8.75% at December 31, 1996 and 9.0% at December
31, 1997)................................................. $250 $ --
---- ----
Total short-term obligations................................ $250 $ --
==== ====
</TABLE>
Long-term Obligations
Long-term obligations consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------ ------
<S> <C> <C>
Line of credit, expiring at February 18, 2001, interest at
prime plus 1.5% or the Eurodollar rate plus 3% (8.75% to
9.75% at December 31, 1996 and 8.94% to 10% at December
31, 1997)................................................. $ -- 2,000
Industrial Revenue Bonds: Variable Rate (3.5% at December
31, 1996 and 3.3% at December 31, 1997) Demand/Fixed Rate
Revenue Bonds, Prince George's County, Maryland; due
beginning in 1996 through 2014, secured by all real estate
equipment and other tangible property of a subsidiary of
the Company............................................... 2,346 2,296
Note payable -- Small Business Administration, monthly
payment of $3,000, including principal and interest at 4%,
maturing November 17, 2014, secured by deed of trust on
real estate and non-real estate assets of the Company,
guaranteed by a stockholder and the stockholder's wife.... 395 376
Notes payable -- Small Business Administration, monthly
payment of $10,077, including principal and interest at
prime plus 2.75% (11% at December 31, 1996 and 11.25% at
December 31, 1997), maturing August 21, 2003 and December
12, 2003, secured by all equipment and tangible property
of the Company, guaranteed by a stockholder............... 585 --
Notes payable - Affiliates, due on demand with interest
ranging from 1% to 8% above prime (9.25% to 16.25% at
December 31, 1996 and 9.5% to 16.5% at December 31, 1997),
unsecured................................................. 56 --
Capital lease obligations................................... 1,431 1,306
All other obligations....................................... 434 570
------ ------
Total............................................. 5,247 6,548
Less -- Current maturities of long-term obligations......... 585 856
------ ------
Total long-term obligations....................... $4,662 5,692
====== ======
</TABLE>
In April 1996, the Company and its subsidiaries entered into a credit
agreement, as amended (the "1996 Credit Agreement"), with Banque Paribas, as
agent, and the lenders named therein. In February 1998, F.Y.I. entered into a
new credit agreement (the "1998 Credit Agreement") with Banque Paribas and Bank
of America Texas, N.A., as co-agents and lenders named therein. Under the 1998
Credit Agreement, the Company and its subsidiaries can borrow on a revolving
credit basis loans in an aggregate outstanding principal
36
<PAGE> 37
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amount up to $50.0 million, subject to certain customary borrowing capacity
requirements. The 1998 Credit Agreement is secured by the assets and/or stock of
F.Y.I. and its subsidiaries.
The commitment to fund revolving credit loans under the 1998 Credit
Agreement expires February 17, 2001. The annual interest rate applicable to
borrowings under this facility is, at the option of the Company, (i) the prime
rate or (ii) grid pricing ranging from 0.5% to 1.5% plus the Eurodollar rate
based on the ratio of debt to EBITDA (as defined in the 1998 Credit Agreement).
The 1998 Credit Agreement requires mandatory prepayments in certain
circumstances. The outstanding principal balance of revolving credit loans is
due and payable on March 31, 2003.
The Company also has outstanding an irrevocable letter of credit in the
amount of approximately $2.4 million to serve as a guarantee for periodic
principal and interest payments related to the Industrial Revenue Bonds. In
January 1998, the Company entered into a letter of credit in the amount of
$10,000,000 to serve as a guarantee for performance under a preliminary contract
with the New York State Workers Compensation Board.
The Company capitalized certain costs associated with the 1996 Credit
Agreement. The unamortized costs of approximately $1.2 million were expensed in
the fourth quarter of 1997 when the Company agreed to terms on the 1998 Credit
Agreement.
The weighted average interest rate on short and long-term obligations at
December 31, 1997 and 1996 was 7.34% and 6.81%, respectively. The 1996 and 1998
Credit Agreements contain certain reporting requirements and financial
covenants, including requirements that the Company maintain minimum levels of
net worth and other financial ratios. As of December 31, 1997 and 1996, the
Company has complied with all loan covenants.
Maturities of Long-Term Obligations
As of December 31, 1997, maturities of long-term obligations are as follows
(in thousands):
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1998........................................................ $ 856
1999........................................................ 566
2000........................................................ 501
2001........................................................ 2,293
2002........................................................ 151
Thereafter.................................................. 2,181
------
Total....................................................... $6,548
======
</TABLE>
37
<PAGE> 38
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. LEASE COMMITMENTS:
The operating companies lease various office buildings, machinery,
equipment, and vehicles. Future minimum lease payments under capital leases and
noncancellable operating leases are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
--------------------
CAPITAL OPERATING
YEARS ENDING DECEMBER 31, LEASES LEASES
------------------------- ------- ---------
<S> <C> <C>
1998........................................................ $ 635 $ 7,087
1999........................................................ 424 6,178
2000........................................................ 263 4,194
2001........................................................ 187 3,337
2002........................................................ 33 2,350
Thereafter.................................................. 8 6,059
------ -------
Total minimum lease payments................................ $1,550 $29,205
=======
Less -- Amounts representing interest....................... 244
------
Net minimum lease payments.................................. 1,306
Less -- Current portion of obligations under capital
leases.................................................... 516
------
Long-term portion of obligations under capital leases....... $ 790
======
</TABLE>
Rent expense for all operating leases for the years ended December 31,
1995, 1996, and 1997 was approximately $275,000, $4,145,000, and $7,871,000,
respectively.
Certain operating companies sublease a portion of their office facilities
under noncancellable lease agreements which expire at various dates to three
businesses. Future minimum sublease rental income as of December 31, 1997 for
the remainder of the term and in the aggregate are as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1998........................................................ $ 97
1999........................................................ 90
2000........................................................ 78
2001........................................................ 11
----
$276
====
</TABLE>
9. INCOME TAXES:
The provision for federal and state income taxes consists of the following
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1996 1997
---- ------ ------
<S> <C> <C> <C>
Current
Federal.................................................. $(18) $2,523 $4,987
State.................................................... -- 547 807
Deferred
Federal.................................................. (40) (165) 249
State.................................................... -- (40) 40
---- ------ ------
$(58) $2,865 $6,083
==== ====== ======
</TABLE>
38
<PAGE> 39
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The differences in income taxes provided and the amounts determined by
applying the federal statutory tax rate to income before income taxes result
from the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1996 1997
---- ------ ------
<S> <C> <C> <C>
Tax at statutory rate...................................... $(10) $2,094 $5,131
Add (deduct):
State income taxes....................................... -- 339 559
(Income) loss of S Corporations.......................... (60) 282 (66)
Nondeductible expenses................................... 12 150 459
---- ------ ------
$(58) $2,865 $6,083
==== ====== ======
</TABLE>
The components of deferred income tax liabilities and assets are as follows
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------ ------
<S> <C> <C>
Deferred income tax liabilities --
Tax over book depreciation and amortization............... $ 441 $ 874
Accrual to cash differences, net.......................... 1,067 974
Accounts receivable....................................... -- 340
Other, net................................................ 7 --
------ ------
Total deferred income tax liabilities............. 1,515 2,188
Deferred income tax assets --
Allowance for doubtful accounts........................... 305 266
Other, net................................................ 100 68
------ ------
Total deferred income tax assets.................. 405 334
------ ------
Total net deferred income tax liabilities................... $1,110 $1,854
====== ======
Current portion of deferred income tax liabilities.......... 759 980
Long-term deferred tax liabilities.......................... 351 874
------ ------
$1,110 $1,854
====== ======
</TABLE>
10. STOCKHOLDERS' EQUITY:
Initial Public Offering and December Public Stock Offering:
On January 26, 1996, the Company completed the IPO of 2,185,000 shares of
Common Stock (including the exercise of the underwriters' over-allotment option)
at $13.00 per share. Proceeds from the IPO, net of underwriting commissions and
offering costs, were approximately $22.9 million.
Upon the closing of the IPO, the Company converted the 9,000 shares of
Series A Preferred Stock then outstanding into 542,557 shares of Common Stock.
On December 17, 1996, the Company completed a follow-on public offering
(the "December Offering") of 2,363,000 shares of Common Stock (including the
exercise of the underwriters' over-allotment option) at $20.00 per share.
Proceeds from the December Offering, net of underwriting commissions and
offering costs, were approximately $43.6 million.
39
<PAGE> 40
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Options and Warrants:
At December 31, 1997, the Company had one stock-based compensation plan,
the 1995 Stock Option Plan ("the Plan"), which is described below. The Company
applies APB Opinion 25 and related Interpretations in accounting for the Plan.
Accordingly, no compensation cost has been recognized for the Plan. Had
compensation cost for the Plan been determined based upon the fair value at
grant dates for awards under the Plan consistent with the method of SFAS No.
123, "Accounting for Stock Based Compensation," the Company's net income and
earnings per share would have been as follows (in thousands, except for per
share data):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------ ------
<S> <C> <C>
Net income under SFAS 123................................... $2,708 $7,476
Diluted net income per common share under SFAS 123.......... 0.46 0.70
Actual net income........................................... 3,295 9,007
Actual diluted net income per common share.................. 0.47 0.85
</TABLE>
The fair value of each option grant was estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions for
1996: risk free interest rate ranging from 5.4% to 6.9%, no dividend yield,
expected life of three years, and volatility of 36%. The following assumptions
were used for 1997: risk free interest rate ranging from 5.7% to 6.6%, no
dividend yield, expected life of three years, and volatility of 33%.
In October 1995, the Board of Directors and F.Y.I.'s stockholders approved
the Plan, which became effective on the date of the IPO. The Plan provides
awards of options to purchase Common Stock and may include incentive stock
options ("ISOs") and/or non-qualified stock options.
The Plan also provides for automatic option grants to directors who are not
otherwise employed by the Company or its subsidiaries. Upon commencement of
service (or upon agreeing to serve in the case of the initial non-employee
directors), a non-employee director will receive a non-qualified option to
purchase 10,000 shares of Common Stock, and continuing non-employee directors
will receive annual options to purchase 5,000 shares of Common Stock. Options
granted to non-employee directors become exercisable one-third on the date of
grant and one-third on each of the next two anniversaries of the date of grant.
Non-employee directors' options have a term of five years from the date of
grant.
The maximum number of shares of Common Stock that may be subject to
outstanding options, determined immediately after the grant of any option, is
the greater of 650,000 shares or 16% of the aggregate number of shares of the
Company's Common Stock outstanding, provided, however, that options to purchase
no more than 650,000 shares of Common Stock may be granted as ISOs. At December
31, 1997 and 1996, approximately 189,000 and 1,037,000 shares, respectively,
were available for issuance.
The Company had options to purchase 1,561,981 and 690,370 shares
outstanding at December 31, 1997 and 1996, respectively. These options, other
than those granted to employee directors, have 10 year expirations
40
<PAGE> 41
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and various vesting schedules. Options are granted at the market price of the
Common Stock on the date of grant.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
------------------------------------
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
-------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Balance at inception................................. -- --
Granted.............................................. 473 $13.00
----- ------
Balance, December 31, 1995........................... 473 $13.00
Granted.............................................. 316 $19.58
Exercised............................................ 46 $13.00
Forfeited............................................ 53 $13.28
----- ------
Balance, December 31, 1996........................... 690 $15.99
Granted.............................................. 982 $21.95
Exercised............................................ 87 $14.28
Forfeited............................................ 23 $18.09
----- ------
Balance, December 31, 1997........................... 1,562 $19.80
===== ======
Exercisable, December 31, 1997....................... 453 $17.48
===== ======
</TABLE>
The following table summarizes information about stock options granted
under the Plan that were outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- -------------------------------
NUMBER WEIGHTED-AVERAGE NUMBER
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/31/97 CONTRACTUAL LIFE EXERCISE PRICE AT 12/31/97 EXERCISE PRICE
- --------------- ----------- ---------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
$ 13.00 307,011 7.4 $13.00 170,931 $13.00
$16.00-$20.00 261,120 8.9 $18.73 170,300 $19.10
$20.38-$25.31 993,850 9.5 $22.18 111,630 $21.86
</TABLE>
Warrants to Purchase Common Stock
In November 1995, the Company granted to executive officers warrants to
purchase 115,000 shares of common stock with an exercise price of $10.00 per
share. The warrants are exercisable as to 50% of the underlying shares on March
31, 1997, and as to the remaining 50% on January 26, 1998. In May 1996, the
Company granted to the Chief Executive Officer an additional warrant to purchase
50,000 shares of Common Stock at an exercise price of $20.00 per share. The
additional warrant is exercisable as to 50% of the underlying shares on May 21,
1997 and as to the remaining 50% on May 21, 1998.
41
<PAGE> 42
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net Income Per Share
Basic and diluted net income per share were computed in accordance with
SFAS No. 128, "Earnings Per Share." The differences between basic weighted
average common shares and diluted weighted average common shares and common
stock equivalents are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1996 1997
----- ----- ------
<S> <C> <C> <C>
Basic weighted average common shares....................... 1,717 6,924 10,438
Weighted average options and warrants...................... -- 128 178
----- ----- ------
Diluted weighted average common shares..................... 1,717 7,052 10,616
===== ===== ======
</TABLE>
11. EMPLOYEE BENEFIT PLANS:
The Company established a defined contribution plan (the "401(k) plan") in
January 1997. The 401(k) plan covers employees of the Company and some of its
subsidiaries. The employees must be at least 21 years of age and work at least
1,000 hours per year with one year of service to be eligible for the plan. In
addition, the Company established a non-qualified plan in December 1996. The
non-qualified compensation plan permits eligible officers to defer a portion of
their compensation. Contributions to both the 401(k) plan and the non-qualified
compensation plan consist of employee pre-tax contributions determined as a
percentage of each participating employee's compensation. The Company may make
contributions to either or both plans at the discretion of the Company's Board
of Directors. No contributions were made to the 401(k) plan or the non-qualified
compensation plan by F.Y.I. for the years ended December 31, 1997 or 1996.
F.Y.I. offers no post-employment or post-retirement benefits.
Certain of the subsidiaries have qualified defined contribution employee
benefit plans (the "Plans"), the majority of which allow for voluntary pre-tax
contributions by employees. The subsidiaries pay all general and administrative
expenses of the Plans and, in some cases, the subsidiaries make matching and
discretionary contributions to the Plans. The subsidiaries offer no
post-employment or post-retirement benefits. The expense incurred related to the
Plans by the subsidiaries was approximately $33,000, $131,000, and $140,000 for
the years ended December 31, 1995, 1996, and 1997, respectively.
12. RELATED-PARTY TRANSACTIONS:
Leasing Transactions
Certain of the Founding Companies lease their operating facilities, along
with certain equipment, from selling parties who remained employees or directors
of the Company. These leases are for various lengths and annual amounts. The
rental expense for these operating leases for the years ended December 31, 1997
and 1996 was approximately $834,000 and $487,000, respectively.
Notes Receivable
In the Acquisitions, the Company acquired $642,000 of notes receivable from
two Founding Company stockholders. At the time of the Merger, the stockholders
entered into new notes receivable with a stated interest rate (5%) and principal
payment schedules. Interest is payable on a semi-annual basis, and principal is
due as follows: 1998 -- $321,000; and 1999 -- $321,000.
Other Transactions
A subsidiary purchased digital coding services from an entity in which an
F.Y.I. stockholder and director had a controlling interest. Effective December
1, 1996, the Company purchased this entity from the stockholder for $2,700,000.
The expense incurred to the entity for the 11 months ended November 30, 1996
42
<PAGE> 43
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
was $32,000, and billings to the entity were $49,000. Additionally, the Company
charged the entity a management fee for accounting services. Management fees
were $25,000 for the eleven months ended November 30, 1996.
13. COMMITMENTS AND CONTINGENCIES:
Litigation
The Company is, from time to time, a party to litigation arising in the
normal course of its business. Management believes that none of these actions
will have a material adverse effect on the financial position or results of
operations of the Company.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of cash and cash equivalents and trade
receivables. The Company maintains cash and cash equivalents and certain other
financial instruments at various major financial institutions across many
geographic areas. Credit risk on trade receivables is minimized as a result of
the large number of entities comprising the Company's customer base and their
dispersion across many industries and geographic areas.
14. QUARTERLY INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
F.Y.I. INCORPORATED
------------------------------------------------------------------------------
1996 QUARTER ENDED 1997 QUARTER ENDED
------------------------------------- -------------------------------------
MAR 31 JUN 30 SEP 30 DEC 31 MAR 31 JUN 30 SEP 30 DEC 31
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue................ $12,221 $20,281 $25,938 $30,378 $33,488 $35,896 $40,509 $44,249
Gross profit................. 4,090 6,939 9,453 11,000 11,383 12,316 13,672 15,359
Earnings before taxes........ 771 1,897 1,970 1,522 3,577 4,100 3,504 3,909
Net income................... 469 1,182 1,243 401 2,163 2,380 2,102 2,362
Pro forma earnings before
taxes...................... 1,105 2,275 2,968 3,100 3,820 4,127 4,250 3,937
Pro forma net income......... 664 1,359 1,773 1,803 2,256 2,396 2,550 2,378
Net income per common share
Basic...................... $ 0.07 $ 0.18 $ 0.18 $ 0.05 $ 0.21 $ 0.23 $ 0.20 $ 0.22
Diluted.................... $ 0.07 $ 0.17 $ 0.18 $ 0.05 $ 0.21 $ 0.23 $ 0.20 $ 0.21
Pro forma net income per
common share
Basic...................... $ 0.10 $ 0.20 $ 0.25 $ 0.24 $ 0.22 $ 0.23 $ 0.24 $ 0.22
Diluted.................... $ 0.10 $ 0.20 $ 0.25 $ 0.23 $ 0.22 $ 0.23 $ 0.24 $ 0.22
Weighted average common
shares outstanding
Basic...................... 6,463 6,632 6,962 7,639 10,129 10,281 10,533 10,810
Diluted.................... 6,578 6,763 7,084 7,784 10,295 10,424 10,739 11,007
</TABLE>
Amounts reported differ from amounts previously reported due to the
pooling-of-interests with MPS discussed in Note 7.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
43
<PAGE> 44
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information called for by Item 10 will be set forth under the caption
"Election of Directors" in the Company's 1998 Proxy Statement, which will be
filed not later than 120 days after the end of the Company's fiscal year end
December 31, 1997 and which is incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
Information called for by Item 11 will be set forth under the caption
"Executive Compensation" in the Company's 1998 Proxy Statement, which will be
filed not later than 120 days after the end of the Company's fiscal year end
December 31, 1997 and which is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information called for by Item 12 will be set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the
Company's 1998 Proxy Statement, which will be filed not later than 120 days
after the end of the Company's fiscal year end December 31, 1997 and which is
incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information called for by Item 13 will be set forth under the caption
"Certain Relationships and Related Transactions" in the Company's 1998 Proxy
Statement, which will be filed not later than 120 days after the end of the
Company's fiscal year end December 31, 1997 and which is incorporated herein by
this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are being filed as part of this Report:
(a)(1) Consolidated Financial Statements
See Index to Consolidated Financial Statements on page 23.
44
<PAGE> 45
All other schedules are omitted because they are not applicable, not
required or the required information is in the Financial Statements or the Notes
thereto.
(a)(3) The following Exhibits are filed as part of this Report as
required by Item 601 of Regulation S-K. The Exhibits designated by an
asterisk are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this Report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I., Incorporated, Deliverex,
Incorporated, ASK Record Management, Inc., Deliverex
Acquisition Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.1 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.2 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, C. & T.
Management Services, Inc., Qualidata, Inc., DPAS
Acquisition Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.2 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.3 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Melanson &
Associates, Inc., Bay Area Micrographics, Researchers
Acquisition Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.3 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.4 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Paragon
Management Group, Inc., Recordex Acquisition Corp.,
Recordex Services, Inc., and the Stockholders named
therein (Incorporated by reference to Exhibit 2.4 to
Amendment No. 1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-98608) effective January
12, 1996)
2.5 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Permanent
Records Inc., Permanent Records Acquisition Corp., and
the Stockholders named therein (Incorporated by reference
to Exhibit 2.5 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
2.6 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Leonard
Archives Inc., Leonard Acquisition Corp. and the
Stockholders named therein (Incorporated by reference to
Exhibit 2.6 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
2.7 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among Imagent Corporation, Imagent
Acquisition Corp. and the Stockholders named therein
(Incorporated by reference to Exhibit 2.7 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.8 -- Agreement and Plan of Reorganization dated as of October
25, 1995, by and among Mobile Information Services
Corporation, Inc., Imagent Acquisition Corp. and the
Stockholders named therein (Incorporated by reference to
Exhibit 2.8 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.9 -- First Amendment to Agreement and Plan of Reorganization,
dated as of October 25, 1995, by and among F.Y.I.
Incorporated, Leonard Archives Inc., Leonard Acquisition
Corp. and the Stockholders named therein (Incorporated by
reference to Exhibit 2.9 to Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.10 -- First Amendment to Agreement and Plan of Reorganization,
dated as of November 14, 1995, by and among F.Y.I.
Incorporated, C. & T. Management Services, Inc.,
Qualidata, Inc., DPAS Acquisition Corp., and the
Stockholders named therein (Incorporated by reference to
Exhibit 2.10 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
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.
(Incorporated by reference to Exhibit 10.17 to
Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
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 (Incorporated
by reference to Exhibit 10.18 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
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
(Incorporated by reference to Exhibit 10.19 to
Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
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 (Incorporated by reference to
Exhibit 2.14 to Post-Effective Amendment No. 3 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
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 (Incorporated by
reference to Exhibit 2.15 to Post-Effective Amendment No.
3 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
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 (Incorporated
by reference to Exhibit 2.16 to Post-Effective Amendment
No. 3 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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 (Incorporated by reference to
Exhibit 2.17 to Post-Effective Amendment No. 3 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
2.18 -- Agreement and Plan of Reorganization, dated as of March
27, 1997, by and among F.Y.I. Incorporated, MAVRICC
Acquisition Corp., MAVRICC Management Systems, Inc.,
F.Y.I. Incorporated, Craig F. Moncher and Kyle C. Kerbawy
(Incorporated by reference to Exhibit 2.18 to the
Company's Current Report on Form 8-K filed on April 9,
1997)
2.19 -- Agreement and Plan of Reorganization, dated as of March
27, 1997, by and among F.Y.I. Incorporated, MMS Escrow
Acquisition Corp., MMS Escrow and Transfer Agency, Inc.,
Craig F. Moncher and Kyle C. Kerbawy (Incorporated by
reference to Exhibit 2.19 to the Company's Current Report
Form 8-K filed on April 9, 1997)
3.1 -- Amended and Restated Certificate of Incorporation of
F.Y.I. Incorporated (Incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
3.2 -- Amended and Restated By-Laws of F.Y.I. Incorporated
(Incorporated by reference to Exhibit 3.2 to the
Company's Form 10-Q filed on August 8, 1997)
4 -- Form of certificate evidencing ownership of Common Stock
of F.Y.I. Incorporated (Incorporated by reference to
Exhibit 4.2 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.1* -- F.Y.I. Incorporated 1995 Stock Option Plan (Incorporated
by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.2* -- Employment Agreement between F.Y.I. Incorporated and
Thomas C. Walker (Incorporated by reference to Exhibit
10.2 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.3* -- Employment Agreement between F.Y.I. Incorporated and
David Lowenstein (Incorporated by reference to Exhibit
10.3 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.4* -- Employment Agreement between F.Y.I. Incorporated and
Jerry F. Leonard, Jr. (Incorporated by reference to
Exhibit 10.4 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.5* -- Employment Agreement between F.Y.I. Incorporated and Greg
Melanson (Incorporated by reference to Exhibit 10.5 to
Amendment No. 1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-98608) effective January
12, 1996)
10.6* -- Employment Agreement between F.Y.I. Incorporated and
Jonathan B. Shaw (Incorporated by reference to Exhibit
10.6 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.7* -- Employment Agreement between F.Y.I. Incorporated and G.
Michael Bellenghi (Incorporated by reference to Exhibit
10.7 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.8 -- Form of Indemnification Agreement between F.Y.I. and each
director (Incorporated by reference to Exhibit 10.8 to
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
10.9* -- Employment Agreement between F.Y.I. Incorporated and Ed
H. Bowman, Jr. (Incorporated by reference to Exhibit 10.9
to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.10 -- Form of Registration Rights Agreement, dated as of
November 14, 1995, by and among Thomas C. Walker, David
Lowenstein and the persons named therein (Incorporated by
reference to Exhibit 10.10 to Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
10.11* -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.11 to Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
10.12 -- Five Year Media Purchase Agreement, dated as of August 9,
1994, between Eastman Kodak Company and Jonathan B. Shaw
(Incorporated by reference to Exhibit 10.12 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
10.13* -- Employment Agreement between F.Y.I. Incorporated and
Robert C. Irvine (Incorporated by reference to Exhibit
10.13 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective February 16, 1996)
10.14 -- Credit Agreement, dated as of April 18, 1996, by and
among F.Y.I. Incorporated and its subsidiaries and Banque
Paribas, IBJ Schroder Bank & Trust, and First Source
Financial LLP (Incorporated by reference to Exhibit 10.14
to Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective April 30, 1996)
10.15 -- Lease Agreement between F.Y.I. Incorporated and One
McKinney Plaza, Inc. (Incorporated by reference to
Exhibit 10.15 to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective April 30, 1996)
10.16* -- Employment Agreement between F.Y.I. Incorporated and
Margot T. Lebenberg (Incorporated by reference to Exhibit
10.16 to Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
10.17 -- First Amendment to Credit Agreement, dated as of June 26,
1996, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust, and First Source Financial LLP (Incorporated by
reference to Exhibit 10.20 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
10.18* -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.21 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.19* -- Warrant issued to Robert C. Irvine (Incorporated by
reference to Exhibit 10.22 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
10.20* -- Employment Agreement between F.Y.I. Incorporated and
Timothy J. Barker (Incorporated by reference to Exhibit 2
to Post-Effective Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
10.21* -- Separation Agreement, dated July 17, 1996, by and between
F.Y.I. Incorporated and Robert C. Irvine (Incorporated by
reference to Exhibit 10.21 to the Company's Registration
Statement on Form S-1 (Registration No. 333-16057)
effective December 11, 1996)
10.22* -- Warrant issued to Timothy J. Barker (Incorporated by
reference to Exhibit 10.22 to the Company's Registration
Statement on Form S-1 (Registration No. 333-16057)
effective December 11, 1996)
10.23 -- Second Amendment to Credit Agreement, dated as of August
30, 1996, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust, and First Source Financial LLP (Incorporated by
reference to Exhibit 10.23 to the Company's Registration
Statement on Form S-1 (Registration No. 333-16057)
effective December 11, 1996)
10.24 -- Third Amendment to Credit Agreement, dated as of December
18, 1996, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust and First Source Financial LLP (Incorporated by
reference to Exhibit 10.24 to the Company's Annual Report
on Form 10-K filed on March 11, 1997).
10.25* -- Amended and Restated Employment Agreement between F.Y.I.
Incorporated and Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.25 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.26* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.26 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.27* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.27 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.28* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Timothy J. Barker (Incorporated by
reference to Exhibit 10.28 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.29* -- Employment Agreement between F.Y.I. Incorporated and Joe
A. Rose (Incorporated by reference to Exhibit 10.29 to
the Company's Form 10-Q filed on August 8, 1997)
10.30* -- Amended and Restated Employment Agreement between F.Y.I.
Incorporated and Joe A. Rose (Incorporated by reference
to Exhibit 10.30 to the Company's Form 10-Q filed on
November 10, 1997)
10.31 -- Fourth Amendment to Credit Agreement, dated as of
November 21, 1997, by and among F.Y.I. Incorporated and
its subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust and First Source Financial LLP
10.32 -- Fifth Amendment to Credit Agreement, dated as of January
1, 1998, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust and First Source Financial LLP
</TABLE>
49
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.33* -- Employment Agreement between F.Y.I. Incorporated and
Ronald Zazworsky
10.34* -- Employment Agreement between F.Y.I. Incorporated and
Thomas C. Walker
10.35* -- Employment Agreement between F.Y.I. Incorporated and
David Lowenstein
10.36* -- Employment Agreement between F.Y.I. Incorporated and John
D. (Jack) Kearney
10.37 -- Amended and Restated Credit Agreement, dated as of
February 17, 1998, by and among F.Y.I. Incorporated,
Banque Paribas, Bank of America Texas, N.A. and the
Lenders named therein
10.38 -- Form of Agreement between the New York State Workers'
Compensation Board and QCSinet Acquisition Corp.
10.39* -- First Amendment to the Amended and Restated Employment
Agreement between F.Y.I. Incorporated and Ed H. Bowman,
Jr.
21 -- List of subsidiaries of F.Y.I. Incorporated
23.1 -- Consent of Arthur Andersen LLP
24 -- Power of Attorney (included with the signature page
hereof)
27 -- Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
The Company did not file any Form 8-K Current Reports during the last
quarter of the fiscal year ended December 31, 1997.
50
<PAGE> 51
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
F.Y.I. INCORPORATED
By: /s/ ED H. BOWMAN, JR.
----------------------------------
Ed H. Bowman, Jr.,
Chief Executive Officer and
President
Date: March 11, 1998
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and constitutes
Ed H. Bowman, Jr. and Margot T. Lebenberg, and each of them singly, his true and
lawful attorneys-in-fact with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities to sign and file
any and all amendments to this report with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
and he hereby ratifies and confirms all that said attorneys-in-fact or any of
them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----
<C> <S> <C>
/s/ ED H. BOWMAN, JR. Director, President and Chief March 11, 1998
- ----------------------------------------------------- Executive Officer (Principal
Ed H. Bowman, Jr. Executive Officer)
/s/ TIMOTHY J. BARKER Senior Vice President and Chief March 11, 1998
- ----------------------------------------------------- Financial Officer (Principal
Timothy J. Barker Accounting Officer)
/s/ THOMAS C. WALKER Chairman of the Board and Chief March 11, 1998
- ----------------------------------------------------- Development Officer
Thomas C. Walker
/s/ DAVID LOWENSTEIN Director, Executive Vice March 11, 1998
- ----------------------------------------------------- President Corporate
David Lowenstein Development and Treasurer
/s/ DONALD F. MOOREHEAD, JR. Director March 11, 1998
- -----------------------------------------------------
Donald F. Moorehead, Jr.
/s/ G. MICHAEL BELLENGHI Director March 11, 1998
- -----------------------------------------------------
G. Michael Bellenghi
/s/ JERRY F. LEONARD, JR. Director March 11, 1998
- -----------------------------------------------------
Jerry F. Leonard, Jr.
/s/ GREGORY R. MELANSON Director and Senior Vice March 11, 1998
- ----------------------------------------------------- President
Gregory R. Melanson
</TABLE>
51
<PAGE> 52
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----
<C> <S> <C>
/s/ JONATHAN B. SHAW Director March 11, 1998
- -----------------------------------------------------
Jonathan B. Shaw
/s/ MICHAEL J. BRADLEY Director March 11, 1998
- -----------------------------------------------------
Michael J. Bradley
/s/ HON. EDWARD M. ROWELL Director March 11, 1998
- -----------------------------------------------------
Hon. Edward M. Rowell
/s/ KYLE C. KERBAWY Director March 11, 1998
- -----------------------------------------------------
Kyle C. Kerbawy
</TABLE>
52
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I., Incorporated, Deliverex,
Incorporated, ASK Record Management, Inc., Deliverex
Acquisition Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.1 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.2 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, C. & T.
Management Services, Inc., Qualidata, Inc., DPAS
Acquisition Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.2 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.3 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Melanson &
Associates, Inc., Bay Area Micrographics, Researchers
Acquisition Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.3 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.4 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Paragon
Management Group, Inc., Recordex Acquisition Corp.,
Recordex Services, Inc., and the Stockholders named
therein (Incorporated by reference to Exhibit 2.4 to
Amendment No. 1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-98608) effective January
12, 1996)
2.5 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Permanent
Records Inc., Permanent Records Acquisition Corp., and
the Stockholders named therein (Incorporated by reference
to Exhibit 2.5 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
2.6 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among F.Y.I. Incorporated, Leonard
Archives Inc., Leonard Acquisition Corp. and the
Stockholders named therein (Incorporated by reference to
Exhibit 2.6 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
2.7 -- Agreement and Plan of Reorganization, dated as of October
25, 1995, by and among Imagent Corporation, Imagent
Acquisition Corp. and the Stockholders named therein
(Incorporated by reference to Exhibit 2.7 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
2.8 -- Agreement and Plan of Reorganization dated as of October
25, 1995, by and among Mobile Information Services
Corporation, Inc., Imagent Acquisition Corp. and the
Stockholders named therein (Incorporated by reference to
Exhibit 2.8 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
2.9 -- First Amendment to Agreement and Plan of Reorganization,
dated as of October 25, 1995, by and among F.Y.I.
Incorporated, Leonard Archives Inc., Leonard Acquisition
Corp. and the Stockholders named therein (Incorporated by
reference to Exhibit 2.9 to Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.10 -- First Amendment to Agreement and Plan of Reorganization,
dated as of November 14, 1995, by and among F.Y.I.
Incorporated, C. & T. Management Services, Inc.,
Qualidata, Inc., DPAS Acquisition Corp., and the
Stockholders named therein (Incorporated by reference to
Exhibit 2.10 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
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 Infor-
mation and Image Management, Inc. and Charles J. Bauer,
Jr. (Incorporated by reference to Exhibit 10.17 to
Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
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 (Incorporated
by reference to Exhibit 10.18 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
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
(Incorporated by reference to Exhibit 10.19 to
Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
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 (Incorporated by reference to
Exhibit 2.14 to Post-Effective Amendment No. 3 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
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 (Incorporated by
reference to Exhibit 2.15 to Post-Effective Amendment No.
3 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
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 (Incorporated
by reference to Exhibit 2.16 to Post-Effective Amendment
No. 3 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
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 (Incorporated by reference to
Exhibit 2.17 to Post-Effective Amendment No. 3 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective September 11, 1996)
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.18 -- Agreement and Plan of Reorganization, dated as of March
27, 1997, by and among F.Y.I. Incorporated, MAVRICC
Acquisition Corp., MAVRICC Management Systems, Inc.,
F.Y.I. Incorporated, Craig F. Moncher and Kyle C. Kerbawy
(Incorporated by reference to Exhibit 2.18 to the
Company's Current Report on Form 8-K filed on April 9,
1997)
2.19 -- Agreement and Plan of Reorganization, dated as of March
27, 1997, by and among F.Y.I. Incorporated, MMS Escrow
Acquisition Corp., MMS Escrow and Transfer Agency, Inc.,
Craig F. Moncher and Kyle C. Kerbawy (Incorporated by
reference to Exhibit 2.19 to the Company's Current Report
Form 8-K filed on April 9, 1997)
3.1 -- Amended and Restated Certificate of Incorporation of
F.Y.I. Incorporated (Incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
3.2 -- Amended and Restated By-Laws of F.Y.I. Incorporated
(Incorporated by reference to Exhibit 3.2 to the
Company's Form 10-Q filed on August 8, 1997)
4 -- Form of certificate evidencing ownership of Common Stock
of F.Y.I. Incorporated (Incorporated by reference to
Exhibit 4.2 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.1* -- F.Y.I. Incorporated 1995 Stock Option Plan (Incorporated
by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.2* -- Employment Agreement between F.Y.I. Incorporated and
Thomas C. Walker (Incorporated by reference to Exhibit
10.2 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.3* -- Employment Agreement between F.Y.I. Incorporated and
David Lowenstein (Incorporated by reference to Exhibit
10.3 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.4* -- Employment Agreement between F.Y.I. Incorporated and
Jerry F. Leonard, Jr. (Incorporated by reference to
Exhibit 10.4 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.5* -- Employment Agreement between F.Y.I. Incorporated and Greg
Melanson (Incorporated by reference to Exhibit 10.5 to
Amendment No. 1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-98608) effective Janu-
ary 12, 1996)
10.6* -- Employment Agreement between F.Y.I. Incorporated and
Jonathan B. Shaw (Incorporated by reference to Exhibit
10.6 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.7* -- Employment Agreement between F.Y.I. Incorporated and G.
Michael Bellenghi (Incorporated by reference to Exhibit
10.7 to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.8 -- Form of Indemnification Agreement between F.Y.I. and each
director (Incorporated by reference to Exhibit 10.8 to
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.9* -- Employment Agreement between F.Y.I. Incorporated and Ed
H. Bowman, Jr. (Incorporated by reference to Exhibit 10.9
to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.10 -- Form of Registration Rights Agreement, dated as of
November 14, 1995, by and among Thomas C. Walker, David
Lowenstein and the persons named therein (Incorporated by
reference to Exhibit 10.10 to Amendment No. 1 to the Com-
pany's Registration Statement on Form S-1 (Registration
No. 33-98608) effective January 12, 1996)
10.11* -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.11 to Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
10.12 -- Five Year Media Purchase Agreement, dated as of August 9,
1994, between Eastman Kodak Company and Jonathan B. Shaw
(Incorporated by reference to Exhibit 10.12 to Amendment
No. 1 to the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12, 1996)
10.13* -- Employment Agreement between F.Y.I. Incorporated and
Robert C. Irvine (Incorporated by reference to Exhibit
10.13 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective February 16, 1996)
10.14 -- Credit Agreement, dated as of April 18, 1996, by and
among F.Y.I. Incorporated and its subsidiaries and Banque
Paribas, IBJ Schroder Bank & Trust, and First Source
Financial LLP (Incorporated by reference to Exhibit 10.14
to Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective April 30, 1996)
10.15 -- Lease Agreement between F.Y.I. Incorporated and One
McKinney Plaza, Inc. (Incorporated by reference to
Exhibit 10.15 to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective April 30, 1996)
10.16* -- Employment Agreement between F.Y.I. Incorporated and
Margot T. Lebenberg (Incorporated by reference to Exhibit
10.16 to Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
10.17 -- First Amendment to Credit Agreement, dated as of June 26,
1996, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust, and First Source Financial LLP (Incorporated by
reference to Exhibit 10.20 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
10.18* -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.21 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
10.19* -- Warrant issued to Robert C. Irvine (Incorporated by
reference to Exhibit 10.22 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11, 1996)
10.20* -- Employment Agreement between F.Y.I. Incorporated and
Timothy J. Barker (Incorporated by reference to Exhibit 2
to Post-Effective Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective July 11, 1996)
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.21* -- Separation Agreement, dated July 17, 1996, by and between
F.Y.I. Incorporated and Robert C. Irvine (Incorporated by
reference to Exhibit 10.21 to the Company's Registration
Statement on Form S-1 (Registration No. 333-16057)
effective December 11, 1996)
10.22* -- Warrant issued to Timothy J. Barker (Incorporated by
reference to Exhibit 10.22 to the Company's Registration
Statement on Form S-1 (Registration No. 333-16057)
effective December 11, 1996)
10.23 -- Second Amendment to Credit Agreement, dated as of August
30, 1996, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust, and First Source Financial LLP (Incorporated by
reference to Exhibit 10.23 to the Company's Registration
Statement on Form S-1 (Registration No. 333-16057)
effective December 11, 1996)
10.24 -- Third Amendment to Credit Agreement, dated as of December
18, 1996, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust and First Source Financial LLP (Incorporated by
reference to Exhibit 10.24 to the Company's Annual Report
on Form 10-K filed on March 11, 1997).
10.25* -- Amended and Restated Employment Agreement between F.Y.I.
Incorporated and Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.25 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.26* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.26 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.27* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.27 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.28* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Timothy J. Barker (Incorporated by
reference to Exhibit 10.28 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.29* -- Employment Agreement between F.Y.I. Incorporated and Joe
A. Rose (Incorporated by reference to Exhibit 10.29 to
the Company's Form 10-Q filed on August 8, 1997)
10.30* -- Amended and Restated Employment Agreement between F.Y.I.
Incorporated and Joe A. Rose (Incorporated by reference
to Exhibit 10.30 to the Company's Form 10-Q filed on
November 10, 1997)
10.31 -- Fourth Amendment to Credit Agreement, dated as of
November 21, 1997, by and among F.Y.I. Incorporated and
its subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust and First Source Financial LLP
10.32 -- Fifth Amendment to Credit Agreement, dated as of January
1, 1998, by and among F.Y.I. Incorporated and its
subsidiaries and Banque Paribas, IBJ Schroder Bank &
Trust and First Source Financial LLP
10.33* -- Employment Agreement between F.Y.I. Incorporated and
Ronald Zazworsky
10.34* -- Employment Agreement between F.Y.I. Incorporated and
Thomas C. Walker
10.35* -- Employment Agreement between F.Y.I. Incorporated and
David Lowenstein
10.36* -- Employment Agreement between F.Y.I. Incorporated and John
D. (Jack) Kearney
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.37 -- Amended and Restated Credit Agreement, dated as of
February 17, 1998, by and among F.Y.I. Incorporated,
Banque Paribas, Bank of America Texas, N.A. and the
Lenders named therein
10.38 -- Form of Agreement between the New York State Workers'
Compensation Board and QCSinet Acquisition Corp.
10.39* -- First Amendment to the Amended and Restated Employment
Agreement between F.Y.I. Incorporated and Ed H. Bowman,
Jr.
21 -- List of subsidiaries of F.Y.I. Incorporated
23.1 -- Consent of Arthur Andersen LLP
24 -- Power of Attorney (included with the signature page
hereof)
27 -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.31
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Fourth Amendment") is
entered into to be effective as of November 21, 1997, by and among F.Y.I.
Incorporated, a Delaware corporation ("F.Y.I."), Imagent Acquisition Corp., a
Delaware corporation ("Imagent"), Researchers Acquisition Corp., a Delaware
corporation ("Researchers"), Recordex Acquisition Corp., a Delaware corporation
("Recordex"), DPAS Acquisition Corp., a Delaware corporation ("DPAS"), Leonard
Archives Acquisition Corp., a Delaware corporation ("Leonard"), Deliverex
Acquisition Corp., a Delaware corporation ("Deliverex"), Permanent Records
Acquisition Corp., a Delaware corporation ("Permanent"), Deliverex Sacramento
Acquisition Corp., a Delaware corporation ("Sacramento"), (F.Y.I., Imagent,
Researchers, Recordex, DPAS, Leonard, Deliverex, Permanent and Sacramento are
collectively referred to as the "Original Borrowers"), B&B (Baltimore-
Washington) Acquisition Corp., a Delaware corporation ("B&B"), Premier
Acquisition Corp., a Delaware corporation ("Premier"), Robert A. Cook
Acquisition Corp., a Delaware corporation ("Cook"), Peninsula Record
Management, Inc., a California corporation ("Peninsula"), RAC (California)
Acquisition Corp., a Delaware corporation ("RAC"), California Medical Record
Service Acquisition Corp., a Delaware corporation ("California Medical"),
Minnesota Medical Record Service Acquisition Corp., a Delaware corporation
("Minnesota Medical"), Texas Medical Record Service Acquisition Corp., a
Delaware corporation ("Texas Medical"), ZIA Information Analysis Group, Inc.,
formerly known as ZIA Acquisition Corp., a Delaware corporation ("Zia"), CH
Acquisition Corp., a Delaware Corporation ("CH") and DISC Acquisition Corp., a
Delaware corporation ("DISC") (B&B, Premier, Cook, Peninsula, RAC, California
Medical, Minnesota Medical, Texas Medical, Zia, CH and DISC are referred to
collectively as the "New Borrowers") (the Original Borrowers and the New
Borrowers are referred to collectively as the "Borrowers"), Banque Paribas, a
bank organized under the laws of the Republic of France, as Agent (the
"Agent"), and the Lenders (as such term is defined in the Credit Agreement, as
hereinafter defined) which are parties hereto.
RECITALS
A. The Original Borrowers, the Agent and the Lenders entered into
that certain Credit Agreement dated as of April 18, 1996 (the "Original Credit
Agreement"), pursuant to which, among other things, the Lenders agreed to make
certain loans available to the Original Borrowers upon the terms and conditions
set forth therein;
B. The Borrowers, certain of the New Borrowers, the Agent and the
Lenders entered into that certain First Amendment to Credit Agreement dated as
of June 26, 1996, that certain Second Amendment to Credit Agreement dated as of
August 30, 1996, and that certain Third Amendment to Credit Agreement dated as
of December 18, 1996 (the Original Credit Agreement, as amended, is hereinafter
referred to as the "Credit Agreement").
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 1
<PAGE> 2
C. The Borrowers, the Agent and the Lenders desire to amend the
Credit Agreement in certain respects as more fully set out herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders, and the Agent hereby agree as
follows:
1. Terms. All terms used herein which begin with an initial
capital letter shall, unless otherwise expressly defined herein, have the same
definitions assigned to such terms in the Credit Agreement, as modified by this
Fourth Amendment.
2. Amendment to Definition of "Term Loans Commitments Termination
Date." Effective as of the date hereof, the definition of "Term Loans
Commitments Termination Date" contained in Section 1.1 of the Credit Agreement
is hereby amended by deleting the phrase "October 15, 1997" and replacing it
with the phrase "March 31, 1998".
3. Amendment to Section 2.1(c) of the Credit Agreement.
Effective as of the date hereof, Section 2.1(c) of the Credit Agreement is
hereby amended to read in its entirety as follows:
(c) Term Loans. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make one or more term
loans to the Term Loans Borrowers from time to time from and including
the Closing Date to but excluding the Term Loans Commitments
Termination Date up to but not exceeding the amount of such Lender's
Term Loans Commitment. (Such term loans referred to in this Section
2.1(c) made by the Lenders to the Term Loans Borrowers are hereinafter
collectively called the "Term Loans".) Notwithstanding anything else
herein or elsewhere to the contrary, the obligation of each Lender to
make Term Loans shall terminate on the Term Loans Commitments
Termination Date.
4. Amendment to Section 2.3(c) of the Credit Agreement.
Effective as of the date hereof, Section 2.3(c) of the Credit Agreement is
hereby amended to read in its entirety as follows:
(c) Each of the Term Loans Borrowers shall jointly and
severally pay to the Agent for the account of each applicable Lender
the outstanding principal of the Term Loans existing as of the Term
Loans Commitments Termination Date (and the outstanding principal for
the Term Loans shall be due and payable) in thirteen (13) equal
quarterly installments on the dates set forth below
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 2
<PAGE> 3
in an amount sufficient to amortize fully the Term Loans by the Term
Loans Maturity Date:
Payment Date
April 15, 1998
July 15, 1998
October 15, 1998
January 15, 1999
April 15, 1999
July 15, 1999
October 15, 1999
January 15, 2000
April 15, 2000
July 15, 2000
October 15, 2000
January 15, 2001
April 15, 2001
5. Amendment to Section 2.11(a) of the Credit Agreement.
Effective as of the date hereof, the second sentence in Section 2.11(a) of the
Credit Agreement is hereby amended by deleting the phrase "October 15, 1997"
wherever located in such sentence and replacing it with the phrase "Term Loans
Commitments Termination Date" in each such location.
6. Amendment to Section 10.6 of the Credit Agreement. Effective
as of the date hereof, the chart in Section 10.6 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:
<TABLE>
<CAPTION>
Ending on December 31 Amount
--------------------- ------
<S> <C>
1996 $1,750,000
1997 $2,600,000
1998 $2,750,000
1999 $2,950,000
2000 and thereafter $3,150,000
</TABLE>
7. Representations and Warranties. The representations and
warranties made by the Borrowers in the Loan Documents, as the same are amended
hereby, are true and correct at the time this Fourth Amendment is executed and
delivered, except to the extent that such representations and warranties are
expressly by their terms made only as of the Closing Date or another specified
date.
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 3
<PAGE> 4
8. Costs. The Borrowers jointly and severally agree to pay all
costs incurred in connection with the negotiation, preparation, execution and
consummation of this Fourth Amendment and the transactions preceding and
contemplated by this Fourth Amendment including, without limitation, the fees
and expenses of counsel to the Agent and the Lenders.
9. Miscellaneous.
(a) Headings. Section headings are for reference only,
and shall not affect the interpretation or meaning of any provision of
this Fourth Amendment.
(b) No Waiver. No failure on the part of the Agent or
the Lenders to exercise, and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under the Loan
Documents shall operate as a waiver thereof, and no single or partial
exercise of any right, power, or privilege under the Loan Documents
shall preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege.
(c) Effect of this Fourth Amendment. The Credit
Agreement, as amended by this Fourth Amendment, shall remain in full
force and effect except that any reference therein, or in any other
Loan Document, referring to the Credit Agreement, shall be deemed to
refer to the Credit Agreement, as amended by this Fourth Amendment.
(d) Governing Law. EXCEPT TO THE EXTENT THAT THE CREDIT
AGREEMENT EXPRESSLY PROVIDES OTHERWISE, THIS THIRD AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF TEXAS.
(e) Counterparts. This Fourth Amendment may be executed
by the different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same Fourth Amendment.
(f) NO ORAL AGREEMENTS. THE CREDIT AGREEMENT, AS AMENDED
BY THIS THIRD AMENDMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE ENTIRE AGREEMENT AMONG THE PARTIES, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES.
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed by their respective duly authorized officers as of the
date first above written.
BORROWERS:
F.Y.I. INCORPORATED
By: /s/ David Lowenstein
-----------------------------------
David Lowenstein
Executive Vice President
IMAGENT ACQUISITION CORP.
RESEARCHERS ACQUISITION CORP.
RECORDEX ACQUISITION CORP.
DPAS ACQUISITION CORP.
LEONARD ARCHIVES ACQUISITION CORP.
DELIVEREX ACQUISITION CORP.
PERMANENT RECORDS ACQUISITION CORP.
DELIVEREX SACRAMENTO ACQUISITION CORP.
B&B (BALTIMORE-WASHINGTON)
ACQUISITION CORP.
PREMIER ACQUISITION CORP.
ROBERT A. COOK ACQUISITION CORP.
PENINSULA RECORD MANAGEMENT, INC.
RAC (CALIFORNIA) ACQUISITION CORP.
CALIFORNIA MEDICAL RECORD SERVICE
ACQUISITION CORP.
MINNESOTA MEDICAL RECORD SERVICE
ACQUISITION CORP.
TEXAS MEDICAL RECORD SERVICE
ACQUISITION CORP.
ZIA INFORMATION ANALYSIS GROUP, INC.
CH ACQUISITION CORP.
DISC ACQUISITION CORP.
By: /s/ David Lowenstein
-----------------------------------
David Lowenstein
Executive Vice President, acting
on behalf of each of the above
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 5
<PAGE> 6
LENDERS:
BANQUE PARIBAS, as Agent and as a Lender
By: /s/ Clark C. King, III
--------------------------------
Name: Clark C. King, III
Title: Director
By: /s/ Peter Toal
--------------------------------
Name: Peter Toal
Title: Managing Director
FIRST SOURCE FINANCIAL LLP
By: FIRST SOURCE FINANCIAL, INC., its
Agent/Manager
By: /s/ John Walding
-----------------------------
Name: John Walding
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Mark Minter
--------------------------------
Name: Mark Minter
Title: Director
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 6
<PAGE> 1
EXHIBIT 10.32
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (the "Fifth Amendment") is
entered into to be effective as of January 1, 1998, by and among F.Y.I.
Incorporated, a Delaware corporation ("F.Y.I."), Imagent Acquisition Corp., a
Delaware corporation ("Imagent"), Researchers Acquisition Corp., a Delaware
corporation ("Researchers"), Recordex Acquisition Corp., a Delaware corporation
("Recordex"), DPAS Acquisition Corp., a Delaware corporation ("DPAS"), Leonard
Archives Acquisition Corp., a Delaware corporation ("Leonard"), Deliverex
Acquisition Corp., a Delaware corporation ("Deliverex"), Permanent Records
Acquisition Corp., a Delaware corporation ("Permanent"), Deliverex Sacramento
Acquisition Corp., a Delaware corporation ("Sacramento"), (F.Y.I., Imagent,
Researchers, Recordex, DPAS, Leonard, Deliverex, Permanent and Sacramento are
collectively referred to as the "Original Borrowers"), B&B (Baltimore-
Washington) Acquisition Corp., a Delaware corporation ("B&B"), Premier
Acquisition Corp., a Delaware corporation ("Premier"), Robert A. Cook
Acquisition Corp., a Delaware corporation ("Cook"), Peninsula Record
Management, Inc., a California corporation ("Peninsula"), RAC (California)
Acquisition Corp., a Delaware corporation ("RAC"), California Medical Record
Service Acquisition Corp., a Delaware corporation ("California Medical"),
Minnesota Medical Record Service Acquisition Corp., a Delaware corporation
("Minnesota Medical"), Texas Medical Record Service Acquisition Corp., a
Delaware corporation ("Texas Medical"), ZIA Information Analysis Group, Inc.,
formerly known as ZIA Acquisition Corp., a Delaware corporation ("Zia"), CH
Acquisition Corp., a Delaware Corporation ("CH") and DISC Acquisition Corp., a
Delaware corporation ("DISC") (B&B, Premier, Cook, Peninsula, RAC, California
Medical, Minnesota Medical, Texas Medical, Zia, CH and DISC are referred to
collectively as the "New Borrowers") (the Original Borrowers and the New
Borrowers are referred to collectively as the "Borrowers"), Banque Paribas, a
bank organized under the laws of the Republic of France, as Agent (the
"Agent"), and the Lenders (as such term is defined in the Credit Agreement, as
hereinafter defined) which are parties hereto.
RECITALS
A. The Original Borrowers, the Agent and the Lenders entered into
that certain Credit Agreement dated as of April 18, 1996 (the "Original Credit
Agreement"), pursuant to which, among other things, the Lenders agreed to make
certain loans available to the Original Borrowers upon the terms and conditions
set forth therein;
B. The Borrowers, certain of the New Borrowers, the Agent and the
Lenders entered into that certain First Amendment to Credit Agreement dated as
of June 26, 1996, that certain Second Amendment to Credit Agreement dated as of
August 30, 1996, that certain Third Amendment to Credit Agreement dated as of
December 18, 1996 and that certain Fourth Amendment to Credit Agreement dated
as of November 21, 1997 (the Original Credit
FIFTH AMENDMENT TO CREDIT AGREEMENT Page 1
<PAGE> 2
Agreement, as amended, is hereinafter referred to as the "Credit Agreement").
C. FYI hopes to enter into a new credit facility (the "New Credit
Facility") by and among the Borrowers, the Agent and certain other financial
institutions.
D. F.Y.I. and the other Borrowers have requested the Lenders to
issue a $10,000,000 irrevocable letter of credit (the "Letter of Credit") for
the benefit of the New York State Workers' Compensation Board.
E. The $10,000,000 Letter of Credit must be issued before the New
Credit Facility, if any, is closed.
F. The Agent and the Lenders desire to accommodate the request of
F.Y.I. and the other Borrowers to issue the Letter of Credit under the Credit
Agreement and to otherwise amend the Credit Agreement in certain respects as
more fully set out herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders, and the Agent hereby agree as
follows:
1. Terms. All terms used herein which begin with an initial
capital letter shall, unless otherwise expressly defined herein, have the same
definitions assigned to such terms in the Credit Agreement, as modified by this
Fifth Amendment.
2. Amendment to Section 2.14. Effective as of the date hereof,
the limitations on the aggregate amount of outstanding Letter of Credit
Liabilities permitted under the Revolving Credit Loan Commitments and the Term
Loan Commitments shall be amended and modified to $2,157,136.90 and
$11,242,863.10, respectively, and the aggregate amount of Letter of Credit
Liabilities permitted under the Credit Agreement shall not exceed $13,400,000.
Without the express written consent of all Lenders, no other Letters of Credit
may be issued under the Credit Agreement.
3. Issuance of Letter of Credit in favor of New York State
Workers' Compensation Board. Effective as of the date hereof, the Lenders
authorize the Agent to issue the Letter of Credit in the face amount of
$10,000,000 to New York State Workers' Compensation Board for the account of
F.Y.I. under the Credit Agreement.
4. New Credit Facility. The Agent and the Borrowers agree that
the Letter of Credit will be deemed part of the "Obligations" under the Credit
Agreement and will also be deemed to be part of the "Obligations" under the New
Credit Facility if and when the New
FIFTH AMENDMENT TO CREDIT AGREEMENT Page 2
<PAGE> 3
Credit Facility is closed.
5. Prepayment and Reduction of Commitments. If the New Credit
Facility does not close or become effective on or before February 28, 1998, (a)
the Borrowers shall be required to prepay $10,000,000 on the Term Loans on
January 31, 1999; and such prepayment shall be applied in inverse order of
maturity, (b) the Term Loan Commitments shall be permanently reduced by
$10,000,000 and (c) the Borrowers shall immediately grant to Agent for the
benefit of the Lenders a first and prior lien and security interest in
$10,000,000 cash.
6. Representations and Warranties. The representations and
warranties made by the Borrowers in the Loan Documents, as the same are amended
hereby, are true and correct at the time this Fifth Amendment is executed and
delivered, except to the extent that such representations and warranties are
expressly by their terms made only as of the Closing Date or another specified
date.
7. Costs. The Borrowers jointly and severally agree to pay all
costs incurred in connection with the negotiation, preparation, execution and
consummation of this Fifth Amendment and the transactions preceding and
contemplated by this Fifth Amendment including, without limitation, the fees
and expenses of counsel to the Agent and the Lenders.
8. Miscellaneous.
(a) Headings. Section headings are for reference only,
and shall not affect the interpretation or meaning of any provision of
this Fifth Amendment.
(b) No Waiver. No failure on the part of the Agent or
the Lenders to exercise, and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under the Loan
Documents shall operate as a waiver thereof, and no single or partial
exercise of any right, power, or privilege under the Loan Documents
shall preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege.
(c) Effect of this Fifth Amendment. The Credit
Agreement, as amended by this Fifth Amendment, shall remain in full
force and effect except that any reference therein, or in any other
Loan Document, referring to the Credit Agreement, shall be deemed to
refer to the Credit Agreement, as amended by this Fifth Amendment.
(d) Governing Law. EXCEPT TO THE EXTENT THAT THE CREDIT
AGREEMENT EXPRESSLY PROVIDES OTHERWISE, THIS THIRD AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF TEXAS.
FIFTH AMENDMENT TO CREDIT AGREEMENT Page 3
<PAGE> 4
(e) Counterparts. This Fifth Amendment may be executed
by the different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same Fifth Amendment.
(f) NO ORAL AGREEMENTS. THE CREDIT AGREEMENT, AS AMENDED
BY THIS FIFTH AMENDMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE ENTIRE AGREEMENT AMONG THE PARTIES, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to be executed by their respective duly authorized officers as of the
date first above written.
BORROWERS:
F.Y.I. INCORPORATED
By: /s/ David Lowenstein
----------------------------------
David Lowenstein
Executive Vice President
FIFTH AMENDMENT TO CREDIT AGREEMENT Page 4
<PAGE> 5
IMAGENT ACQUISITION CORP.
RESEARCHERS ACQUISITION CORP.
RECORDEX ACQUISITION CORP.
DPAS ACQUISITION CORP.
LEONARD ARCHIVES ACQUISITION CORP.
DELIVEREX ACQUISITION CORP.
PERMANENT RECORDS ACQUISITION CORP.
DELIVEREX SACRAMENTO ACQUISITION CORP.
B&B (BALTIMORE-WASHINGTON)
ACQUISITION CORP.
PREMIER ACQUISITION CORP.
ROBERT A. COOK ACQUISITION CORP.
PENINSULA RECORD MANAGEMENT, INC.
RAC (CALIFORNIA) ACQUISITION CORP.
CALIFORNIA MEDICAL RECORD SERVICE
ACQUISITION CORP.
MINNESOTA MEDICAL RECORD SERVICE
ACQUISITION CORP.
TEXAS MEDICAL RECORD SERVICE
ACQUISITION CORP.
ZIA INFORMATION ANALYSIS GROUP, INC.
CH ACQUISITION CORP.
DISC ACQUISITION CORP.
By: /s/ David Lowenstein
------------------------------
David Lowenstein
Executive Vice President,
acting on behalf of each of
the above
LENDERS:
BANQUE PARIBAS, as Agent and as a Lender
By: /s/ Clark C. King, III
------------------------------
Name: Clark C. King, III
Title: Director
FIFTH AMENDMENT TO CREDIT AGREEMENT Page 5
<PAGE> 6
FIRST SOURCE FINANCIAL LLP
By: FIRST SOURCE FINANCIAL, INC., its
Agent/Manager
By: /s/ John Walding
--------------------------------
Name: John Walding
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Mark Minter
--------------------------------
Name: Mark Minter
Title: Director
FIFTH AMENDMENT TO CREDIT AGREEMENT Page 6
<PAGE> 1
EXHIBIT 10.33
EMPLOYMENT AGREEMENT
(RONALD ZAZWORSKY)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
the 28th day of October, 1997 by and between Ronald Zazworsky ("Employee") and
F.Y.I. Incorporated, a Delaware corporation (the "Company"). This Agreement
hereby supersedes any other employment agreements or understandings, written or
oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the document management services business (the "Business").
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the
Company, has and will continue to become familiar with and aware of information
as to the Company's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company, and future
plans with respect thereto, all of which has been and will be established and
maintained at great expense to the Company; this information is a trade secret
and constitutes the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
A G R E E M E N T S
1. Employment and Duties.
(a) The Company hereby employs Employee as a Senior Vice
President. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a Senior Vice President and will report
directly to the President of the Company. Employee hereby accepts this
employment upon the terms and conditions herein contained and, subject to
paragraph 1(b), agrees to devote his working time, attention and efforts to
promote and further the business of the Company.
(b) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the
<PAGE> 2
extent that such activity does not interfere with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed
as prohibiting Employee from making personal investments in such form or manner
as will neither require his services in the operation or affairs of the
companies or enterprises in which such investments are made.
2. Compensation. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) Base Salary; Annual Bonus. The base salary payable to
Employee shall be $150,000 per year, payable on a regular basis in accordance
with the Company's standard payroll procedures but not less than monthly
(pro-rated for any year in which Employee is employed for less than the full
year) beginning January 1, 1998. In addition, a one-time lump sum payment of
$26,000 shall be paid to you on January 1, 1998. For 1998 and subsequent
years, it is the Company's intent to develop a written Incentive Bonus Plan
setting forth the criteria under which Employee and other officers and key
employees will be eligible to receive year-end bonus awards. Employee shall be
eligible for a bonus opportunity of up to 50% of Employee's annual base salary
beginning January 1, 1998 in accordance with this Incentive Bonus Plan, pro-
rated for any year in which Employee was employed for less than the full year.
The award of any bonus shall be based on F.Y.I.'s overall performance and the
total performance of the business unit managed and shall be payable in various
increments based on the performance. The incremental payments and the
Company's targeted performance shall be determined by the Board of Directors
(the "Board") or the compensation committee thereof.
(b) Other Compensation. Employee shall be entitled to receive
additional benefits and compensation from the Company in such form and to such
extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental and other insurance plans that the Company may have
in effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement and a $500 per
month car allowance (determined on a pre-tax basis). All reimbursable
expenses shall be appropriately documented in reasonable detail by
Employee upon submission of any request for reimbursement, and in a
format and manner consistent with the Company's expense reporting
policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded
officers and key employees generally under the Company's policies in
effect from time to time (pro-rated for any year in which Employee is
employed for less than the full year).
2
<PAGE> 3
(iv) The Company shall provide Employee with other
executive perquisites as may be available to or deemed appropriate for
Employee by the Board and participation in all other Company-wide
employee benefits as available from time to time.
(v) Employee shall be granted options (the "Options") to
acquire 50,000 shares of Common Stock at the fair market value on the
date hereof. The Options shall become exercisable as to 40% of the
underlying shares one year following the date hereof and as to the
remainder, 20% of the underlying shares of Common Stock on each of the
next two through four anniversaries of the date hereof. The Options
shall expire on the tenth anniversary of the date of grant.
3. [INTENTIONALLY LEFT BLANK]
4. Term; Termination; Rights on Termination. The term of this
Agreement shall begin on the date hereof and continue for one (1) year (the
"Term"). This Agreement and Employee's employment may be terminated in any one
of the following ways:
(a) Death. The death of Employee shall immediately terminate the
Agreement with no severance compensation due to Employee's estate.
(b) Disability. The Company will make efforts to reasonably
accommodate Employee as required by applicable state or federal disability
laws. However, the parties irrebutably presume that, given Employee's
position, it would be an undue hardship to the Company if Employee is absent
for more than three (3) consecutive months. Therefore, if as a result of
incapacity due to physical or mental illness or injury, Employee shall have
been absent from his full-time duties hereunder for three (3) consecutive
months, then thirty (30) days after receiving written notice (which notice may
occur before or after the end of such three (3) month period, but which shall
not be effective earlier than the last day of such three (3) month period), the
Company may terminate Employee's employment hereunder provided Employee is
unable to resume his full-time duties at the conclusion of such notice period.
Also, Employee may terminate his employment hereunder if his health should
become impaired to an extent that makes the continued performance of his duties
hereunder hazardous to his physical or mental health or his life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that at the Company's
request made within thirty (30) days of the date of such written statement,
Employee shall submit to an examination by a doctor selected by the Company who
is reasonably acceptable to Employee or Employee's doctor and such doctor shall
have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated as a result of Employee's disability, Employee shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination,
3
<PAGE> 4
the base salary at the rate then in effect for whatever time period is
remaining under the Term of this Agreement or for six (6) months, whichever
amount is greater.
(c) Good Cause. The Company may terminate the Agreement five (5)
days after written notice to Employee for good cause, which shall be: (i)
Employee's breach of this Agreement; (ii) Employee's negligence in the
performance or nonperformance (continuing for five (5) days after receipt of
the written notice) of any of Employee's material duties and responsibilities
hereunder; (iii) Employee's dishonesty, fraud or misconduct with respect to the
business or affairs of the Company that adversely affects the operations or
reputation of the Company; (iv) Employee's conviction of a felony crime; or (v)
chronic alcohol abuse or illegal drug abuse by Employee. In the event of a
termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective ten (10) days after written notice is provided
to Employee. Employee may only be terminated without cause by the Company
during the Term hereof if such termination is approved by the Board of
Directors of the Company. Should Employee be terminated by the Company without
cause, Employee shall receive from the Company, in a lump-sum payment due on
the effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the Term of this Agreement or for
six (6) months, whichever amount is greater.
(e) Termination by Employee for Good Reason. Employee may
terminate his employment hereunder for "Good Reason." As used herein, "Good
Reason" shall mean the continuance of any of the following after fifteen (15)
days' prior written notice by Employee to the Company, specifying the basis for
such Employee's having Good Reason to terminate this Agreement:
(i) Employee's removal from, or failure to be reappointed
or reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 4(a), (b) and (c); or
(ii) Any other material breach of this Agreement by the
Company, including the failure to pay Employee on a timely basis the
amounts to which he is entitled under this Agreement.
In the event of any dispute with respect to the termination by the Employee for
Good Reason, such dispute shall be resolved pursuant to the provisions of
paragraph 16 below. In the event that it is determined that Good Reason did
exist, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Should Employee terminate his employment for
Good Reason, Employee shall receive from the Company, in a lump-sum payment due
on the effective date of termination, the base salary at the
4
<PAGE> 5
rate then in effect for whatever time period is remaining under the Term of
this Agreement or for six (6) months, whichever amount is greater.
(f) Termination by Employee Without Cause. If Employee resigns
or otherwise terminates his employment without Good Reason pursuant to
paragraph 4(e), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (f) above, Employee shall be entitled to receive all compensation
earned and all benefits and reimbursements vested or due through the effective
date of termination. Additional compensation subsequent to termination, if
any, will be due and payable to Employee only to the extent and in the manner
expressly provided above or in paragraph 16. All other rights and obligations
of the Company and Employee under this Agreement shall cease as of the
effective date of termination, except that the Company's obligations under
paragraph 10 herein and Employee's obligations under paragraphs 5, 6, 7, 10 and
11 herein shall survive such termination in accordance with their terms.
5. Return of Company Property. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company or
their representatives, vendors or customers which pertain to the business of
the Company shall be and remain the property of the Company, as the case may
be, and be subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company that is collected by Employee shall be delivered promptly to the
Company without request by it upon termination of Employee's employment.
6. Inventions. Employee shall disclose promptly to the Company
any and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of the Company and that Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all
his interests therein to the Company or its nominee. Whenever requested to do
so by the Company, Employee shall execute any and all applications, assignments
or other instruments that the Company shall deem necessary to apply for and
obtain letters patent of the United States or any foreign country or to
otherwise protect the Company's interest therein.
7. Trade Secrets. Employee agrees that he will not, during or
after the term of this Agreement with the Company, disclose the specific terms
of the Company's relationships or agreements with their respective significant
vendors or customers or any other significant and material trade secret of the
Company, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
5
<PAGE> 6
8. Disclosure of Information. Employee agrees that for a period
of three (3) years after the date hereof or during the term of this Agreement
and for a period of three (3) years thereafter, whichever is longer, without
the prior written consent of the Company, Employee shall not, directly or
indirectly, through any form of ownership, in any individual or representative
or affiliated capacity whatsoever, except as may be required by law, reveal,
divulge, disclose or communicate to any person, firm, association, corporation
or other entity in any manner whatsoever information of any kind, nature or
description concerning: (i) the names of any prior or present suppliers or
customers with respect to the Business, (ii) the prices for products or
services with respect to the Business, (iii) the names of personnel with
respect to the Business, (iv) the manner of operation with respect to the
Business, (v) the plans, trade secrets, or other data of any kind, nature or
description, whether tangible or intangible, with respect to the Business, or
(vi) any other financial, statistical or other information regarding the
business acquired by the Company that the Company designates or treats as
confidential or proprietary. The agreements set forth herein shall not apply
to any information that at the time of disclosure or thereafter is generally
available to and known by the public (other than as a result of a disclosure
directly or indirectly by Employee in violation of this Agreement). Without
regard to whether any or all of the foregoing matters would be deemed
confidential, material or important, the parties hereto stipulate that as
between them, the same are important, material and confidential and gravely
affect the effective and successful conduct of the Business and its goodwill.
9. Noncompetition. (a) Employee agrees that during the term of
this Agreement and, upon termination of Employee's employment by the Company
for a period of three (3) years thereafter, he shall not:
(i) Call upon, solicit, divert, take away or attempt to
call upon, solicit, divert or take away any existing customers, suppliers,
businesses, or accounts of the Business in connection with any business
substantially similar to the Business in the territory defined as 100 miles in
and around the Company's and its affiliates operations (the "Territory");
(ii) Hire, attempt to hire, contact or solicit with
respect to hiring for himself or on behalf of any other person any present
employee of the Company in the Business;
(iii) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business in
the Territory;
(iv) Do any act that Employee knew or reasonably should
have known might directly injure the Company in any material respect or that
might divert customers, suppliers or employees from the Business; and
(v) Without limiting the generality of the foregoing
provisions, conduct a business substantially similar to the Business under the
name "F.Y.I. Incorporated" or any other trade names, trademarks or service
marks heretofore used by the Company or its affiliates.
6
<PAGE> 7
The covenants in subsections (i) through (v) are intended to restrict
Employee from competing in any manner with the Company or the Business in the
activities that have heretofore been carried on by the Company or its
affiliates. The obligations set forth in subsections (i) through (v) above
shall apply to actions by Employee, through any form of ownership, and whether
as principal, officer, director, agent, employee, employer, consultant,
stockholder or holder of any equity security (beneficially or as trustee of any
trust), lender, partner, joint venturer or in any other individual or
representative or affiliated capacity whatsoever. However, none of the
foregoing shall prevent Employee from being the holder of up to 5.0% in the
aggregate of any class of securities of any corporation engaged in the
activities described in subsection (i) through (v) above, provided that such
securities are listed on a national securities exchange or reported on the
Nasdaq National Market.
10. Indemnification. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement, then the Company shall indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all
times to use his best efforts to faithfully discharge his duties under this
Agreement, Employee shall not be held liable to the Company for errors or
omissions made in good faith where Employee has not exhibited negligence or
performed criminal and fraudulent acts which damage the business of the
Company.
11. No Prior Agreements. Employee hereby represents and warrants
to the Company that the execution of this Agreement by Employee and his
employment by the Company and the performance of his duties hereunder will not
violate or be a breach of any agreement with a former employer, client or any
other person or entity. Further, Employee agrees to indemnify the Company for
any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
may hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Employee and
such third party which was in existence as of the date of this Agreement.
12. Assignment; Binding Effect. Employee understands that he has
been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding, this Agreement shall be binding upon, inure to the benefit
7
<PAGE> 8
of and be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
13. Complete Agreement. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the
final, complete and exclusive statement and expression of the agreement between
the Company and Employee and of all the terms of this Agreement, and it cannot
be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This Agreement may not be later
modified except by a further writing signed by a duly authorized officer of the
Company and Employee, and no term of this Agreement may be waived except by
writing signed by the party waiving the benefit of such term.
14. Notice. Whenever any notice is required hereunder, it shall
be given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attn: Margot T. Lebenberg, Esq.
To Employee: Ronald Zazworsky
456 Ivy Park Lane
Atlanta, Georgia 30342
Notice shall be deemed given and effective three (3) days after the deposit in
the United States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
15. Severability; Headings. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent
or intent of the Agreement or of any part hereof.
16. Arbitration. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators
8
<PAGE> 9
shall have the authority to order back-pay, severance compensation, vesting of
options (or cash compensation in lieu of vesting of options), reimbursement of
costs, including those incurred to enforce this Agreement, and interest thereon
in the event the arbitrators determine that Employee was terminated without
disability or good cause, as defined in paragraphs 4(b) and 4(c), respectively,
or that the Company has otherwise materially breached this Agreement. A
decision by a majority of the arbitration panel shall be final and binding.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The direct expense of any arbitration proceeding shall be borne
by the Company.
17. Governing Law. This Agreement shall in all respects be
construed according to the laws of the State of Texas.
18. 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.
19. Attorneys' Fees. In the event of any litigation or
arbitration arising under or in connection with this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees as determined by the
court or arbitration panel, as the case may be. Each party to this Agreement
represents and warrants that it has been represented by counsel in the
negotiation and execution of this Agreement, including without limitation the
provisions set forth in this paragraph 19.
20. Change in Control.
(a) Unless he elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the
Company and Employee have not received written notice at least fifteen (15)
business days prior to the anticipated closing date of the transaction giving
rise to the Change in Control from the successor to all or a substantial
portion of the Company's business and/or assets that such successor is willing
as of the closing to assume and agree to perform the Company's obligations
under this Agreement in the same manner and to the same extent that the Company
is hereby required to perform, then such Change in Control shall be deemed to
be a termination of this Agreement by the Company without cause and the
applicable portions of paragraph 5(d) will apply; however, under such
circumstances, the amount of the lump-sum severance payment due to Employee
shall be the equivalent of Employee's salary for one year and the
non-competition provisions of paragraph 3 shall not apply whatsoever.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such successor
is willing to assume the Company's
9
<PAGE> 10
obligations hereunder, Employee may nonetheless, at his sole discretion, elect
to terminate this Agreement by providing written notice to the Company at least
five (5) business days prior to the anticipated closing of the transaction
giving rise to the Change in Control. In such case, the applicable provisions
of paragraph 5(d) will apply as though the Company had terminated the Agreement
without cause; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be the equivalent of Employee's salary
for one year and the non-competition provisions of paragraph 3 shall all apply
for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing. Further, Employee will be
given an opportunity to elect whether to exercise all or any of his vested
options to purchase Common Stock of the Company, including any options with
accelerated vesting under the provisions of the Company's 1995 Stock Option
Plan, such that he may convert the options to shares of Common Stock of the
Company at or prior to the closing of the transaction giving rise to the Change
in Control, if he so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) of any voting security of the
Company and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities
representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the effective date of
the Company's registration statement with respect to its initial
public offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination
for election, to the Board of Directors of the Company was approved by
a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors
also becoming "Additional Original Directors" immediately following
their election), cease for any reason to constitute a majority of the
members of the Board of Directors of the Company;
10
<PAGE> 11
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of the
Company, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result
in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
(iv) the stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the
Company).
(f) Employee must be notified in writing by the Company at any
time that the Company or any member of its Board anticipates that a Change in
Control may take place.
(g) Employee shall be reimbursed by the Company or its successor
for any excise taxes and/or interest or penalties with respect to such excise
taxes that Employee incurs under Section 4999 of the Internal Revenue Code of
1986, as amended (or any similar tax that may hereafter be imposed), as a
result of any Change in Control. Such amount will be due and payable by the
Company or its successor within ten (10) days after Employee delivers a written
request for reimbursement accompanied by a copy of his tax return(s) showing
the excise tax actually incurred by Employee.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
----------------------------------
Title: President and
Chief Executive Officer
EMPLOYEE:
/s/ Ronald Zazworsky
-------------------------------------
Ronald Zazworsky
12
<PAGE> 1
EXHIBIT 10.34
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") between F.Y.I.,
Incorporated ("FYI"), a Delaware corporation, and Thomas C. Walker ("Employee")
is hereby entered into and effective as of the 1st day of January 1998. This
Agreement hereby supersedes any other employment agreements or understandings,
written or oral, between FYI and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, FYI, primarily through companies it
intends to acquire as subsidiaries, will be engaged primarily in the business
of providing document/information management services. References herein to
"FYI" are intended to include FYI and these operating subsidiaries, as may be
applicable in the circumstances.
Employee will be employed hereunder by FYI in a confidential
relationship wherein Employee, in the course of his employment with FYI, will
become familiar with and aware of information as to FYI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by FYI, and future plans with respect thereto, all of which will be
established and maintained at great expense to FYI; this information is a trade
secret and constitutes the valuable good will of FYI.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
A G R E E M E N T S
1. Employment and Duties.
(a) FYI hereby employs Employee as Chairman of the Board
and Chief Development Officer. As such, Employee shall have responsibilities,
duties and authority reasonably accorded to and expected of a Chairman of the
Board and Chief Development Officer and will report directly to the Board of
Directors of FYI (the "Board"). Additional or different duties, titles or
positions, however, may be assigned to Employee or may be taken from Employee
from time to time by the Board, provided that any such changes are consistent
and compatible with Employee's experience, background and managerial skills.
Employee hereby accepts this employment upon the terms and conditions herein
contained and agrees to devote his time, attention and efforts to promote and
further the business of FYI.
-1-
<PAGE> 2
(b) Employee shall faithfully adhere to, execute and
fulfill all reasonable policies established by FYI.
(c) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the extent that such activity (i) does
not interfere with Employee's duties and responsibilities hereunder and (ii)
does not violate paragraph 3 hereof. The foregoing limitations shall not be
construed as prohibiting Employee from serving on the boards of directors of
other companies or making personal investments in such form or manner as will
require his services, other than to a minimal extent, in the operation or
affairs of the companies or enterprises in which such investments are made nor
violate the terms of paragraph 3 hereof.
2. Compensation. For all services rendered by Employee, FYI
shall compensate Employee as follows:
(a) Base Salary. Beginning on January 1, 1998, the base
salary payable to Employee shall be Two Hundred Twenty-Five Thousand Dollars
($225,000) per year, payable on a semimonthly basis in equal installments as
nearly as practicable on the first (1st) and fifteenth (15th) day of each
month. On at least an annual basis, the Board will review Employee's
performance and may make increases to such base salary if, in its sole
discretion, any such increase is warranted.
(b) Incentive Bonus Plan. It is FYI's intent to develop
a written Incentive Bonus Plan setting forth the criteria under which Employee
and other officers and key employees will be eligible to receive year-end bonus
awards. Employee shall have the opportunity under this plan to be eligible for
bonus not to exceed a value equal to 50% of base salary.
(c) Stock Options. FYI's Stock Option Plan sets forth
detailed terms and conditions which will govern stock option grants to Employee
and other employees of FYI.
(d) Executive Perquisites, Benefits and Other
Compensation. Employee shall be entitled to receive additional benefits and
compensation from FYI in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for
Employee and his dependent family members under health,
hospitalization, disability, dental, life and other insurance
plans that FYI may have in effect from time to time.
(ii) Payment of all dues for a social or luncheon
club, provided such club is used by Employee at least fifty
percent (50%) of the time for business entertainment.
-2-
<PAGE> 3
(iii) Reimbursement for all business travel and
other out-of-pocket expenses reasonably incurred by Employee
in the performance of his services pursuant to this Agreement.
All reimbursable expenses shall be appropriately documented in
reasonable detail by Employee upon submission of any request
for reimbursement, and in a format and manner consistent with
FYI's expense reporting policy.
(iv) Four (4) weeks of paid vacation per year or
such greater amount as may be afforded officers and key
employees under FYI's policies in effect from time to time.
(v) An automobile allowance in the amount of Five
Hundred Dollars ($500) per month.
(vi) Other executive perquisites as may be available
to or deemed appropriate for Employee by the Board and
participation in all other employee benefits as available from
time to time.
3. Non-Competition Agreement.
(a) Employee will not, during the period of his
employment by or with FYI, and for a period of two (2) years immediately
following the termination of his employment under this Agreement, for any
reason whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, Company, partnership, corporation
or business of whatever nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, in any business selling
any products or services in direct competition with FYI,
within 100 miles of FYI or where any of its subsidiaries
conducts business, including any territory serviced by FYI or
any of its subsidiaries (the "Territory");
(ii) call upon any person who is, at that time,
within the Territory, an employee of FYI (including its
subsidiaries) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the
employ of FYI (including its subsidiaries);
(iii) call upon any person or entity which is, at
that time, or which has been, within one (1) year prior to
that time, a customer of FYI (including its subsidiaries)
within the Territory for the purpose of soliciting or selling
products or services in direct competition with FYI within the
Territory; or
-3-
<PAGE> 4
(iv) call upon any prospective acquisition
candidate, on his own behalf or on behalf of any competitor of
FYI, which candidate was either called upon by FYI or for
which FYI made an acquisition analysis, for the purpose of
acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than one percent
(1%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or in the over-the-counter market.
(b) Because of the difficulty of measuring economic
losses to FYI as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to FYI for which it
would have no other adequate remedy, Employee agrees that the foregoing
covenant may be enforced by FYI in the event of breach by him by injunctions
and restraining orders, which injunctions and restraining orders may be
obtained from any court with appropriate jurisdiction.
(c) It is agreed by the parties that the foregoing
covenants in this paragraph 3 impose a reasonable restraint on Employee in
light of the activities and business of FYI on the date of the execution of
this Agreement and the current plans of FYI; but it is also the intent of FYI
and Employee that such covenants be construed and enforced in accordance with
the changing activities and business of FYI throughout the term of this
covenant, whether before or after the date of termination of the employment of
Employee. For example, if, during the term of this Agreement, FYI enters a new
and different business in addition to that enumerated under the Recitals above,
then Employee will be precluded from soliciting the customers or employees of
such new business and from directly competing with such new business within 100
miles of its operating location(s) through the term of this covenant.
(d) The covenants in this paragraph 3 are severable and
separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee against FYI,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by FYI of such covenants. It is specifically agreed
that the period of two (2) years stated at the beginning of this paragraph 3,
during which the agreements and covenants of Employee made in this paragraph 3
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this paragraph 3
even if there is pending in a court of competent jurisdiction an action
-4-
<PAGE> 5
(including any appeal from any final judgment) brought by any person, whether
or not a party to this Agreement, in which such person contests the validity of
such agreements and covenants or their enforceability or seeks to avoid their
performance or enforcement.
4. Term; Termination; Rights on Termination. The term of this
Agreement shall begin on the date hereof and continue for one (1) year, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to- year basis on the same terms and conditions contained herein. This
Agreement and Employee's employment may be terminated in any one of the
followings ways:
(a) Death. The death of Employee shall immediately
terminate the Agreement with no severance compensation due to Employee's
estate.
(b) Disability. If, as a result of incapacity due to
physical or mental illness or injury, Employee shall have been absent from his
full-time duties hereunder for four (4) consecutive months, then thirty (30)
days after receiving written notice (which notice may occur before or after the
end of such four (4) month period, but which shall not be effective earlier
than the last day of such four (4) month period), FYI may terminate Employee's
employment hereunder provided Employee is unable to resume his full-time duties
at the conclusion of such notice period. Also, Employee may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Employee shall have
furnished FYI with a written statement from a qualified doctor to such effect
and provided, further, that, at FYI's request made within thirty (30) days of
the date of such written statement, Employee shall submit to an examination by
a doctor selected by FYI who is reasonably acceptable to Employee or Employee's
doctor and such doctor shall have concurred in the conclusion of Employee's
doctor. In the event this Agreement is terminated as a result of Employee's
disability, Employee shall receive from FYI, in a lump-sum payment due within
ten (10) days of the effective date of termination, the Base Salary at the rate
then in effect for whatever time period is remaining under the term of this
Agreement or for one (1) year, whichever amount is greater.
(c) Good Cause. FYI may terminate the Agreement ten (10)
days after written notice to Employee for good cause, which shall include: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's breach of paragraph 3(a) above; (3) Employee's gross negligence in
the performance or intentional nonperformance (continuing for ten (10) days
after receipt of written notice of need to cure) of any of Employee's material
duties and responsibilities hereunder except for nonperformance due to
disability, as set forth in paragraph 4(b) above; (4) Employee's willful
dishonesty, fraud or misconduct with respect to the business or affairs of FYI
which materially and adversely affects the operations or reputation of FYI; (5)
Employee's conviction of a felony crime; or (6) chronic alcohol abuse or
illegal drug abuse by Employee. In the event of a termination for good cause,
as enumerated above, Employee shall have no right to any severance
compensation.
-5-
<PAGE> 6
(d) Without Cause. At any time after the commencement of
employment, FYI or Employee may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the other party. Should Employee be terminated by FYI without
cause, Employee shall receive from FYI, in a lump-sum payment due on the
effective date of termination in the amount of one half of the Base Salary at
the rate then in effect. If Employee resigns or otherwise terminates his
employment without cause pursuant to this paragraph 4(d), Employee shall
receive no severance compensation. Employee shall be deemed to have been
terminated without cause by FYI if Employee shall be assigned any duties
materially inconsistent with, or Employee's responsibilities shall be
significantly limited, or Employee shall be significantly demoted, in any case
so as not to be serving in a senior executive officer capacity to FYI (and its
subsidiaries and affiliates), and the continuance thereof for a period of five
(5) business days after written notice from Employee that he is unwilling to
accept such changes in duties or responsibilities.
(e) Change in Control of FYI. Refer to paragraph 11
below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 11. All other rights and obligations of FYI and Employee under this
Agreement shall cease as of the effective date of termination, except that
FYI's obligations under paragraph 8 herein and Employee's obligations under
paragraphs 3, 5, 6, 7 and 9 herein shall survive such termination in accordance
with their terms.
If termination of Employee's employment arises out of FYI's failure to
pay Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other breach of this Agreement by FYI, as
determined by a court of competent jurisdiction or pursuant to the provisions
of paragraph 15 below, FYI shall pay all amounts and damages to which Employee
may be entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Further, none of the provisions of paragraph 3
shall apply in the event this Agreement is terminated as a result of a breach
by FYI.
5. Return of Company Property. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of FYI or its
representatives, vendors or customers which pertain to the business of FYI
shall be and remain the property of FYI and be subject at all times to its
discretion and control. Likewise, all correspondence, reports, records,
charts, advertising materials and other similar data pertaining to the
business, activities or future plans of FYI which are collected by Employee
shall be delivered promptly to FYI without request by it upon termination of
Employee's employment.
-6-
<PAGE> 7
6. Inventions. Employee shall disclose promptly to FYI any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of FYI and which Employee conceives as a result of his employment
by FYI. Employee hereby assigns and agrees to assign all his interests therein
to FYI or its nominee. Whenever requested to do so by FYI, Employee shall
execute any and all applications, assignments or other instruments that FYI
shall deem necessary to apply for and obtain Letters Patent of the United
States or any foreign country or to otherwise protect FYI's interest therein.
7. Trade Secrets. Employee agrees that he will not, during or
after the term of this Agreement with FYI, disclose the material trade secrets
of FYI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
8. Indemnification. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by FYI against
Employee), by reason of the fact that he is or was performing services under
this Agreement or any prior agreement with F.Y.I., or was or is an employee of
F.Y.I. then FYI shall indemnify Employee against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, as actually
and reasonably incurred by Employee in connection therewith. In the event that
both Employee and FYI are made a party to the same third-party action,
complaint, suit or proceeding, FYI agrees to engage competent legal
representation, and Employee agrees to use the same representation, subject to
Employees reasonable approval or Employee will be liable and responsible for
all attorneys' fees of any separate legal representation and counsel engaged by
him. Further, while Employee is expected at all times to use his best efforts
to faithfully discharge his duties under this Agreement, Employee cannot be
held liable to FYI for errors or omissions made in good faith where Employee
has not exhibited gross, willful and wanton negligence and misconduct or
performed criminal and fraudulent acts which materially damage the business of
FYI.
9. No Prior Agreements. Employee hereby represents and warrants
to FYI that the execution of this Agreement by Employee and his employment by
FYI and the performance of his duties hereunder will not violate or be a breach
of any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify FYI for any claim, including, but not
limited to, attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
FYI based upon or arising out of any non-competition agreement, invention or
secrecy agreement between Employee and such third party which was in existence
as of the date of this Agreement.
10. Assignment: Binding Effect. Employee understands that he has
been selected for employment by FYI on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 11
below, this
-7-
<PAGE> 8
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective heirs, legal representatives,
successors and assigns.
11. Change in Control. The following provisions shall become
applicable in the event of a Change in Control.
(a) Unless he elects to terminate this Agreement pursuant
to (c) below, Employee understands and acknowledges that FYI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of FYI hereunder.
(b) In the event of a pending Change in Control wherein
FYI and Employee have not received written notice at least fifteen (15)
business days prior to the anticipated closing date of the transaction giving
rise to the Change in Control from the successor to all or a substantial
portion of FYI's business and/or assets that such successor is not willing as
of the closing to assume and agree to perform FYI's obligations under this
Agreement in the same manner and to the same extent that FYI is hereby required
to perform, then such Change in Control shall be deemed to be a termination of
this Agreement by FYI without cause and the applicable portions of paragraph
4(d) will apply; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be triple the Base Salary then in
effect and the non-competition provisions of paragraph 3 shall not apply
whatsoever.
(c) In any Change in Control situation, Employee may, at
his sole discretion, elect to terminate this Agreement by providing written
notice to FYI at least five (5) business days prior to the anticipated closing
of the transaction giving rise to the Change in Control. In such case, the
applicable provisions of paragraph 4(d) will apply as though FYI had terminated
the Agreement without cause; however, under such circumstances, the amount of
the lump-sum severance payment due to Employee shall be one hundred and fifty
percent (150%) of the Base Salary then in effect and the non-competition
provisions of paragraph 3 shall all apply for a period of one (1) year from the
effective date of termination.
(d) For purposes of applying paragraph 4 under the
circumstances described in (b) and (c) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change in
Control and all compensation, reimbursements and lump-sum payments due Employee
must be paid in full by FYI at or prior to such closing. Further, all of
Employee's stock options shall immediately vest and Employee will be given
ninety (90) days and an opportunity to elect whether to exercise all or any of
his vested options to purchase FYI common stock, including any options with
accelerated vesting under the provisions of any Stock Option Plan adopted by
FYI, such that he may convert the options to shares of FYI common stock at or
prior to the closing of the transaction giving rise to the Change in Control,
if he so desires.
-8-
<PAGE> 9
(e) A "Change in Control," shall be deemed to have
occurred if:
(i) any person, other than FYI or an employee
benefit plan of FYI, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting
security of FYI and immediately after such acquisition such
Person is, directly or indirectly, the Beneficial Owner of
voting securities representing fifty percent (50%) or more of
the total voting power of all of the then-outstanding voting
securities of FYI;
(ii) the individuals (A) who, as of the effective
date of the Company's registration statement with respect to
its IPO, constitute the Board (the "Original Directors") or
(B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of FYI shall approve a
merger, consolidation, recapitalization, or reorganization of
FYI, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder
approval is not sought or obtained, other than any such
transaction which would result in at least 75% of the total
voting power represented by the voting securities of the
surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the
holders of outstanding voting securities of FYI immediately
prior to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of FYI shall approve a plan of
complete liquidation of FYI or an agreement for the sale or
disposition by FYI of all or a substantial portion of FYI's
assets (i.e., 50% or more of the total assets of FYI).
(f) Employee must be notified in writing by FYI at any
time that FYI or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by FYI or its successor
for any excise taxes that Employee incurs under Section 4999 of the Internal
Revenue Code of 1986, as a result of any Change in Control. Such amount will
be due and payable by FYI or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of his tax
return(s) showing the excise tax actually incurred by Employee.
-9-
<PAGE> 10
12. Complete Agreement. This Agreement is not a promise of
future employment. Employee has no oral representations, understandings or
agreements with FYI or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between FYI and Employee and of all the terms of this Agreement, and it cannot
be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of FYI and Employee, and no term of this Agreement may be waived except by
writing signed by the party waiving the benefit of such term.
13. Notice. Whenever any notice is required hereunder, it shall
be given in writing addressed as follows:
To FYI: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot Lebenberg
Vice President and General Counsel
With a copy to: Charles C. Reeder, Esq.
Locke Purnell Rain Harrell
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
To Employee: Thomas C. Walker
Residence 10-A
3510 Turtle Creek Blvd.
Dallas, Texas 75219
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph 13.
14. Severability; Headings. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent,
or intent of the Agreement or of any part hereof.
-10-
<PAGE> 11
15. Arbitration. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in affect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order back-pay,
severance compensation, vesting of options (or cash compensation in lieu of
vesting of options), reimbursement of costs, including those incurred to
enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee was terminated without disability or good cause, as
defined in paragraphs 4(b) and 4(c), respectively, or that FYI has otherwise
materially breached this Agreement. A decision by a majority of the
arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by FYI.
16. Governing Law. This agreement shall in all respects be
construed according to the laws of the State of Texas.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
F.Y.I. INCORPORATED
By: /s/ Ed Bowman
-------------------------------------
Ed Bowman
President and Chief Executive Officer
EMPLOYEE:
/s/ Thomas C. Walker
----------------------------------------
Thomas C. Walker
-11-
<PAGE> 1
EXHIBIT 10.35
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") between F.Y.I.,
Incorporated ("FYI"), a Delaware corporation, and David Lowenstein ("Employee")
is hereby entered into and effective as of the 1st day of January 1998. This
Agreement hereby supersedes any other employment agreements or understandings,
written or oral, between FYI and Employee.
RECITALS
The following statements are true and correct:
As of the date of this Agreement, FYI, primarily through companies it
intends to acquire as subsidiaries, will be engaged primarily in the business of
providing document/information management services. References herein to "FYI"
are intended to include FYI and these operating subsidiaries, as may be
applicable in the circumstances.
Employee will be employed hereunder by FYI in a confidential
relationship wherein Employee, in the course of his employment with FYI, will
become familiar with and aware of information as to FYI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by FYI, and future plans with respect thereto, all of which will be
established and maintained at great expense to FYI; this information is a trade
secret and constitutes the valuable good will of FYI.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
AGREEMENTS
1. Employment and Duties.
(a) FYI hereby employs Employee as Executive Vice
President-Corporate Development and Treasurer. As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and expected of an
Executive Vice President-Corporate Development and Treasurer and will report
directly to the Board of Directors of FYI (the "Board"). Additional or different
duties, titles or positions, however, may be assigned to Employee or may be
taken from Employee from time to time by the Board, provided that any such
changes are consistent and compatible with Employee's experience, background and
managerial skills. Employee hereby accepts this employment upon the terms and
conditions herein contained and agrees to devote his time, attention and efforts
to promote and further the business of FYI.
-1-
<PAGE> 2
(b) Employee shall faithfully adhere to, execute and fulfill
all reasonable policies established by FYI.
(c) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit or
other pecuniary advantage except to the extent that such activity (i) does not
interfere with Employee's duties and responsibilities hereunder and (ii) does
not violate paragraph 3 hereof. The foregoing limitations shall not be construed
as prohibiting Employee from serving on the boards of directors of other
companies or making personal investments in such form or manner as will require
his services, other than to a minimal extent, in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
2. Compensation. For all services rendered by Employee, FYI shall
compensate Employee as follows:
(a) Base Salary. Beginning on January 1, 1998, the base salary
payable to Employee shall be Two Hundred Thousand Dollars ($200,000) per year,
payable on a semimonthly basis in equal installments as nearly as practicable on
the first (1st) and fifteenth (15th) day of each month. On at least an annual
basis, the Board will review Employee's performance and may make increases to
such base salary if, in its sole discretion, any such increase is warranted.
(b) Incentive Bonus Plan. It is FYI's intent to develop a
written Incentive Bonus Plan setting forth the criteria under which Employee and
other officers and key employees will be eligible to receive year-end bonus
awards. Employee shall have the opportunity under this plan to be eligible for
bonus not to exceed a value equal to 50% of base salary.
(c) Stock Options. FYI's Stock Option Plan sets forth detailed
terms and conditions which will govern stock option grants to Employee and other
employees of FYI.
(d) Executive Perquisites, Benefits and Other Compensation.
Employee shall be entitled to receive additional benefits and compensation from
FYI in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee
and his dependent family members under health,
hospitalization, disability, dental, life and other insurance
plans that FYI may have in effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in
reasonable detail by Employee upon submission of any request
for reimbursement, and in a format and manner consistent with
FYI's expense reporting policy.
-2-
<PAGE> 3
(iii) Four (4) weeks of paid vacation per year or
such greater amount as may be afforded officers and key
employees under FYI's policies in effect from time to time.
(iv) An automobile allowance in the amount of Five
Hundred Dollars ($500) per month.
(v) Other executive perquisites as may be available
to or deemed appropriate for Employee by the Board and
participation in all other employee benefits as available from
time to time.
3. Non-Competition Agreement.
(a) Employee will not, during the period of his employment by
or with FYI, and for a period of two (2) years immediately following the
termination of his employment under this Agreement, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, persons, Company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, in any business selling
any products or services in direct competition with FYI,
within 100 miles of FYI or where any of its subsidiaries
conducts business, including any territory serviced by FYI or
any of its subsidiaries (the "Territory");
(ii) call upon any person who is, at that time,
within the Territory, an employee of FYI (including its
subsidiaries) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the
employ of FYI (including its subsidiaries);
(iii) call upon any person or entity which is, at
that time, or which has been, within one (1) year prior to
that time, a customer of FYI (including its subsidiaries)
within the Territory for the purpose of soliciting or selling
products or services in direct competition with FYI within the
Territory; or
(iv) call upon any prospective acquisition candidate,
on his own behalf or on behalf of any competitor of FYI, which
candidate was either called upon by FYI or for which FYI made
an acquisition analysis, for the purpose of acquiring such
entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than one percent
(1%) of the capital stock of
-3-
<PAGE> 4
a competing business, whose stock is traded on a national securities exchange or
in the over-the-counter market.
(b) Because of the difficulty of measuring economic losses to
FYI as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to FYI for which it would
have no other adequate remedy, Employee agrees that the foregoing covenant may
be enforced by FYI in the event of breach by him by injunctions and restraining
orders, which injunctions and restraining orders may be obtained from any court
with appropriate jurisdiction.
(c) It is agreed by the parties that the foregoing covenants
in this paragraph 3 impose a reasonable restraint on Employee in light of the
activities and business of FYI on the date of the execution of this Agreement
and the current plans of FYI; but it is also the intent of FYI and Employee that
such covenants be construed and enforced in accordance with the changing
activities and business of FYI throughout the term of this covenant, whether
before or after the date of termination of the employment of Employee. For
example, if, during the term of this Agreement, FYI enters a new and different
business in addition to that enumerated under the Recitals above, then Employee
will be precluded from soliciting the customers or employees of such new
business and from directly competing with such new business within 100 miles of
its operating location(s) through the term of this covenant.
(d) The covenants in this paragraph 3 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee against FYI,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by FYI of such covenants. It is specifically agreed
that the period of two (2) years stated at the beginning of this paragraph 3,
during which the agreements and covenants of Employee made in this paragraph 3
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this paragraph 3
even if there is pending in a court of competent jurisdiction an action
(including any appeal from any final judgment) brought by any person, whether or
not a party to this Agreement, in which such person contests the validity of
such agreements and covenants or their enforceability or seeks to avoid their
performance or enforcement.
4. Term; Termination; Rights on Termination. The term of this
Agreement shall begin on the date hereof and continue for one (1) year, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis on the same terms and conditions
-4-
<PAGE> 5
contained herein. This Agreement and Employee's employment may be terminated in
any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from his full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), FYI may terminate Employee's employment
hereunder provided Employee is unable to resume his full-time duties at the
conclusion of such notice period. Also, Employee may terminate his employment
hereunder if his health should become impaired to an extent that makes the
continued performance of his duties hereunder hazardous to his physical or
mental health or his life, provided that Employee shall have furnished FYI with
a written statement from a qualified doctor to such effect and provided,
further, that, at FYI's request made within thirty (30) days of the date of such
written statement, Employee shall submit to an examination by a doctor selected
by FYI who is reasonably acceptable to Employee or Employee's doctor and such
doctor shall have concurred in the conclusion of Employee's doctor. In the event
this Agreement is terminated as a result of Employee's disability, Employee
shall receive from FYI, in a lump-sum payment due within ten (10) days of the
effective date of termination, the Base Salary at the rate then in effect for
whatever time period is remaining under the term of this Agreement or for one
(1) year, whichever amount is greater.
(c) Good Cause. FYI may terminate the Agreement ten (10) days
after written notice to Employee for good cause, which shall include: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's breach of paragraph 3(a) above; (3) Employee's gross negligence in
the performance or intentional nonperformance (continuing for ten (10) days
after receipt of written notice of need to cure) of any of Employee's material
duties and responsibilities hereunder except for nonperformance due to
disability, as set forth in paragraph 4(b) above; (4) Employee's willful
dishonesty, fraud or misconduct with respect to the business or affairs of FYI
which materially and adversely affects the operations or reputation of FYI; (5)
Employee's conviction of a felony crime; or (6) chronic alcohol abuse or illegal
drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance compensation.
(d) Without Cause. At any time after the commencement of
employment, FYI or Employee may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the other party. Should Employee be terminated by FYI without cause,
Employee shall receive from FYI, in a lump-sum payment due on the effective date
of termination in the amount of one half of the Base Salary at the rate then in
effect. If Employee resigns or otherwise terminates his employment without cause
pursuant to this paragraph 4(d), Employee shall receive no severance
compensation. Employee shall be deemed
-5-
<PAGE> 6
to have been terminated without cause by FYI if Employee shall be assigned any
duties materially inconsistent with, or Employee's responsibilities shall be
significantly limited, or Employee shall be significantly demoted, in any case
so as not to be serving in a senior executive officer capacity to FYI (and its
subsidiaries and affiliates), and the continuance thereof for a period of five
(5) business days after written notice from Employee that he is unwilling to
accept such changes in duties or responsibilities.
(e) Change in Control of FYI. Refer to paragraph 11 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 11. All other rights and obligations of FYI and Employee under this
Agreement shall cease as of the effective date of termination, except that FYI's
obligations under paragraph 8 herein and Employee's obligations under paragraphs
3, 5, 6, 7 and 9 herein shall survive such termination in accordance with their
terms.
If termination of Employee's employment arises out of FYI's failure to
pay Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other breach of this Agreement by FYI, as
determined by a court of competent jurisdiction or pursuant to the provisions of
paragraph 15 below, FYI shall pay all amounts and damages to which Employee may
be entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Further, none of the provisions of paragraph 3
shall apply in the event this Agreement is terminated as a result of a breach by
FYI.
5. Return of Company Property. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of FYI or its
representatives, vendors or customers which pertain to the business of FYI shall
be and remain the property of FYI and be subject at all times to its discretion
and control. Likewise, all correspondence, reports, records, charts, advertising
materials and other similar data pertaining to the business, activities or
future plans of FYI which are collected by Employee shall be delivered promptly
to FYI without request by it upon termination of Employee's employment.
6. Inventions. Employee shall disclose promptly to FYI any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of FYI and which Employee conceives as a result of his employment by
FYI. Employee hereby assigns and agrees to assign all his interests therein to
FYI or its nominee. Whenever requested to do so by FYI, Employee shall execute
any and all applications,
-6-
<PAGE> 7
assignments or other instruments that FYI shall deem necessary to apply for and
obtain Letters Patent of the United States or any foreign country or to
otherwise protect FYI's interest therein.
7. Trade Secrets. Employee agrees that he will not, during or
after the term of this Agreement with FYI, disclose the material trade secrets
of FYI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
8. Indemnification. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by FYI against
Employee), by reason of the fact that he is or was performing services under
this Agreement or any prior agreement with F.Y.I., or was or is an employee of
F.Y.I. then FYI shall indemnify Employee against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, as actually
and reasonably incurred by Employee in connection therewith. In the event that
both Employee and FYI are made a party to the same third-party action,
complaint, suit or proceeding, FYI agrees to engage competent legal
representation, and Employee agrees to use the same representation, subject to
Employees reasonable approval or Employee will be liable and responsible for all
attorneys' fees of any separate legal representation and counsel engaged by him.
Further, while Employee is expected at all times to use his best efforts to
faithfully discharge his duties under this Agreement, Employee cannot be held
liable to FYI for errors or omissions made in good faith where Employee has not
exhibited gross, willful and wanton negligence and misconduct or performed
criminal and fraudulent acts which materially damage the business of FYI.
9. No Prior Agreements. Employee hereby represents and warrants
to FYI that the execution of this Agreement by Employee and his employment by
FYI and the performance of his duties hereunder will not violate or be a breach
of any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify FYI for any claim, including, but not
limited to, attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
FYI based upon or arising out of any non-competition agreement, invention or
secrecy agreement between Employee and such third party which was in existence
as of the date of this Agreement.
10. Assignment: Binding Effect. Employee understands that he has
been selected for employment by FYI on the basis of his personal qualifications,
experience and skills. Employee agrees, therefore, he cannot assign all or any
portion of his performance under this Agreement. Subject to the preceding two
(2) sentences and the express provisions of paragraph 11 below, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
11. Change in Control. The following provisions shall become
applicable in the event of a Change in Control.
-7-
<PAGE> 8
(a) Unless he elects to terminate this Agreement pursuant to
(c) below, Employee understands and acknowledges that FYI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of FYI hereunder.
(b) In the event of a pending Change in Control wherein FYI
and Employee have not received written notice at least fifteen (15) business
days prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of FYI's
business and/or assets that such successor is not willing as of the closing to
assume and agree to perform FYI's obligations under this Agreement in the same
manner and to the same extent that FYI is hereby required to perform, then such
Change in Control shall be deemed to be a termination of this Agreement by FYI
without cause and the applicable portions of paragraph 4(d) will apply; however,
under such circumstances, the amount of the lump-sum severance payment due to
Employee shall be triple the Base Salary then in effect and the non-competition
provisions of paragraph 3 shall not apply whatsoever.
(c) In any Change in Control situation, Employee may, at his
sole discretion, elect to terminate this Agreement by providing written notice
to FYI at least five (5) business days prior to the anticipated closing of the
transaction giving rise to the Change in Control. In such case, the applicable
provisions of paragraph 4(d) will apply as though FYI had terminated the
Agreement without cause; however, under such circumstances, the amount of the
lump-sum severance payment due to Employee shall be one hundred and fifty
percent (150%) of the Base Salary then in effect and the non-competition
provisions of paragraph 3 shall all apply for a period of one (1) year from the
effective date of termination.
(d) For purposes of applying paragraph 4 under the
circumstances described in (b) and (c) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change in Control
and all compensation, reimbursements and lump-sum payments due Employee must be
paid in full by FYI at or prior to such closing. Further, all of Employee's
stock options shall immediately vest and Employee will be given ninety (90) days
and an opportunity to elect whether to exercise all or any of his vested options
to purchase FYI common stock, including any options with accelerated vesting
under the provisions of any Stock Option Plan adopted by FYI, such that he may
convert the options to shares of FYI common stock at or prior to the closing of
the transaction giving rise to the Change in Control, if he so desires.
(e) A "Change in Control," shall be deemed to have occurred
if:
(i) any person, other than FYI or an employee benefit
plan of FYI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) of any voting security of
FYI and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting
securities representing fifty percent (50%) or more of the
total voting power of all of the then-outstanding voting
securities of FYI;
-8-
<PAGE> 9
(ii) the individuals (A) who, as of the effective
date of the Company's registration statement with respect to
its IPO, constitute the Board (the "Original Directors") or
(B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of FYI shall approve a merger,
consolidation, recapitalization, or reorganization of FYI, a
reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval
is not sought or obtained, other than any such transaction
which would result in at least 75% of the total voting power
represented by the voting securities of the surviving entity
outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of
outstanding voting securities of FYI immediately prior to the
transaction, with the voting power of each such continuing
holder relative to other such continuing holders not
substantially altered in the transaction; or
(iv) the stockholders of FYI shall approve a plan of
complete liquidation of FYI or an agreement for the sale or
disposition by FYI of all or a substantial portion of FYI's
assets (i.e., 50% or more of the total assets of FYI).
(f) Employee must be notified in writing by FYI at any time
that FYI or any member of its Board anticipates that a Change in Control may
take place.
(g) Employee shall be reimbursed by FYI or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by FYI or its successor within ten (10) days after Employee delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Employee.
12. Complete Agreement. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with FYI or any of its officers, directors or representatives covering the same
subject matter as this Agreement. This written Agreement is the final, complete
and exclusive statement and expression of the agreement between FYI and Employee
and of all the terms of this Agreement, and it cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous oral or written
-9-
<PAGE> 10
agreements. This written Agreement may not be later modified except by a further
writing signed by a duly authorized officer of FYI and Employee, and no term of
this Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
13. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To FYI: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot Lebenberg
Vice President and General Counsel
With a copy to: Charles C. Reeder, Esq.
Locke Purnell Rain Harrell
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
To Employee: David Lowenstein
2808 McKinney Avenue, Apt. 452
Dallas, Texas 75204
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 13.
14. Severability; Headings. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only and
are not intended in any way to describe, interpret, define or limit the extent,
or intent of the Agreement or of any part hereof.
15. Arbitration. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas, Texas,
in accordance with the rules of the American Arbitration Association then in
affect. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash
-10-
<PAGE> 11
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 4(b) and 4(c), respectively, or that FYI has
otherwise materially breached this Agreement. A decision by a majority of the
arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by FYI.
16. Governing Law. This agreement shall in all respects be
construed according to the laws of the State of Texas.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
F.Y.I. INCORPORATED
By: /s/ Ed Bowman
-------------------------------------
Ed Bowman
President and Chief Executive Officer
EMPLOYEE:
/s/ David Lowenstein
--------------------------------------------
David Lowenstein
-11-
<PAGE> 1
EXHIBIT 10.36
EMPLOYMENT AGREEMENT
JOHN D. (JACK) KEARNEY
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
the 5th day of January, 1998 by and between John D. (Jack) Kearney ("Employee")
and F.Y.I. Incorporated, a Delaware corporation (the "Company"). This Agreement
hereby supersedes any other employment agreements or understandings, written or
oral, between the Company and Employee.
RECITALS
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the document management services business (the "Business").
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the Company,
has and will continue to become familiar with and aware of information as to the
Company's customers, specific manner of doing business, including the processes,
techniques and trade secrets utilized by the Company, and future plans with
respect thereto, all of which has been and will be established and maintained at
great expense to the Company; this information is a trade secret and constitutes
the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
AGREEMENTS
1. Employment and Duties.
(a) The Company hereby employs Employee as a Vice President-Corporate
Development. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a Vice President-Corporate Development
and will report directly to the Executive Vice President-Corporate Development
of the Company. Employee hereby accepts this employment upon the terms and
conditions herein contained and, subject to paragraph 1(b), agrees to devote his
working time, attention and efforts to promote and further the business of the
Company.
<PAGE> 2
(b) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage except to the extent that such activity does not interfere
with Employee's duties and responsibilities hereunder. The foregoing limitations
shall not be construed as prohibiting Employee from making personal investments
in such form or manner as will neither require his services in the operation or
affairs of the companies or enterprises in which such investments are made.
2. Compensation. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) Base Salary; Annual Bonus. The base salary payable to Employee
shall be $150,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly (pro-rated for
any year in which Employee is employed for less than the full year). For 1998
and subsequent years, it is the Company's intent to develop a written Incentive
Bonus Plan setting forth the criteria under which Employee and other officers
and key employees will be eligible to receive year-end bonus awards. Employee
shall be eligible for a bonus opportunity of up to 50% of Employee's annual base
salary in accordance with this Incentive Bonus Plan, pro-rated for any year in
which Employee was employed for less than the full year. The award of any bonus
shall be based on the total performance of the Employee and the Company. The
incremental payments and the Company's targeted performance shall be determined
by the Board of Directors (the "Board") or the compensation committee thereof.
(b) Other Compensation. Employee shall be entitled to receive
additional benefits and compensation from the Company in such form and to such
extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental and other insurance plans that the Company may have
in effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement and a $500 per
month car allowance (determined on a pre-tax basis). All reimbursable
expenses shall be appropriately documented in reasonable detail by
Employee upon submission of any request for reimbursement, and in a
format and manner consistent with the Company's expense reporting
policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (pro-rated for any year in which Employee is employed for
less than the full year).
2
<PAGE> 3
(iv) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board and participation in all other Company-wide employee
benefits as available from time to time, which may include
participation in the Company's 1996 Long-Term Incentive Compensation
Plan.
(v) Employee shall be granted options (the "Options") to
acquire 40,000 shares of Common Stock at the fair market value on the
date hereof. The Options shall become exercisable as to 40% of the
underlying shares one year following the date hereof and as to the
remainder, 20% of the underlying shares of Common Stock on each of the
next three (3) anniversaries of the date hereof. The Options shall
expire on the tenth anniversary of the date of grant. After six months
of employment, Employee shall be eligible for an additional grant to
acquire up to 10,000 shares of Common Stock based upon Employee's
performance objectives ("Additional Options"). Such Additional Options
shall vest 20% on each anniversary of the date of grant.
3. Place of Performance.
(a) Employee understands that he may be requested by the Board of
Directors of the Company (the "Board") to relocate from his then current
residence to another geographic location in order to more efficiently carry out
his duties and responsibilities under this Agreement or as part of a promotion
or other increase in duties and responsibilities. In such event, if Employee
agrees to relocate, the Company will pay relocation costs up to $30,000 to move
Employee, his immediate family and their personal property and effects. Such
costs may include, by way of example, but are not limited to, pre-move visits to
search for a new residence, investigate schools or for other purposes; temporary
lodging and living costs prior to moving into a new permanent residence;
duplicate home carrying costs; and closing costs on the sale of Employee's
present residence and on the purchase of a comparable residence in the new
location. The general intent of the foregoing is to assist Employee with the
cost of the relocation, with an understanding that Employee will use his best
efforts to incur only those costs which are reasonable and necessary to effect a
smooth, efficient and orderly relocation with minimal disruption to the business
affairs of the Company and the personal life of Employee and his family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "good cause"
for termination of this Agreement under the terms of paragraph 4(c).
4. Term; Termination; Rights on Termination. The term of this
Agreement shall begin on the date hereof and continue for one (1) year (the
"Term"). This Agreement and Employee's employment may be terminated in any one
of the following ways:
(a) Death. The death of Employee shall immediately terminate the
Agreement with no severance compensation due to Employee's estate.
3
<PAGE> 4
(b) Disability. The Company will make efforts to reasonably accommodate
Employee as required by applicable state or federal disability laws. However,
the parties irrebutably presume that, given Employee's position, it would be an
undue hardship to the Company if Employee is absent for more than three (3)
consecutive months. Therefore, if as a result of incapacity due to physical or
mental illness or injury, Employee shall have been absent from his full-time
duties hereunder for three (3) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
three (3) month period, but which shall not be effective earlier than the last
day of such three (3) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume his full-time duties
at the conclusion of such notice period. Also, Employee may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Employee or Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is terminated as a
result of Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for six (6) months, whichever amount is
greater.
(c) Good Cause. The Company may terminate the Agreement five (5) days
after written notice to Employee for good cause, which shall be: (i) Employee's
breach of this Agreement; (ii) Employee's negligence in the performance or
nonperformance (continuing for five (5) days after receipt of the written
notice) of any of Employee's material duties and responsibilities hereunder;
(iii) Employee's dishonesty, fraud or misconduct with respect to the business or
affairs of the Company that adversely affects the operations or reputation of
the Company; (iv) Employee's conviction of a felony crime; or (v) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a termination
for good cause, as enumerated above, Employee shall have no right to any
severance compensation.
(d) Without Cause. At any time after the commencement of employment,
the Company may, without cause, terminate this Agreement and Employee's
employment, effective ten (10) days after written notice is provided to
Employee. Employee may only be terminated without cause by the Company during
the Term hereof if such termination is approved by the Board of Directors of the
Company. Should Employee be terminated by the Company without cause, Employee
shall receive from the Company, in a lump-sum payment due on the effective date
of termination, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for six (6) months,
whichever amount is greater.
(e) Termination by Employee for Good Reason. Employee may terminate his
employment hereunder for "Good Reason." As used herein, "Good Reason" shall mean
the
4
<PAGE> 5
continuance of any of the following after fifteen (15) days' prior written
notice by Employee to the Company, specifying the basis for such Employee's
having Good Reason to terminate this Agreement:
(i) Employee's removal from, or failure to be reappointed or
reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 4(a), (b) and (c); or
(ii) Any other material breach of this Agreement by the
Company, including the failure to pay Employee on a timely basis the
amounts to which he is entitled under this Agreement.
In the event of any dispute with respect to the termination by the Employee for
Good Reason, such dispute shall be resolved pursuant to the provisions of
paragraph 16 below. In the event that it is determined that Good Reason did
exist, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Should Employee terminate his employment for Good
Reason, Employee shall receive from the Company, in a lump-sum payment due on
the effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the Term of this Agreement or for
six (6) months, whichever amount is greater.
(f) Termination by Employee Without Cause. If Employee resigns or
otherwise terminates his employment without Good Reason pursuant to paragraph
4(e), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (f) above, Employee shall be entitled to receive all compensation earned
and all benefits and reimbursements vested or due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in the manner expressly
provided above or in paragraph 16. All other rights and obligations of the
Company and Employee under this Agreement shall cease as of the effective date
of termination, except that the Company's obligations under paragraph 10 herein
and Employee's obligations under paragraphs 5, 6, 7, 10 and 11 herein shall
survive such termination in accordance with their terms.
5. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company or their
representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company, as the case may be, and
be subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company that is collected by Employee shall be
5
<PAGE> 6
delivered promptly to the Company without request by it upon termination of
Employee's employment.
6. Inventions. Employee shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company and that Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
letters patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
7. Trade Secrets. Employee agrees that he will not, during or after
the term of this Agreement with the Company, disclose the specific terms of the
Company's relationships or agreements with their respective significant vendors
or customers or any other significant and material trade secret of the Company,
whether in existence or proposed, to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever.
8. Disclosure of Information. Employee agrees that for a period of
three (3) years after the date hereof or during the term of this Agreement and
for a period of three (3) years thereafter, whichever is longer, without the
prior written consent of the Company, Employee shall not, directly or
indirectly, through any form of ownership, in any individual or representative
or affiliated capacity whatsoever, except as may be required by law, reveal,
divulge, disclose or communicate to any person, firm, association, corporation
or other entity in any manner whatsoever information of any kind, nature or
description concerning: (i) the names of any prior or present suppliers or
customers with respect to the Business, (ii) the prices for products or services
with respect to the Business, (iii) the names of personnel with respect to the
Business, (iv) the manner of operation with respect to the Business, (v) the
plans, trade secrets, or other data of any kind, nature or description, whether
tangible or intangible, with respect to the Business, or (vi) any other
financial, statistical or other information regarding the business acquired by
the Company that the Company designates or treats as confidential or
proprietary. The agreements set forth herein shall not apply to any information
that at the time of disclosure or thereafter is generally available to and known
by the public (other than as a result of a disclosure directly or indirectly by
Employee in violation of this Agreement). Without regard to whether any or all
of the foregoing matters would be deemed confidential, material or important,
the parties hereto stipulate that as between them, the same are important,
material and confidential and gravely affect the effective and successful
conduct of the Business and its goodwill.
9. Noncompetition. (a) Employee agrees that during the term of this
Agreement and, upon termination of Employee's employment by the Company for a
period of three (3) years thereafter, he shall not:
6
<PAGE> 7
(i) Call upon, solicit, divert, take away or attempt to call
upon, solicit, divert or take away any existing customers, suppliers,
businesses, or accounts of the Business in connection with any business
substantially similar to the Business in the territory defined as 100 miles in
and around the Company's and its affiliates operations (the "Territory");
(ii) Hire, attempt to hire, contact or solicit with respect to
hiring for himself or on behalf of any other person any present employee of the
Company in the Business;
(iii) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business in
the Territory;
(iv) Do any act that Employee knew or reasonably should have
known might directly injure the Company in any material respect or that might
divert customers, suppliers or employees from the Business; and
(v) Without limiting the generality of the foregoing
provisions, conduct a business substantially similar to the Business under the
name "F.Y.I. Incorporated" or any other trade names, trademarks or service marks
heretofore used by the Company or its affiliates.
The covenants in subsections (i) through (v) are intended to restrict
Employee from competing in any manner with the Company or the Business in the
activities that have heretofore been carried on by the Company or its
affiliates. The obligations set forth in subsections (i) through (v) above shall
apply to actions by Employee, through any form of ownership, and whether as
principal, officer, director, agent, employee, employer, consultant, stockholder
or holder of any equity security (beneficially or as trustee of any trust),
lender, partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Employee from being the holder of up to 5.0% in the aggregate of any class of
securities of any corporation engaged in the activities described in subsection
(i) through (v) above, provided that such securities are listed on a national
securities exchange or reported on the Nasdaq National Market.
10. Indemnification. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement, then the Company shall indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all times
to use his best efforts to faithfully discharge his duties
7
<PAGE> 8
under this Agreement, Employee shall not be held liable to the Company for
errors or omissions made in good faith where Employee has not exhibited
negligence or performed criminal and fraudulent acts which damage the business
of the Company.
11. No Prior Agreements. Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and his employment
by the Company and the performance of his duties hereunder will not violate or
be a breach of any agreement with a former employer, client or any other person
or entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any non-competition
agreement, invention or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
12. Assignment; Binding Effect. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding, this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
13. Complete Agreement. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Employee and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the Company and Employee,
and no term of this Agreement may be waived except by writing signed by the
party waiving the benefit of such term.
14. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attn: Margot T. Lebenberg, Esq.
To Employee: John D. (Jack) Kearney
7327 Marquette Street
Dallas, TX 75225
8
<PAGE> 9
Notice shall be deemed given and effective three (3) days after the deposit in
the United States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
15. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
16. Arbitration. Any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas, Texas,
in accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in
paragraphs 4(b) and 4(c), respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any arbitration
proceeding shall be borne by the Company.
17. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
18. 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.
19. Attorneys' Fees. In the event of any litigation or arbitration
arising under or in connection with this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees as determined by the court or
arbitration panel, as the case may be. Each party to this Agreement represents
and warrants that it has been represented by counsel in the negotiation and
execution of this Agreement, including without limitation the provisions set
forth in this paragraph 19.
9
<PAGE> 10
20. Change in Control.
(a) Unless he elects to terminate this Agreement pursuant to (c) below,
Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least fifteen (15) business days
prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of the
Company's business and/or assets that such successor is not willing as of the
closing to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company is hereby
required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by the Company without cause and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be the equivalent
of Employee's salary for six months and the non-competition provisions of
paragraph 9 shall not apply whatsoever.
(c) In any Change in Control situation in which Employee has received
written notice from the successor to the Company that such successor is willing
to assume the Company's obligations hereunder, Employee may nonetheless, at his
sole discretion, elect to terminate this Agreement by providing written notice
to the Company at least five (5) business days prior to the anticipated closing
of the transaction giving rise to the Change in Control. In such case, the
applicable provisions of paragraph 5(d) will apply as though the Company had
terminated the Agreement without cause; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be the equivalent
of Employee's salary for six months and the non-competition provisions of
paragraph 9 shall all apply for a period of one (1) year from the effective date
of termination.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing. Further, Employee will be given
an opportunity to elect whether to exercise all or any of his vested options to
purchase Common Stock of the Company, including any options with accelerated
vesting under the provisions of the Company's 1995 Stock Option Plan, such that
he may convert the options to shares of Common Stock of the Company at or prior
to the closing of the transaction giving rise to the Change in Control, if he so
desires.
10
<PAGE> 11
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company and
immediately after such acquisition such Person is, directly or
indirectly, the Beneficial Owner of voting securities representing 50%
or more of the total voting power of all of the then-outstanding voting
securities of the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board of
Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also
becoming "Additional Original Directors" immediately following their
election), cease for any reason to constitute a majority of the members
of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation
of any such transaction if stockholder approval is not sought or
obtained, other than any such transaction which would result in at
least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the
Company).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
11
<PAGE> 12
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes and/or interest or penalties with respect to such excise taxes
that Employee incurs under Section 4999 of the Internal Revenue Code of 1986, as
amended (or any similar tax that may hereafter be imposed), as a result of any
Change in Control. Such amount will be due and payable by the Company or its
successor within ten (10) days after Employee delivers a written request for
reimbursement accompanied by a copy of his tax return(s) showing the excise tax
actually incurred by Employee.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
----------------------------------------
Title: President and Chief Executive Officer
EMPLOYEE:
/s/ John D. (Jack) Kearney
--------------------------------------------
John D. (Jack) Kearney
13
<PAGE> 1
EXHIBIT 10.37
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of February 17, 1998
by and among
F.Y.I. INCORPORATED,
BANQUE PARIBAS, AS AGENT,
BANK OF AMERICA TEXAS, N.A.,
AS CO-AGENT,
and
THE LENDERS NAMED HEREIN
$50,000,000 REVOLVING CREDIT LOAN FACILITY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 1.4 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 2 - Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.3 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.5 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans,
Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.7 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.8 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.9 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.12 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.13 Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.14 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 3 - Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.1 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.2 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.3 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.4 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.5 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.6 Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.7 Reinstatement of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 4 - Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.2 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.4 Treatment of Affected Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.6 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.7 Additional Interest on Eurodollar Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT - Page i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 5 - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.1 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.2 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.3 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.4 Additional Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.5 Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.6 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.7 Landlord and Mortgagee Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 6 - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.1 Closing Date Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.2 Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.3 All Extensions of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.4 Closing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 7 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.1 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.3 Corporate Action: No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.4 Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.5 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.6 Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.7 Rights in Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.8 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.9 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.10 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.12 Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.13 ERISA; Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.15 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.16 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.18 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.19 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.21 Labor Disputes and Acts of God . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.22 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.23 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.24 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.25 Related Transactions Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.26 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT - Page ii
<PAGE> 4
<TABLE>
<S> <C>
Section 7.27 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.28 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.29 Common Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 8 - Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.1 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.2 Maintenance of Existence, Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.4 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.6 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.7 Keeping Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.9 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.11 ERISA; Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.12 Trade Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.13 No Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 9 - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.1 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.2 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.3 Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.4 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 9.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 9.6 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.7 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.8 Disposition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.9 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.10 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.11 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.12 Intercompany Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.13 Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.14 Modification of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.15 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.16 Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 10 - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.1 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.2 Ratio of Total Debt to EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.3 Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.4 Consolidated Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.5 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT - Page iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 11 - Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.3 Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 11.4 Performance by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 12 - The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.1 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.2 Rights of Agent as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.4 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.5 Independent Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.6 Several Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 13 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.2 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.3 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.4 No Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.5 No Fiduciary Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 13.6 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13.7 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 13.10 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 13.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 13.12 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 13.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.17 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.18 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 13.19 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.20 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.21 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.22 Approvals and Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.23 Agent for Services of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.24 Amendment and Restatement of Prior Agreement. . . . . . . . . . . . . . . . . . . . . . . 92
Section 13.25 Assignments and Assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT - Page iv
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Section
- ------- ---------------------- -------
<S> <C> <C>
A Form of Assignment and Acceptance 1.1
B Form of Note 1.1 and 2.2
C Form of Subordination Agreement 1.1
D Form of Swingline Note
E Form of Notice of Borrowings, Conversions,
Continuations or Prepayments 2.9
F Form of Solvency Certificate 1.1, 6.2, 8.1
G Form of Compliance Certificate 8.1
</TABLE>
INDEX TO SCHEDULES
<TABLE>
<CAPTION>
Schedule Description of Schedule
- -------- -----------------------
<S> <C>
1.1(a) Mortgaged Properties
1.1(b) Permitted Liens
7.4 Permits, Franchises, Licenses and Authorizations constituting Governmental Requirements or
involving Governmental Authorities
7.6 Litigation and Judgments
7.7 Ownership of Real Properties
7.10 Existing Debt
7.11 Taxes
7.13 Plans
7.15 Capitalization; Options, etc.
7.22 Material Contracts
7.23 Bank Accounts
7.27 Employee Matters
7.28 Insurance
9.5 Investments
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT - Page v
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 17,
1998, is by and among F.Y.I. INCORPORATED ("F.Y.I."), a Delaware corporation,
each of the banks or other lending institutions which is a party hereto (as
evidenced by the signature pages of this Agreement) or which may from time to
time become a party hereto or any successor or assignee thereof (individually,
a "Lender" and, collectively, the "Lenders"), BANQUE PARIBAS, a bank organized
under the laws of France acting through its Chicago Branch, as agent for itself
and the other Lenders (in such capacity, together with its successors in such
capacity, the "Agent") and BANK OF AMERICA TEXAS, N.A., as co-agent for itself
and the other Lenders (in such capacity, together with its successors in such
capacity, the "Co-Agent").
RECITALS:
a. On April 18, 1996, F.Y.I., certain Subsidiaries of
F.Y.I. (collectively, the "Prior Borrowers"), the Agent and
certain lenders executed a certain Credit Agreement (as
amended from time to time, the "Prior Agreement") pursuant to
which the Lenders (as defined therein) extended (i) a
revolving credit facility to the Revolving Loans Borrowers (as
defined therein, including F.Y.I.) for working capital and
general corporate purposes and (ii) a term loan facility to
the Term Loans Borrowers (as defined therein, including
F.Y.I.) to finance future acquisitions by the Term Loans
Borrowers. After giving effect to certain assignments made to
Paribas immediately prior hereto, Paribas is, as of the
Closing Date, the only lender under the Prior Agreement.
b. F.Y.I., the Lenders identified on the signature pages
of this Agreement, the Agent and the Co- Agent desire, with
the written consent of the Prior Borrowers, to enter into this
Agreement for the purposes of providing the credit facility
referred to herein and amending and restating the Prior
Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions, etc. As used in this Agreement, the
following terms shall have the following meanings:
"Accounting Changes" means as specified in Section 1.3(a).
"Acquisition" means any transaction or series of related transactions
for the purpose of or
AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
<PAGE> 8
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person or of any business or division of a
Person, (b) the acquisition by a Person of 50% or more of the Capital Stock of
any Person or otherwise causing any Person to become a Subsidiary of the
acquiring Person, or (c) a merger, consolidation, amalgamation or any other
combination of a Person with another Person.
"Additional Costs" means as specified in Section 4.1(a).
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of one percent) determined by the Agent to be equal to (a) the
Eurodollar Rate for such Eurodollar Loan for such Interest Period divided by
(b) one minus the Reserve Requirement for such Eurodollar Loan for such
Interest Period.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds fifty percent or more of any class of
voting Capital Stock of such Person; or (c) fifty percent or more of the voting
Capital Stock of which is directly or indirectly beneficially owned or held by
the Person in question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise; provided, however, in no event shall the Agent, the
Co-Agent or any Lender be deemed an Affiliate of F.Y.I. or any of its
Subsidiaries.
"Agent" means as specified in the initial paragraph of this Agreement.
"Agreement" means this Agreement and any and all amendments,
modifications, supplements, renewals, extensions or restatements hereof.
"Applicable Lending Office" means for each Lender and each Type of
Loan, the Lending Office of such Lender (or an Affiliate of such Lender)
designated for such Type of Loan below its name on the signature pages hereof
(or, with respect to a Lender that becomes a party to this Agreement pursuant
to an assignment made in accordance with Section 13.8, in the Assignment and
Acceptance executed by it) or such other office of such Lender (or an Affiliate
of such Lender) as such Lender may from time to time specify to F.Y.I. and the
Agent as the office by which its Loans of such Type are to be made and
maintained.
"Applicable Margin" means, with respect to any period and with respect
to Prime Rate Loans, Eurodollar Loans and the Commitment Fees, the percentage
set forth in the table below that corresponds to the ratio of (a) Total Debt as
of the date of the relevant financial statements referred to below to (b)
EBITDA for the four fiscal quarters of FYI then most recently ended as of the
date of such financial statements, calculated in accordance with Section 1.4:
AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
<PAGE> 9
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Applicable Margins
for
- -----------------------------------------------------------------------------------------------
Total Debt to Eurodollar Prime Commitment
EBITDA Ratio Loans Rate Loans Fee
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
> or = 2.50 to 1.00 1.50% 0% 0.375%
- -----------------------------------------------------------------------------------------------
> or = 2.00 to 1.00 and < 2.50 to 1.00 1.00% 0% 0.250%
- -----------------------------------------------------------------------------------------------
> or = 1.50 to 1.00 and < 2.00 to 1.00 0.75% 0% 0.250%
- -----------------------------------------------------------------------------------------------
< 1.50 to 1.00 0.50% 0% 0.250%
- -----------------------------------------------------------------------------------------------
</TABLE>
For purposes hereof and notwithstanding the preceding sentence, the Applicable
Margin for the period from the Closing Date to the first Calculation Date shall
be deemed to be 0.50% for Eurodollar Loans, 0% for Prime Rate Loans and 0.250%
for Commitment Fees and shall thereafter be calculated on each Calculation Date
based upon the preceding table and the financial statements delivered by F.Y.I.
pursuant to Section 8.1(b) and the certificate delivered by F.Y.I. pursuant to
Section 8.1(c); provided, that if F.Y.I. fails to deliver to the Agent such
financial statements or certificate on or before the relevant Calculation Date,
the Applicable Margin shall be deemed to be the percentage reflected in the
preceding table as if the ratio of Total Debt to EBITDA were greater than 2.50
to 1.00 until the date such statements and certificate are received by the
Agent, after which the Applicable Margin shall be determined as otherwise
provided herein.
"Asset Disposition" means the disposition of any or all of the
Property (other than sales of Inventory in the ordinary course of business and
the grant of a Lien as security) of F.Y.I. or any of its Subsidiaries, whether
by sale, lease, transfer, assignment, condemnation or otherwise, but excluding
any involuntary disposition resulting from casualty damage to Property.
"Assignee" means as specified in Section 13.8(b).
"Assigning Lender" means as specified in Section 13.8(b).
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and its Assignee and accepted by the Agent pursuant to Section
13.8(e), in substantially the form of Exhibit A hereto.
"B&B Letter of Credit" means a Letter of Credit issued by the Issuing
Bank in favor of the Fifth Third Bank, as trustee, or any successor thereto
(the "Trustee") for the benefit of the holders of those certain $2,400,000
Prince George's County, Maryland Variable Rate Demand/Fixed Rate Revenue Bonds
(B&B Records Center, Inc. Facility) 1989 Issue as a replacement for the letter
of credit issued by Crestar Bank in favor of the Trustee, in a face amount not
to exceed $2,500,000, and issued under the Commitments, as such Letter of
Credit may be renewed, extended or replaced.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 3
<PAGE> 10
"B of A Letter of Credit" means that certain Letter of Credit issued
by Bank of America National Trust & Savings Association in favor of the New
York State Workers Compensation Board as beneficiary in a face amount of
$10,000,000 having an expiration date of March 31, 2003, which Letter of Credit
was issued pursuant to an Application and Agreement for Standby Letter of
Credit, dated as of January 27, 1998, between F.Y.I. and QCSINET Acquisition
Corp., a wholly-owned Subsidiary of F.Y.I., as Applicants, and Bank of America
Texas, N.A. as credit-provider.
"Bankruptcy Code" means as specified in Section 11.1(e).
"Basle Accord" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented
and otherwise modified and in effect from time to time, or any replacement
thereof.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in New York, New York or Chicago, Illinois, and
(b) with respect to all borrowings, payments, Conversions, Continuations,
Interest Periods and notices in connection with Eurodollar Loans, any day which
is a Business Day described in clause (a) above and which is also a day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Calculation Date" means the date occurring each quarter during the
term of this Agreement which is 15 days after the date upon which quarterly
financial statements of F.Y.I. and its consolidated Subsidiaries are required
by Section 8.1(b) to be delivered to the Agent (or, if such date is not a
Business Day, the next succeeding Business Day).
"Capital Expenditures" means, for any period, expenditures (including
the aggregate amount of Capital Lease Obligations incurred during such period)
made by F.Y.I. or any of its Subsidiaries to acquire or construct fixed assets,
plant or equipment (including renewals, improvements or replacements, but
excluding repairs) during such period and which, in accordance with GAAP, are
classified as capital expenditures, exclusive of any expenditures for
Acquisitions.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal Property, which
obligations are classified as a capital lease on a balance sheet of such Person
under GAAP. For purposes of this Agreement, the amount of such Capital Lease
Obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Capital Stock" means corporate stock and any and all shares,
partnership interests, limited partnership interests, limited liability company
interests, membership interests, equity interests, participations, rights or
other equivalents (however designated) of corporate stock or any of the
foregoing issued by any entity (whether a corporation, a partnership or another
entity).
"Change of Control" means the existence or occurrence of any of the
following after the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 4
<PAGE> 11
Closing Date: (a) any Person or two or more Persons acting as a group (as
defined in Section 13d-3 of the Securities Exchange Act of 1934) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934)
of 20% or more of the outstanding shares of voting stock of F.Y.I.; (b)
individuals who, as of the Closing Date, constitute the Board of Directors of
F.Y.I. (the "F.Y.I. Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of F.Y.I.; provided, however, that
any individual becoming a director of F.Y.I. subsequent to the Closing Date
whose election, or nomination for election by F.Y.I.'s shareholders was
approved by a vote of at least a majority of the directors then comprising the
F.Y.I. Incumbent Board shall be considered as though such individual were a
member of the F.Y.I. Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act of 1934) or other
actual or threatened solicitation of proxies or contest by or on behalf of a
Person other than the Board of Directors of F.Y.I.; or (c) the consummation of
any transaction the result of which is that any Person or group beneficially
owns more of the voting stock of F.Y.I. than is beneficially owned, in the
aggregate, by the "Permitted Holders" as such term is defined in the Prior
Agreement.
"Closing Date" means February 17, 1998, the date of this Agreement.
"Co-Agent" means as specified in the initial paragraph of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means all Property of any nature whatsoever upon which a
Lien is created or purported to be created by any Loan Document as security for
the Obligations or any portion thereof.
"Commitment" means, as to any Lender, the obligation of such Lender to
make or continue Loans and incur or participate in Letter of Credit Liabilities
hereunder in an aggregate principal amount at any one time outstanding up to
but not exceeding the amount set forth opposite the name of such Lender on the
signature pages hereto under the heading "Commitment" or, if such Lender is a
party to an Assignment and Acceptance, the amount set forth in the most recent
Assignment and Acceptance of such Lender, as the same may be reduced or
terminated pursuant to Section 2.13 or 11.2, and "Commitments" means such
obligations of all Lenders. As of the Closing Date, the aggregate principal
amount of the Commitments is $50,000,000.
"Commitment Percentage" means, as to any Lender, the percentage
equivalent of a fraction, the numerator of which is the amount of the
Commitment of such Lender, and the denominator of which is the aggregate amount
of the Commitments of all of the Lenders, as adjusted from time to time in
accordance with Section 13.8.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of (a)(i)
AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
<PAGE> 12
EBITDA of F.Y.I. and its Subsidiaries for such period minus (ii) Capital
Expenditures of F.Y.I. and its Subsidiaries paid during such period, minus
(iii) taxes of F.Y.I. and its Subsidiaries paid or payable in cash during such
period, to (b) the Fixed Charges of F.Y.I. and its Subsidiaries for such
period.
"Consolidated Interest Coverage Ratio" means, for any period, the
ratio of (a) EBITDA of F.Y.I. and its Subsidiaries for such period to (b)
Consolidated Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, all interest on
Debt of F.Y.I. and its Subsidiaries (or other applicable Person) paid or
accrued during such period, including the interest portion of payments under
Capital Lease Obligations, but excluding any fees paid by F.Y.I. and its
Subsidiaries in connection with the closing of the transactions evidenced by
the Prior Agreement or this Agreement to the extent that the same have been
capitalized in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss) of F.Y.I. and its Subsidiaries (or other applicable Person) for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means, at any particular time, all amounts
which, in conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of F.Y.I. and its Subsidiaries.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.6 of a Eurodollar Loan as a Eurodollar Loan
of the same Type from one Interest Period to the next Interest Period.
"Contract Rate" means as specified in Section 13.12(a).
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.6 or Article 4 of one Type of Loan into the other Type of
Loan.
"Currency Hedge Agreement" means any currency hedge or exchange
agreement, option or futures contract or other agreement intended to protect
against or manage a Person's exposure to fluctuations in currency exchange
rates.
"Current Date" means a date occurring no more than 30 days prior to
the Closing Date or such earlier date which is reasonably acceptable to the
Agent.
"Debt" means as to any Person at any time (without duplication): (a)
all indebtedness, liabilities and obligations of such Person for borrowed
money, (b) all indebtedness, liabilities and obligations of such Person
evidenced by bonds, notes, debentures, or other similar instruments, (c) all
indebtedness, liabilities and obligations of such Person to pay the deferred
purchase price of Property or services, except trade accounts payable of such
Person arising in the ordinary course of
AMENDED AND RESTATED CREDIT AGREEMENT - Page 6
<PAGE> 13
business that are not past due by more than 120 days, and excluding Seller Earn
Out which is contingent, (d) all Capital Lease Obligations of such Person, (e)
all Debt of others Guaranteed by such Person, (f) all indebtedness, liabilities
and obligations secured by a Lien existing on Property owned by such Person,
whether or not the indebtedness, liabilities or obligations secured thereby
have been assumed by such Person or are non-recourse to such Person, (g) all
reimbursement obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, bankers' acceptances, surety or other bonds and
similar instruments, (h) all indebtedness, liabilities and obligations of such
Person to redeem or retire shares of Capital Stock of such Person, (i) all
indebtedness, liabilities and obligations of such Person under Interest Rate
Protection Agreements or Currency Hedge Agreements, and (j) all indebtedness,
liabilities and obligations of such Person in respect of unfunded vested
benefits under any Plan.
"Debt Issuance" means any issuance by F.Y.I. or any Subsidiary of
F.Y.I. of any Debt of F.Y.I. or such Subsidiary, respectively, which Debt is
issued or sold by F.Y.I. or any Subsidiary of F.Y.I. primarily for the purpose
of raising capital or increasing liquidity and which Debt consists of Debt of
the types referred to in clauses (a) or (b) of the definition of "Debt", but
not of the types of Debt referred to in clauses (c), (d), (e), (g), (h), (i) or
(j) of the definition of "Debt" and which Debt is not permitted under Section
9.1. The incurrence of Seller Subordinated Debt does not constitute a "Debt
Issuance."
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, (a) in respect of any principal of any Loan or
any Reimbursement Obligation at all times during which an Event of Default has
occurred and is continuing, and (b) in respect of any principal of any Loan,
any Reimbursement Obligation or any other amount payable by F.Y.I. under this
Agreement or any other Loan Document which is not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate per annum during the
period of such Event of Default or during the period commencing on the due date
until such amount is paid in full, respectively, equal to the lesser of (i) the
sum of two percent (2%) plus the Prime Rate as in effect from time to time plus
the Applicable Margin for Prime Rate Loans for the applicable period or (ii)
the Maximum Rate; provided, however, that if such Event of Default relates to,
or if such amount in default is, principal of a Eurodollar Loan and the due
date is a day other than the last day of an Interest Period therefor, the
"Default Rate" for such principal shall be, for the period from and including
the due date and to but excluding the last day of the Interest Period therefor,
the lesser of (A) two percent plus the interest rate for such Eurodollar Loan
for such Interest Period as provided in Section 2.4(a)(ii) hereof or (B) the
Maximum Rate and, thereafter, the rate provided for above in this definition.
"Deposit Account" means a deposit account maintained by F.Y.I. with a
bank selected by F.Y.I. and reasonably acceptable to the Agent.
"Dollars" and "$" mean lawful money of the U.S.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
<PAGE> 14
"EBITDA" means, for any period, without duplication, the sum of the
following for F.Y.I. and its Subsidiaries (or other applicable Person) for such
period determined on a consolidated basis in accordance with GAAP: (a)
Consolidated Net Income, plus (b) Consolidated Interest Expense, plus (c)
income and franchise taxes to the extent deducted in determining Consolidated
Net Income, plus (d) depreciation and amortization expense and other non-cash,
non- tax items to the extent deducted in determining Consolidated Net Income,
minus (e) non-cash income to the extent included in determining Consolidated
Net Income. For purposes of calculating the EBITDA of F.Y.I. and its
consolidated Subsidiaries for any period of four consecutive fiscal quarters
including, without limitation, the four consecutive fiscal quarter period used
in determining compliance with the twelve month trailing EBITDA requirement in
the definition of Permitted Acquisition, the EBITDA associated with any Person
or assets acquired in a Permitted Acquisition during such period of four
consecutive fiscal quarters shall be added, without duplication, if the
Permitted Acquisition and the EBITDA of the Person or assets acquired were
approved in writing by the Required Lenders.
"Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) acceptable to the Agent
and approved by F.Y.I., which approval shall not unreasonably be withheld,
provided, however, that any Person referred to in this clause (b) shall not be
required to be acceptable to the Agent or approved by F.Y.I. if a Default has
then occurred and is continuing.
"Environmental Law" means any federal, state, local or foreign law,
statute, code or ordinance, principle of common law, rule or regulation, as
well as any Permit, order, decree, judgment or injunction issued, promulgated,
approved or entered thereunder, relating to pollution or the protection,
cleanup or restoration of the environment or natural resources, or to the
public health or safety, or otherwise governing the generation, use, handling,
collection, treatment, storage, transportation, recovery, recycling, discharge
or disposal of Hazardous Materials, including, without limitation as to U.S.
laws, the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Section 9601 et seq., the Superfund Amendment and
Reauthorization Act of 1986, 99-499, 100 Stat. 1613, the Resource Conservation
and Recovery Act of 1976, 42 U. S. C. Section 6901 et seq., the Occupational
Safety and Health Act, 29 U S.C. Section 651 et seq., the Clean Air Act, 42
U.S.C. Section 7401 et seq., the Clean Water Act, 33 U. S. C. Section 1251
et seq., the Emergency Planning and Community Right to Know Act, 42 U. S. C.
Section 11001 et seq., the Federal Insecticide, Fungicide and Rodenticide Act,
7 U.S.C. Section 136 et seq., and the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., and any state or local counterparts.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability or criminal, penal or civil statute, including,
without limitation, any Environmental Law, Permit, order or agreement
AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
<PAGE> 15
with any Governmental Authority or other Person, arising from environmental,
health or safety conditions or the Release or threatened Release of a Hazardous
Material into the environment.
"Equity Issuance" means any issuance by F.Y.I. or any Subsidiary of
F.Y.I. of any Capital Stock of F.Y.I. or such Subsidiary, respectively.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of a group of entities, organizations or employers of which a Loan
Party is also a member and which is treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" means Loans that bear interest at rates based upon
the Eurodollar Rate and the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted by the Reference Lender at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) two Business Days prior to
the first day of such Interest Period for the offering by the Reference Lender
to leading banks in the London interbank market of Dollar deposits in
immediately available funds having a term comparable to such Interest Period
and in an amount comparable to the principal amount of the Eurodollar Loan made
by the Reference Lender to which such Interest Period relates. If the
Reference Lender is not participating in any Eurodollar Loans during any
Interest Period therefor (whether as a result of Section 4.4 or for any other
reason), the Eurodollar Rate and the Adjusted Eurodollar Rate for such Loans
for such Interest Period shall be determined by reference to the amount of the
Loans which the Reference Lender would have made had it been participating in
such Loans.
"Event of Default" means as specified in Section 11.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest one- sixteenth of one percent (1/16 of
1%)) equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (a) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if
such rate is not so published on such next succeeding Business Day, the Federal
Funds Rate for any day shall be the average rate charged to the Reference
Lender on such day on such transactions as determined by the Agent.
"Fee Letter" means the letter dated as of February 17, 1998 (and
accepted by F.Y.I. as of
AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
<PAGE> 16
February 17, 1998) between F.Y.I. and the Agent.
"Fixed Charges" means, for any period, the sum of (a) Consolidated
Interest Expense of F.Y.I. and its Subsidiaries during such period, plus (b)
all scheduled payments (as such scheduled payments are reduced by application
of any prepayments) of principal with respect to the Loans and other
outstanding Debt during such period, plus (c) for any period commencing prior
to the Loans Termination Date, an amount equal to 20% of the principal amount
of the Loans outstanding as of the end of such period.
"F.Y.I." means as specified in the initial paragraph of this
Agreement.
"F.Y.I. Common Stock" means the common stock of F.Y.I., par value $.01
per share.
"F.Y.I. Equity Documents" means F.Y.I.'s Certificate of Incorporation
and the F.Y.I. Common Stock.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state,
provincial or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, Permit,
certificate, license, authorization or other directive or requirement of any
federal, state, county, municipal, parish, provincial or other Governmental
Authority or any department, commission, board, court, agency or any other
instrumentality of any of them.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation as to the payment
thereof or to protect the obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not
AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
<PAGE> 17
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
The amount of any Guarantee shall be deemed to be an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder).
"Guaranties" means the guaranty agreements, in form and substance
satisfactory to the Agent, executed at any time pursuant to the Prior Agreement
or this Agreement by any of the Subsidiaries of F.Y.I. or any other Loan Party
in favor of the Agent for the benefit of the Agent and the Lenders, and any
guaranty agreement executed pursuant to Section 5.3 hereof, and any and all
amendments, modifications, supplements, renewals, extensions or restatements
thereof.
"Hazardous Material" means any substance, product, liquid, waste,
pollutant, chemical, contaminant, insecticide, pesticide, gaseous or solid
matter, organic or inorganic matter, fuel, micro-organisms, ray, odor,
radiation, energy, vector, plasma, constituent or material which (a) is or
becomes listed, regulated or addressed under any Environmental Law or (b) is,
or is deemed to be, alone or in any combination, hazardous, hazardous waste,
toxic, a pollutant, a deleterious substance, a contaminant or a source of
pollution or contamination under any Environmental Law, including, without
limitation, asbestos, petroleum, underground storage tanks (whether empty or
containing any substance) and polychlorinated biphenyls.
"Intellectual Property" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including unregistered names and marks), trademark
and service mark registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar
technical information, engineering know-how, customer and supplier information,
assembly and test data drawings or royalty rights.
"Interest Period" means, with respect to any Eurodollar Loan, each
period commencing on the date such Loan is made or Converted from a Prime Rate
Loan or (if Continued) the last day of the next preceding Interest Period with
respect to such Loan, and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as F.Y.I. may select
as provided in Section 2.9 hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month. Notwithstanding the foregoing: (a) each Interest
Period which would otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day (or, if such succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day); (b)
any Interest Period which would otherwise extend beyond the Loans Maturity Date
shall end on the Loans Maturity Date; (c) no more than seven (7) Interest
Periods for Eurodollar Loans shall be in effect at the same time; (d) no
Interest Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loans would otherwise
AMENDED AND RESTATED CREDIT AGREEMENT - Page 11
<PAGE> 18
be a shorter period, such Loans shall not be available hereunder; (e) no
Interest Period shall have a duration of more than six months; and (f) no
Interest Period for a Loan may commence before and end after any principal
repayment date unless, after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans having Interest Periods that end after such
principal payment date shall be equal to or less than the amount of the Loans
scheduled to be outstanding hereunder after such principal payment date. The
permitted length of Interest Periods will not limit the terms of any Interest
Rate Protection Agreement.
"Interest Rate Protection Agreements" means, with respect to F.Y.I. or
any Subsidiary of F.Y.I., an interest rate swap, cap or collar agreement or
similar arrangement between F.Y.I. or any Subsidiary of F.Y.I. and one or more
Lenders that are parties to this Agreement providing for the transfer or
mitigation of interest rate risks either generally or under specified
contingencies.
"Inventory" means all inventory now owned or hereafter acquired by
F.Y.I. or any of its Subsidiaries wherever located and whether or not in
transit, which is or may at any time be held for sale or lease, or furnished
under any contract (exclusive of leases of real Property covered by a Mortgage)
for service or held as raw materials, work in process, or supplies or materials
used or consumed in the business of F.Y.I. or any of its Subsidiaries.
"Investments" means as specified in Section 9.5.
"IPO" means F.Y.I.'s public offering of 2,185,000 shares of F.Y.I.
Common Stock which offering closed in January of 1996 and was made pursuant to
the registration statement of F.Y.I. Incorporated on Form S-1, No. 33-98608,
the final version of which was filed with the Securities and Exchange
Commission on January 23, 1996.
"IPO Documents" means that certain registration statement of F.Y.I.
Incorporated on Form S-1, No. 33-98608, the final version of which was filed
with the Securities and Exchange Commission on January 23, 1996, that certain
underwriting agreement between Montgomery Securities, William Blair & Co.,
L.L.C. and F.Y.I., regarding the public offering of 1,900,000 shares of common
stock, dated January 22, 1996, and each other document filed with the
Securities and Exchange Commission or any state securities commission in
connection with the IPO.
"Issuing Bank" means Banque Paribas or, in the case of the B of A
Letter of Credit only, Bank of America Texas, N.A. (with respect to notices and
payment of fees and reimbursements pursuant to this Agreement) or Bank of
America National Trust & Savings Association (with respect to the issuance of
the B of A Letter of Credit and drawings thereunder).
"Lender" and "Lenders" means as specified in the initial paragraph of
this Agreement.
"Letter of Credit" means any standby letter of credit issued by the
Issuing Bank for the account of F.Y.I. (or F.Y.I. and any of its Subsidiaries)
pursuant to this Agreement (which letter of credit shall be irrevocable unless
otherwise agreed by the Issuing Bank and F.Y.I.).
AMENDED AND RESTATED CREDIT AGREEMENT - Page 12
<PAGE> 19
"Letter of Credit Agreement" means, with respect to each Letter of
Credit to be issued by the Issuing Bank therefor, the letter of credit
application and reimbursement agreement which such Issuing Bank requires to be
executed by the account party or parties in connection with the issuance of
such Letter of Credit.
"Letter of Credit Liabilities" means, at any time, the aggregate
undrawn face amounts of all outstanding Letters of Credit and all unreimbursed
drawings under Letters of Credit issued pursuant to the Commitments.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation or other encumbrance of any
kind or nature whatsoever (including, without limitation, any conditional sale
or title retention agreement), whether arising by contract, operation of law or
otherwise.
"Loan Documents" means this Agreement, the Prior Agreement, the Notes,
the Security Documents, the Fee Letter, the Letters of Credit, the Letter of
Credit Agreements, any Interest Rate Protection Agreement or Currency Hedge
Agreement between F.Y.I. or any Subsidiary of F.Y.I. and any Lender, any
Subordination Agreements, and all other agreements, documents and instruments
now or hereafter executed and/or delivered pursuant to or in connection with
any of the foregoing (including, without limitation, this Agreement and the
Prior Agreement), and any and all amendments, modifications, supplements,
renewals, extensions or restatements thereof.
"Loan Party" means F.Y.I., each of its Subsidiaries and any other
Person who is or becomes a party to any agreement, document or instrument that
Guarantees or secures payment or performance of the Obligations or any part
thereof.
"Loans" means as specified in Section 2.1(a).
"Loans Maturity Date" means March 31, 2003.
"Loans Termination Date" means February 17, 2001.
"Material Adverse Effect" means any material adverse effect, or the
occurrence of any event or the existence of any condition that could reasonably
be expected to have a material adverse effect, on (a) the business or financial
condition or performance of F.Y.I. and its Subsidiaries, taken as a whole, (b)
the ability of F.Y.I. to pay and perform the Obligations when due, or (c) the
validity or enforceability of (i) any of the Loan Documents, (ii) any Lien
created or purported to be created by any of the Loan Documents or the required
priority of any such Lien, or (iii) the rights and remedies of the Agent or the
Lenders under any of the Loan Documents.
"Material Contracts" means, as to any Person, any supply, purchase,
service, employment, tax, indemnity, shareholder or other agreement or contract
for which the aggregate amount or value of services performed or to be
performed for or by, or funds or other Property transferred or to be
AMENDED AND RESTATED CREDIT AGREEMENT - Page 13
<PAGE> 20
transferred to or by, such Person or any of its Subsidiaries party to such
agreement or contract, or by which such Person or any of its Subsidiaries or
any of their respective Properties are otherwise bound, during any fiscal year
of the Person exceeds $5,000,000 as of the Closing Date with respect to
expenditures required by such Person, or $10,000,000 as of the Closing Date
with respect to revenues which the other party to the contract is required to
pay to such Person, and any and all amendments, modifications, supplements,
renewals or restatements thereof.
"Material Subsidiary" means any Subsidiary of F.Y.I. which is not a
Nonmaterial Subsidiary.
"Maximum Rate" means, with respect to any Lender, the maximum
non-usurious interest rate (or, if the context so permits or requires, an
amount of interest calculated at such rate), if any, that at any time or from
time to time may be contracted for, taken, reserved, charged or received with
respect to the particular Obligations as to which such rate is to be
determined, payable to such Lender pursuant to this Agreement or any other Loan
Document, under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum non-usurious interest
rate than applicable laws now allow. The Maximum Rate shall be calculated in a
manner that takes into account any and all fees, payments and other charges in
respect of the Loan Documents that constitute interest under applicable law.
Each change in any interest rate provided for herein based upon the Maximum
Rate resulting from a change in the Maximum Rate shall take effect without
notice to F.Y.I. at the time of such change in the Maximum Rate. For purposes
of determining the Maximum Rate under Texas law if, contrary to the intent of
the parties, Texas law is ever used to determine the Maximum Rate, the
applicable rate ceiling shall be the indicated rate ceiling described in, and
computed in accordance with, Article 5069, Vernon's Texas Civil Statutes;
provided, however, that, to the extent permitted by applicable law, the Agent
shall have the right to change the applicable rate ceiling from time to time in
accordance with applicable law.
"Mortgaged Properties" means, collectively, the fee-owned Properties
and leasehold interests in the Properties listed on Schedule 1.1(a) hereof
which are or are to be subject to the Mortgages, and any such after-acquired
Properties which become subject to a Mortgage pursuant to Section 5.4 hereof.
"Mortgages" means the deed of trusts, leasehold deeds of trust,
mortgages, leasehold mortgages, collateral assignments of leases and other real
estate security documents, in form and substance satisfactory to the Agent,
executed at any time pursuant to the Prior Agreement or this Agreement by
F.Y.I. or any of its Subsidiaries or any other Loan Party in favor of the Agent
for the benefit of the Agent and the Lenders with respect to any Mortgaged
Property, and any and all amendments, modifications, supplements, renewals or
restatements thereof.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by or are required
from any Loan Party or any ERISA Affiliate since 1974 and which is covered by
Title IV of ERISA.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 14
<PAGE> 21
"Net Proceeds" means, with respect to any Asset Disposition, (a) the
gross amount of cash received by F.Y.I. or any of its Subsidiaries from such
Asset Disposition, minus (b) the amount, if any, of all taxes paid or payable
by F.Y.I. or any of its Subsidiaries directly resulting from such Asset
Disposition (including the amount, if any, estimated by F.Y.I. in good faith at
the time of such Asset Disposition for taxes payable by F.Y.I. or any of its
Subsidiaries on or measured by net income or gain resulting from such Asset
Disposition), minus (c) the reasonable out- of-pocket costs and expenses
incurred by F.Y.I. or such Subsidiary in connection with such Asset Disposition
(including reasonable brokerage fees paid to a Person other than an Affiliate
of F.Y.I. and including any transfer or similar taxes) excluding any fees or
expenses paid to an Affiliate of F.Y.I., minus (d) amounts applied to the
repayment of indebtedness (other than the Obligations) secured by a Permitted
Lien on the Property subject to the Asset Disposition, minus (e) the actual
amount refunded to the buyer as a result of a post-closing purchase price
adjustment which occurs within 180 days of the closing and is provided for in
the asset purchase agreement or the stock purchase agreement as provided to the
Lenders prior to the Acquisition. "Net Proceeds" with respect to any Asset
Disposition shall also include proceeds (after deducting any amounts specified
in clauses (b), (c) and (d) of the preceding sentence) of insurance with
respect to any actual or constructive loss of Property, an agreed or
compromised loss of Property or the taking of any Property under the power of
eminent domain and condemnation awards and awards in lieu of condemnation for
the taking of Property under the power of eminent domain, except such proceeds
and awards as are released to and used by F.Y.I. or any of its Subsidiaries in
accordance with Section 8.5(b). "Net Proceeds" means, with respect to any
Equity Issuance or Debt Issuance, (a) the gross amount of cash or other
consideration received from such Equity Issuance or Debt Issuance, as the case
may be, minus (b) the reasonable out-of-pocket costs and expenses incurred by
the issuer in connection with such Equity Issuance or Debt Issuance, as the
case may be (including reasonable underwriting fees paid to a Person other than
an Affiliate of F.Y.I.) excluding any fees or expenses paid to an Affiliate of
F.Y.I.
"Nonconsenting Lender" means as specified in Section 13.11.
"Nonmaterial Subsidiary" means, as of any date of determination, a
Subsidiary of F.Y.I. (a) which has total tangible assets that are less than
$7,500,000, (b) which has net worth that is less than $7,500,000, and (c) which
has revenues that are less than $7,500,000 during the twelve-month period then
most recently ended. For purposes of this definition, total tangible assets,
net worth and revenues of a Subsidiary shall be determined on a consolidated
basis for such Subsidiary and for all Subsidiaries of such Subsidiary.
"Notes" means the promissory notes made by F.Y.I. evidencing the Loans
(including, without limitation, the Swingline Advances) in the form of Exhibit
B or, as to the Swingline Advances, Exhibit D hereto, and also includes such
promissory notes issued in registered form pursuant to Section 2.2(b).
"Obligations" means any and all (a) indebtedness, liabilities and
obligations of the Loan Parties, or any of them, to the Agent, the Issuing Bank
and the Lenders, or any of them, evidenced by and/or arising pursuant to any of
the Loan Documents, now existing or hereafter arising, whether
AMENDED AND RESTATED CREDIT AGREEMENT - Page 15
<PAGE> 22
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, including, without
limitation, (i) the obligations of the Loan Parties to repay the Loans, the
Letter of Credit Liabilities and the Reimbursement Obligations, to pay interest
on the Loans, the Letter of Credit Liabilities and Reimbursement Obligations
(including, without limitation, interest, if any, accruing after any
bankruptcy, insolvency, reorganization or other similar filing) and to pay all
fees, indemnities, costs and expenses (including attorneys' fees) provided for
in the Loan Documents and (ii) the indebtedness constituting the Loans, the
Letter of Credit Liabilities, the Reimbursement Obligations and such fees,
indemnities, costs and expenses, and (b) indebtedness, liabilities and
obligations of F.Y.I. or any of its Subsidiaries under any and all Interest
Rate Protection Agreements and Currency Hedge Agreements that it may enter into
with any Lender to the extent permitted by Section 9.1(e).
"Operating Lease" means, with respect to any Person, any lease, rental
or other agreement for the use by that Person of any Property which is not a
Capital Lease Obligation.
"Outstanding Credit" means, at any particular time, the sum of (a) the
outstanding principal amount of the Loans (inclusive of the Swingline
Advances), plus (b) the Letter of Credit Liabilities.
"Paribas" means Banque Paribas, a bank organized under the laws of the
Republic of France.
"Payor" means as specified in Section 3.4.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA (including a Multiemployer Plan) which is subject to the
funding requirements under Section 302 of ERISA or Section 412 of the Code, in
whole or in part, and which is maintained or contributed to currently or at any
time within the six years immediately preceding the Closing Date or, in the
case of a Multiemployer Plan, at any time since September 2, 1974, by F.Y.I. or
any subsidiary of F.Y.I. or any ERISA Affiliate for employees of F.Y.I. or any
subsidiary of F.Y.I. or any ERISA Affiliate.
"Peril" means as specified in Section 8.5(a).
"Permit" means any permit, certificate, approval, order, license or
other authorization.
"Permitted Acquisition" means any Acquisition which has been approved
in writing by the Agent and the Required Lenders or any other Acquisition which
satisfies each of the following requirements: (a) the acquiror (or surviving
corporation if the acquisition is by means of a merger) is F.Y.I. or any
Subsidiary of F.Y.I., (b) the assets to be acquired in connection with such
Acquisition are assets that are to be used in the existing businesses of the
acquiror as such business is presently conducted, (c) such Acquisition has been
approved by the Board of Directors of the acquired entity, (d) the acquired
entity shall have generated positive EBITDA during the twelve-month period
AMENDED AND RESTATED CREDIT AGREEMENT - Page 16
<PAGE> 23
preceding the Acquisition, which positive EBIDTA shall be audited or reviewed
by an accounting firm acceptable to the Agent if (but only if) the Acquisition
involves total consideration paid or payable of $10,000,000 or more, after
adjusting for excess owners' compensation and other pro forma charges as
validated by the Agent, (e) after giving effect to such Acquisition and any
Debt incurred in connection therewith, Total Debt does not exceed 2.5 times
EBITDA for the four fiscal quarters most recently completed of F.Y.I. and its
Subsidiaries (and including the acquired entity's trailing twelve month EBITDA
as adjusted for any interest not acquired, if audited or reviewed by an
accounting firm acceptable to the Agent) (EBITDA may include proforma
adjustments to an acquired entity's earnings, as adjusted for any interest not
acquired, acceptable to the Agent), (f) such Acquisition shall not exceed
$20,000,000 in total consideration (including any Debt assumed or guaranteed in
connection therewith), without Required Lenders' approval, (g) the aggregate
amount of all such Acquisitions made on or after the Closing Date shall not
exceed $25,000,000, in total consideration (including any Debt assumed or
guaranteed in connection therewith) in any twelve month period without Required
Lenders' approval, (h) prior to and after giving effect to the Acquisition, no
Default shall exist, (i) after giving effect to such Acquisition, F.Y.I. will
not violate any financial covenant, and (j) no material part of the Property or
business operations to be acquired are located outside the U.S. or Canada;
provided, however, that up to $7,000,000 (valued at total purchase
consideration including any Debt assumed or guaranteed in connection therewith)
in Acquisitions made on or after the Closing Date and during the term of this
Agreement will be deemed to be Permitted Acquisitions despite their failure to
meet the requirements of items (d) or (j) preceding so long as no such acquired
entity or entities shall have annual sales (individually for any one such
acquired entity or in the aggregate for all such acquired entities) in excess
of $10,000,000 or cumulative EBITDA losses (individually for any one such
acquired entity or in the aggregate for all such acquired entities) in excess
of $1,500,000 incurred, in each case during the twelve-month period preceding
the respective dates of acquisition.
"Permitted Acquisition Documents" means any acquisition agreement and
each other material agreement, document or instrument executed or delivered in
connection with or pursuant to any Permitted Acquisition.
"Permitted Capital Expenditures" means as specified in Section 10.6.
"Permitted Liens" means:
(a) Liens disclosed on Schedule 1.1(b) hereto as to
F.Y.I. and its Material Subsidiaries (as applicable, as described on
such schedule);
(b) Liens securing the Obligations in favor of the Agent
(for the benefit of the Agent and the Lenders) pursuant to the Loan
Documents;
(c) Encumbrances consisting of easements, zoning
restrictions or other restrictions on the use of real Property or, as
to the real Property referred to in clause (ii) below only,
imperfections to title that (i) as to any Mortgaged Property, do not
(individually
AMENDED AND RESTATED CREDIT AGREEMENT - Page 17
<PAGE> 24
or in the aggregate) materially affect the value of the Property
encumbered thereby or materially impair the ability of F.Y.I. or any
of its Subsidiaries to use such Property in its businesses, and none
of which is violated in any material respect by existing or proposed
structures or land use, and (ii) as to any real Property other than
Mortgaged Property, were entered into in the ordinary course of
business and could not have a Material Adverse Effect;
(d) Liens for taxes, assessments or other governmental
charges that are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen,
carriers, landlords or other similar statutory Liens securing
obligations that are not yet due and are incurred in the ordinary
course of business or which are being contested in good faith and for
which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure
payment of workmen's compensation or other social security programs or
to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, contracts (other than for payment of Debt) or
leases, all in the ordinary course of business;
(g) Purchase-money Liens on any Property hereafter
acquired or the assumption after the Closing Date of any Lien on
Property existing at the time of such acquisition (and not created in
contemplation of such acquisition), or a Lien incurred or assumed
after the Closing Date in connection with any conditional sale or
other title retention agreement or Capital Lease Obligation; provided
that:
(i) any Property subject to the foregoing is
acquired by F.Y.I. or any of its Subsidiaries in the ordinary
course of its business and the Lien on the Property attaches
concurrently or within 90 days after the acquisition thereof;
(ii) the Debt secured by any Lien so created,
assumed or existing shall not exceed the lesser of the cost or
fair market value at the time of acquisition of the Property
covered thereby;
(iii) each such Lien shall attach only to the
Property so acquired and the proceeds thereof; and
(iv) the Debt secured by all such Liens, together
with the Debt secured by all other purchase-money Liens on any
Property at any time owned or acquired, shall not exceed
$8,000,000 at any time outstanding in the aggregate;
(h) Easements, rights-of-way, restrictions and other
Liens and imperfections to title that are approved by the Agent and
are listed on Exhibit B to any Mortgage; and
AMENDED AND RESTATED CREDIT AGREEMENT - Page 18
<PAGE> 25
(i) Any extension, renewal or replacement of any of the
foregoing, provided that Liens permitted hereunder shall not be
extended or spread to cover any additional indebtedness or Property;
provided, however, that none of the Permitted Liens (except those in favor of
the Agent) may attach or relate to the Capital Stock of or any other ownership
interest in F.Y.I. or any of its Subsidiaries.
"Person" means any individual, corporation, trust, association,
company, partnership, joint venture, limited liability company, Governmental
Authority or other entity.
"Plan" means any employee benefit plan as defined in Section 3(3) of
ERISA established or maintained or contributed to by any Loan Party opposing
counsel any ERISA Affiliate, including any Pension Plan.
"Prime Rate" means, at any time, the rate of interest per annum then
most recently established by Morgan Guaranty Trust Company as announced at its
office in New York, New York, as its highest commercial prime rate then in
effect, which rate may not be the lowest rate of interest charged by Morgan
Guaranty Trust Company to its commercial borrowers. Each change in any
interest rate provided for herein based upon the Prime Rate resulting from a
change in the Prime Rate shall take effect without notice to F.Y.I. at the time
of such change in the Prime Rate.
"Prime Rate Loans" means Loans that bear interest at rates based upon the Prime
Rate.
"Principal Office" means the principal office of the Agent in Chicago,
Illinois, presently located at 227 West Monroe Street, Suite 3300, Chicago,
Illinois 60606.
"Prior Agreement" means as specified in Recital A of this Agreement.
"Prior Borrowers" means as specified in Recital A of this Agreement.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"Projections" means F.Y.I.'s forecasted consolidated (a) balance
sheets, (b) income statements, and (c) cash flow statements, together with
appropriate supporting details and a statement of underlying assumptions,
prepared on or about the Closing Date.
"Property" means property of all kinds, real, personal or mixed,
tangible or intangible (including, without limitation, all rights relating
thereto), whether owned or acquired on or after the Closing Date.
"Quarterly Date" means the last day of each March, June, September and
December of each year, the first of which shall be the first such day after the
Closing Date.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 19
<PAGE> 26
"Receivables" means, as at any date of determination thereof, each and
every "account" as such term is defined in the UCC and includes, without
limitation, the unpaid portion of the obligation, as stated on the respective
invoice, or, if there is no invoice, other writing, of a customer of F.Y.I. or
any of its Subsidiaries in respect of Inventory sold and shipped or services
rendered by F.Y.I. or any of its Subsidiaries.
"Reference Lender" means Banque Paribas.
"Register" means as specified in Section 13.8(d).
"Registered Note" means as specified in Section 2.2(b).
"Registered Note Register" means as specified in Section 13.8(h).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Lender, any change
after the Closing Date in any U.S. federal or state laws or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of lenders
including such Lender of or under any U.S. federal or state laws or foreign
laws or regulations (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
"Reimbursement Obligation" means the obligation of F.Y.I. (as account
party or parties, respectively) to reimburse the Issuing Bank for any drawing
under a Letter of Credit.
"Related Transactions" means, collectively, (a) the making of the
Loans, (b) the execution and delivery of the Related Transactions Documents,
and (c) the payment of all fees, costs and expenses associated with the
foregoing.
"Related Transactions Documents" means the Loan Documents, the F.Y.I.
Equity Documents, the IPO Documents and all other agreements, documents and
instruments executed and/or delivered pursuant to or in connection with any of
the foregoing.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, discharge, disposal, disbursement,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment or into or out of Property owned by such Person, including, without
limitation, the movement of Hazardous Materials through or in the air, soil,
surface water or ground water.
"Remedial Action" means a actions required to (a) cleanup, remove,
respond to, treat or otherwise address Hazardous Materials in the indoor or
outdoor environment, (b) prevent the Release
AMENDED AND RESTATED CREDIT AGREEMENT - Page 20
<PAGE> 27
or threat of Release or minimize the further Release of Hazardous Materials so
that they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (c) perform studies and
investigations on the extent and nature of any actual or suspected
contamination, the remedy or remedies to be used or health effects or risks of
such contamination, or (d) perform post-remedial monitoring, care or remedy of
a contaminated site.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Required Lenders" means, at any date of determination, Lenders having
in the aggregate at least 81% (in Dollar amount as to any one or more of the
following) of the sum of the aggregate outstanding Commitments (or, if the
Commitments have terminated or expired, the aggregate outstanding principal
amount of the Loans and the aggregate Letter of Credit Liabilities).
"Required Payment" means as specified in Section 3.4.
"Reserve Requirement" means, for any Eurodollar Loan of any Lender for
any Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
Lenders by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which the Eurodollar Rate
or the Adjusted Eurodollar Rate is to be determined or (b) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Responsible Officer" means, as to any Loan Party, the chief financial
officer, chief operating officer or chief executive officer of such Person.
"Restricted Payment" means (a) any dividend or other distribution
(whether in cash, Property or obligations), direct or indirect, on account of
(or the setting apart of money for a sinking or other analogous fund for) any
shares of any class of Capital Stock of F.Y.I. or any of its Subsidiaries now
or hereafter outstanding, except a dividend payable solely in equity securities
of F.Y.I.; (b) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of F.Y.I. or any of its
Subsidiaries now or hereafter outstanding; (c) any loan, advance or payment
(pursuant to a tax sharing agreement or otherwise) to F.Y.I.; and (d) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of F.Y.I. or any of its Subsidiaries now or hereafter outstanding.
"Security Agreements" means the security agreements and pledge
agreements, in form and substance satisfactory to the Agent, executed at any
time pursuant to the Prior Agreement or this Agreement by F.Y.I. or any of its
Subsidiaries or any other Loan Party in favor of the Agent for the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 21
<PAGE> 28
benefit of the Agent and the Lenders, and any security agreement or pledge
agreement executed pursuant to Section 5.3 hereof, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Security Documents" means the Guaranties, the Security Agreements and
the Mortgages, as they may be amended, modified, supplemented, renewed,
extended or restated from time to time, and any and all other agreements, deeds
of trust, mortgages, chattel mortgages, security agreements, pledges,
guaranties, assignments of proceeds, assignments of income, assignments of
contract rights, assignments of partnership interests, assignments of royalty
interests, assignments of performance or other collateral assignments,
completion or surety bonds, standby agreements, subordination agreements,
undertakings and other agreements, documents, instruments and financing
statements now or hereafter executed and/or delivered by any Loan Party in
connection with or as security or assurance for the payment or performance of
the Obligations or any part thereof.
"Seller Earn Out" means any obligation incurred by F.Y.I. or a
Subsidiary in connection with a Permitted Acquisition which (i) is only payable
by F.Y.I. for performance by a seller, or a shareholder, officer or director of
a seller, of obligations over the passage of time (e.g., non-compete payments)
or in the event certain future performance goals are achieved with respect to
the assets or business acquired, excluding any noncompete payments in excess of
15% of the purchase price and excluding performance-based payments which are
greater than 750% of the earnings or cash flow on which they are based and (ii)
provides that the maximum potential liability of F.Y.I. or any Subsidiary with
respect thereto is limited.
"Seller Subordinated Debt" means any Debt of F.Y.I. (and not of any
Subsidiary of F.Y.I.) which (a) is owed to a seller as part of the purchase
consideration for a Permitted Acquisition, (b) is subordinated to the
Obligations pursuant to a Subordination Agreement, (c) does not, when
aggregated with the principal balance of all other Seller Subordinated Debt,
exceed $10,000,000 in principal amount, (d) does not have an interest rate in
excess of twelve percent (12%) per annum, and (e) is unsecured. Seller
Subordinated Debt may be convertible into Capital Stock of F.Y.I.
"Solvency Certificate" means a certificate substantially in the form
of Exhibit F attached hereto.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for
AMENDED AND RESTATED CREDIT AGREEMENT - Page 22
<PAGE> 29
which such Person's Property would constitute unreasonably small capital after
giving due consideration to current and anticipated future capital requirements
and current and anticipated future business conduct and the prevailing practice
in the industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, such liabilities shall be computed at the
amount which, in light of the facts and circumstances existing at such time,
represents the amount (net of contribution rights) that can reasonably be
expected to become an actual or matured liability.
"Subordination Agreement" means a Subordination Agreement in the form
attached hereto as Exhibit C, relating to Seller Subordinated Debt.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the outstanding shares of stock or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors (or Persons performing similar
functions) of such corporation or entity (irrespective of whether or not at the
time, in the case of a corporation, stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries.
"Swingline Advances" means as specified in Section 2.1(a).
"Total Debt" means, at any particular time, the aggregate principal
amount of all Debt of F.Y.I. and its Subsidiaries outstanding, determined on a
consolidated basis.
"Total Debt to EBITDA Ratio" means as specified in Section 10.3.
"Total Senior Debt" means, at any particular time, the aggregate
principal amount of the Total Debt that is not Seller Subordinated Debt.
"Type" means any type of Loan (i.e., a Prime Rate Loan or Eurodollar
Loan).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas and/or any other jurisdiction, the laws of which may be applicable to or
in connection with the creation, perfection or priority of any Lien on any
Property created pursuant to any Security Document.
"UCP" means as specified in Section 2.14(b).
"U.S." means the United States of America.
"Wholly-Owned Subsidiary" means, with respect to any Person, a
Subsidiary of such Person all of whose outstanding Capital Stock (other than
directors' qualifying shares, if any) shall at the time be owned by such Person
and/or one or more of its Wholly-Owned Subsidiaries.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 23
<PAGE> 30
Section 1.2 Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof", "herein" and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. Unless
otherwise specified, all Article and Section references pertain to this
Agreement. Terms used herein that are defined in the UCC, unless otherwise
defined herein, shall have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP consistent with such accounting principles
applied in the preparation of the audited financial statements referred to in
Section 7.2(a). All financial information delivered to the Agent pursuant to
Section 8.1 shall be prepared in accordance with GAAP applied on a basis
consistent with such accounting principles applied in the preparation of the
audited financial statements referred to in Section 7.2(a) or in accordance
with Section 8.7. In the event that any "Accounting Changes" (as defined
below) occur and such changes result in a change in the method of calculation
of financial covenants, standards or terms in this Agreement, then F.Y.I. and
the Agent agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating F.Y.I.'s financial condition
shall be the same after such Accounting Changes as if such Accounting Changes
had not been made. Until such time as such an amendment shall have been
executed and delivered by F.Y.I., the Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" means: (a) changes in accounting principles required by
the promulgation of any rule, regulations, pronouncement or opinion by the
Financial Accounting Standards Board, the American Institute of Certified
Public Accounts or the Securities and Exchange Commission (or successors
thereto or agencies with similar functions) after the Closing Date; and (b)
changes in accounting principles approved by F.Y.I.'s certified public
accountants and implemented after the Closing Date.
(b) F.Y.I. shall deliver to the Agent and the Lenders, at the same
time as the delivery of any annual or quarterly financial statement under
Section 8.1, (i) a description, in reasonable detail, of any material variation
between the application of GAAP employed in the preparation of the next
preceding annual, quarterly or monthly financial statements as to which no
objection has been made in accordance with the last sentence of subsection (a)
preceding and (ii) reasonable estimates of the difference between such
statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in this Agreement (including Article 10 hereof),
neither F.Y.I. nor any of its Subsidiaries will change the last day of its
fiscal year from December 31, or the last days of the first three fiscal
quarters of F.Y.I. and its Subsidiaries in each of its fiscal years from that
existing on the Closing Date. Any Subsidiary of F.Y.I. created or acquired
after the Closing Date shall, as soon as reasonably practicable, be put on a
fiscal year ending December 31.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 24
<PAGE> 31
Section 1.4 Financial Covenants. The financial covenants
contained in Article 10 shall be calculated on a consolidated basis for F.Y.I.
and its Subsidiaries.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 25
<PAGE> 32
ARTICLE 2
Loans
Section 2.1 Commitments.
(a) Loans. Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make one or more revolving credit loans to
F.Y.I. from time to time from and including the Closing Date to but excluding
the Loans Termination Date up to but not exceeding the amount of such Lender's
Commitment as then in effect; provided, however, that (i) the Outstanding
Credit applicable to a Lender shall not at any time exceed the remainder of
such Lender's Commitment then in effect minus such Lender's Commitment
Percentage of the Swingline Advances then outstanding and (ii) the Outstanding
Credit of all Lenders shall not at any time exceed the remainder of the
Commitments then in effect minus the Swingline Advances then outstanding.
(Such revolving credit loans referred to in this Section 2.1(a) now or
hereafter made by the Lenders to F.Y.I. from and including and after the
Closing Date are hereinafter collectively called the "Loans".) All loans made
by the Lenders (as defined in this Agreement or the Prior Agreement) or their
predecessors in interest to F.Y.I. or any Subsidiary of F.Y.I. under the Prior
Agreement that are outstanding as of the Closing Date shall hereafter be Loans
hereunder and shall be deemed to have been made to F.Y.I. under this Agreement.
Subject to the foregoing limitations and the other terms and conditions of this
Agreement, F.Y.I. may, prior to the Loans Termination Date, borrow, repay and
reborrow the Loans hereunder. Notwithstanding anything to the contrary
contained in this Agreement, F.Y.I. may from time to time request, and Paribas
may at its discretion from time to time advance (but shall in no event be
obligated to advance), Loans which are to be funded solely by Paribas (the
"Swingline Advances"); provided, however, that (A) the aggregate principal
amount of the Swingline Advances outstanding at any time shall not exceed
$1,000,000 and the aggregate principal amount of the Loans outstanding at any
time (inclusive of the Swingline Advances) shall not exceed the aggregate
principal amount of the Commitments, (B) all Swingline Advances shall be and
shall remain as Prime Rate Loans, and (C) Paribas shall give the Agent and each
Lender written notice of the aggregate outstanding principal amount of the
Swingline Advances upon the written request of the Agent or any Lender (but no
more often than once every calendar quarter). Furthermore, upon one Business
Day's prior written notice given by Paribas to the Agent and the other Lenders
at any time and from time to time (including, without limitation, at any time
following the occurrence of a Default or an Event of Default) and, in any event
and without the necessity of any such notice, on the Business Day immediately
preceding the Loans Termination Date, each Lender (including, without
limitation, Paribas) severally agrees, as provided in the first sentence of
this Section 2.1(a), and notwithstanding anything to the contrary contained in
this Agreement, the existence of any Default or Event of Default or the
inability or failure of F.Y.I. or any of its Subsidiaries or any other Loan
Party to satisfy any condition precedent to funding any of the Loans contained
in Article 6 (which conditions precedent shall not apply to this sentence), to
make a Loan, in the form of a Prime Rate Loan, in an amount equal to its
Commitment Percentage of the aggregate principal amount of the Swingline
Advances then outstanding, and the proceeds of such Loans shall be promptly
paid
AMENDED AND RESTATED CREDIT AGREEMENT - Page 26
<PAGE> 33
by the Agent to Paribas and applied as a repayment of the aggregate principal
amount of the Swingline Advances then outstanding.
(b) Continuation and Conversion of Loans. Subject to the terms
and conditions of this Agreement, F.Y.I. may borrow the Loans as Prime Rate
Loans or as Eurodollar Loans (except for Loans which constitute Swingline
Advances) and, until the Loans Maturity Date, may Continue Eurodollar Loans or
Convert Loans (other than Loans which constitute Swingline Advances) of one
Type into Loans of the other Type.
(c) Lending Offices. Loans of each Type made by each Lender shall
be made and maintained at such Lender's Applicable Lending Office for Loans of
such Type.
(d) Refinancing of Prior Loans. Notwithstanding anything to the
contrary contained in this Agreement, all Revolving Credit Loans (as defined in
the Prior Agreement) which are outstanding under the Prior Agreement as of the
Closing Date shall be automatically refinanced by Loans made under this
Agreement as of the Closing Date and, accordingly, Loans in the aggregate
principal amount equal to the aggregate principal amount of such Revolving
Credit Loans shall be, as of the Closing Date, outstanding under this
Agreement.
Section 2.2 Notes.
(a) Unregistered Notes. The Loans made by each Lender shall be
evidenced by a single promissory note of F.Y.I. in substantially the form of
Exhibit B hereto, dated the Closing Date, payable to the order of such Lender
in a principal amount equal to its Commitment (as originally in effect or
thereafter increased) and otherwise duly completed; provided, however, that the
Swingline Advances made by Paribas shall be evidenced by a single promissory
note of F.Y.I. in the maximum original principal amount of $1,000,000 payable
to the order of Paribas in substantially the form of Exhibit D hereto, dated
the Closing Date. Each Lender is hereby authorized by F.Y.I. to endorse on the
schedule (or a continuation thereof) attached to the Note of such Lender, to
the extent applicable, the date, amount and Type of and the Interest Period for
each Loan made by such Lender to F.Y.I. and the amount of each payment or
prepayment of principal of such Loan received by such Lender, provided that any
failure by such Lender to make any such endorsement shall not affect the
obligations of F.Y.I. under such Note or this Agreement in respect of such
Loan.
(b) Registered Notes. Any Lender that is not a U.S. Person and
that could become completely exempt from withholding of U.S. taxes in respect
of payment of any Obligations due to such Lender hereunder relating to any of
its Loans if such Loans were in registered form for U.S. Federal income tax
purposes may request F.Y.I. (through the Agent), to exchange such Lender's Note
evidencing its Loans for a promissory note or notes registered as provided in
Section 13.8(h) hereof (a "Registered Note"). Registered Notes may not be
exchanged for Notes that are not in registered form.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 27
<PAGE> 34
Section 2.3 Repayment of Loans. F.Y.I. shall pay to the Agent
for the account of each applicable Lender the outstanding principal of the
Loans existing as of the Loans Termination Date (and the outstanding principal
of the Loans existing as of the Loans Termination Date shall be due and
payable) in eight (8) quarterly installments as follows:
(a) On each of the first seven (7) Quarterly Dates
following the Loans Termination Date, F.Y.I. shall pay to the Agent
an amount equal to the quotient of the Outstanding Credit as of the
Loans Termination Date divided by twenty (20); and
(b) On the Loans Maturity Date, F.Y.I. shall pay to the
Agent an amount equal to the aggregate outstanding principal amount of
all Loans.
For purposes of this Section 2.3, the aggregate undrawn face amount of all
Letters of Credit and the aggregate amount of the outstanding Reimbursement
Obligations shall be added to the outstanding principal balance of the Loans
for purposes of determining the amount F.Y.I. must pay to the Agent under this
Section 2.3. More specifically, if any Letters of Credit or Reimbursement
Obligations are outstanding as of the Loans Maturity Date, then, in addition to
the repayment of all outstanding Loans on the Loans Maturity Date, F.Y.I. shall
deliver to the Agent cash or cash equivalents in an amount equal to the
aggregate undrawn face amount of all Letters of Credit and the aggregate amount
of all outstanding Reimbursement Obligations, such cash or cash equivalents to
be pledged to the Agent as security for the Obligations pursuant to
documentation satisfactory to the Agent in form and substance.
Section 2.4 Interest.
(a) Interest Rate. F.Y.I. shall pay to the Agent for the account
of each Lender interest on the unpaid principal amount of each Loan made by
such Lender to F.Y.I. for the period commencing on the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(i) during the periods such Loan is a Prime Rate Loan,
the lesser of (A) the Prime Rate plus the Applicable Margin or (B) the
Maximum Rate; and
(ii) during the periods such Loan is a Eurodollar Loan,
the lesser of (A) the Eurodollar Rate plus the Applicable Margin or
(B) the Maximum Rate.
(b) Payment Dates. Accrued interest on the Loans shall be due and
payable in arrears as follows:
(i) in the case of Prime Rate Loans, on each Quarterly
Date;
(ii) in the case of each Eurodollar Loan, on the last day
of the Interest Period with respect thereto and, in the case of a
Eurodollar Loan having an Interest Period of six (6)
AMENDED AND RESTATED CREDIT AGREEMENT - Page 28
<PAGE> 35
months, on the day in the third succeeding calendar month numerically
corresponding to the commencement date of such Interest Period (or, if
no numerically corresponding date exists, on the last Business Day of
such third succeeding calendar month);
(iii) upon the payment or prepayment of any Loan or the
Conversion of any Loan to a Loan of the other Type (but only on the
principal amount so paid, prepaid or Converted); and
(iv) on the Loans Maturity Date.
(c) Default Interest. Notwithstanding the foregoing, F.Y.I. shall
pay to the Agent for the account of each Lender interest at the applicable
Default Rate on any principal of any Loan made by such Lender, any
Reimbursement Obligation owing to such Lender and (to the fullest extent
permitted by law) any other amount payable by F.Y.I. under this Agreement or
any other Loan Document to such Lender, which is not paid in full when due
(whether at stated maturity, by acceleration or otherwise) or which is
outstanding during the continuance of an Event of Default, for the period from
and including the due date thereof or the date of the occurrence of such Event
of Default (as applicable) to but excluding the date the same is paid in full.
Interest payable at the Default Rate shall be payable from time to time on
demand by the Agent.
Section 2.5 Borrowing Procedure. F.Y.I. shall give the Agent
notice of each borrowing hereunder in accordance with Section 2.9. Not later
than 12:00 noon (Chicago, Illinois time) on the date specified for each
borrowing hereunder, each Lender will make available the amount of the Loan to
be made by it on such date to the Agent, at the Principal Office, in
immediately available funds, for the account of F.Y.I. The amount so received
by the Agent shall, subject to the terms and conditions of this Agreement, be
made available to F.Y.I. by wire transfer of immediately available funds to the
applicable Deposit Account no later than 1:00 p.m.
Section 2.6 Optional Prepayments, Conversions and Continuations
of Loans, Reduction of Commitments. Subject to Sections 2.7 and 2.8, F.Y.I.
shall have the right from time to time to prepay the Loans, to Convert all or
part of a Loan (other than a Swingline Advance) of one Type into a Loan of
another Type or to Continue Eurodollar Loans; provided that: (a) F.Y.I. shall
give the Agent notice of each such prepayment, Conversion or Continuation as
provided in Section 2.9, (b) Eurodollar Loans may only be Converted on the last
day of the Interest Period, unless F.Y.I., concurrently with making any such
prepayment, pays all amounts owing to the Agent and the Lenders under Section
4.5, (c) except for Conversions of Eurodollar Loans into Prime Rate Loans, no
Conversions or Continuations shall be made while a Default has occurred and is
continuing, (d) optional prepayments of the Loans shall be applied first to the
Swingline Advances (until such advances are paid in full) and then to the Loans
other than the Swingline Advances, and (e) optional prepayments of the Loans
made on or after the Loans Termination Date shall be applied to the
then-remaining installments of principal of the Loans pro rata.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 29
<PAGE> 36
Section 2.7 Mandatory Prepayments.
(a) Asset Dispositions. F.Y.I. shall, within two Business Days
after each day on which it or any of its Subsidiaries receives any Net Proceeds
from an Asset Disposition, pay to the Agent, as a prepayment of the Loans, an
aggregate amount equal to 100% of the Net Proceeds from such Asset Disposition.
Notwithstanding the foregoing, no such prepayment will be required pursuant to
this Section 2.7(a) (i) from the Net Proceeds from any single Asset Disposition
of used equipment if such Net Proceeds are $250,000 or less and are fully
re-invested in equipment used in the ordinary course of the business of the
Person making such Asset Disposition within 180 days of such Asset Disposition,
so long as the Net Proceeds from all such Asset Dispositions in any one
calendar year do not exceed $250,000, (ii) from the Net Proceeds of any
expropriation or condemnation of real Property if and to the extent that such
Net Proceeds are, as a result of such expropriation or condemnation,
re-invested in similar real Property or used to modify other then-existing real
Property used in the ordinary course of the business of the Person whose real
Property is affected thereby within 180 days of receipt of proceeds of such
expropriation or condemnation or (iii) until the cumulative Net Proceeds
received at any time from all Asset Dispositions made on or after December 31,
1997 exceeds 15% of F.Y.I.'s consolidated tangible net assets as of the date of
such Asset Disposition (in which case a prepayment shall be made in the amount
of the Net Proceeds from any Asset Disposition in excess of such amount, or if,
as of the date of determination, cumulative Net Proceeds from prior Asset
Dispositions exceed 15% of F.Y.I.'s consolidated tangible net assets, F.Y.I.
shall pay to the Agent, as a prepayment of the Loans, in addition to 100% of
the Net Proceeds from such Asset Disposition, the amount of such cumulative Net
Proceeds from prior Asset Dispositions in excess of 15% of F.Y.I.'s
consolidated tangible net assets). Notwithstanding the foregoing, in
connection with any Asset Disposition consisting of the disposition of assets
acquired in a Permitted Acquisition, to the extent that the disposition of such
assets was contemplated and disclosed to the Lenders at the time of the
consummation of the Permitted Acquisition in which the assets were acquired,
and if such Asset Disposition occurs within one year of the closing of the
Permitted Acquisition, the prepayment required under this Section 2.7(a) shall
be limited to the lesser of 100% of the Net Proceeds of the Asset Disposition
or an amount equal to the principal amount of any Loans advanced in connection
with the Permitted Acquisition.
(b) Equity Issuances. F.Y.I. shall, on each day that it receives
any Net Proceeds from any Equity Issuance, pay to the Agent, as a prepayment of
the Loans, an aggregate amount equal to 50% of the Net Proceeds from such
Equity Issuance; provided, however, that no prepayment shall be required if and
to the extent that the Capital Stock issued in such Equity Issuance is (i)
issued to a Seller as part of the purchase consideration for a Permitted
Acquisition, (ii) issued to raise cash to pay part of the purchase
consideration for a specific Permitted Acquisition contemplated at the time of
such issuance and the proceeds of which are subsequently expended for such
purpose, or (iii) issued to an officer, director, employee or consultant of
either F.Y.I. or a Subsidiary of F.Y.I. in consideration for services rendered
or pursuant to any employee benefit or incentive plan. This Section 2.7(b)
shall not apply if the Total Debt to EBITDA Ratio is less than 2.00 to 1.00
after giving effect to the Equity Issuance and to application of proceeds
thereof.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 30
<PAGE> 37
(c) Debt Issuances. F.Y.I. shall, on each day that it or any of
its Subsidiaries receives any Net Proceeds from any Debt Issuance, pay to the
Agent, as a prepayment of the Loans, an aggregate amount equal to 100% of the
Net Proceeds from such Debt Issuance. No Debt Issuances may be made without
the prior written consent of the Agent and the Required Lenders.
(d) Commitments. If at any time the Outstanding Credit exceeds
the Commitments, within three Business Day after the occurrence thereof F.Y.I.
shall pay to the Agent the amount of such excess as a prepayment of the Loans
(or, if the Loans have been paid in full, to reduce or to provide cash
collateral to secure the outstanding Letter of Credit Liabilities relating to
Letters of Credit issued pursuant to the Commitments).
(e) Application of Mandatory Prepayments. All prepayments
pursuant to Sections 2.7(a), 2.7(b) or 2.7(c) preceding (i) if made prior to
the Loans Termination Date, shall be applied first to any Swingline Advances
until such advances are paid in full, and (ii) if made on or after the Loans
Termination Date, shall be applied to the then- remaining installments of
principal of the Loans in the inverse order of the maturities of such
installments.
Section 2.8 Minimum Amounts. Except for Conversions and
prepayments pursuant to Section 2.7 and Article 4, each borrowing, each
Conversion and each prepayment of principal of the Loans shall be in an amount
at least equal to $1,000,000 or an integral multiple of $500,000 in excess
thereof; provided, however, that each borrowing of Swingline Advances shall be
in an amount at least equal to $100,000 or in integral multiples of $50,000 in
excess thereof (borrowings, prepayments or Conversions of or into Loans of
different Types or, in the case of Eurodollar Loans, having different Interest
Periods at the same time hereunder shall be deemed separate borrowings,
prepayments and Conversions for purposes of the foregoing, one for each Type or
Interest Period).
Section 2.9 Certain Notices. Notices by F.Y.I. to the Agent of
terminations or reductions of Commitments, of borrowings and issuances of
Letters of Credit, Conversions, Continuations and prepayments of Loans and of
the duration of Interest Periods shall be irrevocable and shall be effective
only if received by the Agent not later than 12:00 noon (Chicago, Illinois
time) on the Business Day prior to or on the date of the relevant termination,
reduction, borrowing or issuance, Conversion, Continuation or prepayment or the
first day of such Interest Period specified below:
AMENDED AND RESTATED CREDIT AGREEMENT - Page 31
<PAGE> 38
<TABLE>
<CAPTION>
Number of
Notice Business Days Prior
------ -------------------
<S> <C>
Terminations or Reductions of Commitments 1
Borrowing of Prime Rate Loans same day
Borrowing of Eurodollar Loans 3
Conversions or Continuations of Loans 3
Prepayment of Prime Rate Loans same day
Prepayments of Eurodollar Loans 3
Issuances of Letters of Credit 5
</TABLE>
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 2.8 hereof)
and Type of the Loans to be borrowed (and, with respect to Prime Rate Loans,
whether any of such Loans shall consist of Swingline Advances), Converted,
Continued or prepaid (and, in the case of a Conversion, the Type of Loans to
result from such Conversion) and the date of borrowing, Conversion,
Continuation or prepayment (which shall be a Business Day). Notices of
borrowings, Conversions, Continuations or prepayments shall be in the form of
Exhibit E hereto, appropriately completed as applicable. Each such notice of
the duration of an Interest Period shall specify the Loans to which such
Interest Period is to relate. The Agent shall promptly notify the Lenders of
the contents of each such notice. In the event F.Y.I. fails to select the Type
of Loan, or the duration of any Interest Period for any Eurodollar Loan, within
the time period and otherwise as provided in this Section 2.9, such Loan (if
outstanding as Eurodollar Loan) will be automatically Converted into a Prime
Rate Loan on the last day of preceding Interest Period for such Loan or (if
outstanding as a Prime Rate Loan) will remain as, or (if not then outstanding)
will be made as, a Prime Rate Loan. F.Y.I. may not borrow any Eurodollar
Loans, Convert any Loans into Eurodollar Loans or Continue any Loans as
Eurodollar Loans if the interest rate for such Eurodollar Loans would exceed
the Maximum Rate.
Section 2.10 Use of Proceeds.
(a) F.Y.I. represents and warrants to and covenants with the Agent
and the Lenders that the proceeds of the Loans to be made on and after the
Closing Date shall be used for working capital and general corporate purposes
of F.Y.I. and its Subsidiaries in the ordinary course of business and to
finance partially or wholly future Permitted Acquisitions, including the
transaction costs of F.Y.I. and its Subsidiaries associated with such Permitted
Acquisitions.
(b) None of the proceeds of any Loan have been or will be used to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as
AMENDED AND RESTATED CREDIT AGREEMENT - Page 32
<PAGE> 39
amended, or to purchase or carry any margin stock (within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System).
Section 2.11 Fees.
(a) F.Y.I. agrees to pay to the Agent for the account of each
Lender a commitment fee (the "Commitment Fees") on the daily average unused or
unfunded amount of such Lender's Commitment, for the period from and including
the Closing Date to and including the Loans Termination Date, at the rate equal
to the Applicable Margin per annum based on a 360 day year and the actual
number of days elapsed, which accrued Commitment Fees shall be payable in
arrears on each Quarterly Date beginning on March 31, 1998 and on the Loans
Termination Date. Notwithstanding anything to the contrary contained in this
Agreement, any and all Swingline Advances outstanding from time to time shall
be wholly excluded, and shall not count as used or funded amounts, for purposes
of determining the unused or unfunded amount of each Lender's Commitment in
accordance with this Section 2.11(a).
(b) F.Y.I. agrees to pay to the Agent (for the account of the
Agent and/or the Lenders, as may be specified in the Fee Letter) such
additional fees as are specified in the Fee Letter, which fees shall be payable
in such amounts and on such dates as are specified therein.
Section 2.12 Computations. Interest and fees payable by F.Y.I.
hereunder and under the other Loan Documents shall be computed on the basis of
a year of 360 days (except as stated in the proviso below) and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which payable unless, in the case of interest, such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be;
provided, however, that interest payable by F.Y.I. hereunder on all Prime Rate
Loans shall be on the basis of a completed year of 365 or 366 days, as
applicable.
Section 2.13 Termination or Reduction of Commitments.
(a) Optional. F.Y.I. shall have the right to terminate or reduce
in part the unused portion of the Commitments at any time and from time to
time, provided that (i) F.Y.I. shall give notice of each such termination or
reduction as provided in Section 2.9, (ii) each partial reduction shall be in
an aggregate amount of at least $1,000,000 or an integral multiple of $500,000
in excess thereof, and (iii) F.Y.I. shall not have the right to terminate or
reduce in part any unused portion of the Commitments that could or may be
required to be advanced by the Lenders to refinance Swingline Advances then
outstanding. The Commitments may not be reinstated or increased after they
have been terminated or reduced.
(b) Mandatory. Each mandatory prepayment of the Loans pursuant to
Section 2.7 shall permanently reduce the Commitments by the amount of the
prepayment, which reduction may not be reinstated.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 33
<PAGE> 40
Section 2.14 Letters of Credit.
(a) Subject to the terms and provisions of this Agreement, F.Y.I.
may utilize the Commitments by requesting that the Issuing Bank issue Letters
of Credit; provided, that the aggregate amount of outstanding Letter of Credit
Liabilities under the Commitments shall not at any time exceed $17,500,000.
Notwithstanding anything to the contrary contained in this Agreement, each of
the letters of credit issued under or in connection with the Prior Agreement
and outstanding as of the Closing Date and the B of A Letter of Credit shall be
deemed, and shall be, a Letter of Credit issued hereunder. Promptly after the
Closing Date, Bank of America Texas will return to Paribas the letter of credit
issued by Paribas on January 28, 1998, in support of the B of A Letter of
Credit. Upon the later of (i) the date of this Agreement or (ii) the date of
issue of each Letter of Credit, the Issuing Bank shall be deemed, without
further action by any party hereto, to have sold to each Lender, and each
Lender shall be deemed, without further action by any party hereto, to have
purchased from the Issuing Bank, a participation to the extent of such Lender's
Commitment Percentage in such Letter of Credit.
(b) F.Y.I. shall give the Issuing Bank (with a copy to the Agent)
at least five Business Days irrevocable prior notice (effective upon receipt)
specifying the date of each Letter of Credit and the nature of the transactions
to be supported thereby. Upon receipt of such notice the Issuing Bank shall
promptly notify each applicable Lender of the contents thereof and of such
Lender's Commitment Percentage of the amount of the proposed Letter of Credit.
Each Letter of Credit shall have an expiration date that does not exceed one
year from the date of issuance (provided, however, that the B&B Letter of
Credit may have an expiration date that is up to eighteen months after the date
of issuance and the B of A Letter of Credit may have an expiration date that
extends to March 31, 2003) and that does not extend beyond the Loans Maturity
Date, shall be payable in Dollars, shall support a transaction entered into in
the ordinary course of the account party's or parties' business, shall be
satisfactory in form and substance to the Issuing Bank, and shall be issued
pursuant to such agreements, documents and instruments (including a Letter of
Credit Agreement) as the Issuing Bank may reasonably require, none of which
shall be inconsistent with this Section 2.14. Each Letter of Credit shall (i)
provide for the payment of drafts presented for, on or thereunder by the
beneficiary in accordance with the terms thereof, when such drafts are
accompanied by the documents (if any) described in the Letter of Credit and
(ii) to the extent not inconsistent with the terms hereof or any applicable
Letter of Credit Agreement, be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (together with any subsequent revision thereof approved by
a Congress of the International Chamber of Commerce and adhered to by the
Issuing Bank, the "UCP"), and shall, as to matters not governed by the UCP, be
governed by, and construed and interpreted in accordance with, the laws of the
State of Texas.
(c) F.Y.I. agrees to pay to the Agent for the account of each
Lender, in arrears on each Quarterly Date beginning on March 31, 1998 and on
the Loans Maturity Date, a nonrefundable letter of credit fee with respect to
each Letter of Credit issued in an amount equal to the product of (i) the
Applicable Margin for Eurodollar Loans in effect on the date of issuance of
such Letter of Credit
AMENDED AND RESTATED CREDIT AGREEMENT - Page 34
<PAGE> 41
(with respect to the fee due on the first Quarterly Date after issuance) or on
the first day of the applicable quarter or other period beginning after the
calendar quarter during which the issuance of such Letter of Credit occurred
(with respect to the fee due on each subsequent Quarterly Date or on the Loans
Maturity Date), multiplied by (ii) the daily average face amount of the Letters
of Credit in effect during the applicable period. The Agent agrees to pay to
each Lender, promptly after receiving any payment of letter of credit fees
referred to above in this subsection (c), such Lender's Commitment Percentage
of such fees. F.Y.I. further agrees to pay to the Issuing Bank for its own
account, on the date of issuance of such Letter of Credit and on each
anniversary of such date of issuance (if such Letter of Credit then remains
outstanding), an amount equal to the greater of one-quarter of one percent
(0.25%) of the face amount of the Letter of Credit being issued or $750.00. In
addition to the foregoing fees, F.Y.I. shall pay or reimburse the Issuing Bank
for such normal and customary costs and expenses, including, without
limitation, administrative, issuance, amendment, payment and negotiation
charges, as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(d) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment or other drawing under such Letter of Credit, the
Issuing Bank shall promptly notify F.Y.I. and each applicable Lender as to the
amount to be paid as a result of such demand or drawing and the respective
payment date. If at any time the Issuing Bank shall make a payment to a
beneficiary of a Letter of Credit pursuant to a drawing under such Letter of
Credit, each Lender will pay to the Issuing Bank, immediately upon the Issuing
Bank's demand at any time commencing after such payment until reimbursement
therefor in full by F.Y.I., an amount equal to such Lender's Commitment
Percentage of such payment, together with interest on such amount for each day
from the date of such payment to the date of payment by such Lender of such
amount at a rate of interest per annum equal to the Federal Funds Rate.
(e) F.Y.I. shall be irrevocably and unconditionally obligated to
immediately reimburse the Issuing Bank for any amounts paid by the Issuing Bank
upon any drawing under any Letter of Credit issued pursuant to the Commitments,
without presentment, demand, protest or other formalities of any kind. The
Issuing Bank will pay to each Lender such Lender's Commitment Percentage of all
amounts received from or on behalf of F.Y.I. for application in payment, in
whole or in part, of the Reimbursement Obligation in respect of any Letter of
Credit, but only to the extent such Lender has made payment to the Issuing Bank
in respect of such Letter of Credit pursuant to subsection (d) above.
Outstanding Reimbursement Obligations shall bear interest at the Default Rate
and such interest shall be payable on demand.
(f) The Reimbursement Obligations of F.Y.I. under this Agreement
and the other Loan Documents shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and the other Loan Documents under all circumstances whatsoever, including,
without limitation, the following circumstances.
(i) Any lack of validity or enforceability of any Letter
of Credit or any other Loan Document;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 35
<PAGE> 42
(ii) Any amendment or waiver of or any consent to
departure from any Loan Document;
(iii) The existence of any claim, setoff, counterclaim,
defense or other right which any Loan Party or other Person may have
at any time against any beneficiary of any Letter of Credit, the
Agent, the Issuing Bank, the Lenders or any other Person, whether, in
connection with this Agreement or any other Loan Document or any
unrelated transaction;
(iv) Any statement, draft or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever, provided, that the failure of
the Issuing Bank to discover such forgery, fraud, invalidity or
insufficiency shall not have constituted gross negligence or willful
misconduct by the Issuing Bank;
(v) Payment by the Issuing Bank under any Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit, provided, that such
payment shall not have constituted gross negligence or willful
misconduct of the Issuing Bank; and
(vi) Any other circumstance whatsoever, whether or not
similar to any of the foregoing, provided that such other circumstance
or event shall not have been the result of the gross negligence or
willful misconduct of the Issuing Bank.
(g) F.Y.I. assumes all risks of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Agent, the Issuing Bank, the Lenders nor any of their
respective officers or directors shall have any responsibility or liability to
F.Y.I. or any other Person for: (i) the failure of any draft to bear any
reference or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any Person
to surrender or to take up any Letter of Credit or to send documents apart from
drafts as required by the terms of any Letter of Credit, or the failure of any
Person to note the amount of any instrument on any Letter of Credit, (ii)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, (iii) in the absence of gross negligence or willful misconduct of the
Issuing Bank, the validity, sufficiency or genuineness of any draft or other
document, or any endorsement(s) thereon, even if any such draft, document or
endorsement should in fact prove to be in any and all respects invalid,
insufficient, fraudulent or forged or any statement therein is untrue or
inaccurate in any respect, (iv) the payment by the Issuing Bank to the
beneficiary of any Letter of Credit against presentation of any draft or other
document that does not comply with the terms of the Letter of Credit, or (v)
any other circumstance whatsoever in making or failing to make any payment
under a Letter of Credit; provided, however, that, notwithstanding the
foregoing, the account party or parties shall have a claim against the Issuing
Bank, and the Issuing Bank shall be liable to the account party or parties, to
the extent of any direct, but not indirect or consequential, damages suffered
by the account party or parties which it or they prove in a final nonappealable
judgment were caused by (A) the Issuing Bank's willful misconduct or gross
negligence in
AMENDED AND RESTATED CREDIT AGREEMENT - Page 36
<PAGE> 43
determining whether documents presented under any Letter of Credit complied
with the terms thereof or (B) the Issuing Bank's willful failure to pay under
any Letter of Credit after presentation to it of documents strictly complying
with the terms and conditions of such Letter of Credit. The Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
ARTICLE 3
Payments
Section 3.1 Method of Payment. All payments of principal,
interest, fees and other amounts to be made by the F.Y.I. under this Agreement
and the other Loan Documents shall be made to the Agent at the Principal Office
for the account of each Lender's Applicable Lending Office in Dollars and in
immediately available funds, without setoff, deduction or counterclaim, not
later than 11:00 a.m. (Chicago, Illinois time) on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day).
F.Y.I. shall, at the time of making any such payment, specify to the Agent the
sums payable by F.Y.I. under this Agreement and the other Loan Documents to
which such payment is to be applied (and in the event that F.Y.I. fails to so
specify, or if an Event of Default has occurred and is continuing, the Agent
may apply such payment to the Obligations in such order and manner as the Agent
may elect, subject to Section 3.2); provided, however, that, unless Paribas
expressly agrees to the contrary, such payment shall be applied first to any
Swingline Advances until such advances are paid in full. Upon the occurrence
and during the continuation of an Event of Default, all proceeds of any
Collateral, and all funds from time to time on deposit in any concentration
account or any collection account, if any, referred to in Section 8.13, may be
applied by the Agent to the Obligations in such order and manner as the Agent
may elect, subject to Section 3.2; provided, however, that, unless Paribas
expressly agrees to the contrary, such proceeds and funds shall be applied
first to any outstanding Swingline Advances until such advances are paid in
full. Each payment received by the Agent under this Agreement or any other
Loan Document for the account of a Lender shall be paid promptly to such
Lender, in immediately available funds, for the account of such Lender's
Applicable Lending Office. Whenever any payment under this Agreement or any
other Loan Document shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest and commitment fee, as the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise
provided in this Agreement: (a) each Loan shall be made by the Lenders under
Section 2.1, each payment of commitment fees under Section 2.11(a) shall be
made for the account of the Lenders, and each termination or reduction of the
Commitments under Section 2.13 shall be applied to the Commitments of the
Lenders, pro rata according to the respective unused Commitments; (b) the
making, Conversion and Continuation of Loans of a particular Type (other than
Conversions
AMENDED AND RESTATED CREDIT AGREEMENT - Page 37
<PAGE> 44
provided for by Section 4.4) shall be made pro rata among the Lenders holding
Loans of such Type according to the amounts of their respective Commitments;
(c) each payment and prepayment by F.Y.I. of principal of or interest on Loans
of a particular Type shall be made to the Agent for the account of the Lenders
holding Loans of such Type pro rata in accordance with the respective unpaid
principal amounts of such Loans held by such Lenders; (d) Interest Periods for
Loans of a particular Type shall be allocated among the Lenders holding Loans
of such Type pro rata according to the respective principal amounts held by
such Lenders; and (e) the Lenders (other than the Issuing Bank) shall purchase
participations in the Letters of Credit pro rata in accordance with their
Commitment Percentages.
Section 3.3 Sharing of Payments, Etc. If a Lender shall obtain
payment of any principal of or interest on any of the Obligations due to such
Lender hereunder through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from
the other Lenders participations in the Obligations held by the other Lenders
in such amounts, and make such adjustments from time to time as shall be
equitable to the end that all the Lenders shall share pro rata in accordance
with the unpaid principal and interest on the Obligations then due to each of
them. To such end, all of the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if all or any
portion of such excess payment is thereafter rescinded or must otherwise be
restored. F.Y.I. agrees, to the fullest extent it may effectively do so under
applicable law, that any Lender, so purchasing a participation in the
Obligations by the other Lenders may exercise all rights of setoff, banker's
lien, counterclaim or similar rights with respect to such participation as
fully as if such Lender were a direct holder of Obligations in the amount of
such participation. Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness, liability or obligation of F.Y.I. or any of its Subsidiaries.
Section 3.4 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Lender or F.Y.I. (the "Payor") prior to the date
on which such Lender is to make payment to the Agent of the proceeds of a Loan
to be made by it hereunder or F.Y.I. is to make a payment to the Agent for the
account of one or more of the Lenders, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Federal Funds Rate for
such period.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 38
<PAGE> 45
Section 3.5 Withholding Taxes.
(a) All payments by F.Y.I. of principal of and interest on the
Loans and of all fees and other amounts payable under the Loan Documents shall
be made free and clear of, and without deduction by reason of, any present or
future taxes, levies, duties, imposts, assessments or other charges levied or
imposed by any Governmental Authority (other than taxes on the overall net
income of any Lender). If any such taxes, duties, imposts, assessments or
other charges are so levied or imposed, F.Y.I. will (i) make additional
payments in such amounts so that every net payment of principal of and interest
on the Loans and of all other amounts payable by it under the Loan Documents,
after withholding or deduction for or on account of any such present or future
taxes, duties, imposts, assessments or other charges (including any tax imposed
on or measured by net income of a Lender attributable to payments made to or on
behalf of a Lender pursuant to this Section 3.5 and any penalties or interest
attributable to such payments), will not be less than the amount provided for
herein or therein absent such withholding or deduction (provided that F.Y.I.
shall not have any obligation to pay such additional amounts to any Lender to
the extent that such taxes, duties, imposts, assessments or other charges are
levied or imposed by reason of the failure of such Lender to comply with the
provisions of Section 3.6), (ii) make such withholding or deduction, and (iii)
remit the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law. Without limiting the generality
of the foregoing, F.Y.I. will, upon written request of any Lender, reimburse
each such Lender for the amount of (A) such taxes, duties, imports, assessments
or other charges so levied or imposed by any Governmental Authority and paid by
such Lender as a result of payments made by F.Y.I. under or with respect to the
Loans and Letter of Credit Liabilities other than such taxes, duties, imports,
assessments and other charges previously withheld or deducted by F.Y.I. which
have previously resulted in the payment of the required additional amount to
the Lender, and (B) such taxes, duties, assessments and other charges so levied
or imposed with respect to any Lender reimbursement under the foregoing clause
(A), so that the net amount received by such Lender (net of payments made under
or with respect to the Loans and Letter of Credit Liabilities) after such
reimbursement will not be less than the net amount the Lender would have
received if such taxes, duties, assessments and other charges on such
reimbursement had not been levied or imposed. F.Y.I. shall furnish promptly to
the Agent for distribution to each affected Lender, as the case may be, upon
request of such Lender, official receipts evidencing any such payment,
withholding or reduction.
(b) F.Y.I. will indemnify the Agent and each Lender (without
duplication) against, and reimburse the Agent and each Lender for, all present
and future taxes, levies, duties, imposts, assessments or other charges
(including interest and penalties) levied or collected (whether or not legally
or correctly imposed, assessed, levied or collected), excluding, however, any
taxes imposed on the overall net income of the Agent or such Lender or any
lending office of the Agent or such Lender by any jurisdiction in which the
Agent or such Lender or any such lending office is located, on or in respect of
this Agreement, any of the Loan Documents or the Obligations or any portion
thereof (the "reimbursable taxes"). Any such indemnification shall be on an
after-tax basis, taking into account any such reimbursable taxes imposed on the
amounts paid as indemnity.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 39
<PAGE> 46
(c) Without prejudice to the survival of any other term or
provision of this Agreement, the obligations of F.Y.I. under this Section 3.5
shall survive the payment of the Loans and the other Obligations and
termination of the Commitments.
Section 3.6 Withholding Tax Exemption. Each Lender that is not
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Closing Date or the date upon
which it becomes a party to this Agreement and if it is legally able to do so,
deliver to F.Y.I., for and on behalf of F.Y.I., and the Agent two duly
completed copies of U.S. Internal Revenue Service Form 1001, 4224 or W-8, as
appropriate, certifying in any case that such Lender is entitled to receive
payments from F.Y.I. under any Loan Document without deduction or withholding
of any U.S. federal income taxes. Each Lender which so delivers a Form 1001,
4224 or W-8 further undertakes to deliver to F.Y.I., for and on behalf of
F.Y.I., and the Agent two additional copies of such form (or a successor form)
on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by F.Y.I. or the Agent, in each case certifying that such
Lender is entitled to receive payments from F.Y.I. under any Loan Document
without deduction or withholding of any U.S. federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises F.Y.I., for and on behalf of F.Y.I., and the Agent that it
is not capable of receiving such payments without any deduction or withholding
of U.S. federal income tax.
Section 3.7 Reinstatement of Obligations. Notwithstanding
anything to the contrary contained in this Agreement or any other Loan
Document, if the payment of any amount of principal of or interest with
respect to the Loans, the Reimbursement Obligations or any other amount of the
Obligations, or any portion thereof, is rescinded, voided or must otherwise be
refunded by the Agent, any Lender or the Issuing Bank upon the insolvency,
bankruptcy or reorganization of F.Y.I. or any other Loan Party or otherwise for
any reason whatsoever, then each of (a) the Obligations, (b) the Loan Documents
(including, without limitation, this Agreement, the Notes and the Security
Documents), (c) the indebtedness, liabilities and obligations of F.Y.I. and any
other Loan Party under the Loan Documents, and (d) all Liens for the benefit of
the Agent and the Lenders created under or evidenced by the Loan Documents,
will be automatically reinstated and become automatically effective and in full
force and effect, all to the extent that and as though such payment so
rescinded, voided or otherwise refunded had never been made.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 40
<PAGE> 47
ARTICLE 4
Yield Protection and Illegality
Section 4.1 Additional Costs.
(a) F.Y.I. shall pay directly to each Lender from time to time,
promptly upon the request of such Lender, the costs actually incurred by such
Lender which such Lender determines are directly attributable to its making or
maintaining of any Eurodollar Loans to F.Y.I. or its obligation to make or
create any of such Loans hereunder to F.Y.I., or any reduction in any amount
receivable by such Lender hereunder from F.Y.I. in respect of any such Loans or
obligations (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable
to such Lender under this Agreement or its Notes in respect of any of
such Loans (other than taxes imposed on the overall net income of such
Lender or its Applicable Lending Office for any of such Loans by the
jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, such Lender (including any of such
Loans or any deposits referred to in the definition of "Eurodollar
Rate" in Section 1.1 hereof, but excluding the Reserve Requirement to
the extent it is included in the calculation of the Adjusted
Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement
or the Notes or any of such extensions of credit or liabilities or
commitments.
Each Lender will notify F.Y.I. (with a copy to the Agent) of any event
occurring after the Closing Date which will entitle such Lender to compensation
pursuant to this Section 4.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation, and (if so
requested by F.Y.I.) will designate a different Applicable Lending Office for
the Eurodollar Loans of such Lender if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Lender, violate any law, rule or regulation or be in any way
disadvantageous to such Lender, provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the U.S.
Each Lender will furnish F.Y.I. with a certificate setting forth the basis,
amount and computation of each request of such Lender for compensation under
this Section 4.1(a). If any Lender requests compensation from F.Y.I. under
this Section 4.1(a), F.Y.I. may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make or Continue making, or
Convert Prime Rate Loans into,
AMENDED AND RESTATED CREDIT AGREEMENT - Page 41
<PAGE> 48
Eurodollar Loans until the Regulatory Change giving rise to such request ceases
to be in effect (in which case the provisions of Section 4.4 hereof shall be
applicable).
(b) Without limiting the effect of the foregoing provisions of
this Section 4.1, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement
or a category of extensions of credit or other assets of such Lender which
includes Eurodollar Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if such
Lender so elects by notice to F.Y.I. (with a copy to the Agent), the obligation
of such Lender to make or Continue making, or Convert Prime Rate Loans into,
Eurodollar Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 4.4 hereof
shall be applicable).
(c) Determinations and allocations by any Lender for purposes of
this Section 4.1 of the effect of any Regulatory Change on its costs of
maintaining its obligation to make Loans or of making or maintaining Loans or
on amounts receivable by it in respect of Loans and of the additional amounts
required to compensate such Lender in respect of any Additional Costs, shall be
conclusive in the absence of manifest error, provided that such determinations
and allocations are made on a reasonable basis.
Section 4.2 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Loans for any
Interest Period therefor:
(a) The Agent reasonably determines (which determination
shall be conclusive absent manifest error) that quotations of interest
rates for the relevant deposits referred to in the definition of
"Eurodollar Rate" in Section 1.1 hereof are not being provided in the
relative amounts or for the relative maturities for purposes of
determining the rate of interest for such Loans as provided in this
Agreement; or
(b) Required Lenders reasonably determine (which
determination shall be conclusive absent manifest error) and notify
the Agent that the relevant rates of interest referred to in the
definition of "Eurodollar Rate" or "Adjusted Eurodollar Rate" in
Section 1.1 hereof on the basis of which the rate of interest for such
Loans for such Interest Period is to be determined do not accurately
reflect the cost to the Lenders of making or maintaining such Loans
for such Interest Period;
then the Agent shall give F.Y.I. prompt notice thereof and, so long as such
condition remains in effect, the Lenders shall be under no obligation to make
Eurodollar Loans or to Convert Prime Rate Loans into Eurodollar Loans and
F.Y.I. shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans, either prepay such Loans or Convert such
Loans into Prime Rate Loans in accordance with the terms of this Agreement.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 42
<PAGE> 49
Section 4.3 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
hereunder or (b) maintain Eurodollar Loans hereunder, then such Lender shall
promptly notify F.Y.I. for and on behalf of F.Y.I. (with a copy to the Agent)
thereof and such Lender's obligation to make or maintain Eurodollar Loans and
to Convert Prime Rate Loans into Eurodollar Loans hereunder shall be suspended
until such time as such Lender may again make and maintain Eurodollar Loans (in
which case the provisions of Section 4.4 hereof shall be applicable).
Section 4.4 Treatment of Affected Loans. If the obligation of
any Lender to make or Continue, or to Convert Prime Rate Loans into, Eurodollar
Loans is suspended pursuant to Section 4.1 or 4.3 hereof, such Lender's
Eurodollar Loans shall be automatically Converted into Prime Rate Loans on the
last day(s) of the then current Interest Period(s) for the Eurodollar Loans
(or, in the case of a Conversion required by Section 4.1(b) or 4.3 hereof, on
such earlier date as such Lender may specify to F.Y.I., with a copy to the
Agent) and, unless and until such Lender gives notice as provided below that
the circumstances specified in Section 4.1 or 4.3 hereof which gave rise to
such Conversion no longer exist:
(a) To the extent that such Lender's Eurodollar Loans
have been so Converted, all payments and prepayments of principal
which would otherwise be applied to such Lender's Eurodollar Loans
shall be applied instead to its Prime Rate Loans; and
(b) All Loans which would otherwise be made or Continued
by such Lender as Eurodollar Loans shall be made as or Converted into
Prime Rate Loans and all Loans of such Lender which would otherwise be
Converted into Eurodollar Loans shall be Converted instead into (or
shall remain as) Prime Rate Loans.
If such Lender gives notice to F.Y.I. (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof which gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such
Lender's Prime Rate Loans shall be automatically Converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Eurodollar
Loans, to the extent necessary so that, after giving effect thereto, all Loans
held by the Lenders holding Eurodollar Loans and by such Lender are held pro
rata (as to principal amounts, Types and Interest Periods) in accordance with
their respective Commitments.
Section 4.5 Compensation. F.Y.I. shall pay to the Agent for the
account of each Lender, promptly upon the request of such Lender through the
Agent, such amount or amounts as shall be sufficient (in the reasonable opinion
of such Lender) to compensate it for any loss, cost or expense incurred by it
as a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Loan for
any reason
AMENDED AND RESTATED CREDIT AGREEMENT - Page 43
<PAGE> 50
(including, without limitation, the acceleration of the outstanding Loans
pursuant to Section 11.2) on a date other than the last day of an Interest
Period for such Loan; or
(b) Any failure by F.Y.I. for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 6 to
be satisfied) to borrow, Convert or prepay a Eurodollar Loan on the date for
such borrowing, Conversion or prepayment specified in the relevant notice of
borrowing, prepayment or Conversion under this Agreement.
Section 4.6 Capital Adequacy. If, after the Closing Date, any
Lender shall have determined that the adoption or implementation of any
applicable law, rule or regulation regarding capital adequacy (including,
without limitation, any law, rule or regulation implementing the Basle Accord),
or any change therein, or any change in the interpretation or administration
thereof by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or compliance by such Lender (or its
parent) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any central bank or other
Governmental Authority (including, without limitation, any guideline or other
requirement implementing the Basle Accord), has or would have the effect of
reducing the rate of return on such Lender's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which such Lender (or its parent) could have
achieved but for such adoption, implementation, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time, within
ten Business Days after demand by such Lender (with a copy to the Agent),
F.Y.I. shall pay to such Lender such additional amount or amounts as will
compensate such Lender (or its parent) for such reduction. A certificate of
such Lender claiming compensation under this Section 4.6 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error, provided that the determination thereof is made on a
reasonable basis. In determining such amount or amounts, such Lender may use
any reasonable averaging and attribution methods.
Section 4.7 Additional Interest on Eurodollar Loans. F.Y.I.
shall pay, directly to each Lender from time to time, additional interest on
the unpaid principal amount of each Eurodollar Loan held by such Lender, from
the date of the making of such Eurodollar Loan until such principal amount is
paid in full, at an interest rate per annum determined by such Lender in good
faith equal to the positive remainder (if any) of (a) the Adjusted Eurodollar
Rate applicable to such Eurodollar Loan minus (b) the Eurodollar Rate
applicable to such Eurodollar Loan. Each payment of additional interest
pursuant to this Section 4.7 shall be payable by F.Y.I. on each date upon which
interest is payable on such Eurodollar Loan pursuant to Section 2.4(b);
provided, however, that F.Y.I. shall not be obligated to make any such payment
of additional interest until the first Business Day after the date when F.Y.I.
has been informed (i) that such Lender is subject to a Reserve Requirement and
(ii) of the amount of such Reserve Requirement (after which time F.Y.I. shall
be obligated to make all such payments of additional interest, including,
without limitation, such payment of additional interest that otherwise would
have been payable by F.Y.I. on or prior to such time had F.Y.I. been earlier
informed).
AMENDED AND RESTATED CREDIT AGREEMENT - Page 44
<PAGE> 51
ARTICLE 5
Security
Section 5.1 Collateral. To secure the full and complete payment
and performance of the Obligations, F.Y.I. shall, and shall cause each of its
Subsidiaries in existence on the Closing Date (other than, with respect to
clause (b) succeeding, such Subsidiaries, if any, which are Nonmaterial
Subsidiaries and which have not previously granted the Liens referred to in
this Section 5.1) to, grant to the Agent for the benefit of the Agent and the
Lenders a perfected, first priority Lien (except for Permitted Liens, if any,
which are expressly permitted by the Loan Documents to have priority over the
Liens in favor of the Agent) on all of its right, title and interest in and to
the following Property, whether now owned or hereafter acquired, pursuant to
the Security Documents:
(a) all Capital Stock of each of the Subsidiaries of F.Y.I. now
owned or hereafter acquired by F.Y.I. or any Subsidiary of F.Y.I.; and
(b) all other Property of F.Y.I. and each of such Subsidiaries in
which a security interest was (or was required to be) granted to the Agent by
F.Y.I. or such Subsidiary pursuant to or in accordance with the Prior Agreement
and/or the Security Documents (as defined in the Prior Agreement), including,
without limitation, the Mortgaged Properties and all accounts (including,
without limitation, Receivables), inventory (including, without limitation,
Inventory), equipment, contract rights, general intangibles, instruments,
investment property, chattel paper, Permits, Intellectual Property and
intercompany Debt.
Section 5.2 Guaranties. Each Subsidiary of F.Y.I. in existence
on the Closing Date shall guarantee the payment and performance of the
Obligations pursuant to the applicable Guaranty.
Section 5.3 New Subsidiaries. Contemporaneously with the
creation or acquisition of any Subsidiary of F.Y.I. after the Closing Date,
F.Y.I. shall and shall cause each of its Subsidiaries to:
(a) grant or cause to be granted to the Agent, for the benefit of
the Agent and the Lenders, a perfected, first priority security interest in all
Capital Stock or other ownership interests in or indebtedness of such
Subsidiary owned by F.Y.I. or by any Subsidiary of F.Y.I. (to the extent such
Capital Stock or other ownership interests or indebtedness are already not so
pledged to the Agent);
(b) cause each such Subsidiary to guarantee the payment and
performance of the Obligations by executing and delivering to the Agent an
appropriate Guaranty, substantially in the form of the Guaranties delivered by
other Subsidiaries of F.Y.I. on or about the Closing Date, and which Guaranty
also provides that such Subsidiary agrees to comply with all of the covenants
contained in this Agreement applicable to it; and
(c) if and to the extent required by Section 5.4, cause each such
Subsidiary to execute and
AMENDED AND RESTATED CREDIT AGREEMENT - Page 45
<PAGE> 52
deliver to the Agent an appropriate Security Agreement, substantially in the
form of the Security Agreements delivered by other Subsidiaries of F.Y.I. on or
before the Closing Date, and such other Security Documents as the Agent may
reasonably request to grant the Agent, for the benefit of the Agent and the
Lenders, a perfected, first priority Lien (except for Permitted Liens, if any,
which are expressly permitted by the Loan Documents to have priority over the
Liens in favor of the Agent) on all Property of such Subsidiary (other than
immaterial Properties in which the Agent has agreed it will not require a
Lien).
Section 5.4 Additional Security.
(a) If the Total Debt to EBITDA Ratio shall at any time (whether
before or after any release of Liens in accordance with Section 5.5) exceed
1.75 to 1.00, F.Y.I. shall, and shall cause each of its Subsidiaries other
than Nonmaterial Subsidiaries (subject to Section 5.4(b)) to, within ten
Business Days thereafter, grant or cause to be granted to the Agent, for the
benefit of the Agent and the Lenders, a perfected, first priority Lien in all
Property of F.Y.I. and such Subsidiaries (other than immaterial Properties in
which Agent has agreed it will not require a Lien) in which a Lien was not
previously granted in accordance with Section 5.1 or 5.3 , which Liens shall be
granted pursuant to such Security Documents in form and substance satisfactory
to the Agent as the Agent may request from time to time. Without limiting the
generality of the foregoing, if the Total Debt to EBITDA Ratio shall at any
time exceed 1.75 to 1.00, F.Y.I. shall, and shall cause each of its
Subsidiaries other than Nonmaterial Subsidiaries (subject to Section 5.4(b))
to, within ten Business Days thereafter and contemporaneously with the
acquisition of any fee real Property or the execution of any lease of real
Property concurrently therewith or thereafter execute, acknowledge and deliver
to the Agent a Mortgage or an amendment or modification to an existing Mortgage
covering (i) all fee real Property then owned or then being or thereafter
acquired, respectively, F.Y.I. or any of such Subsidiaries and (ii) all of
F.Y.I.'s or any of such Subsidiaries' rights and interests as lessee, in, to
and under each real estate lease then in existence or then being or thereafter
entered into, respectively, together with evidence reasonably satisfactory to
the Agent and its counsel, including, without limitation, if requested by the
Agent, a commitment for a mortgagee policy of title insurance in favor of the
Agent, in form and substance reasonably satisfactory to the Agent, that the
Mortgage creates a valid, first priority Lien on the fee estate or leasehold
estate, as the case may be, in favor of the Agent for the benefit of the Agent
and the Lenders (except for Permitted Liens, if any, which are expressly
permitted by the Loan Documents to have priority over the Liens in favor of the
Agent), together with appraisals and surveys if requested by the Agent;
provided, however, that (A) with respect to any fee real Property having a fair
market value of less than $200,000, F.Y.I. and such Subsidiaries shall not be
required to execute, acknowledge or deliver such Mortgage or amendment or
modification to an existing Mortgage unless or until fee real Property or
Properties having an aggregate fair market value of $200,000 or more would be
covered by any such Mortgage or amendment or modification to an existing
Mortgage and, until such time, shall not be required to deliver such mortgagee
policy of title insurance or such appraisals (unless required by laws or
regulations applicable to any Lender) or surveys with respect to such
Properties or waivers of landlord liens or landlord agreements referred to
herein and (B) with respect to any lease of real Property, F.Y.I. and such
Subsidiaries shall not be required to execute, acknowledge or deliver such
AMENDED AND RESTATED CREDIT AGREEMENT - Page 46
<PAGE> 53
Mortgage or amendment or modification to an existing Mortgage if the tangible
Property of F.Y.I. and/or its Subsidiaries located and to be located thereon
does not exceed $500,000 in aggregate fair market value. Following the date of
each such acquisition of Property, if requested by the Agent or the Required
Lenders, F.Y.I. shall, and shall cause each of its Subsidiaries with an
interest in such Properties to, (A) deliver or cause to be delivered to the
Agent, a mortgagee policy of title insurance insuring the Liens of the Mortgage
covering such fee real Property in an amount reasonably satisfactory to the
Agent on standard form policies (except for Permitted Liens, if any, which are
expressly permitted by the Loan Documents to have priority over the Liens in
favor of the Agent) and (B) provide the Agent with a current environmental
assessment of such Property in form and substance reasonably satisfactory to
the Agent. In addition, with respect to each such leasehold estate, F.Y.I.
shall, and shall cause each of its Subsidiaries to, use its best reasonable
efforts to obtain either (1) waivers of landlord's Liens from each lessor or
(2) landlord agreements from each lessor, in form and substance reasonably
satisfactory to the Agent.
(b) Notwithstanding anything to the contrary contained in Section
5.4(a), in the event that additional security is required to be granted in
accordance with Section 5.4(a), one or more Nonmaterial Subsidiaries (as the
Agent may request) shall be required to grant Liens in accordance with Section
5.4(a) as if such Nonmaterial Subsidiaries were Material Subsidiaries if and to
the extent necessary to ensure that (i) the aggregate total assets of all
Nonmaterial Subsidiaries that have not granted such Liens does not exceed five
percent of the total assets of F.Y.I. and its Subsidiaries on a consolidated
basis, (ii) the aggregate net worth of all Nonmaterial Subsidiaries that have
not granted such Liens does not exceed five percent of the total net worth of
F.Y.I. and its Subsidiaries on a consolidated basis, and (iii) the aggregate
revenues of all Nonmaterial Subsidiaries that have not granted such Liens does
not exceed five percent of the revenues of F.Y.I. and its Subsidiaries on a
consolidated basis.
Section 5.5 Release of Collateral.
(a) Upon any sale, transfer or other disposition of Collateral
that is expressly permitted under Section 9.8 and upon five Business Days prior
written request by F.Y.I., the Agent shall execute at F.Y.I.'s expense such
documents as may be necessary to evidence the release by the Agent of its Liens
on such Collateral; provided, however, that (i) the Agent shall not be required
to release any Lien on any Collateral if a Default shall have occurred and be
continuing, (ii) the Agent shall not be required to execute any such document
on terms which, in the Agent's opinion, would expose the Agent to liability or
create any obligation not reimbursed by F.Y.I. or entail any consequences other
than the release of such Lien without recourse or warranty, and (iii) such
release shall not in any manner discharge, affect or impair any of the
Obligations or any of the Agent's Liens on any Collateral retained by F.Y.I. or
any of its Subsidiaries, including, without limitation, its Liens on the
proceeds of any such sale, transfer or other disposition.
(b) If, after additional security has been granted in accordance
with Section 5.4, the Total Debt to EBITDA Ratio is less than 1.75 to 1.00 and
F.Y.I., at such time, has an investment grade rating from either Moody's
Investors Service, Inc. (Baa3 or better) or Standard & Poor's Corporation
AMENDED AND RESTATED CREDIT AGREEMENT - Page 47
<PAGE> 54
(BBB- or better) on an unsecured basis, the Agent shall, upon the request of
F.Y.I., execute at F.Y.I.'s expense such documents as may be necessary to
evidence the release by the Agent of its Liens on any or all Collateral granted
as additional security in accordance with Section 5.4; provided, however, that
(i) the Agent shall not be required to release any Lien on any Collateral if a
Default shall have occurred and be continuing, (ii) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation not reimbursed by
F.Y.I. or entail any consequences other than the release of such Lien without
recourse or warranty, and (iii) such release shall not in any manner discharge,
affect or impair any of the Obligations or any of the Agent's Liens on any
Collateral retained by F.Y.I. or any of its Subsidiaries, including, without
limitation, its Liens on the proceeds of any such sale, transfer or other
disposition.
Section 5.6 Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time
to time, without notice to F.Y.I., any other Loan Party or any other Person
(any such notice being hereby expressly waived by F.Y.I.), to set off and apply
any and all deposits (general, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of F.Y.I. against any and all of the Obligations now or
hereafter existing under this Agreement, such Lender's Note or any other Loan
Document, irrespective of whether or not the Agent or such Lender shall have
made any demand under this Agreement, such Lender's Note or any such other Loan
Document and although such Obligations may be unmatured. Each Lender agrees
promptly to notify F.Y.I. (with a copy to the Agent) after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights and remedies of each
Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Lender may have.
Section 5.7 Landlord and Mortgagee Waivers. On or before the
Closing Date with respect to a lease of real Property as to which the Agent has
or is, in accordance with Article 5 of this Agreement or the Prior Agreement,
required to have a leasehold Mortgage, and prior to or concurrently with F.Y.I.
or any of its Subsidiaries entering into a lease of real Property on or after
the Closing Date as to which the Agent has or is, in accordance with Article 5,
required to have a leasehold Mortgage, F.Y.I. shall, unless the Agent has
waived such requirement in its discretion as to any particular leased Property,
provide to the Agent an agreement of such of the landlords and their lenders
relating to such leased Properties, in form and substance reasonably
satisfactory to the Agent, including, without limitation, any leased Properties
where the landlord (i) owns any Capital Stock of F.Y.I., (ii) holds any Seller
Subordinated Debt, or (iii) is the beneficiary of or payee under any Seller
Earn Out.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 48
<PAGE> 55
ARTICLE 6
Conditions Precedent
Section 6.1 Closing Date Conditions. The agreement of the Agent
and the Lenders to enter into this Agreement, and each of the obligations of
each Lender to make its initial Loan under this Agreement and the obligation of
the Issuing Bank to issue the initial Letter of Credit under this Agreement are
subject to the conditions precedent that the Agent shall have received, on or
before the Closing Date, all of the following in form and substance
satisfactory to the Agent and, in the case of actions to be taken, evidence
that the following required actions have been taken to the satisfaction of the
Agent; provided, however, that, if and to the extent that any of the items
listed in clauses (c), (d), (e), (i), (m), (o), (q), (x) or (y) below were
delivered at the closing of, or in accordance with, the Prior Agreement and
have not been amended, extended, supplemented or otherwise altered, such items
shall not be required to be delivered again.
(a) Resolutions. Resolutions of the Board of Directors of F.Y.I.
and each Material Subsidiary certified by its Secretary or an Assistant
Secretary which authorize the execution, delivery and performance by such Loan
Party of the Loan Documents to which it is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency certified
by the Secretary or an Assistant Secretary of F.Y.I. and each Material
Subsidiary certifying the name of each officer or other representative of such
Loan Party (i) who is authorized to sign the Loan Documents to which such Loan
Party is or is to be a party (including any certificates contemplated therein),
together with specimen signatures of each such officer or other representative,
and (ii) who will, until replaced by other officers or representatives duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with the Loan Documents and the transactions contemplated thereby;
(c) Articles or Certificates of Incorporation, etc. The articles
or certificates of incorporation, certificate of formation, certificate of
limited partnership, partnership agreement or other applicable constitutional
document of F.Y.I. and each Material Subsidiary certified by the Secretary of
State or other applicable Governmental Authority of the state or other
jurisdiction of incorporation or organization of such Loan Party and dated as
of a Current Date;
(d) Bylaws. The bylaws of F.Y.I. and each Material Subsidiary
certified by the Secretary or an Assistant Secretary of such Loan Party;
(e) Governmental Certificates. Certificates of appropriate
officials as to the existence and good standing, status or compliance, as
applicable, of F.Y.I. and each Material Subsidiary in their respective
jurisdictions of incorporation or organization and any and all jurisdictions
where such Loan Party is qualified to do business as a foreign corporation or
other entity, each such certificate to be dated as of a Current Date;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 49
<PAGE> 56
(f) Notes. The Notes duly completed and executed by F.Y.I.;
(g) Guaranties. A Guaranty executed by each of the Subsidiaries
of F.Y.I. (or such amendments or ratifications to the Guaranties existing as of
the Closing Date as are deemed necessary or appropriate by the Agent);
(h) Security Agreements. A Security Agreement executed by F.Y.I.
and each of its Subsidiaries which are required to grant Liens in accordance
with Article 5 (or such amendments or ratifications to the Security Agreements
existing as of the Closing Date as are deemed necessary or appropriate by the
Agent to maintain its perfected security interest in the Collateral);
(i) Stock Certificates. The stock certificates representing all
of the issued and outstanding Capital Stock of each of the Subsidiaries of
F.Y.I. accompanied by appropriate stock powers signed in blank;
(j) Financing Statements. Financing statements and all other
requisite filing documents executed by the Loan Parties necessary or
appropriate to perfect the Liens created pursuant to the Security Documents (or
such amendments to the financing statements existing as of the Closing Date as
are deemed necessary or appropriate by the Agent);
(k) Lien Releases. Releases or assignments of Liens and UCC-3
financing statements in recordable form, as may be necessary to reflect that
the Liens created by the Security Documents are first priority Liens (except
for Permitted Liens, if any, which are expressly permitted by the Loan
Documents to have priority over the Liens in favor of the Agent);
(l) Lien Searches. If and to the extent not previously delivered
to the Agent in connection with the Prior Agreement, Lien searches in the names
of F.Y.I. and each of its Material Subsidiaries (and in all names under which
each such Person has done business within the last five years and in all names
of Persons who previously owned any of the Properties constituting Collateral
as the Agent may require) in each state, county, parish or other jurisdiction
where each such Person maintains an office or has Property, showing no
financing statements or other Lien instruments of record except for Permitted
Liens (and Liens released in accordance with Section 6.1(k));
(m) Leases. If requested by the Agent, copies of all leases (and
all amendments and supplements thereto) pursuant to which F.Y.I. or any of its
Subsidiaries leases Mortgaged Properties;
(n) Consents. Copies of all material consents necessary for the
execution, delivery and performance by each of the Loan Parties of the Loan
Documents to which it is a party, which consents shall be certified by a
Responsible Officer of the applicable Loan Party as true and correct copies of
such consents as of the Closing Date;
(o) Permits. If requested by the Agent, copies of all material
Permits affecting F.Y.I. or any of its Material Subsidiaries in connection with
its businesses or any of the Properties owned or
AMENDED AND RESTATED CREDIT AGREEMENT - Page 50
<PAGE> 57
leased by it, and evidence satisfactory to the Agent that F.Y.I. and each of
its Material Subsidiaries are able to conduct their businesses with the use of
such Permits in full force and effect;
(p) Payment of Principal, Interest, Fees and Expenses. F.Y.I.
shall have paid in full (i) all outstanding principal of the "Term Loans" (as
defined in the Prior Agreement), (ii) all accrued and unpaid interest (whether
or not due and payable) with respect to the Revolving Credit Loans (as defined
in the Prior Agreement) and the Term Loans (as defined in the Prior Agreement),
(iii) all accrued and unpaid fees (whether or not due and payable) under or
with respect to the Prior Agreement (including, without limitation, commitment
fees, letter of credit fees and other fees payable in accordance with Section
2.11 of the Prior Agreement), (iv) all fees due on or before the Closing Date
as specified in this Agreement or in the Fee Letter, and (v) all fees and
expenses of or incurred by the Agent and its counsel to the extent billed on or
before the Closing Date and payable pursuant to this Agreement;
(q) Regulatory Approvals. Evidence satisfactory to the Agent that
all filings, consents or approvals with or of Governmental Authorities
necessary to consummate the transactions contemplated by the Loan Documents and
the Related Transactions Documents have been made and obtained, as applicable,
including, without limitation, all approvals or filings (if any) required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the lapse of all
waiting periods with respect thereto;
(r) Compliance with Laws. As of the Closing Date, each Person
that is a party to this Agreement or any of the other Loan Documents shall have
complied with all Governmental Requirements necessary to consummate the
transactions contemplated by this Agreement and the other Loan Documents;
(s) No Prohibitions. No Governmental Requirement shall prohibit
the consummation of the transactions contemplated by this Agreement or any
other Loan Document, and no order, judgment or decree of any Governmental
Authority or arbitrator shall, and no litigation or other proceeding shall be
pending or threatened which would, enjoin, prohibit, restrain or otherwise
adversely affect the consummation of the transactions contemplated by this
Agreement and the other Loan Documents or otherwise have a Material Adverse
Effect;
(t) No Material Adverse Change. As of the Closing Date, no
material adverse change shall have occurred with respect to the financial
condition, results of operations, business, operations, capitalization,
liabilities or prospects of F.Y.I. or any of its Subsidiaries since December
31, 1996, and the Agent shall have received evidence that the economic
performance of F.Y.I. and each of its Subsidiaries to the Closing Date is not
materially different from the economic projections for F.Y.I. and each of its
Subsidiaries for fiscal year 1997 that were previously submitted to the Agent;
(u) Unused Revolving Credit Commitments. As of the Closing Date,
the aggregate amount of unused availability under the Commitments, after giving
effect to the Loans made on such date, shall be at least $10,000,000;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 51
<PAGE> 58
(v) Financial Statements. If and to the extent not previously
delivered to the Agent, copies of each of the financial statements referred to
in Section 7.2;
(w) Opinions of Counsel. Favorable opinions (or comfort letters
with respect to clause (ii) succeeding) of (i) Locke Purnell Rain Harrell (a
Professional Corporation), counsel for the Loan Parties, and such other counsel
as may be acceptable to the Agent, in form and substance satisfactory to the
Agent with respect to F.Y.I. and its Subsidiaries with respect to the Loan
Documents and (ii) such other counsel as may be acceptable to the Agent
regarding the power and authority of each of the Subsidiaries of F.Y.I. to
execute and deliver its Guaranty and Security Agreement under the laws of its
jurisdiction of incorporation or organization, as the Agent may require;
(x) Opinions of Local Counsel. If and to the extent not
previously delivered to the Agent, a favorable opinion or comfort letter (as
the Agent may require) of local counsel to the Agent in each state or province
where Mortgaged Properties or Inventory owned by F.Y.I. or its Subsidiaries are
located in form and substance satisfactory to the Agent; and
(y) Accountant's Letter. If and to the extent not previously
delivered to the Agent, a letter from F.Y.I. authorizing the independent
public accountant of F.Y.I. and its Subsidiaries to communicate with the Agent
and the Lenders and acknowledging reliance by the Agent and the Lenders on
past, present and future financial statements.
F.Y.I. shall deliver, or cause to be delivered, to the Agent sufficient
counterparts of each agreement, document or instrument to be received by the
Agent under this Section 6.1 to permit the Agent to distribute a copy of the
same to each of the Lenders. After the request of F.Y.I., the Agent shall
inform F.Y.I. in writing as to the status of satisfaction of the conditions
precedent set forth in this Section 6.1.
Section 6.2 Initial Extension of Credit. Each of the obligations
of each Lender to make its initial Loan under this Agreement and the obligation
of the Issuing Bank to issue the initial Letter of Credit under this Agreement
are subject to the condition precedent that the Agent shall have received, on
or before the date of such initial Loan or initial Letter of Credit (whichever
is earlier), all of the following in form and substance satisfactory to the
Agent, and, in the case of action to be taken, evidence that the following
required actions have been taken to the satisfaction of the Agent:
(a) Mortgages. Mortgages covering all of the Mortgaged Properties
owned by F.Y.I. or any of its Subsidiaries listed on Schedule 1.1(a) hereof or
otherwise required to be mortgaged at such date in accordance with this
Agreement executed by F.Y.I. or such Subsidiary (as applicable) (or such
amendments or ratifications to the Mortgages existing as of the Closing Date as
are deemed necessary or appropriate by the Agent to maintain its perfected Lien
on the Collateral);
(b) Landlord and Mortgagee Waivers. If required in accordance
with Section 5.7, agreements of such of the landlords and their lenders
relating to the leased Properties leased by F.Y.I.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 52
<PAGE> 59
and its Subsidiaries as the Agent may require in form and substance reasonably
satisfactory to the Agent, including, without limitation, for any leased
Properties where the landlord (i) owns any Capital Stock of F.Y.I., (ii) holds
any Seller Subordinated Debt, or (iii) is the beneficiary of or payee under any
Seller Earn Out;
(c) Endorsements to Title Opinions. Endorsements to the existing
mortgagee policies of title insurance (if any) issued on behalf of a title
insurance company reasonably acceptable to the Agent in favor of the Agent;
committing that the Mortgages create valid, first priority Liens on the
Mortgaged Properties (except for Permitted Liens, if any, which are expressly
permitted by the Loan Documents to have priority over the Liens in favor of the
Agent) as security for the Obligations; each such endorsement shall (i) have
been issued at the expense of F.Y.I. or its Subsidiary, (ii) contain no
exceptions or exclusions except for those approved by the Agent, (iii) have
been issued and underwritten by companies acceptable to the Agent, (iv) contain
such endorsements as may be required by the Agent, (v) be in an amount
satisfactory to the Agent, and (vi) be otherwise in form and substance
satisfactory to the Agent;
(d) Wiring Instructions. Written instructions from F.Y.I. to the
Agent with respect to the disbursement of the proceeds of the Loans;
(e) Insurance Policies. Originals of certificates of insurance
evidencing all insurance policies required by this Agreement and the other Loan
Documents, together with endorsements naming the Agent as loss payee under all
such casualty insurance policies and the Agent as an additional insured party
under all such liability policies and, if requested by the Agent, copies of all
such insurance policies.
(f) Letter of Credit Agreement. With respect to any issuance of a
Letter of Credit, a Letter of Credit Agreement in the form required by the
Issuing Bank with respect thereto executed by F.Y.I.;
(g) Solvency Certificate; Contribution Agreement. (i) A Solvency
Certificate; and (ii) contribution agreements (or applicable amendments to any
such agreements existing as of the Closing Date) between and among F.Y.I. and
its Subsidiaries to evidence applicable rights of contribution;
(h) Budget. A copy of the consolidated budget of F.Y.I. and its
Subsidiaries for fiscal year 1997 (segregated by entity and quarter or month,
and setting forth all material assumptions); and
(i) Closing Balance Sheet. A copy of the unaudited consolidated
balance sheet of F.Y.I. and its Subsidiaries as of September 30, 1997, which
balance sheet shall be accompanied by a certificate of a Responsible Officer of
F.Y.I. certifying that there has been no material adverse change in the assets
or liabilities of F.Y.I. and its Subsidiaries, taken as a whole, since such
date.
Section 6.3 All Extensions of Credit. The obligation of each
Lender to make any Loan
AMENDED AND RESTATED CREDIT AGREEMENT - Page 53
<PAGE> 60
(including the initial Loan) and the obligation of the Issuing Bank to issue
any Letter of Credit (including the initial Letter of Credit) under this
Agreement are subject to the satisfaction of each of the conditions precedent
set forth in Section 6.1 and 6.2 as of the dates required by such Sections 6.1
and 6.2 and each of the following additional conditions precedent:
(a) No Default or Material Adverse Effect. No Default or Material
Adverse Effect shall have occurred and be continuing, or would result from such
Loan or Letter of Credit;
(b) Representations and Warranties. All of the representations
and warranties of F.Y.I. and its Subsidiaries and the other Loan Parties
contained in Article 7 hereof and in the other Loan Documents shall be true and
correct on and as of the date of such Loan or Letter of Credit with the same
force and effect as if such representations and warranties had been made on and
as of such date, except to the extent that such representations and warranties
are expressly by their terms made only as of the Closing Date or another
specified date; and
(c) Additional Documentation. The Agent shall have received such
additional approvals, opinions, agreement, documents and instruments as the
Agent may reasonably request.
Each notice of borrowing or request for the issuance of a Letter of Credit by
F.Y.I. hereunder shall constitute a representation and warranty by F.Y.I. that
the conditions precedent set forth in Sections 6.2(a) and (b) have been
satisfied (both as of the date of such notice and, unless F.Y.I. otherwise
notifies the Agent prior to the date of such borrowing or Letter of Credit, as
of the date of such borrowing or Letter of Credit).
Section 6.4 Closing Certificates. The agreement of the Agent and
the Lenders to enter into this Agreement is subject to the condition that the
Agent receive, concurrently with the execution and delivery of this Agreement,
a Closing Certificate in form and substance reasonably satisfactory to the
Agent certifying as to the satisfaction of each of the conditions precedent set
forth in Section 6.1. The obligations of the Lenders to make the initial Loan
and the obligation of the Issuing Bank to issue the initial Letter of Credit
are subject to the condition that the Agent receive, prior to the date of such
initial Loan or the issuance of such initial Letter of Credit, a Closing
Certificate in form and substance reasonably satisfactory to the Agent
certifying as to the satisfaction of each of the conditions precedent set forth
in Section 6.2.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 54
<PAGE> 61
ARTICLE 7
Representations and Warranties
F.Y.I. represents and warrants to the Agent and the Lenders that the
following statements are and, after giving effect to the Related Transactions,
will be true, correct and complete:
Section 7.1 Corporate Existence. Each Loan Party (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, (b) has all
requisite power and authority to own its Properties and carry on its business
as now being or as proposed to be conducted, and (c) is qualified to do
business in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a Material
Adverse Effect. Each Loan Party has the power and authority and legal right to
execute, deliver and perform its obligations under the Loan Documents and the
Related Transactions Documents to which it is or may become a party. F.Y.I. is
a holding company and is not an operating company and does not engage in any
material business operations apart from the ownership and management of its
Subsidiaries.
Section 7.2 Financial Statements.
(a) F.Y.I. has delivered to the Agent and the Lenders proforma
audited combined and combining financial statements of F.Y.I. and its
Subsidiaries as of and for the fiscal years ended December 31, 1993, 1994,
1995, and 1996 and unaudited combined and combining financial statements for
F.Y.I. and its Subsidiaries for the nine-month period ended September 30, 1997.
To F.Y.I.'s knowledge, such financial statements are true and correct, have
been prepared in accordance with GAAP and fairly and accurately present, on a
combined and combining (where applicable) basis, the financial condition of
F.Y.I. and its combined Subsidiaries, as of the respective dates indicated
therein and the results of operations for the respective periods indicated
therein. There has not been, as of the Closing Date, any material adverse
change in the business, condition (financial or otherwise), operations or
Properties of F.Y.I. or its Subsidiaries or since the effective dates of the
most recent applicable financial statements referred to in this Section 7.2(a).
(b) The Projections were prepared by F.Y.I. on a basis
substantially consistent with the financial statements referred to in Section
7.2(a). The Projections represent, as of the Closing Date, the good faith
estimate of F.Y.I. concerning the probable financial condition and performance
of F.Y.I. and its Subsidiaries based on assumptions believed to be reasonable
at the time made.
Section 7.3 Corporate Action: No Breach. The execution, delivery
and performance by each Loan Party of the Loan Documents to which it is or may
become a party and compliance with the terms and provisions hereof and thereof
have been duly authorized by all requisite corporate or other entity action on
the part of the Loan Parties and do not and will not (a) violate or conflict
with, or result in a breach of, or require any consent under (i) the articles
or certificates of incorporation or bylaws of any Loan Party, (ii) any
Governmental Requirement applicable to a Loan Party or any
AMENDED AND RESTATED CREDIT AGREEMENT - Page 55
<PAGE> 62
of its Property or any order, writ, injunction or decree of any Governmental
Authority or arbitrator applicable to a Loan Party or any of its Property, or
(iii) any material agreement, document or instrument to which any Loan Party is
a party or by which any Loan Party or any of its Property is bound or subject,
or (b) constitute a default under any such material agreement, document or
instrument, or result in the creation or imposition of any Lien (except under
the Security Documents as provided in Article 5) upon any of the revenues or
Property of any Loan Party.
Section 7.4 Operation of Business. The Loan Parties possess all
material Permits, franchises, licenses and authorizations necessary or
appropriate to conduct their respective businesses substantially as now
conducted and where the failure to do so would constitute or result in a
Material Adverse Effect. All of such Permits, franchises, licenses and
authorizations of F.Y.I. and its Material Subsidiaries which constitute a
Governmental Requirement or which are or are to be issued by any Governmental
Authority are disclosed on Schedule 7.4. None of such Persons is in material
violation of any such Permits, franchises, licenses or authorizations.
Section 7.5 Intellectual Property. The Loan Parties own or
possess (or will be licensed or have the full right to use) all Intellectual
Property which is necessary for the operation of their respective businesses as
presently conducted and as proposed to be conducted, without any known conflict
with the rights of others which could reasonably be expected to have a Material
Adverse Effect. The consummation of the transactions contemplated by this
Agreement, the other Loan Documents and the Related Transactions Documents will
not materially alter or impair, individually or in the aggregate, any of such
rights of such Persons. No product of the Loan Parties infringes upon any
Intellectual Property owned by any other Person, and no claim or litigation is
pending or, to the knowledge of F.Y.I. or any of its Subsidiaries, threatened
against any Loan Party or any such Person contesting its right to use any
product or material which could have a Material Adverse Effect. There is no
violation by any Loan Party of any right of such Loan Party with respect to any
material Intellectual Property owned or used by such Loan Party which would
constitute or result in a Material Adverse Effect.
Section 7.6 Litigation and Judgments. Each material action,
suit, investigation or proceeding before or by any Governmental Authority or
arbitrator pending or, to the knowledge of F.Y.I. or any of its Subsidiaries,
threatened against or affecting any Loan Party, or that relates to any of the
Related Transactions as of the Closing Date, is disclosed on Schedule 7.6.
None of such actions, suits, investigations or proceedings could, if adversely
determined, have a Material Adverse Effect. As of the Closing Date, there are
no outstanding judgments against any Loan Party or any of their respective
Subsidiaries.
Section 7.7 Rights in Properties; Liens. Each of the Loan
Parties has good and indefeasible title to or, except as expressly stated to
the contrary on Schedule 1.1(a), valid leasehold interests in its Properties
and assets, real and personal, including the Properties, assets and leasehold
interests reflected in the financial statements described in Section 7.2 and
the Pro Formas, and none of the Properties or leasehold interests of F.Y.I. or
any of its Material Subsidiaries or, to the best of F.Y.I.'s knowledge without
undertaking a current Lien search, any of its Nonmaterial Subsidiaries
AMENDED AND RESTATED CREDIT AGREEMENT - Page 56
<PAGE> 63
is subject to any Lien, except Permitted Liens. Except as disclosed on
Schedule 7.7, neither F.Y.I. nor any of its Subsidiaries owns any right, title
or interest in any real Properties.
Section 7.8 Enforceability. The execution, delivery and
performance of the Loan Documents and the Related Transaction Documents to
which each of the Loan Parties is a party have been duly authorized by
resolutions of the board of directors of such Loan Party (or other appropriate
action authorizing such execution, delivery and performance has been taken with
respect to each Loan Party that is not a corporation). The Loan Documents and
the Related Transactions Documents have been duly and validly executed and
delivered by each of the Loan Parties that is a party thereto and constitute
the legal, valid and binding obligations of the Loan Parties, enforceable
against the Loan Parties in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to the enforcement of creditors' rights and general principles of equity.
Section 7.9 Approvals. No authorization, approval or consent of,
and no filing or registration with or notice to, any Governmental Authority or
third party is or will be necessary for the execution, delivery or performance
by any Loan Party of any of the Loan Documents or Related Transactions
Documents to which it is a party or for the validity or enforceability thereof,
except for such consents, approvals and filings as have been validly obtained
or made and are in full force and effect. The consummation of the Related
Transactions does not require the consent or approval of any other Person,
except such consents and approvals (a) as have been validly obtained and are in
full force and effect or (b) as to which the failure to obtain is not,
individually or in the aggregate, material. None of the Loan Parties has
failed to obtain any material governmental consent, approval, license, Permit,
franchise or other governmental authorization necessary for the ownership of
any of its Properties or the conduct of its business.
Section 7.10 Debt. As of the Closing Date, the Loan Parties and
their Subsidiaries have no Debt except for (a) the Obligations and (b) the Debt
disclosed on Schedule 7.10 hereto.
Section 7.11 Taxes. The Loan Parties have filed all tax returns
(federal, state and local) required to be filed, including all income,
franchise, employment, Property and sales tax returns, and have paid all of
their respective liabilities (other than liabilities which do not, in the
aggregate, exceed $100,000 in amount) for taxes, assessments, governmental
charges and other levies that are due and payable, except such taxes, if any,
the payment of which is currently being contested in good faith by appropriate
proceedings diligently conducted by or on behalf of such Person and as to
which, if required by GAAP, such Person has established adequate reserves.
F.Y.I. is not aware of any pending investigation of any Loan Party or any of
their respective Subsidiaries, by any taxing authority or of any pending but
unassessed tax liability of any Loan Party or any of their respective
Subsidiaries, other than with respect to (a) ad valorem or other real property
taxes not in excess of $100,000 as to any such Person and (b) other taxes in an
aggregate amount as to any such Person which could not, if an adverse
determination is made with respect to such taxes, materially and adversely
affect such Person, which (as to each of clauses (a) and (b) preceding) are
currently being contested in good faith by appropriate proceedings diligently
conducted by or on behalf of such
AMENDED AND RESTATED CREDIT AGREEMENT - Page 57
<PAGE> 64
Person and as to which, if required by GAAP, such Person has established
adequate reserves. No tax Liens have been filed and, except as disclosed on
Schedule 7.11, no claims are being asserted against any Loan Party or any of
their respective Subsidiaries, with respect to any taxes; provided, however,
that, with respect to the Nonmaterial Subsidiaries, such representation is made
only to the best of F.Y.I.'s knowledge without undertaking a current Lien
search. Except as disclosed on Schedule 7.11 hereto, as of the Closing Date,
none of the U.S. income tax returns of the Loan Parties or any of their
respective Subsidiaries are under audit. The charges, accruals and reserves on
the books of the Loan Parties in respect of taxes or other governmental charges
are in accordance with GAAP.
Section 7.12 Margin Securities. None of the Loan Parties or any
of their respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T, U
or X of the Board of Governors of the Federal Reserve System), and no part of
the proceeds of any Loan will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock.
Section 7.13 ERISA; Plans. Neither any Loan Party nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any Pension
Plan other than the Pension Plans identified on Schedule 7.13. Each Plan of
each Loan Party is in compliance in all material respects with all applicable
provisions of ERISA and the Code . Neither a Reportable Event nor a Prohibited
Transaction has occurred within the last 60 months with respect to any Plan.
No notice of intent to terminate a Pension Plan has been filed, nor has any
Pension Plan been terminated. No circumstances exist which constitute grounds
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Pension Plan, nor has the PBGC instituted any such
proceedings. Neither any of the Loan Parties nor any ERISA Affiliate has
completely or partially withdrawn from a Multiemployer Plan. Each Loan Party
and each ERISA Affiliate have met their minimum funding requirements under
ERISA and the Code with respect to all of their Plans subject to such
requirements, and, as of the Closing Date except as specified on Schedule 7.13,
the present value of all vested benefits under each funded Plan (exclusive of
any Multiemployer Plan) does not and will not exceed the fair market value of
all such Plan assets allocable to such benefits, as determined on the most
recent valuation date of such Plan and in accordance with ERISA. Neither any
of the Loan Parties nor any ERISA Affiliate has incurred any liability to the
PBGC under ERISA. No litigation is pending or threatened concerning or
involving any Plan. There are no unfunded or unreserved liabilities (on either
a going-concern basis or a wind-up basis) relating to any Plan that could,
individually or in the aggregate, have a Material Adverse Effect if such Loan
Party were required to fund or reserve such liability in full. As of the
Closing Date, no funding waivers have been or will have been requested or
granted under Section 412 of the Code with respect to any Plan. No unfunded or
unreserved liability for benefits under any Plan or Plans or (exclusive of any
Multiemployer Plans) exceeds $2,000,000 with respect to any such Plan or
$4,000,000 with respect to all such Plans in the aggregate as of the Closing
Date, on either a going-concern basis or a wind-up basis.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 58
<PAGE> 65
Section 7.14 Disclosure. No written statement, report,
representation or warranty made by any Loan Party in any Loan Document
(excluding any IPO Documents to the extent that the same may be deemed to be
Loan Documents) or furnished to the Agent or any Lender by any Loan Party in
connection with the Loan Documents (excluding any IPO Documents to the extent
that the same may be deemed to be Loan Documents) or the making of the Loans or
issuance of the Letters of Credit as contemplated hereby contains any untrue
statement (at the time such statement was made) of a material fact or omits to
state any material fact necessary to make the statements herein or therein not
misleading. There is no fact known to F.Y.I. which has had a Material Adverse
Effect, and there is no fact known to F.Y.I. which might in the future have a
Material Adverse Effect, except as may have been disclosed in writing to the
Agent and the Lenders.
Section 7.15 Capitalization.
(a) On and as of the Closing Date, the authorized Capital Stock,
share ownership and par value per share of each of the Subsidiaries of F.Y.I.
are listed on Schedule 7.15.
(b) All of the issued and outstanding Capital Stock of F.Y.I. and
its Subsidiaries has been validly issued and is fully paid and nonassessable.
Except as described on Schedule 7.15, there are no outstanding subscriptions,
options, warrants, calls or rights (including preemptive rights) to acquire,
and no outstanding securities or instruments convertible into, Capital Stock of
F.Y.I. or any of its Subsidiaries.
(c) On and as of the Closing Date, each Material Subsidiary of
F.Y.I. is identified as such on Schedule 7.15 and, except as so identified,
F.Y.I. does not have any Material Subsidiaries on and as of such date.
Section 7.16 Agreements. None of the Loan Parties is a party to
any indenture, loan, credit agreement, stock purchase agreement or any lease or
other agreement, document or instrument, or subject to any charter or corporate
restriction, that could reasonably be expected to have a Material Adverse
Effect. None of the Loan Parties is in default in any respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, document or instrument binding on it or
its Properties, except for instances of noncompliance that, individually or in
the aggregate, could not have a Material Adverse Effect.
Section 7.17 Compliance with Laws. None of the Loan Parties is in
violation of any Governmental Requirement, except for instances of
non-compliance that, individually or in the aggregate, could not have a
Material Adverse Effect.
Section 7.18 Investment Company Act. None of the Loan Parties is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
Section 7.19 Public Utility Holding Company Act. None of the Loan
Parties is a "holding company" or a "subsidiary company" of a "holding company"
or an "affiliate" of a "holding
AMENDED AND RESTATED CREDIT AGREEMENT - Page 59
<PAGE> 66
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 7.20 Environmental Matters.
(a) Except for instances of noncompliance with or exceptions to
any of the following representations and warranties that could not have,
individually or in the aggregate, a Material Adverse Effect:
(i) The Loan Parties and all of their respective
Properties and operations are in full compliance with all
Environmental Laws in all material respects. Neither F.Y.I. nor any
of its Subsidiaries is aware of, and neither F.Y.I. nor any of its
Subsidiaries has received written notice of, any past, present or
future conditions, events, activities, practices or incidents which
may interfere with or prevent the compliance or continued compliance
by any Loan Party with all Environmental Laws;
(ii) The Loan Parties have obtained all Permits that are
required under applicable Environmental Laws, and all such Permits are
in good standing and all such Persons are in compliance with all of
the terms and conditions thereof;
(iii) No Hazardous Materials exist on, about or within or
have been (to F.Y.I.'s or any of its Subsidiaries' knowledge) or are
being used, generated, stored, transported, disposed of on or Released
from any of the Properties of the Loan Parties except in compliance
with applicable Environmental Laws in all material respects. The use
which the Loan Parties make and intend to make of their respective
Properties will not result in the use, generation, storage,
transportation, accumulation, disposal or Release of any Hazardous
Material on, in or from any of their Properties except in compliance
with applicable Environmental Laws;
(iv) Neither the Loan Parties nor any of their respective
currently or previously owned or leased Properties or operations is
subject to any outstanding or, to the best of F.Y.I.'s or any of its
Subsidiaries' knowledge, threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or
administrative proceeding with respect to (A) any failure to comply
with Environmental Laws, (B) any Remedial Action, or (C) any
Environmental Liabilities;
(v) There are no conditions or circumstances associated
with the currently or previously owned or leased Properties or
operations of the Loan Parties that could reasonably be expected to
give rise to any Environmental Liabilities or claims resulting in any
Environmental Liabilities. None of the Loan Parties is subject to, or
has received written notice of any claim from any Person alleging that
any of the Loan Parties is or will be subject to, any Environmental
Liabilities;
(vi) None of the Properties of the Loan Parties is a
treatment facility (except for
AMENDED AND RESTATED CREDIT AGREEMENT - Page 60
<PAGE> 67
the recycling of Hazardous Materials generated on-site and the
treatment of liquid wastes subject to the Clean Water Act or other
applicable Environmental Law) for temporary storage of Hazardous
Materials generated on-site prior to their disposal off-site) or
disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., regulations
thereunder or any comparable provision of state law. The Loan Parties
and their Subsidiaries are compliance with all applicable financial
responsibility requirements of all Environmental Laws; and
(vii) None of the Loan Parties has failed to file any
notice required under applicable Environmental Law reporting a
Release.
(b) No Lien arising under any Environmental Law has attached to
any Property or revenues of any Loan Party.
Section 7.21 Labor Disputes and Acts of God. Neither the business
nor the Properties of any Loan Party are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that is having or could have a Material
Adverse Effect.
Section 7.22 Material Contracts. Attached hereto as Schedule 7.22
is a complete list, as of the Closing Date, of all Material Contracts of the
Loan Parties, other than the Loan Documents. All of the Material Contracts are
in full force and effect and none of the Loan Parties is in default under any
Material Contract and, to the best of F.Y.I.'s or any of its Subsidiaries'
knowledge after due inquiry, no other Person that is a party thereto is in
default under any of the Material Contracts. None of the Material Contracts
prohibit the transactions contemplated under the Loan Documents or the Related
Transactions Documents. All of the Material Contracts have been transferred or
assigned to, or are currently in the name of, a Loan Party. F.Y.I. has
delivered to the Agent a complete and current copy of each Material Contract
(other than purchase orders entered into in the ordinary course of business)
existing on the Closing Date and, with respect to each Material Contract (other
than purchase orders entered into in the ordinary course of business) entered
into after the Closing Date, will deliver to the Agent a complete and current
copy of such Material Contract in a reasonably prompt fashion after the
creation thereof.
Section 7.23 Bank Accounts. As of the Closing Date, Schedule 7.23
sets forth the account numbers and location of all primary bank accounts of
F.Y.I.
Section 7.24 Outstanding Securities. As of the Closing Date, all
outstanding securities (as defined in the Securities Act of 1933, as amended,
or any successor thereto, and the rules and regulations of the Securities and
Exchange Commission thereunder) of the Loan Parties have been offered, issued,
sold and delivered in compliance with all applicable Governmental Requirements.
Each of the IPO and the IPO Documents were conducted and prepared in accordance
with all applicable Governmental Requirements, including, without limitation,
Rule 10b-5 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 61
<PAGE> 68
Section 7.25 Related Transactions Documents.
(a) No rights of cancellation or rescission and, to F.Y.I.'s or
any of its Subsidiaries' knowledge, no defaults or defenses exist with respect
to any of the Related Transactions Documents. F.Y.I. has delivered to the
Agent complete and correct copies of all Related Transactions Documents,
including all schedules and exhibits thereto. The Related Transactions
Documents set forth the entire agreement and understanding of the parties
thereto relating to the subject matter thereof, and there are no other
agreements, arrangements or understandings, written or oral, relating to the
matters covered thereby.
(b) As of the Closing Date, all conditions precedent to the
Related Transactions pursuant to the Related Transactions Documents have been
fulfilled or (with the prior written consent of the Agent) waived, the Related
Transactions Documents have not been amended or otherwise modified (except as
permitted by this Agreement), and there has not been any breach of any material
term or condition contained in the Related Transactions Documents.
Section 7.26 Solvency. F.Y.I. and each of its Subsidiaries, as a
separate entity, is Solvent as of the Closing Date.
Section 7.27 Employee Matters. Except as set forth on Schedule
7.27, as of the Closing Date (a) none of the Loan Parties or any of its
respective Subsidiaries, or any of its respective employees, is subject to any
collective bargaining agreement, and (b) no petition for certification or union
election is pending with respect to the employees of any Loan Party or any of
its respective Subsidiaries, and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of any
of the Loan Parties or any of its respective Subsidiaries. There are no
strikes, slowdowns, work stoppages or controversies pending or, to the best
knowledge of F.Y.I. or any of its Subsidiaries after due inquiry, threatened
against, any of the Loan Parties or any of its respective Subsidiaries, and its
respective employees, which could have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule 7.27, as
of the Closing Date, none of the Loan Parties or any of its respective
Subsidiaries is subject to an employment contract.
Section 7.28 Insurance. Schedule 7.28 sets forth a summary
description of all policies of insurance that will be in effect as of the
Closing Date for F.Y.I. and its Subsidiaries. To the extent such policies have
not been replaced, no notice of cancellation has been received for such
policies and F.Y.I. and its Subsidiaries are in compliance with all of the
terms and conditions of such policies.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 62
<PAGE> 69
Section 7.29 Common Enterprise. The expertise and efforts of
F.Y.I. and each of its Subsidiaries support and benefit the other members of
their affiliated corporate group. F.Y.I. and each Subsidiary expect to derive
substantial benefit (and F.Y.I. and each Subsidiary may reasonably be expected
to derive substantial benefit), directly and indirectly, from the Loans,
Letters of Credit and the other transactions contemplated by this Agreement,
both in their separate capacities and as a member of an affiliated and
integrated corporate group. F.Y.I. and each Subsidiary will receive reasonably
equivalent value in exchange for the collateral and guaranty being provided by
it pursuant to Article 5 as security for the payment and performance of the
Obligations.
ARTICLE 8
Affirmative Covenants
F.Y.I. covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder or any
Letter of Credit remains outstanding, it will perform and observe, or cause to
be performed and observed, the following covenants:
Section 8.1 Reporting Requirements. F.Y.I. will furnish to the
Agent, in quantities sufficient to allow the Agent to distribute the same to
each Lender (and the Agent shall distribute the same to each Lender in a
reasonably prompt fashion after its receipt thereof):
(a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the end of each fiscal year of F.Y.I., beginning
with the fiscal year ending December 31, 1997, (i) a copy of the annual audit
report of F.Y.I. and its consolidated Subsidiaries as of the end of and for
such fiscal year then ended containing, on a consolidated and (if requested by
the Agent) consolidating basis, balance sheets and statements of income,
retained earnings and cash flow, in each case setting forth in comparative form
the figures for the preceding fiscal year, all in reasonable detail and audited
and certified by independent certified public accountants of recognized
standing acceptable to the Agent and containing no qualification thereto except
as may be reasonably acceptable to the Agent, to the effect that such report
has been prepared in accordance with GAAP, (ii) a certificate of such
independent certified public accountants to the Agent (A) stating that to their
knowledge no Default has occurred and is continuing or, if in their opinion a
Default has occurred and is continuing, stating the nature thereof, and (B)
confirming the calculations set forth in the officer's certificate delivered
concurrently therewith, and (iii) if requested by the Agent, unaudited
consolidating balance sheets and statements of income, retained earnings and
cash flow, in each case setting forth in comparative form the figures for the
preceding fiscal year;
(b) Quarterly Financial Statements. As soon as available, and in
any event within 45 days after the end of each of the quarters of each fiscal
year of F.Y.I., beginning with the fiscal quarter ending December 31, 1997, a
copy of (i) an unaudited financial report of F.Y.I. and its consolidated
AMENDED AND RESTATED CREDIT AGREEMENT - Page 63
<PAGE> 70
Subsidiaries as of the end of such fiscal quarter and for the portion of the
fiscal year then ended containing, on a consolidated basis, balance sheets and
statements of income, retained earnings and cash flow, in each case setting
forth in comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail certified by a Responsible
Officer of F.Y.I. to have been prepared in accordance with GAAP and to fairly
and accurately present (subject to year-end audit adjustments) the financial
condition and results of operations of F.Y.I. and its consolidated
Subsidiaries, on a consolidated basis, at the date and for the periods
indicated therein and (ii) management's financial reports comparing actual
financial results for the period to the current budget for the period;
(c) Certificate of No Default, etc.. Concurrently with the
delivery of each of the financial statements referred to in Sections 8.1(a) and
8.1(b)), a certificate, substantially in the form of Exhibit G hereto, of a
Responsible Officer of F.Y.I. (i) stating that, to the best of such officer's
knowledge, no Default has occurred and is continuing or, if a Default has
occurred and is continuing, stating the nature thereof and the action that has
been taken and is proposed to be taken with respect thereto, and (ii) showing
(with respect to each certificate delivered concurrently with the delivery of
each of the financial statements referred to in Section 8.1(a) and 8.1(b)) in
reasonable detail the calculations demonstrating compliance with Section 9.5(i)
and Article 10, (iii) summarizing all material information regarding each
Acquisition made during the fiscal quarter then most recently ended, which
information shall include the names of the acquiror and the entity whose
Capital Stock or assets were acquired, the nature of the assets owned by the
acquired entity or acquired directly (as applicable), the nature of the
business of the acquired entity or in which the assets acquired were and will
be utilized (as applicable), the amount of the purchase price and all other
consideration paid and payable in connection with such Acquisition and the form
of such purchase price or other consideration, the remaining amount (if any) in
each "basket" referred to in the definition of the term "Permitted Acquisition"
after giving effect to all of such Acquisitions and such other information as
the Agent may reasonably request, (iv) attaching (unless the Agent has agreed
that the same need not be attached) the most recent financial statements of the
entity whose Capital Stock or assets were acquired that are available to F.Y.I.
and (if the Agent so requests) a copy of all Permitted Acquisition Documents
relating to such Acquisition referred to in clause (iii) preceding, and (v)
certifying that each Acquisition referred to in clause (iii) preceding is a
Permitted Acquisition (and including financial data supporting such
certification if requested by the Agent) and that no other Acquisitions were
consummated during the fiscal quarter then most recently ended;
(d) Budget. As soon as available and in any event before the
beginning of each fiscal year of F.Y.I. for each fiscal year after 1997, a copy
of the budget of F.Y.I. and its Subsidiaries on a consolidated basis for such
fiscal year (segregated by entity with respect to each entity, if any, to be
acquired which is included in such budget and segregated by quarter or month
and setting forth all material assumptions);
(e) Management Letters. Promptly upon any request therefor by the
Agent, a copy of any management letter or written report submitted to any Loan
Party by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects
AMENDED AND RESTATED CREDIT AGREEMENT - Page 64
<PAGE> 71
or Properties of any such Person;
(f) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits and proceedings before any Governmental
Authority or arbitrator affecting any Loan Party which, if determined adversely
to any such Person could have a Material Adverse Effect;
(g) Notice of Default. As soon as possible and in any event
immediately upon F.Y.I.'s knowledge or the knowledge of any Subsidiary of
F.Y.I. of the occurrence of any Default, a written notice setting forth the
details of such Default and the action that F.Y.I. or such Subsidiary has taken
and proposes to take with respect thereto, and F.Y.I. will also at that time
provide notice of such Default to each holder of Seller Subordinated Debt;
(h) ERISA Reports. Promptly after the filing or receipt thereof,
copies of all reports, including annual reports, and notices which any Loan
Party or any of its ERISA Affiliates files with or receives from the PBGC or
the U.S. Department of Labor under ERISA; and as soon as possible and in any
event within five days after any such Person knows or has reason to know that
any Pension Plan is insolvent, or that any Reportable Event or Prohibited
Transaction has occurred with respect to any Plan or that the PBGC, any Loan
Party or any ERISA Affiliate has instituted or will institute proceedings under
ERISA to terminate or withdraw from or reorganize any Pension Plan, a
certificate of a Responsible Officer of such Loan Party setting forth the
details as to such insolvency, withdrawal, Reportable Event, Prohibited
Transaction, tax or penalty or termination and the action that such Loan Party
has taken and proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, a copy of any statement or report furnished by any Loan Party to any
other party pursuant to the terms of any indenture, loan, stock purchase or
credit or similar agreement and not otherwise required to be furnished to the
Agent and the Lenders pursuant to any other subsection of this Section 8.1;
(j) Notice of Material Adverse Effect. Within five Business Days
after F.Y.I. or any Subsidiary of F.Y.I. becomes aware thereof, written notice
of any matter that could have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of each
financial statement, report, notice or proxy statement sent by any Loan Party
to its stockholders generally and one copy of each regular, periodic or special
report, registration statement or prospectus filed by any Loan Party with any
securities exchange or the Securities and Exchange Commission or any successor
agency, and of all press releases and other statements made by any of the Loan
Parties to the public containing material developments in its business;
(l) Notice of New Properties and Subsidiaries. Concurrently with
the delivery of each of the financial statements referred to in Sections 8.1(a)
and 8.1(b), notice of (i) if the Total Debt to EBITDA Ratio then exceeds 1.75
to 1.00, any real Property acquired or any lease of real Property which meets
the criteria set forth in Section 5.4 entered into by F.Y.I. or any of its
Subsidiaries as
AMENDED AND RESTATED CREDIT AGREEMENT - Page 65
<PAGE> 72
lessee, (ii) if the Total Debt to EBITDA Ratio then exceeds 1.75 to 1.00, any
additional patents, copyrights and trademarks, and any other Intellectual
Property of which the Agent should be aware in order to ensure its Lien
thereon, acquired by F.Y.I. or any of its Subsidiaries, and (iii) the creation
or acquisition of any direct or indirect Subsidiary of F.Y.I. after the Closing
Date and subsequent to the last delivery of such information;
(m) Appraisals. From time to time if the Agent determines that
such appraisals are required to comply with applicable Governmental
Requirements or to syndicate the Loans, appraisals of the Mortgaged Properties
reasonably satisfactory in form and substance to the Agent (such appraisals to
be at the expense of F.Y.I.);
(n) Insurance. Within 30 days after any request therefor by the
Agent, a report in form and substance reasonably satisfactory to the Agent
summarizing all material insurance coverage maintained by F.Y.I. and its
Subsidiaries as of the date of such report and all material insurance coverage
planned to be maintained by such Persons in the subsequent fiscal year;
(o) Plan Information. From time to time, as reasonably requested
by the Agent or any Lender, such books, records and other documents relating to
the any Pension Plan as the Agent or any Lender shall specify; prior to any
termination, partial termination or merger of a Pension Plan covering employees
of F.Y.I. or any Subsidiary of F.Y.I. or any ERISA Affiliate, or a transfer of
assets of a Pension Plan covering employees of F.Y.I. or any Subsidiary of
F.Y.I. or any ERISA Affiliate, written notification thereof; promptly upon
F.Y.I.'s or any F.Y.I. Subsidiary's receipt thereof, a copy of any
determination letter or advisory opinion regarding any Pension Plan received
from any Governmental Authority and any amendment or modification thereto as
may be necessary as a condition to obtaining a favorable determination letter
or advisory opinion; and promptly upon the occurrence thereof, written
notification of any action requested by any Governmental Authority to be taken
as a condition to any such determination letter or advisory opinion;
(p) Environmental Assessments and Notices. Promptly after the
receipt thereof, a copy of each environmental assessment (including any
analysis relating thereto) prepared with respect to any real Property of any
Loan Party and each notice sent by any Governmental Authority relating to any
failure or alleged failure to comply with any Environmental Law or any
liability with respect thereto;
(q) Certain Capital Expenditures. If any Permitted Capital
Expenditures (as defined in Section 10.5) consist of the purchase of all or
substantially all of the assets of any Person, at least 30 days prior to such
purchase, provide evidence satisfactory to the Agent that the contingent
liabilities to be assumed by the purchaser with respect to such assets
(including, without limitation, contingent liabilities relating to ERISA,
environmental matters and litigation) do not exceed ten percent of the purchase
price paid for such assets;
(r) General Information. Promptly, such other information
concerning the Loan Parties and their respective Subsidiaries as the Agent or
any Lender may from time to time reasonably
AMENDED AND RESTATED CREDIT AGREEMENT - Page 66
<PAGE> 73
request; and
(s) Solvency Certificate. At the time of the making of the
initial Loan or the issuance of the initial Letter of Credit and at the making
of each Loan thereafter, a Solvency Certificate.
Section 8.2 Maintenance of Existence, Conduct of Business.
F.Y.I. will, and will cause each of its Subsidiaries to (except as may be
otherwise permitted by Section 9.3), preserve and maintain its corporate
existence and all of its material leases, privileges, licenses, Permits,
franchises, qualifications, Intellectual Property, intangible Property and
rights that are necessary in the ordinary conduct of its business. F.Y.I.
will, and will cause each of its Subsidiaries to, conduct its business in an
orderly and efficient manner in accordance with good business practices, in
each case in all material respects.
Section 8.3 Maintenance of Properties. F.Y.I. will, and will in
all material respects cause each of its Subsidiaries to, maintain, keep and
preserve all of its Properties necessary or appropriate in the proper conduct
of its business in good repair, working order and condition (ordinary wear and
tear excepted) and make all necessary repairs, renewals, replacements,
betterments and improvements thereof.
Section 8.4 Taxes and Claims. F.Y.I. will, and will cause each
of its Subsidiaries to, pay or discharge at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments and governmental charges
(other than those which do not, in the aggregate, exceed $100,000 in amount)
imposed on it or its income or profits or any of its Property and (b) all
lawful claims for labor, material and supplies, which, if unpaid, might become
a Lien upon any of its Property; provided, however, that neither F.Y.I. nor any
of its Subsidiaries shall be required to pay or discharge any tax, levy,
assessment or governmental charge or claim for labor, material or supplies
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings being diligently pursued and for which adequate
reserves have been established under GAAP.
Section 8.5 Insurance.
(a) F.Y.I. will, and will cause each of its Subsidiaries to, keep
insured by financially sound and reputable insurers all Property of a character
usually insured by responsible corporations engaged in the same or a similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations or entities and carry
such other insurance as is usually carried by such corporations or entities,
provided that in any event F.Y.I. and its Subsidiaries (as appropriate) will
maintain:
(i) Property Insurance -- Insurance against loss or
damage covering substantially all of the tangible real and personal
Property and improvements of F.Y.I. and each of its Subsidiaries by
reason of any Peril (as defined below) in such amounts (subject to any
deductibles as shall be satisfactory to the Agent) as shall be
reasonable and customary and sufficient to avoid the insured named
therein from becoming a co-insurer of any loss under
AMENDED AND RESTATED CREDIT AGREEMENT - Page 67
<PAGE> 74
such policy, but in any event in such amounts as are reasonably
available as determined by F.Y.I.'s independent insurance broker
reasonably acceptable to the Agent.
(ii) Automobile Liability Insurance for Bodily Injury and
Property Damage --Insurance in respect of all vehicles (whether owned,
hired or rented by F.Y.I. or any of its Subsidiaries) at any time
located at, or used in connection with, its Properties or operations
against liabilities for bodily injury and Property damage in such
amounts as are then customary for vehicles used in connection with
similar Properties and businesses, but in any event to the extent
required by applicable law.
(iii) Comprehensive General Liability Insurance --
Insurance against claims for bodily injury, death or Property damage
occurring on, in or about the Property (and adjoining streets,
sidewalks and waterways) of F.Y.I. and its Subsidiaries, in such
amounts as are then customary for Property similar in use in the
jurisdictions where such Properties are located.
(iv) Worker's Compensation Insurance -- Worker's
compensation insurance (including employers' liability insurance) to
the extent required by applicable law, which may be self-insurance to
the extent permitted by applicable law.
(v) Product Liability Insurance -- Insurance against
claims for bodily injury, death or Property damage resulting from the
use of products sold by F.Y.I. or any of its Subsidiaries to the
extent and in such amounts as then customarily maintained by
responsible Persons engaged in businesses similar to that of F.Y.I.
and/or any of its Subsidiaries.
(vi) Business Interruption Insurance -- Insurance against
loss of operating income earned from the operation of the Properties
of F.Y.I. and its Subsidiaries, by reason of any Peril (to the extent
reasonably available) affecting the operation thereof, and insurance
against any other insurable loss of operating income by reason of any
business interruption affecting F.Y.I. or any of its Subsidiaries to
the extent covered by standard business interruption policies in the
applicable states.
Such insurance shall be written by financially responsible companies selected
by F.Y.I. and having an A.M. Best Rating of "A-" or better and being in a
financial size category of "VI" or larger, or by other companies reasonably
acceptable to the Required Lenders. No later than the date of the making of
the initial Loan or the issuance of the initial Letter of Credit, each policy
referred to in this Section 8.5 shall provide that it will not be canceled,
amended or reduced except after not less than 30 days' prior written notice to
the Agent and shall also provide that the interests of the Agent and the
Lenders shall not be invalidated by any act or negligence of F.Y.I. or any of
its Subsidiaries. F.Y.I. will advise the Agent promptly of any policy
cancellation, reduction or amendment. For purposes hereof, the term "Peril"
shall mean, collectively, fire, lightning, flood, windstorm, hail, explosion,
riot and civil commotion, vandalism and malicious mischief, damage from
aircraft, vehicles and smoke and other perils covered by the "all-risk"
endorsement then in use in the jurisdictions where the Properties of F.Y.I. and
its Subsidiaries are located.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 68
<PAGE> 75
(b) If a Default shall have occurred and be continuing, F.Y.I.
will cause all proceeds of insurance paid on account of the loss of or damage
to any Property of F.Y.I. or any of its Subsidiaries and all awards of
compensation for any Property of F.Y.I. or any of its Subsidiaries taken by
condemnation or eminent domain to be paid directly to the Agent to be applied
against or held as security for the Obligations, at the election of the Agent
and the Required Lenders.
Section 8.6 Inspection Rights. F.Y.I. will, and will cause each
of its Subsidiaries to, permit representatives and agents of the Agent and each
Lender, during normal business hours and upon reasonable notice to F.Y.I., to
examine, copy and make extracts from its books and records, to visit and
inspect its Properties and to discuss its business, operations and financial
condition with its officers and independent certified public accountants.
F.Y.I. will authorize its accountants in writing (with a copy to the Agent) to
comply with this Section 8.6. The Agent or its representatives may, at any time
and from time to time at F.Y.I.'s expense, conduct field exams for such
purposes as the Agent may reasonably request.
Section 8.7 Keeping Books and Records. F.Y.I. will, and will
cause each of its Subsidiaries to, maintain appropriate books of record and
account in accordance with GAAP consistently applied in which true, full and
correct entries will be made of all their respective dealings and business
affairs. If any Accounting Changes from the accounting principles used in the
preparation of the financial statements referenced in Section 8.1 are hereafter
required or permitted by GAAP and are adopted by any F.Y.I. or any of its
Subsidiaries, the provisions of Section 1.3(a) shall be applicable thereto;
provided that, until any necessary amendments have been made, the certificate
required to be delivered under Section 8.1(c) hereof demonstrating compliance
with Article 10 shall include calculations setting forth the adjustments from
the relevant items as shown in the current financial statements based on the
changes to GAAP to the corresponding items based on GAAP as used in the
financial statements referenced in Section 7.2(a), in order to demonstrate how
such financial covenant compliance was derived from the current financial
statements.
Section 8.8 Compliance with Laws. F.Y.I. will, and will cause
each of its Subsidiaries to, comply with all applicable Governmental
Requirements, except for instances of noncompliance that could not have,
individually or in the aggregate, a Material Adverse Effect.
Section 8.9 Compliance with Agreements. F.Y.I. will, and will
cause each of its Subsidiaries to, comply with all agreements, contracts and
instruments binding on it or affecting its Properties or business, except for
instances of noncompliance that could not have, individually or in the
aggregate, a Material Adverse Effect.
Section 8.10 Further Assurances. F.Y.I. will, and will cause each
of its Subsidiaries to, execute and deliver such further agreements, documents
and instruments and take such further action as may be reasonably requested by
the Agent to carry out the provisions and purposes of this Agreement and the
other Loan Documents, to evidence the Obligations and to create, preserve,
maintain and perfect the Liens of the Agent for the benefit of itself and the
Lenders in and to the Collateral and the required priority of such Liens.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 69
<PAGE> 76
Section 8.11 ERISA; Plans. F.Y.I. will, and will cause each of
its ERISA Affiliates to, comply with all minimum funding requirements and all
other material requirements of ERISA, if applicable, so as not to give rise to
any liability thereunder.
Section 8.12 Trade Accounts Payable. F.Y.I. will, and will cause
each of its Subsidiaries to, pay all trade accounts payable before the same
become more than 90 days past due, except (a) trade accounts payable contested
in good faith or (b) trade accounts payable in an aggregate amount not to
exceed at any time outstanding $400,000 and with respect to which no proceeding
to enforce collection has been commenced or, to the knowledge of F.Y.I. or any
Subsidiary of F.Y.I., threatened.
Section 8.13 No Consolidation. F.Y.I. will, and (except with
respect to clause (a) succeeding which shall not be applicable to Subsidiaries
of F.Y.I.) will cause each of its Subsidiaries to:
(a) with respect to F.Y.I. only, provide that, at all times, at
least one (1) member of its board of directors or at least one (1) of its
officers will be a Person who is not an officer, director or employee of any
Affiliate of F.Y.I. or any other Subsidiary;
(b) maintain corporate records and books of account separate from
those of any corporation which is an Affiliate of F.Y.I. and separate from
those of any Subsidiary of F.Y.I.;
(c) not commingle its funds or assets with those of any
corporation which is an Affiliate of F.Y.I. or with those of any Subsidiary of
F.Y.I.; and
(d) provide that its board of directors will hold all appropriate
meetings to authorize and approve such Person's corporate actions.
ARTICLE 9
Negative Covenants
Each of F.Y.I. and each of its Subsidiaries jointly and severally
covenants and agrees that, as long as the Obligations or any part thereof are
outstanding or any Lender has any Commitment hereunder or any Letter of Credit
remains outstanding, it will perform and observe, or cause to be performed and
observed, the following covenants:
Section 9.1 Debt. F.Y.I. will not, and will not permit any of
its Subsidiaries to, incur, create, assume or permit to exist any Debt, except:
(a) Debt of F.Y.I. and its Subsidiaries to the Lenders pursuant to
the Loan Documents;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 70
<PAGE> 77
(b) Existing Debt described on Schedule 7.10 hereto and renewals,
replacements (on terms no more onerous to the borrower than the existing
terms), and extensions of such Debt which do not increase the outstanding
principal amount of, such Debt and the terms and provisions of which are not
materially more onerous than the terms and conditions of such Debt on the
Closing Date;
(c) Purchase money Debt secured by purchase money Liens, which
Debt and Liens are permitted under and meet all of the requirements of clause
(g) of the definition of Permitted Liens contained in Section 1.1;
(d) Seller Subordinated Debt; provided, however, that no Seller
Subordinated Debt may be created or incurred during the continuance of any
Default or Event of Default or if a Default or Event of Default would result
from the creation or incurrence of such Seller Subordinated Debt;
(e) Intercompany Debt between or among F.Y.I. and any of its
Wholly-Owned Subsidiaries incurred in the ordinary course of business, subject
to the requirement that any and all of the Debt permitted pursuant to this
Section 9.1(e) shall be unsecured, shall be evidenced by instruments
satisfactory to the Agent which will be pledged to the Agent for the benefit of
the Agent and the Lenders and shall be subordinated to the Obligations pursuant
to a subordination agreement in form and substance satisfactory to the Agent
(the foregoing being referred to as "Intercompany Debt");
(f) Obligations under Interest Rate Protection Agreements and
Currency Hedge Agreements, provided that each counterparty shall be Banque
Paribas or another counterparty rated in one of the three highest rating
categories of Standard and Poors Corporation or Moody's Investors Service,
Inc., and provided that the maximum amount for which interest may be fixed or
capped under all such Interest Rate Protection Agreements may not exceed one
hundred percent (100%) of the Debt of F.Y.I. and its Subsidiaries, and provided
further, however, that the maximum amount of currency for which risk may be
hedged under a Currency Hedge Agreement may not exceed one hundred percent
(100%) of the foreign currency at risk in the transactions in which F.Y.I. and
its Subsidiaries are engaged; and
(g) Liabilities of F.Y.I. or any F.Y.I. Subsidiary in respect of
unfunded vested benefits under any Plan if and to the extent that the existence
of such liabilities will not constitute, cause or result in a Default;
provided, however, that, notwithstanding the foregoing, the aggregate
outstanding principal amount of Debt of the Subsidiaries of F.Y.I., exclusive
of Debt referred to in clause (a) preceding, shall not at any time exceed
$10,000,000.
Section 9.2 Limitation on Liens. F.Y.I. will not, and will not
permit any of its Subsidiaries to, incur, create, assume or permit to exist any
Lien upon any of its Property or
AMENDED AND RESTATED CREDIT AGREEMENT - Page 71
<PAGE> 78
revenues, whether now owned or hereafter acquired, except Permitted Liens.
Section 9.3 Mergers, Etc. F.Y.I. will not, and will not permit
its Subsidiaries to, (a) become a party to a merger or consolidation, (b)
wind-up, dissolve or liquidate itself, or (c) purchase or acquire all or a
material or substantial part of the business or Properties of any Person;
provided, however, that (i) Permitted Acquisitions (but no other Acquisitions)
shall be permitted, and (ii) any Subsidiary of F.Y.I. may merge with and into
F.Y.I. if F.Y.I. is the entity surviving such merger and any Subsidiary of
F.Y.I. may merge with and into any Wholly-Owned Subsidiary of F.Y.I. if such
Wholly-Owned Subsidiary is the entity surviving such merger and no
consideration is given by the surviving entity in such merger other than
Capital Stock of the surviving entity and such Capital Stock is pledged to the
Agent, on behalf of the Agent and the Lenders, as security for the Obligations
pursuant to Section 9.6. The surviving entity in any such merger shall ratify
the Security Documents and other obligations of the non-surviving entity under
the Loan Documents.
Section 9.4 Restricted Payments. F.Y.I. will not, and will not
permit any of its Subsidiaries to, make any Restricted Payments, except:
(a) Subsidiaries of F.Y.I. may declare and pay dividends to
F.Y.I.;
(b) The Subsidiaries of F.Y.I. may make tax payments to F.Y.I. if
and to the extent that all such payments are promptly paid by F.Y.I. to the
appropriate Governmental Authority to whom such payments are owed; provided
that in no event shall such payments be greater than the amounts actually paid
by F.Y.I. in respect of such taxes;
(c) To the extent required by the terms of any employment
agreement, purchases by F.Y.I. of shares of F.Y.I. Common Stock from employees
of F.Y.I. or its Subsidiaries upon the termination of the employment of such
employees, provided that the amount paid therefor shall not exceed the fair
market value of such shares to be purchased and shall not exceed $250,000 in
the aggregate during any fiscal year or a cumulative total of $350,000 in the
aggregate during the term of this Agreement and F.Y.I. shall grant to the
Agent, for the benefit of the Agent and the Lenders, a Lien on all of such
shares purchased by F.Y.I. as security for the Obligations pursuant to a pledge
agreement in form and substance reasonably satisfactory to the Agent;
(d) To the extent permitted under Sections 9.5(g) and 9.5(h);
provided, however, that no Restricted Payments may be made pursuant to clauses
(a), (b), (c) or (d) preceding if a Default exists at the time of such
Restricted Payment or would result therefrom.
Section 9.5 Investments. F.Y.I. will not, and will not permit
any of its Subsidiaries to, make or permit to remain outstanding any advance,
loan, extension of credit or capital contribution to or investment in any
Person, or purchase or own any stock, bonds, notes, debentures or other
securities of any Person, or be or become a joint venturer with or partner of
any Person (all such
AMENDED AND RESTATED CREDIT AGREEMENT - Page 72
<PAGE> 79
transactions being herein called "Investments"), except:
(a) Investments in obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
F.Y.I. or any of its Subsidiaries;
(b) Existing Investments identified on Schedule 9.5 hereto;
(c) Investments in securities issued or guaranteed by the U.S. or
any agency thereof with maturities of one year or less from the date of
acquisition;
(d) Investments in certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any Lender or with any domestic commercial
bank having capital and surplus in excess of $500,000,000;
(e) Investments in repurchase obligations with a term of not more
than seven days for securities of the types described in clause (c) preceding
with any Lender or with any domestic commercial bank having capital and surplus
in excess of $500,000,000;
(f) Investments in commercial paper of a domestic issuer rated A-1
or better or P-1 or better by Standard & Poor's Corporation or Moody's
Investors Services, Inc., respectively, maturing not more than six months from
the date of acquisition;
(g) (i) Investments by F.Y.I. and its Subsidiaries in its
Subsidiaries existing on the Closing Date, (ii) any Investments of F.Y.I. in
its Subsidiaries which represent amounts invested in such Subsidiary to enable
such Subsidiary (A) to pay all or a portion of the purchase consideration for a
Permitted Acquisition, (B) to make Permitted Capital Expenditures, (C) to
retire any Existing Debt, or (D) to retire any Debt assumed in connection with
a Permitted Acquisition, and (iii) Investments by F.Y.I. in Wholly-Owned
Subsidiaries of F.Y.I.;
(h) Intercompany Debt permitted pursuant to Section 9.1(e);
(i) up to $10,000,000 in Investments made by F.Y.I., and owned by
F.Y.I. and not any Subsidiary of F.Y.I., in publicly traded equity securities
of a Person whose material business and properties are all located in the U.S.
or Canada and who is engaged in a business similar or complementary to the
business of F.Y.I. or a Subsidiary of F.Y.I. and which has generated positive
EBITDA during the twelve-month period preceding the purchase of such securities
so long as the aggregate of such equity securities owned by F.Y.I. does not at
any time exceed (a) 5% of the total assets of F.Y.I. and its consolidated
Subsidiaries as determined in accordance with GAAP; and
(j) Investments which constitute Permitted Acquisitions;
provided, however, that no Investments may be made by F.Y.I. or any of its
Subsidiaries pursuant
AMENDED AND RESTATED CREDIT AGREEMENT - Page 73
<PAGE> 80
to clause (g) or (h) preceding if a Default exists at the time of such
Investment or would result therefrom.
Section 9.6 Limitation on Issuance of Capital Stock. F.Y.I. will
not permit any of its Subsidiaries to, at any time issue, sell, assign or
otherwise dispose of (a) any of its Capital Stock, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its Capital Stock, or (c) any option, warrant or other right to acquire any of
its Capital Stock; provided, however, that, if and to the extent not otherwise
prohibited by this Agreement or the other Loan Documents (i) a Subsidiary of
F.Y.I. may issue additional shares of its Capital Stock to F.Y.I. for full and
fair consideration, and (ii) F.Y.I. may engage in any merger permitted under
clause (ii) of the proviso to Section 9.3; provided, further, however, that all
of such additional shares of Capital Stock referred to in clauses (i) and (ii)
preceding and any shares of Capital Stock issued in any merger referred to in
clause (ii) preceding shall be pledged to the Agent, on behalf of the Agent and
the Lenders, as security for the Obligations pursuant to a pledge agreement in
form and substance reasonably satisfactory to the Agent.
Section 9.7 Transactions With Affiliates. Except for (a) the
payment of salaries, bonus and incentive compensation in the ordinary course of
business consistent with prudent business practices, and (b) the furnishing of
employment benefits in the ordinary course of business consistent with prudent
business practices, F.Y.I. will not, and will not permit any of its
Subsidiaries to, enter into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate, officer or director of F.Y.I. or such Subsidiary except in the
ordinary course of and pursuant to the reasonable requirements of F.Y.I.'s or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to F.Y.I. or such Subsidiary, respectively, than would be obtained in a
comparable arms-length transaction with a Person not an Affiliate, officer or
director of F.Y.I. or such Subsidiary, respectively.
Section 9.8 Disposition of Property. F.Y.I. will not, and will
not permit any of its Subsidiaries to, sell, lease, assign, transfer or
otherwise dispose of any of its Property, except:
(a) dispositions of Inventory in the ordinary course of business,
(b) Asset Dispositions by F.Y.I. and its Subsidiaries to Persons
other than F.Y.I. and its Subsidiaries if each of the following conditions has
been satisfied: (i) the Net Proceeds from any single Asset Disposition or
series of related Asset Dispositions in any fiscal year of F.Y.I. do not exceed
$250,000 and the cumulative Net Proceeds from all Asset Dispositions do not
exceed $500,000, (ii) the consideration received by F.Y.I. or its Subsidiaries
is at least equal to the fair market value of such assets, (iii) the sole
consideration received is cash payable at the closing, provided, however, that
up to a cumulative total of $125,000 of Property may be disposed of by F.Y.I.
and its Subsidiaries on a combined basis on terms which defer payment of a
portion of the purchase price, (iv) no Default exists at the time of or will
result from such Asset Disposition, and (v) F.Y.I. makes, or causes the
appropriate Subsidiary to make, any payment required under Section 2.7;
AMENDED AND RESTATED CREDIT AGREEMENT - Page 74
<PAGE> 81
(c) Asset Dispositions by F.Y.I. and its Subsidiaries to F.Y.I. or
another Subsidiary if each of the following conditions has been satisfied: (i)
the aggregate fair market value of the assets sold, disposed of or otherwise
transferred shall not exceed $250,000 in aggregate amount during any fiscal
year, (ii) the assets sold, disposed of or otherwise transferred shall, if
subject to a first priority Lien in favor of the Agent and the Lenders,
continue to be subject to a perfected, first priority Lien (except for
Permitted Liens, if any, which are expressly permitted by the Loan Documents to
have priority over the Liens in favor of the Agent) in favor of the Agent and
the Lenders, and (iii) no Default exists at the time of or will result from
such Asset Disposition;
(d) dispositions of Property no longer used or useful in the
ordinary course of business;
(e) Asset Dispositions that were contemplated and disclosed to the
Lenders at the time of any Permitted Acquisition if the Asset Disposition
occurs, and the Net Proceeds thereof are applied, as required or permitted by
Section 2.7; and
(f) Asset Dispositions by Subsidiaries of F.Y.I., and Asset
Dispositions consisting of a sale of all of the issued and outstanding Capital
Stock of a Subsidiary of F.Y.I., if the aggregate fair market value of the
Property sold or otherwise transferred in connection with all of such Asset
Dispositions on or after the Closing Date does not exceed ten percent of the
net book value of the tangible assets of F.Y.I. and its Subsidiaries as of the
date of any such Asset Disposition.
Section 9.9 Sale and Leaseback. F.Y.I. will not, and will not
permit any of its Subsidiaries to, enter into any arrangement with any Person
pursuant to which it leases from such Person real or personal Property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 9.10 Lines of Business. F.Y.I. will not, and will not
permit any of its Subsidiaries to, engage in any line or lines of business
activity other than the businesses in which they are engaged on the Closing
Date and lines of business reasonably related thereto. F.Y.I. will not,
without the prior written consent of the Required Lenders, become an operating
company and will not engage in any business activity except for business
activities relating to its ownership and management of its Subsidiaries
substantially consistent with its current business activities. F.Y.I. shall
not and shall not permit any of its Subsidiaries to own Property or conduct any
material business operations outside the U.S., Canada or, to the extent
permitted by the last proviso in the definition of Permitted Acquisitions,
Mexico and the Caribbean.
Section 9.11 Environmental Protection. F.Y.I. will not, and will
not permit any of its Subsidiaries to, (a) use (or permit any tenant to use)
any of its Properties for the handling, processing, storage, transportation or
disposal of any Hazardous Material except in compliance with applicable
Environmental Laws, (b) generate any Hazardous Material except in compliance
with applicable Environmental Laws, (c) conduct any activity that is likely to
cause a Release or threatened Release of any Hazardous Material in violation of
any Environmental Law, or (d) otherwise conduct any activity or use any of its
Properties in any manner that violates or is likely
AMENDED AND RESTATED CREDIT AGREEMENT - Page 75
<PAGE> 82
to violate any Environmental Law or create any Environmental Liabilities for
which F.Y.I. or any of its Subsidiaries would be responsible, except for
circumstances or events described in clauses (a) through (d) preceding that
could not have, individually or in the aggregate, a Material Adverse Effect.
Section 9.12 Intercompany Transactions. Except as may be
expressly permitted or required by the Loan Documents, F.Y.I. will not, and
will not permit any of its Subsidiaries to, create or otherwise cause or permit
to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any Subsidiary to (a) pay dividends or make any other
distribution to F.Y.I. or any of its Subsidiaries in respect of such
Subsidiary's Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, (b) pay any indebtedness owed to
F.Y.I. or any of its Subsidiaries, (c) make any loan or advance to F.Y.I. or
any of its Subsidiaries, or (d) sell, lease or transfer any of its Property to
F.Y.I. or any of its Subsidiaries.
Section 9.13 Management Fees. F.Y.I. will not, and will not
permit any of its Subsidiaries to, pay any management, consulting or similar
fees (excluding directors' fees) to any Affiliate of F.Y.I. or to any director,
officer or employee of F.Y.I. or any Affiliate of F.Y.I.; provided, however,
that any Subsidiary of F.Y.I. may pay management or similar fees to F.Y.I. to
the extent that the amount of such fees paid in any year does not exceed ten
percent of the gross revenues of the paying Subsidiary for that year.
Section 9.14 Modification of Other Agreements. F.Y.I. will not,
and will not permit any of its Subsidiaries to, consent to or implement any
termination, amendment, modification, supplement or waiver of (a) the F.Y.I.
Equity Documents, if the same could have a Material Adverse Effect or otherwise
could be materially adverse to the Agent or the Lenders, (b) the certificate of
incorporation or bylaws (or analogous constitutional documents) of F.Y.I. or
any of its Subsidiaries if the same could have a Material Adverse Effect or
otherwise could be materially adverse to the Agent or the Lenders, or (c) any
other Material Contract to which it is a party or any Permit which it possesses
if the same could have a Material Adverse Effect; provided, however, that
F.Y.I. and its Subsidiaries may amend or modify the agreements, documents and
instruments referred to in clause (c) preceding if and to the extent that such
amendment or modification is not substantive or material and could not have a
Material Adverse Effect.
Section 9.15 ERISA Plans. F.Y.I. will not, and will not permit
any of its Subsidiaries to:
(a) allow, or take (or permit any ERISA Affiliate to take) any
action which would cause, any unfunded or unreserved liability for benefits
under any Plan (exclusive of any Multiemployer Plan) to exist or to be created
that exceeds $25,000 with respect to any such Plan or $50,000 with respect to
all such Plans in the aggregate on either a going concern or a wind-up basis;
or
(b) with respect to any Multiemployer Plan, allow, or take (or
permit any ERISA Affiliate to take) any action which would cause, any unfunded
or unreserved liability for benefits under any Multiemployer Plan to exist or
to be created, either individually as to any such Plan or in the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 76
<PAGE> 83
aggregate as to all such Plans, that could, upon any partial or complete
withdrawal from or termination of any such Multiemployer Plan or Plans, have a
Material Adverse Effect.
Section 9.16 Dividend Restrictions. F.Y.I. will not permit any of
its Subsidiaries to be party to or bound by any agreement, document,
instrument, covenant or other restriction (other than this Agreement) which
restricts the ability of such Subsidiary to pay dividends to, make distribution
to, and make advance to, F.Y.I. or any Subsidiary of F.Y.I.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 77
<PAGE> 84
ARTICLE 10
Financial Covenants
F.Y.I. covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder or any
Letter of Credit remains outstanding, it will perform and observe, or cause to
be performed and observed, the following covenants:
Section 10.1 Consolidated Net Worth. F.Y.I. will at all times
maintain Consolidated Net Worth in an amount not less than the sum of (a)
$90,000,000 plus (b) 75% of cumulative Consolidated Net Income, if positive,
for any fiscal quarter, i.e., exclusive of negative Consolidated Net Income for
any fiscal quarter, after December 31, 1997, plus (c) all Net Proceeds of each
Equity Issuance after December 31, 1997, minus the amount of any stock
repurchase consummated under the terms of Section 9.4(c).
Section 10.2 Ratio of Total Debt to EBITDA.
(a) F.Y.I. will not permit the ratio, calculated as of the end of
each fiscal quarter of F.Y.I. commencing with the fiscal quarter ended December
31, 1997, of (i) Total Debt to (ii) EBITDA (the "Total Debt to EBITDA Ratio")
for the four fiscal quarters then ended for F.Y.I. and its Subsidiaries to
exceed the ratio set forth below for the period during which such fiscal
quarter end occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From December 31,1997, through December 31, 2000 3.00 to 1.00
From January 1, 2001 through December 31, 2001 2.50 to 1.00
From January 1, 2002 and at all times thereafter 2.00 to 1.00
</TABLE>
(b) F.Y.I. will not permit the ratio, calculated as of the end of
each fiscal quarter of F.Y.I. commencing with the fiscal quarter ended June 30,
1996, of (i) the sum of (A) Total Debt, plus (B) the highest possible amount of
all unpaid Seller Earn Out payable pursuant to an Acquisition contract in cash
over any period of time, whether the payment of such Seller Earn Out is
contingent or otherwise, to (ii) the sum of (A) EBITDA for the four fiscal
quarters then ended for F.Y.I. and its Subsidiaries plus (B) the EBITDA or EBIT
required by the applicable Acquisition contract(s) to generate the amount of
Seller Earn Out set forth in (i)(B) above (the "Adjusted Total Debt to EDITDA
Ratio") to exceed the ratio set forth below for the period during which such
fiscal quarter end occurs:
AMENDED AND RESTATED CREDIT AGREEMENT - Page 78
<PAGE> 85
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From December 31, 1997, through December 31, 2000 3.25 to 1.00
From January 1, 2001 through December 31, 2001 2.75 to 1.00
From January 1, 2002, and at all times thereafter 2.25 to 1.00
</TABLE>
Section 10.3 Consolidated Fixed Charge Coverage Ratio. F.Y.I.
will not permit the Consolidated Fixed Charge Coverage Ratio, calculated as of
the end of each fiscal quarter of F.Y.I.. commencing with the fiscal quarter
ended December 31, 1997, for the four fiscal quarters of F.Y.I. then ended, to
be less than 1.50 to 1.00.
Section 10.4 Consolidated Interest Coverage Ratio. F.Y.I. will
not permit the Consolidated Interest Coverage Ratio, calculated as of the end
of each fiscal quarter of F.Y.I. commencing with the fiscal quarter ended
December 31, 1997, for the four fiscal quarters of F.Y.I. then ended, to be
less than the ratio set forth below for the period during which such fiscal
quarter end occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From December 31, 1997, through December 31, 2000 4.00 to 1.00
From January 1, 2001 through December 31, 2001 4.50 to 1.00
From January 1, 2002, and at all times thereafter 5.00 to 1.00
</TABLE>
Section 10.5 Capital Expenditures. F.Y.I. will not permit the
aggregate Capital Expenditures of F.Y.I. and its Subsidiaries during any fiscal
year of F.Y.I. to exceed the sum of (a) $10,000,000 ("Permitted Capital
Expenditures") plus (b) an amount equal to 110% of the annual depreciation of
any entity acquired in a Permitted Acquisition (i) for the fiscal year in which
such Permitted Acquisition is made, for the twelve-month period preceding the
date of the Permitted Acquisition multiplied by a fraction the numerator of
which is the number of calendar days remaining in the fiscal year in which such
Permitted Acquisition is consummated after the date of consummation of such
Permitted Acquisition and the denominator of which is 365, and (ii) for each
subsequent fiscal year, increasing at a rate of three percent (3%).
AMENDED AND RESTATED CREDIT AGREEMENT - Page 79
<PAGE> 86
ARTICLE 11
Default
Section 11.1 Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) F.Y.I. or any of its Subsidiaries shall fail to pay, repay or
prepay when due any amount of principal owing to the Agent or any Lender
pursuant to this Agreement or any other Loan Document, or shall fail to pay
within two days after the due date thereof any interest, fee or other amount or
other Obligation owing to the Agent or any Lender pursuant to this Agreement or
any other Loan Document.
(b) Any representation or warranty made or deemed made by F.Y.I.
or any of its Subsidiaries or by any Loan Party in any Loan Document or in any
certificate, report, notice or financial statement furnished at any time in
connection with this Agreement or any other Loan Document shall be false,
misleading or erroneous in any material respect when made or deemed to have
been made.
(c) F.Y.I. or any of its Subsidiaries shall fail to perform,
observe or comply with any covenant, agreement or term contained in Sections
5.1, 5.2, 8.1(g), 8.1(j), 8.2 (other than the last sentence of Section 8.2),
8.6, or 8.7, Article 9 (other than Section 9.7, 9.11 and 9.15) or Article 10 of
this Agreement; F.Y.I. or any of its Subsidiaries shall fail to perform,
observe or comply with any covenant, agreement or term contained in Sections
5.3, 8.1 (other than Sections 8.1(g), or 8.1(j)), 8.4, 8.5, 8.8, 8.9, 8.10,
8.12, 9.7 or 9.11) and such failure is not remedied or waived within ten days
after such failure commenced; F.Y.I. or any of its Subsidiaries shall fail to
perform, observe or comply with any covenant, agreement or term contained in
any Security Agreement other than in Section 4.05, 4.08, 4.11(b), 4.11(c), 4.12
or 4.16 thereof; F.Y.I. or any of its Subsidiaries shall fail to perform,
observe or comply with any covenant, agreement or term contained in any
Mortgage executed by it and such failure shall continue beyond any grace or
cure period specified in such Mortgage; any Guarantor shall fail to perform,
observe or comply with any covenant, agreement or term contained in its
Guaranty, subject to any grace period applicable to such covenant, agreement or
term in this Agreement to the extent this Agreement is incorporated therein by
reference; or any Loan Party shall fail to perform, observe or comply with any
other covenant, agreement or term contained in this Agreement or any other Loan
Document (other than covenants to pay the Obligations) and such failure is not
remedied or waived within the earlier to occur of 30 days after such failure
commenced or, if a different grace period is expressly made applicable in such
other Loan Documents, such applicable grace period.
(d) F.Y.I. ceases to be Solvent or any other Loan Party (other
than a Nonmaterial Subsidiary) ceases to be Solvent for a period exceeding 15
days from the earlier of the date notice of such failure to remain Solvent is
given by the Agent to F.Y.I. or the date F.Y.I. is obligated to give
AMENDED AND RESTATED CREDIT AGREEMENT - Page 80
<PAGE> 87
notice of such Default to the Agent under Section 8.1(g), or any Loan Party
(other than a Nonmaterial Subsidiary) shall admit in writing its inability to,
or be generally unable to, pay its debts as such debts become due; provided,
however, that if any Loan Party shall cease to be Solvent more than once in any
twelve-month period, such occurrence shall immediately become an Event of
Default.
(e) Any Loan Party (other than a Nonmaterial Subsidiary) shall (i)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner, liquidator or the like of itself or of
all or any substantial part of its Property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the United
States Bankruptcy Code as now or hereafter in effect (the "Bankruptcy Code"),
(iv) institute any proceeding or file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding-up or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code, or
(vi) take any corporate or other action for the purpose of effecting any of the
foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval or consent of any of the Loan Parties in (other than a
Nonmaterial Subsidiary) any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of any of the Loan Parties
or of all or any substantial part of its Property, or (iii) similar relief in
respect of any of the Loan Parties under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
and such proceeding or case shall continue undismissed, or an order, judgment
or decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or an order
for relief against any of the Loan Parties shall be entered in an involuntary
case under the Bankruptcy Code.
(g) Any one or more of the Loan Parties shall fail to discharge
within a period of 30 days after the commencement thereof any attachment,
sequestration, forfeiture or similar proceeding or proceedings involving an
aggregate amount in excess of $1,000,000 against any of its or their
Properties.
(h) A final judgment or judgments for the payment of money in
excess of $1,000,000 in the aggregate shall be rendered by a court or courts
against the Loan Parties or any of them on claims not covered by insurance or
as to which the insurance carrier has denied responsibility and the same shall
not be paid or discharged, or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof and the Loan Parties
shall not, within said period of 30 days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.
(i) Any of the Loan Parties shall fail to pay when due any
principal of or interest on any
AMENDED AND RESTATED CREDIT AGREEMENT - Page 81
<PAGE> 88
Debt (other than the Obligations) having (either individually or in the
aggregate) a principal amount of at least $1,000,000, or the maturity of any
such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any event shall
have occurred (and shall not have been waived or otherwise cured) that permits
(or, with the giving of notice or lapse of time or both, would permit) any
holder or holders of such Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Permitted
Holder, any Loan Party, or any of its Affiliates, or any Loan Party shall deny
that it has any further liability or obligation under any of the Loan
Documents, or any Lien created by the Loan Documents shall for any reason cease
to be a valid, first priority perfected Lien (except for Permitted Liens, if
any, which are expressly permitted by the Loan Documents to have priority over
the Liens in favor of the Agent) upon any of the Collateral purported to be
covered thereby.
(k) Any of the following events shall occur or exist with respect
to any Loan Party or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any Pension Plan;
(iii) the filing under Section 4041 of ERISA of a notice of intent to terminate
any Pension Plan or the termination of any Pension Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Pension Plan, or the institution by
the PBGC of any such proceedings; (v) any "accumulated funding deficiency" (as
defined in Section 406 of ERISA or Section 412 of the Code), whether or not
waived, shall exist with respect to any Plan; or (vi) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Plan or the
reorganization, insolvency or termination (other than in connection with an
Acquisition and in compliance with ERISA and other applicable laws) of any
Pension Plan; and in each case above, such event or condition, together with
all other events or conditions, if any, have subjected or could in the
reasonable opinion of Required Lenders subject any Loan Party or any ERISA
Affiliate to any tax, penalty or other liability to a Plan, a Multiemployer
Plan, the PBGC or otherwise (or any combination thereof) which in the aggregate
exceed or could reasonably be expected to exceed $2,000,000.
(l) The occurrence of a Change of Control.
(m) If, at any time, the subordination provisions of any of the
Seller Subordinated Debt shall be invalidated or shall otherwise cease to be in
full force and effect.
(n) The occurrence of any Material Adverse Effect; provided,
however, that, for purposes of this Section 11.1(n), no Material Adverse Effect
shall be deemed to have occurred under clause (a) of the definition of Material
Adverse Effect in Section 1.1 unless, based upon the financial condition or
financial performance of F.Y.I., it is not reasonable to expect that F.Y.I.
will be able to
AMENDED AND RESTATED CREDIT AGREEMENT - Page 82
<PAGE> 89
comply with all its financial covenants set forth in Article 10.
Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (subject to Section 13.11 with respect to clauses (a)
and (b) below) and, if directed by the Required Lenders, the Agent shall do any
one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Loans and all other amounts payable by
F.Y.I. or any of its Subsidiaries under the Loan Documents immediately due and
payable, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest or other formalities of
any kind, all of which are hereby expressly waived by F.Y.I.;
(b) Termination of Commitments. Terminate the Commitments
(including, without limitation, the obligation of the Issuing Bank to issue
Letters of Credit) without notice to F.Y.I.;
(c) Judgment. Reduce any claim to judgment;
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted
to the Agent for the benefit of the Agent and the Lenders to secure payment and
performance of the Obligations in accordance with the terms of the Loan
Documents; or
(e) Rights. Exercise any and all rights and remedies afforded by
the laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity or otherwise, including, without limitation, the right of
setoff provided by Section 5.6 of this Agreement;
provided, however, that upon the occurrence of an Event of Default under
Section 11.1(e) or Section 11.1(f), the Commitments of all of the Lenders
(including, without limitation, the obligation of the Issuing Bank to issue
Letters of Credit) shall immediately and automatically terminate, and the
outstanding principal of and accrued and unpaid interest on the Loans and all
other amounts payable by F.Y.I. under the Loan Documents shall thereupon become
immediately and automatically due and payable, all without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest or other formalities of any kind, all of which are hereby
expressly waived by the F.Y.I.
Section 11.3 Cash Collateral. If an Event of Default shall have
occurred and be continuing the F.Y.I. shall, if requested by the Agent or the
Required Lenders, pledge to the Agent as security for the Obligations an amount
in immediately available funds equal to the then outstanding Letter of Credit
Liabilities, such funds to be held in a cash collateral account satisfactory to
the Agent without any right of withdrawal by F.Y.I. or any of its Subsidiaries.
Section 11.4 Performance by the Agent. If any Loan Party shall
fail to perform any covenant or agreement in accordance with the terms of the
Loan Documents, the Agent may, at the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 83
<PAGE> 90
direction of the Required Lenders, perform or attempt to perform such covenant
or agreement on behalf of such Loan Party. In such event, F.Y.I. or any of its
Subsidiaries shall, at the request of the Agent, promptly pay any amount
expended by the Agent or the Lenders in connection with such performance or
attempted performance to the Agent at the Principal Office, together with
interest thereon at the applicable Default Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent
nor any Lender shall have any liability or responsibility for the performance
of any obligation of F.Y.I. or any of its Subsidiaries or any other Loan Party
under this Agreement or any of the other Loan Documents.
ARTICLE 12
The Agent
Section 12.1 Appointment, Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Neither the Agent nor any of its Affiliates, officers,
directors, employees, attorneys or agents shall be liable to any Lender for any
action taken or omitted to be taken by any of them hereunder or otherwise in
connection with this Agreement or any of the other Loan Documents except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, the Agent (a) may treat the payee of any
Note as the holder thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
the Agent, (b) shall have no duties or responsibilities except those expressly
set forth in this Agreement and the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Document be a trustee or fiduciary
for any Lender, (c) shall not be required to initiate any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Lenders, (d) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained
in this Agreement or any other Loan Document, or any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Loan Document, or for the value, validity,
effectiveness, enforceability or sufficiency of this Agreement or any other
Loan Document or any other document referred to or provided for herein or
therein or for any failure by any Person to perform any of its obligations
hereunder or thereunder, (e) may consult with legal counsel (including counsel
for any Loan Party), independent public accountants and other experts selected
by it and shall not be liable to any Lender for any action taken or omitted to
be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and (f) shall incur no liability under or in respect of
any Loan Document to any Lender by acting upon any notice, consent, certificate
or other instrument or writing reasonably believed by it to be genuine and
signed or sent by the proper party or parties. As to any matters not expressly
provided for by this Agreement, the Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder in accordance with
instructions signed
AMENDED AND RESTATED CREDIT AGREEMENT - Page 84
<PAGE> 91
by the Required Lenders, and such instructions of the Required Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to liability or which is contrary to this
Agreement or any other Loan Document or applicable law.
Section 12.2 Rights of Agent as a Lender. With respect to its
Commitments, the Loans made by it and the Notes issued to it, Banque Paribas
(and any successor acting as Agent) in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, own
securities of, and generally engage in any kind of banking, trust or other
business with, the Loan Parties or any of their Affiliates and any other Person
who may do business with or own securities of the Loan Parties or any of their
Affiliates, all as if it were not acting as the Agent and without any duty to
account therefor to the Lenders. Each Lender acknowledges the potential
conflict of interest between Banque Paribas (i) as a Lender holding
disproportionate interests in the various Commitments and Loans and (ii) as the
Agent under this Agreement and each Lender expressly consents to, and waives
any claim based upon, such potential conflicts of interest.
Section 12.3 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on the Loans or of commitment fees) unless the
Agent has received notice from a Lender or F.Y.I. specifying such Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment). The Agent shall (subject to Section 12.1) take such
action with respect to such Default as shall be directed by the Required
Lenders, provided that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall seem
advisable and in the best interest of the Lenders.
SECTION 12.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO
INDEMNIFY THE AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT
REIMBURSED UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS
OF F.Y.I. UNDER SECTIONS 13.1 AND 13.2), RATABLY IN ACCORDANCE WITH ITS PRO
RATA SHARE (CALCULATED ON THE BASIS OF THE AGGREGATE COMMITMENT PERCENTAGES),
ANY AND ALL LIABILITIES (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL
LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY
AMENDED AND RESTATED CREDIT AGREEMENT - Page 85
<PAGE> 92
ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN RESPECT OF ANY OF
THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT NO LENDER SHALL BE LIABLE FOR ANY
PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS
INTENTION OF THE LENDERS THAT THE AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND
HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES (INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT (EXCEPT TO THE
EXTENT THE SAME ARE CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION 12.4, EACH
LENDER AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA
SHARE (CALCULATED ON THE BASIS OF THE AGGREGATE COMMITMENT PERCENTAGES) OF ANY
AND ALL OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
REASONABLY INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION,
DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER
THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN
RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT
THAT THE AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH EXPENSES BY F.Y.I..
Section 12.5 Independent Credit Decisions. Each Lender agrees
that it has independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of F.Y.I. and its Subsidiaries and
the other Loan Parties and its own decision to enter into this Agreement and
that it will, independently and without reliance upon the Agent or any other
Lender, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by any Loan Party of this Agreement or any other Loan
Document or to inspect the Properties or books of any Loan Party. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder or under the other Loan
Documents, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other financial information concerning the affairs,
financial condition or business of any Loan Party (or any of their Affiliates)
which may come into the possession of the Agent or any of its Affiliates.
Section 12.6 Several Commitments. The Commitments and other
obligations of the
AMENDED AND RESTATED CREDIT AGREEMENT - Page 86
<PAGE> 93
Lenders under this Agreement are several. The default by any Lender in making
a Loan in accordance with its Commitment shall not relieve the other Lenders of
their obligations under this Agreement. In the event of any default by any
Lender in making any Loan, each nondefaulting Lender shall be obligated to make
its Loan but shall not be obligated to advance the amount which the defaulting
Lender was required to advance hereunder. In no event shall any Lender be
required to advance an amount or amounts with respect to any of the Loans which
would in the aggregate exceed such Lender's Commitment with respect to such
Loans. No Lender shall be responsible for any act or omission of any other
Lender.
Section 12.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders and F.Y.I.. Upon any such
resignation, the Required Lenders will have the right to appoint another Lender
as a successor Agent. If no successor Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be
a commercial bank organized under the laws of the U.S. or any state thereof or
of a foreign country if acting through its U.S. branch and having combined
capital and surplus of at least $100,000,000. F.Y.I. shall have the right to
approve any successor Agent appointed under this Section 12.7, which approval
shall not unreasonably be withheld. Upon the acceptance of its appointment as
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all rights, powers, privileges, immunities and duties of the
resigning Agent, and the resigning Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents. After any
Agent's resignation as Agent, the provisions of this Article 12 shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was the Agent.
ARTICLE 13
Miscellaneous
Section 13.1 Expenses. Whether or not the transactions
contemplated hereby are consummated, F.Y.I. hereby agrees, on demand, to pay or
reimburse the Agent and each of the Lenders for paying: (a) all reasonable
out-of-pocket costs and expenses of the Agent in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
other Loan Documents, and any and all waivers, amendments, modifications,
renewals, extensions and supplements thereof and thereto, and the syndication
of the Commitments and the Loans, including, without limitation, the reasonable
fees and expenses of legal counsel for the Agent, (b) all reasonable
out-of-pocket costs and expenses of the Agent and the Lenders in connection
with any Default, the exercise of any right or remedy and the enforcement of
this Agreement or any other Loan Document or any term or provision hereof or
thereof, including, without limitation, the reasonable fees and expenses of
legal counsel for the Agent and the Lenders, (c) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
Governmental Authority in respect of this
AMENDED AND RESTATED CREDIT AGREEMENT - Page 87
<PAGE> 94
Agreement or any of the other Loan Documents, (d) all costs, expenses,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any Lien contemplated by this
Agreement or any other Loan Document, and (e) all reasonable out-of-pocket
costs and expenses incurred by the Agent in connection with due diligence,
computer services, copying, appraisals, audits (including environmental audits
and collateral audits), field exams, insurance, consultants and search reports.
SECTION 13.2 INDEMNIFICATION. F.Y.I. HEREBY AGREES TO INDEMNIFY
THE AGENT AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM, AND HOLD EACH OF
THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES (INCLUDING, WITHOUT
LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' AND
CONSULTANTS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B)
ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) THE RELATED
TRANSACTIONS, (D) ANY BREACH BY ANY LOAN PARTY OF ANY REPRESENTATION, WARRANTY,
COVENANT OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (E) THE USE
OR PROPOSED USE OF ANY LOAN OR LETTER OF CREDIT, (F) ANY AND ALL TAXES, LEVIES,
DEDUCTIONS AND CHARGES IMPOSED ON THE AGENT, THE ISSUING BANK OR ANY LENDER IN
RESPECT OF ANY LETTER OF CREDIT, (G) THE PRESENCE, RELEASE, THREATENED RELEASE,
DISPOSAL, REMOVAL OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT,
WITHIN OR AFFECTING ANY OF THE PROPERTIES OF ANY LOAN PARTY, EXCEPT TO THE
EXTENT THAT THE LOSS, DAMAGE OR CLAIM IS THE DIRECT RESULT OF AN INTENTIONAL
AND AFFIRMATIVE ACT BY THE PERSON TO BE INDEMNIFIED THAT CONSTITUTES GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSON, OR (H) ANY INVESTIGATION,
LITIGATION OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING;
BUT EXCLUDING ANY OF THE FOREGOING TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. THE OBLIGATIONS OF
F.Y.I. UNDER THIS SECTION 13.2 SHALL SURVIVE THE REPAYMENT OF THE LOANS AND
LETTER OF CREDIT LIABILITIES AND TERMINATION OF THE COMMITMENTS.
Section 13.3 Limitation of Liability. None of the Agent, any
Lender or any Affiliate, officer, director, employee, attorney or agent thereof
shall be liable for any error of judgment or act done in good faith, or be
otherwise liable or responsible under any circumstances whatsoever (including
such Person's negligence), except for such Person's gross negligence or willful
AMENDED AND RESTATED CREDIT AGREEMENT - Page 88
<PAGE> 95
misconduct. None of the Agent, any Lender or any Affiliate, officer, director,
employee, attorney or agent thereof shall have any liability with respect to,
and F.Y.I. hereby waives, releases and agrees not to sue any of them upon, any
claim for any special, indirect, incidental or consequential damages suffered
or incurred by F.Y.I. or any other Loan Party in connection with, arising out
of or in any way related to this Agreement or any of the other Loan Documents,
or any of the transactions contemplated by this Agreement or any of the other
Loan Documents. F.Y.I. hereby waives, releases and agrees not to sue the Agent
or any Lender or any of their respective Affiliates, officers, directors,
employees, attorneys or agents for exemplary or punitive damages in respect of
any claim in connection with, arising out of or in any way related to this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers and
other professional Persons and consultants retained by the Agent and the
Lenders shall have the right to act exclusively in the interest of the Agent
and the Lenders and shall have no duty of disclosure, duty of loyalty, duty of
care or other duty or obligation of any type or nature whatsoever to F.Y.I. or
any of its Subsidiaries or any of their shareholders or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between
F.Y.I. and each Lender is solely that of debtor and creditor, and neither the
Agent nor any Lender has any fiduciary or other special relationship with
F.Y.I. or any other Loan Party, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between F.Y.I. and
any Lender, or any other Loan Party and any Lender, to be other than that of
debtor and creditor. No joint venture or partnership is created by this
Agreement among the Lenders or among F.Y.I. or any other Loan Party and the
Lenders.
Section 13.6 Equitable Relief. F.Y.I. recognizes that, in the
event it fails to pay, perform, observe or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Agent
and the Lenders. F.Y.I. therefore agrees that the Agent and the Lenders, if the
Agent or the Lenders so request, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under
this Agreement or any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided for in this Agreement and the other Loan Documents
are cumulative and not exclusive of any rights and remedies provided by law.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 89
<PAGE> 96
Section 13.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. Neither
F.Y.I. nor any other Loan Party may assign or transfer any of its rights or
obligations under this Agreement or any other Loan Document without the prior
written consent of the Agent and the Required Lenders. Any Lender may sell
participations in all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender shall remain solely responsible to F.Y.I. for the performance of
such obligations, (iii) such Lender shall remain the holder of its Notes for
all purposes of this Agreement, (iv) F.Y.I. shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and (v) such
Lender shall not sell a participation that conveys to the participant the right
to vote or give or withhold consents under this Agreement or any other Loan
Document, other than (if and to the extent that such Lender so agrees) the
right to vote upon or consent to (A) any increase of such Lender's Commitments
(other than an increase resulting from an assignment to or in favor of such
Lender from another Lender in accordance with this Agreement), (B) any
reduction of the principal amount of, or interest to be paid on, the Loans of
such Lender, (C) any reduction of any commitment fee or other amount payable to
such Lender under any Loan Document if and to the extent that such reduction
would decrease the fee or other amount payable to the participant, (D) any
postponement of any date for the payment of any amount payable in respect of
the Loans of such Lender, (E) any release of a material portion of the
Collateral from the Liens created by the Security Documents and not otherwise
expressly authorized by the Loan Documents, and (F) any release of any Loan
Party from liability under the Loan Documents.
(b) F.Y.I. and each of the Lenders agree that any Lender (the
"Assigning Lender") may at any time assign to one or more Eligible Assignees
all, or a proportionate part of all, of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, its
Commitments, Loans, Letters of Credit (each an "Assignee"); provided, however,
that (i) each such assignment shall be of a constant percentage of the
Assigning Lender's rights and obligations under this Agreement and the other
Loan Documents and (ii) except in the case of an assignment of all of a
Lender's rights and obligations under this Agreement and the other Loan
Documents, the amount of the Commitments, Loans and Letters of Credit of the
Assigning Lender being assigned pursuant to each assignment (determined as of
the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than an aggregate amount equal to $5,000,000, and
(iii) the parties to each such assignment shall execute and deliver to the
Agent for its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Notes subject to such assignment,
and a processing and recordation fee of $4,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof or such other date as may be approved by the
Agent, (1) the Assignee thereunder
AMENDED AND RESTATED CREDIT AGREEMENT - Page 90
<PAGE> 97
shall be a party hereto as a "Lender" and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and under the
Loan Documents, and (2) the Assigning Lender thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement and the other Loan Documents (and, in the case
of an Assignment and Acceptance covering all or the remaining portion of a
Lender's rights and obligations under the Loan Documents, such Lender shall
cease to be a party thereto, provided that such Lender's rights under Article
4, Section 13.1 and Section 13.2 accrued through the date of assignment shall
continue.
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any other instrument
or document furnished pursuant thereto; (ii) such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition or results of operations of any Loan Party or the
performance or observance by any Loan Party of its obligations under the Loan
Documents; (iii) such Assignee confirms that it has received a copy of the
other Loan Documents, together with copies of the financial statements referred
to in Section 7.2 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and without
reliance upon the Agent or such Assigning Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and
the other Loan Documents; (v) such Assignee confirms that it is an Eligible
Assignee; (vi) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and exercise such powers under the Loan Documents
as are delegated to the Agent by the terms thereof, together with such powers
as are reasonably incidental thereto; and (vii) such Assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.
(d) The Agent shall maintain at its Principal Office a copy of
each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and F.Y.I., the Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes under the Loan Documents. The Register shall
be available for inspection by any Borrower any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an Assigning Lender
AMENDED AND RESTATED CREDIT AGREEMENT - Page 91
<PAGE> 98
and Assignee representing that it is an Eligible Assignee, together with the
Notes subject to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt written notice thereof
to F.Y.I. Within five Business Days after its receipt of such notice, F.Y.I.,
at its expense, shall execute and deliver to the Agent in exchange for each
surrendered Note evidencing particular Loans, a new Note evidencing each such
Loans payable to the order of such Eligible Assignee in an amount equal to such
Loans assigned to it and, if the Assigning Lender has retained any Loans, a new
Note evidencing each such Loans payable to the order of the Assigning Lender in
the amount of such Loans retained by it (each such promissory note shall
constitute a "Note" for purposes of the Loan Documents). Such new Notes shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibits C and D hereto, as
applicable.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
13.8, disclose to the Assignee or participant or proposed Assignee or
participant any information relating to F.Y.I. or any of its Subsidiaries or
any other Loan Party furnished to such Lender by or on behalf of F.Y.I. or any
of its Subsidiaries or any other Loan Party provided that F.Y.I. shall have no
liability for the accuracy of any such information except (i) to the Agent and
the Lenders to the extent expressly provided herein or (ii) as of the date it
was furnished by F.Y.I.; provided that each such actual or proposed Assignee or
participant shall agree to be bound by the provisions of Section 13.20.
(g) Any Lender may assign and pledge all or any of the Notes held
by it to any Federal Reserve Bank or the U.S. Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve System and/or
Federal Reserve Bank; provided, that, any payment made by F.Y.I. for the
benefit of such assigning and/or pledging Lender in accordance with the terms
of the Loan Documents shall satisfy F.Y.I.'s obligations under the Loan
Documents in respect thereof to the extent of such payment. No such assignment
and/or pledge shall release the assigning and/or pledging Lender from its
obligations hereunder.
(h) F.Y.I. shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of F.Y.I., shall be
kept by the Agent on behalf of F.Y.I. at no extra charge to F.Y.I. at the
address to which notices to the Agent are to be sent hereunder) on which it
enters the name of the registered owner of each of the Loans evidenced by a
Registered Note. Notwithstanding anything to the contrary contained in this
Section 13.8, a Registered Note and the Loans evidenced thereby may be assigned
or otherwise transferred in whole or in part only by registration of such
assignment or transfer of such Registered Note and the Loans evidenced thereby
on the Registered Note Register (and each Registered Note shall expressly so
provide). Any assignment or transfer of all or part of such Loans and the
Registered Note evidencing the same shall be registered on the Registered Note
Register only upon surrender for registration of assignment or transfer of the
Registered Note evidencing such Loans, duly endorsed by (or accompanied by a
written instrument of assignment or transfer duly executed by) the registered
noteholder thereof, and
AMENDED AND RESTATED CREDIT AGREEMENT - Page 92
<PAGE> 99
thereupon one or more new Registered Notes in the same aggregate principal
amount shall be issued to the designated assignee(s) or transferee(s). Prior
to the due presentment for registration of transfer of any Registered Note,
F.Y.I. and the Agent shall treat the Person in whose name such Loans and the
Registered Note(s) evidencing the same are registered as the owner thereof for
the purpose of receiving all payments thereon and for all other purposes,
notwithstanding any notice to the contrary. The Registered Note Register shall
be available for inspection by F.Y.I. and any Lender at any reasonable time
upon reasonable prior notice.
Section 13.9 Survival. All representations and warranties made or
deemed made in this Agreement or any other Loan Document or in any document,
statement or certificate furnished in connection with this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans, and no investigation by the Agent or any
Lender or any closing shall affect the representations and warranties or the
right of the Agent or any Lender to rely upon them. Without prejudice to the
survival of any other obligation of F.Y.I. hereunder, the obligations of
F.Y.I. under Article 4 and Sections 13.1 and 13.2 shall survive repayment of
the Loans and the Letter of Credit Liabilities, but shall not survive the
expiration of any applicable statute of limitations.
SECTION 13.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, TERM
SHEETS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES HERETO.
Section 13.11 Amendments. No amendment or waiver of any provision
of this Agreement, the Notes or any other Loan Document to which F.Y.I. is a
party, nor any consent to any departure by F.Y.I. therefrom, shall in any event
be effective unless the same shall be agreed or consented to by the Required
Lenders and F.Y.I. in writing, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver or consent shall, unless in writing
and signed by all of the Lenders and F.Y.I., do any of the following: (a)
increase the Commitments of the Lenders or subject the Lenders to any
additional obligations; (b) reduce the principal of, or interest on, the Loans,
Letter of Credit Liabilities or any fees or other amounts payable hereunder;
(c) postpone any date fixed for any payment (including, without limitation, any
mandatory prepayment) of principal of, or interest on, the Loans, Letter of
Credit Liabilities or any fees or other amounts payable hereunder; (d) change
the Commitment Percentages or the aggregate unpaid principal amount of the
Loans, Letter of Credit Liabilities or the number or interests of the Lenders
which shall be required for the Lenders or any of them to take any action under
this Agreement; (e) change any provision contained in this Section 13.11 or
modify the definition of "Required Lenders" contained in Section 1.1; or (f)
except
AMENDED AND RESTATED CREDIT AGREEMENT - Page 93
<PAGE> 100
as expressly authorized by this Agreement, release any Collateral from any of
the Liens created by the Security Documents, except for Collateral which, in
the aggregate for all such Collateral released, has a value of $1,000,000 or
less, or release any guaranty of all or any portion of the Obligations. The
Agent shall not terminate a Payment Blockage Period under any Subordination
Agreement without the consent of the Required Lenders. Notwithstanding
anything to the contrary contained in this Section 13.11, no amendment, waiver
or consent shall be made with respect to Article 12 hereof without the prior
written consent of the Agent. If at any time a Lender becomes a Nonconsenting
Lender (as identified in this Section 13.11), F.Y.I. shall have the right to
replace such Lender with another Person; provided that (i) such new Person
shall be an Eligible Assignee acceptable to the Agent and such new Person shall
execute an Assignment and Acceptance, (ii) F.Y.I. shall have no right to
replace Banque Paribas, (iii) neither the Agent nor any Lender shall have any
obligation to F.Y.I. to find such other Person, and (iv) in the event of a
replacement of a Nonconsenting Lender, in order for F.Y.I. to be entitled to
replace such a Lender, such replacement must take place no later than 180 days
after the date the Nonconsenting Lender shall notify F.Y.I. and the Agent of
its failure to agree to any requested consent, waiver or other modification.
Each Lender (other than Banque Paribas) agrees to its replacement at the option
of F.Y.I. pursuant to this Section 13.11 and in accordance with Section 13.8;
provided that the successor Lender shall purchase without recourse such
Lender's interest in the Obligations of F.Y.I. to such Lender for cash in an
aggregate amount equal to the aggregate unpaid principal thereof, all unpaid
interest accrued thereon, all unpaid commitment fees accrued for the account of
such Lender, any breakage costs incurred by the selling Lender because of the
prepayment of any Eurodollar Loans, all other fees (if any) applicable thereto
and all other amounts (including any amounts under Article 4) then owing to
such Lender hereunder or under any other Loan Document and the Loan Parties
shall execute a release addressed to such Lender releasing such Lender from all
claims arising in connection with the Loan Documents. In the event that (x)
F.Y.I. or the Agent has requested the Lenders to consent to a departure or
waiver of any provisions of the Loan Documents or to agree to any other
modification thereto, (y) the consent, waiver or other modification in question
requires the agreement of all Lenders in accordance with the terms of this
Section 13.11 and (z) Required Lenders have agreed to such consent, waiver or
other modification, then any Lender who does not agree to such consent, waiver
or other modification shall be deemed a "Nonconsenting Lender".
Section 13.12 Maximum Interest Rate.
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the
interest rate (the "Contract Rate") for any Obligation shall exceed the Maximum
Rate, thereby causing the interest accruing on such Obligation to be limited to
the Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the other
AMENDED AND RESTATED CREDIT AGREEMENT - Page 94
<PAGE> 101
Loan Documents, none of the terms and provisions of this Agreement or the other
Loan Documents shall ever be construed to create a contract or obligation to
pay interest at a rate in excess of the Maximum Rate; and neither the Agent nor
any Lender shall ever charge, receive, take, collect, reserve or apply, as
interest on the Obligations, any amount in excess of the Maximum Rate. The
parties hereto agree that any interest, charge, fee, expense or other
obligation provided for in this Agreement or in the other Loan Documents which
constitutes interest under applicable law shall be, ipso facto and under any
and all circumstances, limited or reduced to an amount equal to the lesser of
(i) the amount of such interest, charge, fee, expense or other obligation that
would be payable in the absence of this Section 13.12(b) or (ii) an amount,
which when added to all other interest payable under this Agreement and the
other Loan Documents, equals the Maximum Rate. If, notwithstanding the
foregoing, the Agent or any Lender ever contracts for, charges, receives,
takes, collects, reserves or applies as interest any amount in excess of the
Maximum Rate, such amount which would be deemed excessive interest shall be
deemed a partial payment or prepayment of principal of the Obligations and
treated hereunder as such; and if the Obligations, or applicable portions
thereof, are paid in full, any remaining excess shall promptly be paid to
F.Y.I. (as appropriate). In determining whether the interest paid or payable,
under any specific contingency, exceeds the Maximum Rate, F.Y.I., the Agent and
the Lenders shall, to the maximum extent permitted by applicable law, (i)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
Obligations, or applicable portions thereof, so that the interest rate does not
exceed the Maximum Rate at any time during the term of the Obligations;
provided that, if the unpaid principal balance is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum Rate,
the Agent and/or the Lenders, as appropriate, shall refund to F.Y.I. the amount
of such excess and, in such event, the Agent and the Lenders shall not be
subject to any penalties provided by any laws for contracting for, charging,
receiving, taking, collecting, reserving or applying interest in excess of the
Maximum Rate.
(c) Pursuant to Chapter 346 of the Texas Finance Code, as amended,
F.Y.I. agrees that such Chapter (which regulates certain revolving credit loan
accounts and revolving tri-party accounts) shall not govern or in any manner
apply to the Obligations.
Section 13.13 Notices. All notices and other communications
provided for in this Agreement and the other Loan Documents to which F.Y.I. or
any of its Subsidiaries is a party shall be given or made by telecopy or in
writing and telecopied, mailed by certified mail return receipt requested or
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof (or, with respect to a Lender that
becomes a party to this Agreement pursuant to an assignment made in accordance
with Section 13.8, in the Assignment and Acceptance executed by it); or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party given in accordance with this Section 13.13. Except
as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy or personally
delivered or, in the case of a mailed notice, upon receipt, in
AMENDED AND RESTATED CREDIT AGREEMENT - Page 95
<PAGE> 102
each case given or addressed as aforesaid; provided, however, that notices to
the Agent shall be deemed given when received by the Agent.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 96
<PAGE> 103
SECTION 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN LOAN
DOCUMENTS, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE
U.S.; PROVIDED, HOWEVER, THAT THE LAWS (WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES) OF THE STATE OF ILLINOIS SHALL GOVERN ISSUES RELATING TO THE
MAXIMUM AMOUNT OF INTEREST (OR CONSIDERATION DEEMED TO BE INTEREST) WHICH MAY
BE CONTRACTED FOR, CHARGED, RECEIVED, TAKEN, COLLECTED, RESERVED OR APPLIED
WITH RESPECT TO THE OBLIGATIONS. F.Y.I. AND EACH OF ITS SUBSIDIARIES HEREBY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF EACH OF (1) THE U.S. DISTRICT
COURT FOR THE NORTHERN DISTRICT OF TEXAS OR THE NORTHERN DISTRICT OF ILLINOIS,
(2) ANY TEXAS STATE COURT SITTING IN DALLAS COUNTY, TEXAS, (3) ANY ILLINOIS
STATE COURT SITTING IN COOK COUNTY, ILLINOIS FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF F.Y.I.
AND EACH OF ITS SUBSIDIARIES HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY
AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF
SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SET FORTH UNDERNEATH ITS SIGNATURE
HERETO. EACH OF F.Y.I. AND EACH OF ITS SUBSIDIARIES HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 13.15 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 13.16 Severability. Any provision of this Agreement held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.18 Construction. Each of F.Y.I. and each of its
Subsidiaries, the Agent and each Lender acknowledges that it has had the
benefit of legal counsel of its own choice and has been afforded an opportunity
to review this Agreement and the other Loan Documents with its legal
AMENDED AND RESTATED CREDIT AGREEMENT - Page 97
<PAGE> 104
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by the parties hereto.
Section 13.19 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
Section 13.20 Confidentiality. Each Lender agrees to exercise its
best efforts to keep any information delivered or made available by any Loan
Party to it which is clearly indicated to be confidential information,
confidential from anyone other than Persons employed or retained by such Lender
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any
Lender from disclosing such information (a) to any other Lender, (b) to any
Person if reasonably incidental to the administration of the Loans, (c) upon
the order of any court or administrative agency, (d) upon the request or demand
of any regulatory agency or authority having jurisdiction over such Lender, (e)
which has been publicly disclosed, (f) in connection with any litigation to
which the Agent, any Lender or their respective Affiliates may be a party, (g)
to the extent reasonably required in connection with the exercise of any remedy
under the Loan Documents, (h) to such Lender's legal counsel, independent
auditors and affiliates, and (i) to any actual or proposed participant or
Assignee of all or part of its rights hereunder, so long as such actual or
proposed participant or Assignee agrees to be bound by the provisions of this
Section 13.20.
SECTION 13.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF ANY LOAN PARTY, THE AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 13.22 Approvals and Consent. Except as may be expressly
provided to the contrary in this Agreement or in the other Loan Documents (as
applicable), in any instance under this Agreement or the other Loan Documents
where the approval, consent or exercise of judgment of the Agent or any Lender
is requested or required, (a) the granting or denial of such approval or
consent and the exercise of such judgment shall be within the sole discretion
of the Agent and such Lender, and the Agent and such Lender shall not, for any
reason or to any extent, be required to grant such approval or consent or to
exercise such judgment in any particular manner, regardless of the
reasonableness of the request or the action or judgment of the Agent or such
Lender, and (b) no approval or consent of the Agent or any Lender shall in any
event be effective unless the same shall be in writing and the same shall be
effective only in the specific instance and for the specific purpose
AMENDED AND RESTATED CREDIT AGREEMENT - Page 98
<PAGE> 105
for which given.
Section 13.23 Agent for Services of Process. Each of F.Y.I. and
each of its Subsidiaries hereby irrevocably designates Margot T. Lebenberg,
Timothy J. Barker or any other officer of F.Y.I., at the offices of F.Y.I. at
3232 McKinney Avenue, Suite 900, Dallas, Texas 75204, to receive, for and on
behalf of such Person, service of process in the State of Texas and the State
of Illinois, such service being hereby acknowledged by such Person to be
effective and binding service in every respect. Each of F.Y.I. and each of its
Subsidiaries agrees that the failure of its agent for service of process to
give any notice of any such service of process to such Person shall not impair
or affect the validity of such service or of any judgment based thereon. If,
despite the foregoing, there is for any reason no agent for service of process
of such Person available to be served, then such Person further irrevocably
consents to the service of process by the mailing thereof by the Agent or the
Required Lenders by registered or certified mail, postage prepaid, to such
Person at its address listed on the signature pages hereof. Nothing in this
Section 13.23 shall affect the right of the Agent or the Lenders to serve legal
process in any other manner permitted by law or affect the right of the Agent
or any Lender to bring any action or proceeding against F.Y.I. or any of its
Subsidiaries or its Property in the court of any jurisdiction.
Section 13.24 Amendment and Restatement of Prior Agreement.
Effective as of the Closing Date and upon satisfaction of the conditions
precedent set forth in Section 6.1 (including, but not without limitation,
Section 6.1(p)), this Agreement shall constitute an amendment and restatement
of, but not an extinguishment of the Obligations (as defined in the Prior
Agreement) outstanding under, the Prior Agreement in its entirety; provided,
however, that the Prior Agreement shall remain in full force and effect unless
and until such amendment and restatement occurs.
Section 13.25 Assignments and Assumptions. The Lenders hereby
agree among themselves (and F.Y.I. and each of the Loan Parties hereby
consents to such agreement) that, concurrently with the Closing Date, there
shall be deemed to have occurred assignments and assumptions with respect to
the Debt, Liens, rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, the Commitments, the Loans and the
Letters of Credit) such that, after giving effect to such assignments and
assumptions, the Commitments and the outstanding Loans and Letters of Credit of
each of the Lenders are as stated in this Agreement, and the Lenders hereby
make such assignments and assumptions. The Lenders shall make all appropriate
payments and adjustments among themselves to effectuate the appropriate
purchase price for and other amounts payable with respect to such assignments
and assumptions.
AMENDED AND RESTATED CREDIT AGREEMENT - Page 99
<PAGE> 106
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
F.Y.I. INCORPORATED
By: /s/ David Lowenstein
--------------------
Name: David Lowenstein
Title: Executive Vice President
Address for Notices:
-------------------
3232 McKinney Avenue, Suite 900
Dallas, Texas 75204
Telecopy No.: 214-953-7556
Telephone No.: 214-953-7555
Attention: Margot T. Lebenberg
General Counsel
AMENDED AND RESTATED CREDIT AGREEMENT - Page 100
<PAGE> 107
BANQUE PARIBAS, as Agent and a Lender
Commitment: By: /s/ Clark C. King, III
- ---------- ----------------------
Name: Clark C. King, III
$20,000,000 Title: Director
By: /s/ Nicholas C. Mast
--------------------
Name: Nicholas C. Mast
Title: Regional General Manager
Address for Notices:
-------------------
227 West Monroe Street, Suite 3300
Chicago, Illinois 60606
Telecopy No.: 312-853-6020
Telephone No.: 312-853-6000
Attention: Corporate Banking Group
Lending Office for Prime Rate Loans:
-----------------------------------
227 West Monroe Street, Suite 3300
Chicago, Illinois 60606
Attention: Judy Wu
Administration
Lending Office for Eurodollar Loans:
-----------------------------------
227 West Monroe Street, Suite 3300
Chicago, Illinois 60606
Attention: Judy Wu
Administration
AMENDED AND RESTATED CREDIT AGREEMENT - Page 101
<PAGE> 108
BANK OF AMERICA TEXAS, N.A.,
as Co-Agent and a Lender
Commitment: By: /s/ Connor J. Duffey
- ---------- --------------------
Name: Connor J. Duffey
$20,000,000 Title: Vice President
Address for Notices:
-------------------
Bank of America Texas, N.A.
1925 West John Carpenter Freeway
Irving, Texas 75063-3297
Telecopy No.: (972) 444-7167
Telephone No.: (972) 444-5195
Attention: Connor J. Duffey
Lending Office for Prime Rate Loans:
-----------------------------------
Bank of America Texas, N.A.
1925 West John Carpenter Freeway
Irving, Texas 75063-3297
Telecopy No.: (972) 444-7167
Telephone No.: (972) 444-7414
Attention: Lyn Ridgeway
Lending Office for Eurodollar Loans:
-----------------------------------
Bank of America Texas, N.A.
1925 West John Carpenter Freeway
Irving, Texas 75063-3297
Telecopy No.: (972) 444-7167
Telephone No.: (972) 444-7414
Attention: Lyn Ridgeway
AMENDED AND RESTATED CREDIT AGREEMENT - Page 102
<PAGE> 109
BANK ONE, TEXAS, N.A.
Commitment: By: /s/ Scott Rhea
- ---------- --------------
$10,000,000 Name: Scott Rhea
Title: Vice President
Address for Notices:
-------------------
Bank One, Texas, N.A.
1717 Main Street
Dallas, Texas 75201
Telecopy No.: (214) 290-2765
Telephone No.: (214) 290-290-2637
Attention: Scott Rhea
Lending Office for Prime Rate Loans:
-----------------------------------
Bank One, Texas, N.A.
1717 Main Street
Dallas, Texas 75201
Telecopy No.: (214) 290-2765
Telephone No.: (214) 290-290-2637
Attention: Scott Rhea
Lending Office for Eurodollar Loans:
-----------------------------------
Bank One, Texas, N.A.
1717 Main Street
Dallas, Texas 75201
Telecopy No.: (214) 290-2765
Telephone No.: (214) 290-290-2637
Attention: Scott Rhea
AMENDED AND RESTATED CREDIT AGREEMENT - Page 103
<PAGE> 110
The undersigned Prior Borrowers hereby consent to the terms and
provisions of this Agreement and hereby agree that this Agreement shall
constitute an amendment and restatement of the Prior Agreement.
PRIOR BORROWERS:
IMAGENT ACQUISITION CORP.
RESEARCHERS ACQUISITION CORP.
RECORDEX ACQUISITION CORP.
DPAS ACQUISITION CORP.
LEONARD ARCHIVES ACQUISITION CORP.
DELIVEREX ACQUISITION CORP.
PERMANENT RECORDS ACQUISITION CORP.
DELIVEREX SACRAMENTO ACQUISITION CORP.
B&B (BALTIMORE-WASHINGTON)
ACQUISITION CORP.
PREMIER ACQUISITION CORP.
ROBERT A. COOK ACQUISITION CORP.
PENINSULA RECORD MANAGEMENT, INC.
RAC (CALIFORNIA) ACQUISITION CORP.
CALIFORNIA MEDICAL RECORD SERVICE
ACQUISITION CORP.
MINNESOTA MEDICAL RECORD SERVICE
ACQUISITION CORP.
TEXAS MEDICAL RECORD SERVICE
ACQUISITION CORP.
ZIA INFORMATION ANALYSIS GROUP, INC.
CH ACQUISITION CORP.
and
DISC ACQUISITION CORP.
By: /s/ David Lowenstein
--------------------
Name: David Lowenstein
Title: Vice President, acting on
behalf of each of the Prior
Borrowers
AMENDED AND RESTATED CREDIT AGREEMENT - Page 104
<PAGE> 1
EXHIBIT 10.38
AGREEMENT
Contract No. C-140162
------------------------
Agreement dated the 21st day of January, 1998 between the New York
State Workers' Compensation Board (Board) and QCSinet Acquisition Corp.
(hereinafter "QCSinet" or "Contractor"), a corporation with its principal place
of business located at 1150 NW 72d Avenue, Suite 600, Miami, Florida 33126.
Whereas the Board has issued a Request for Proposal dated September 9,
1997 and entitled Request for Proposal For Paper to Image Conversion Services
(hereinafter "RFP"); and
Whereas, in response to this RFP, QCSinet has submitted a proposal
which includes a Volume 1 Technical Proposal and Volume 2 Cost Proposal; and
Whereas, by letter dated December 30, 1997 the Board has awarded
QCSinet the within described contract;
NOW THEREFORE, in consideration of the foregoing, and the mutual
promises and covenants contained herein, it is mutually agreed as follows:
1 GENERAL CONTRACTOR DUTIES AND OBLIGATIONS
1.1 GENERAL CONTRACTOR DUTIES
The Contractor shall:
1.1.1 Assume responsibility for the cost, delivery of services, and timely
accomplishment of all obligations and duties required by the Agreement
whether or not such obligations or duties are performed by the
Contractor, its subcontractor, or its supplier. Subcontracting
assignments are allowed under this contract under the terms set forth
in section 12 of this Agreement. The Contractor shall carry out its
obligations and duties in a competent and timely manner.
1.1.2 Be the sole point of contact with regard to contractual matters.
1.1.3 Maintain a dedicated administrative organization sufficient to
discharge its contractual duties, obligations and responsibilities.
1.1.4 Maintain a level of liaison and cooperation with the Board necessary
for proper performance of all contractual responsibilities.
1.1.5 Provide access to its main operation team through key personnel such
as Managing Executive and Operation Manager.
<PAGE> 2
1.1.6 Maintain operation staffing levels and personnel as required for
performance of its duties under this Agreement.
1.1.7 Notwithstanding the circumstances under which the employment of a "key
personnel" is terminated with the Contractor, subject to prior
approval of the Board, designate an equally qualified alternate with
full authority to act in that "key position" for full performance
under this Agreement. Such designee will have no authority to alter
or modify any of the terms and conditions of the Agreement.
1.1.8 Agree that, except as specified in this Agreement and section 2-3 of
the RFP, no aspect of Contractor performance under this Agreement will
be contingent upon Board personnel or the availability of Board
resources.
1.1.9 Immediately notify the Board upon learning of any situation which can
reasonably be expected to adversely affect the operation of this
project. If such notification was verbal, then submit within three
(3) days of learning of the circumstance, a written description of the
situation and a recommendation for its resolution.
1.1.10 Cooperate fully with any other contractors that may be engaged by the
Board.
1.1.11 Refrain from honoring any requests to perform work outside the scope
of the Agreement unless such request(s) are pursuant to the Scope of
Work Alteration procedures set forth in section 13 of this Agreement.
1.1.12 Cooperate with the Board, any other authorized State agency, and any
law enforcement authority, in the investigation, documentation and
litigation of any alleged illegal act, misconduct or unethical
behavior related to this contract or which may affect the Board's
operations.
1.1.13 Perform in accordance with the Performance Standards set forth in the
RFP or as otherwise required in this Agreement.
1.1.14 Modify, at its own cost, the application or technical configuration to
meet the Performance Standards set forth in this RFP or as otherwise
required in this Agreement.
1.1.15 Honor any written commitment within the scope of this Agreement and
the Contractor's proposal. Failure of the Contractor to fulfill any
such commitment shall render the Contractor liable under the default
provisions for damages due to the Board under the terms of this
Agreement. For the purpose of this Agreement, a written commitment by
the Contractor includes commitments specified by this Agreement, the
proposal submitted by the Contractor, and specific written amendments
to its proposal. Written commitments by the Contractor are further
defined as including: (1) any warranty or representation made by the
Contractor in a proposal as to performance; (2) any warranty or
representation made by the Contractor described in (1) above, made in
any literature descriptions, drawings, or specifications accompanying
or referred to in a proposal; and (3) any modification of or
affirmation or representation as to the above which is made by the
Contractor in or during the course of negotiations, whether or not
incorporated into a formal amendment to the proposal.
2
<PAGE> 3
2 SPECIFIC CONTRACTOR DUTIES AND OBLIGATIONS
2.1 SPECIFIC CONTRACTOR DUTIES
The Contractor shall:
2.1.1 Convert the Board's paper-based claims documents to electronic-based
claims documents; and deliver the images and their associated indices
as accurate reproductions of the original documents to the Board, as
described in the Contractor's proposal. Contractor specifically
agrees to:
(a) provide a paper-to-image conversion operation and maintain at
its expense, all facility(ies) necessary to perform required
services within New York State, with space adequate to house
all staff, equipment, materials and supplies and paper
documents to support the operational needs of the system as
specified in section 2-5 of the RFP;
(b) obtain, maintain, and pay for all permits and licenses legally
required to transact business and pay all fees and comply with
all laws, rules and regulations applicable to the
paper-to-image conversion operations at no additional cost to
the Board;
(c) provide all hardware and software necessary to perform the
required services;
(d) provide all staff required to manage and operate the
paper-to-image conversion facility(ies);
(e) establish and demonstrate that controls are in place to
monitor the accuracy and authenticity of data, the reliability
of hardware and software, and the integrity and security of
the system before any paper-to-image conversion operations are
commenced, as specified in section 2-8.3 of the RFP;
(f) provide "backfile" paper-to-image conversion services to
convert all claims documents associated with open case folders
and reopened case files, from each district office of the
Workers' Compensation Board, and deliver the images and their
associated indices as accurate reproductions of the original
documents to the Board within seven (7) calendar days of
receipt;
(g) convert "no-claims" documents from paper to images from each
district office and deliver images and their associated
indices as accurate reproductions of the original documents to
the Board within seven (7) calendar days of receipt;
(h) store paper case folders, no-claims documents, and incoming
claims documents for at least six (6) months after conversion;
(i) provide secured destruction of the paper documents after
completion of statewide conversion in accordance with a plan
and schedule developed by the Board;
(j) correct any defects identified by the Board's quality control
process;
3
<PAGE> 4
(k) complete the duties specified in paragraphs f - j of section
2.1.1 herein as quickly as possible, with completion no later
than December 31, 1998;
(l) convert all incoming claims documents to generate images from
the paper documents and deliver the images and their
associated indices as accurate reproductions of the original
documents to the Board within twenty-four (24) hours after
receipt of the daily documents.
2.1.2 Accept responsibility for full knowledge of the Office for Technology
Policy 96-10, titled Guidelines for the Legal Acceptance of
Electronically Stored Documents; State Archives and Records
Administration brochure titled Guidelines for the Acceptance of Public
Records in an Emerging Electronic Environment.
2.1.3 Provide reliable systems and processes which are capable of producing
trustworthy records, and manage the paper-to-image conversion
facility, the operations, the functional areas and staff in a manner
that will ensure the legal admissibility of the image records in a
court of law in accordance with the guidelines listed in section 2.1.2
herein and provide for complete documentation of all operational
procedures.
2.1.4 Design, develop, install, implement, maintain and manage the systems
as required by this Agreement and the RFP, and provide all staff,
hardware, software and facilities necessary to perform required
services at the prices stated in Contractor's Cost Proposal, Volume 2.
2.1.5 Maintain confidentiality of documents through appropriate
non-disclosure agreements with employees.
2.1.6 Permit Board staff to be present when Board documents are being
converted.
2.1.7 Warrant that Product(s) furnished pursuant to this Agreement shall,
when used in accordance with the Product documentation, be able to
accurately process date/time data (including, but not limited to,
calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000,
including leap year calculations. Where a purchase requires that
specific Products must perform as a package or system, this warranty
shall apply to the Products as a system.
In the event of any breach of this warranty, Contractor shall restore
the Product to the same level of performance as warranted herein, or
repair or replace the Product with conforming Product so as to
minimize interruption to the Board's ongoing business processes, time
being of the essence, at Contractor's sole cost and expense. This
warranty does not extend to correction of the Board's errors in data
conversion.
For the purposes of this warranty, the following definitions shall
apply: "PRODUCT" shall include, without limitations: any piece or
component of equipment, hardware, firmware, middleware, custom or
commercial software, or internal components or subroutines therein
which perform any date/time data recognition function, calculation,
comparing or sequencing. Where services are being furnished, e.g.
consulting, systems integration, code or data conversion or data
entry, the term "Product" shall include resulting deliverables.
4
<PAGE> 5
"CONTRACTOR'S PRODUCT" shall include all Product delivered under this
Agreement by Contractor other than Third Party Product.
"THIRD PARTY PRODUCT" shall include product manufactured or developed
by a corporate entity independent from Contractor and provided by
Contractor on a non-exclusive licensing or other distribution
Agreement with the third party manufacturer. "Third Party Product"
does not include product where Contractor is: a) a corporate
subsidiary or affiliate of the third party manufacturer/developer;
and/or b) the exclusive re-seller or distributor of product
manufactured or developed by said corporate entity.
This warranty shall survive beyond termination or expiration of the
Agreement.
Nothing in this warranty shall be construed to limit any rights or
remedies otherwise available under this agreement.
2.1.8 Meet the performance standards specified in section 2-6 of the RFP for
each of the paper-to-image conversion operations defined in section
2-4 of the RFP.
2.1.9 Restore the paper-to-image conversion functions as specified in
section 2-7 of the RFP, at the performance levels specified in section
2-6 of the RFP, within seventy-two (72) hours of a disaster.
"Disaster" shall include, but not be limited to: theft, fire and
smoke damage, water damage, damage or unauthorized destruction caused
by employees, and fatal system problems (such as non-functioning
critical hardware, internal personnel- induced disasters (hacking
and/or sabotage)).
2.1.10 Ensure that the images and indices produced by contractor on behalf of
the Board can be confidently used as the Board's primary record,
enabling the elimination of paper records, as specified in section 2-8
of the RFP. Convert paper documents so that the delivered documents
are retrievable, readable and clear enough that reasonable hardcopy
output can be obtained at a later point.
2.1.11 Receive, protect and preserve all original documents transferred
possession of by the Board and safeguard such documents from damage or
destruction until completion of paper-to-image conversion and,
further, until such time as the Board authorizes the secure
destruction of such documents.
2.1.12 Provide 100 percent (100%) retrievability of paper documents prior to
their secured destruction pursuant to section 2.1.1(i) herein.
2.1.13 Return to the Board, at Contractor's expense, sample numbers of open
case folders and original paper documents transferred to Contractor by
the Board, upon the Board's request, within five (5) days of the
request.
2.1.14 Provide training and regular retraining of staff as specified in
section 2-8.2 of the RFP before any paper-to- image conversion
operations are commenced by Contractor.
2.1.15 Closely supervise employees and inspect employees' work to detect
deficiencies including the
5
<PAGE> 6
use of unauthorized procedures, employees in need of additional
training, any inefficiencies in existing hardware and software, and to
receive ideas as to how to improve the system.
2.1.16 Keep complete logs to trace the activities of employees,
subcontractors and intruders to enable the thorough investigation of
any suspicious activity as part of monitoring the accuracy and
authenticity of data, the reliability of hardware and software, and
the integrity and security of the system.
2.1.17 Establish and follow employee exit procedures for all employees with
access to Board documents which include all of the following:
(a) unambiguous notice of termination;
(b) an exit interview;
(c) signed and dated records of communications between the
overseeing supervisor and employee;
(d) reminder of confidentiality and nondisclosure of Board
information and a copy of confidentiality agreement for
employee's use;
(e) retrieval of property, documents, keys, ID cards in the
employee's possession;
(f) escort of employee to his or her workstation to obtain
personal effects;
(g) escort out of building; and
(h) immediate disablement of all employee's access codes,
passwords and authorizations.
2.1.18 Provide management reports as specified in section 2-9 of the RFP.
2.1.19 Attend formal weekly status meetings with the Board's management team,
as specified in section 2-9 of the RFP.
2.1.20 Permit Board and Office of State Comptroller (OSC) audit staff access
to records and computer resources as specified in section 2-10 of the
RFP.
3 GENERAL BOARD DUTIES AND OBLIGATIONS
The Board shall:
3.1 Provide reasonable accommodation at the Board's premises to enable
Contractor to carry out its work under this Agreement.
3.2 Provide responses to reasonable requests for information; provide
data, documentation and staff cooperation as appropriate.
6
<PAGE> 7
4 SPECIFIC BOARD DUTIES AND OBLIGATIONS
4.1 Identify all incoming claims documents to be directed for
paper-to-image conversion; manually count the mail and complete a
transmittal slip.
4.2 Pull the no-claims documents, prepare a transmittal slip, and provide
all no-claims documents and transmittal slip to the Contractor on the
first day of conversion.
4.3 Pull open case folders, prepare a transmittal slip, and provide the
open case folders and transmittal slip to the Contractor at a rate
mutually agreed upon by the parties, commencing no later than May 1998
and finishing no later than December 31, 1998. .
4.4 Provide for transportation of all incoming claims documents from all
district offices to the Contractor. The Board may elect to contract
with the Contractor for transportation of the incoming claims
documents at the prices stated in Contractor's Cost Proposal, Volume
2.
4.5 Implement a quality control process prior to the end of six (6) months
from the date documents are received by the Contractor to ensure that
all performance standards are met, including, but not limited to,
those relating to accuracy, quality and volume.
4.6 Refer problems immediately to the Contractor for identification and
corrective action.
5 BOARD ADMINISTRATION
5.1 The parties acknowledge that joint administration and control is
essential to the success of the Board operation. Therefore, the
parties shall use agreed upon processes and forms to report progress
and to identify, track and resolve problems and issues associated with
the operation.
5.2 Each party shall, within five (5) days after this Agreement becomes
effective pursuant to section 18.1 herein, appoint a Managing
Executive and Operation Manager.
5.3 The Operation Managers may clarify, explain, provide further details,
handle necessary technical matters, implement technical changes,
develop administrative procedures, and act as the primary contact
persons between the entities, but shall have no authority to affect,
change, alter, amend or modify any of the terms and conditions of this
Agreement.
5.4 The Managing Executive shall be authorized to: (a) receive and
resolve issues regarding this operation as escalated by the Operation
Manager(s), and (b) negotiate amendments affecting the contract price
and the terms and conditions of the Agreement subject to final
approval by the Board and the Comptroller of the State of New York.
7
<PAGE> 8
5.5 Any good faith dispute arising under the terms of this Agreement which
is not resolved within a reasonable period of time by the Operation
Managers shall be brought to the attention of the representatives of
the parties as set forth below:
<TABLE>
<CAPTION>
ESCALATION
TIMETABLE CONTRACTOR BOARD
(BUSINESS DAYS) REPRESENTATIVE REPRESENTATIVE
<S> <C> <C>
Not to exceed 2 days Operation Manager Operation Manager
Not to exceed 5 days Managing Executive Deputy Executive
Director
Not to exceed 10 days To be named Chair
</TABLE>
Both the Board and the Contractor agree that this dispute resolution
process shall precede the assertion of any legal rights, including the
Board's right to assess liquidated damages, and the parties will
continue without delay all their respective responsibilities under
this Agreement.
6 BILLINGS TO THE BOARD
6.1 The Contractor shall bill the Board using invoices satisfactory to the
Board and the Office of the State Comptroller of the State of New
York. Billings will be based on the actual volume of pages converted
by the Contractor at the per-page price designated in Contractor's
proposal for each of the three categories. A single invoice will be
submitted for each month of the contract. All charges for a month
shall be billed during the month immediately following the month in
which the charges took place. Payments, minus any liquidated damages
as stated in section 8 of this Agreement, shall be made in accordance
with Article XI-A of the New York State Finance Law.
6.2 The Contractor is responsible for all travel, meals, and lodging costs
for their staff associated with delivery of services under this
Agreement.
7 ASSURANCES/LETTER OF CREDIT
Prior to the adoption of this Agreement by the parties, the Contractor
shall demonstrate proof of financial responsibility by filing with the
Chair of the Workers' Compensation Board an irrevocable letter of
credit from a New York State or federally chartered bank qualified to
do business in New York State and insured by the Federal Deposit
Insurance Corporation. In the event of damages occurring as a result
of disaster, default, abandonment, or nonperformance, and/or in the
event of breach of this Agreement resulting in liquidated damages, as
per the terms identified elsewhere in this Agreement, the Board may
demand disbursement of all or any portion(s) of the face value of the
letter of credit to recover said damages and/or liquidated damages.
Such disbursements, pursuant to the demand of all or any portion(s) of
the face value of this letter of credit, may be effected by the
Board's submission of a written demand for payment to the institution
that issued the letter of credit on behalf of the Contractor. Partial
disbursement(s), pursuant to demand, shall not terminate the letter of
credit, but the balance shall
8
<PAGE> 9
be diminished by any amounts disbursed and shall otherwise remain in
effect. The Board shall follow the dispute escalation procedures
contained in section 5.5 of this Agreement prior to making any demand
for disbursement of all or any portion of the letter of credit.
The letter of credit shall name the Chair of the Workers' Compensation
Board as beneficiary and be in the amount of ten million dollars
($10,000,000). If, in the Board's discretion, the Contractor has
satisfactorily performed its duties during the first year of the
contract, such letter of credit may be reduced in the second year to
the amount of five million dollars ($5,000,000). The letter of credit
shall authorize the New York State Workers' Compensation Board to draw
a draft on sight, when accompanied by a Certificate from the New York
State Workers' Compensation Board certifying that the amount demanded
is due because of the failure of Contractor to perform under this
Agreement as specified in sections 8, 9, 11, and/or 14 of this
Agreement; and authorize partial drawings from the face of the letter
of credit.
The letter of credit shall not be canceled, revoked, or terminated
during the term of the Agreement between the Workers' Compensation
Board and the Contractor and for a period of ninety (90) days
thereafter.
8 CONTRACTOR FAILURE TO MEET WORK PERFORMANCE STANDARDS
In the event the Contractor fails, in the reasonable judgment of the
Board, to properly achieve the performance standards for each of the
areas below, the following specific actions may be taken.
8.1 FAILURE TO MEET QUALITY AND/OR TECHNICAL PERFORMANCE STANDARDS
(a) As used in this provision and consistent with section 2.6 of
the RFP, the term "batch" is defined as follows:
(1) A "batch" of incoming daily mail consists of all incoming
claims documents transferred from the Board to the
Contractor each day.
(2) A "batch" of no-claims documents consists of all
no-claims documents transferred from the Board to the
Contractor on the first day of conversion.
(3) A "batch" of open case folders consists of all folders
transferred from the Board to the Contractor each day.
(b) If any information which is readable and recognizable in an
original document cannot be read and recognized on the digital
image at the quality and technical capabilities specified in
section 2-6 of the RFP, Contractor shall, at the Board's
request, reconvert the document.
(c) If the number of documents from a batch which reveal missing
documents, poor image quality, poor retrievability, or
technical non-compliance exceeds 5 percent (5%) of the batch,
Contractor shall, at Contractor's expense, reconvert the
entire batch. Failure by the Board to timely review, accept
or reject a batch shall not constitute acceptance of a
9
<PAGE> 10
batch by the Board. If, in such circumstance, the Board
subsequently requires material changes to the delivered
images, the parties shall fairly consider and mutually agree
as to the effect of the untimely rejection or acceptance on
the delivery or implementation schedules. In no event shall
the Contractor be entitled to any price increase due to the
need to correct deficient deliverables. The Board shall not
assess liquidated damages greater than one day until such time
as the Board has provided notice to the Contractor of the
failure to achieve a performance standard. Liquidated damages
as provided in section 8.2 herein shall only be assessed for
that period of time subsequent to providing such notice.
8.2 FAILURE TO MEET VOLUME AND ACCESSIBILITY PERFORMANCE STANDARDS
The Board will be committing considerable financial and personnel
resources to meet the time frames specified in this Agreement and the
RFP. Contractor agrees to pay liquidated damages proportionate to the
extent of the failure to meet volume and accessibility performance
standards as specified below. Liquidated damages are not limited to
the amount of the monthly billing. Liquidated damages will be
recovered solely against either the current month's billing, or
subsequent monthly billings, or, if such billings are insufficient to
cover such damages, from the face value of the letter of credit upon
the Board's written demand for payment, as authorized in section 7 of
this Agreement.
8.2.1 LATE DELIVERY OF CONVERTED INCOMING DAILY DOCUMENTS
Contractor shall convert all pages of incoming daily mail and deliver
the file images and indices to the Board within twenty-four (24) hours
to achieve 100 percent (100%) performance. For each day that
performance falls below the quantity or time frame standard for
transmission, liquidated damages shall be assessed as follows:
<TABLE>
<S> <C>
More than twenty-four (24) hours, one thousand dollars ($1,000) per day.
More than forty-eight (48) hours, two thousand dollars ($2,000) per day.
More than seventy-two (72) hours, three thousand dollars ($3,000) per day.
More than ninety-six (96) hours, four thousand dollars($4,000) per day.
</TABLE>
8.2.2 LATE DELIVERY OF CONVERTED OPEN CASE FOLDERS
Contractor shall complete the paper-to-image conversion of open case
folders and older cases which are reopened, from each of the district
offices, and deliver the images and associated indices to the Board
within seven (7) calendar days of Contractor's receipt of the folders
to achieve 100 percent (100%) performance. For each day that
performance falls below the time standard for delivery of the images
and indices to the Board, liquidated damages shall be assessed as
follows:
<TABLE>
<S> <C>
More than seven (7) days, one thousand dollars ($1,000) per day.
More than fourteen (14) days, two thousand dollars ($2,000) per day.
More than twenty-one (21) days, three thousand dollars ($3,000) per day.
More than twenty-eight (28) days, four thousand dollars ($4,000) per day.
</TABLE>
10
<PAGE> 11
8.2.3 LATE DELIVERY OF CONVERTED NO-CLAIMS DOCUMENTS
Contractor shall complete the paper-to-image conversion of the 1997
and 1998 no-claims documents from each of the district offices and
deliver the images and associated indices to the Board within seven
(7) calendar days of Contractor's receipt of the documents to achieve
100 percent (100%) performance. For each day that performance falls
below the time standard for delivery of the images and indices to the
Board, liquidated damages shall be assessed as follows:
<TABLE>
<S> <C>
More than seven (7) days, one thousand dollars ($1,000) per day.
More than fourteen (14) days, two thousand dollars ($2,000) per day.
More than twenty-one (21) days, three thousand dollars ($3,000) per day.
More than twenty-eight (28) days, four thousand dollars ($4,000) per day.
</TABLE>
8.3 FAILURE TO MEET DISASTER RECOVERY STANDARDS
The Board commits considerable financial and personnel resources to
maintain its on-going operations. Failure to maintain routine,
on-going operations results in downtime. Downtime results in loss of
productivity and is costly to the Board. Contractor agrees to pay
liquidated damages proportionate to the extent of the failure to meet
disaster recovery standards as specified in section 2-7 of the RFP.
Liquidated damages are not limited to the amount of the monthly
billing. Liquidated damages will be recovered solely against either
the current month's billing, or subsequent monthly billings, or, if
such billings are insufficient to cover such damages, from the face
value of the letter of credit upon the Board's written demand for
payment, as authorized in section 7 of this Agreement.
For each day there is an inability to restore the paper-to-image
conversion functions at the performance levels specified in section
2-6 of the RFP within seventy-two (72) hours of a disaster, liquidated
damages shall be assessed as follows:
<TABLE>
<S> <C>
More than seventy-two (72) hours, one thousand dollars ($1,000)
More than eighty-four (84) hours, two thousand dollars ($2,000).
More than ninety-six (96) hours, five thousand dollars ($5,000).
More than one hundred eight (108) hours, ten thousand dollars ($10,000).
More than one hundred twenty (120) hours, fifteen thousand dollars ($15,000).
More than one hundred forty-eight (148) hours, twenty thousand dollars($20,000).
</TABLE>
8.4 FAILURE TO MEET MANAGEMENT REPORTING REQUIREMENTS
The Board will be committing considerable financial and personnel
resources to meet the time frames specified in this Agreement and the
RFP. Reliance on timely management reports is crucial to meeting
timely completion of this operation. Contractor agrees to pay
liquidated damages proportionate to the extent of the failure to meet
the management reporting requirements as specified in section 2-9 of
the RFP. Liquidated damages are not limited to the amount of the
monthly billing. Liquidated damages will be recovered solely against
either the current month's billing, or subsequent monthly billings,
or, if such billings are insufficient to cover such damages, from the
face value of the letter of credit upon the Board's written demand for
payment, as authorized in section 7 of this Agreement.
11
<PAGE> 12
The amount of liquidated damages for failure to meet the management
reporting requirements will amount to three thousand dollars ($3,000)
multiplied by the quantity of management reports not delivered within
three (3) days of the end of a reporting period divided by the total
management reports due.
8.5 FAILURE TO CURE
If the Contractor continues to be deficient for ten (10) days beyond
the due date of any performance standard, or in the case of any
ongoing or recurring failure to meet a performance standard, then ten
(10) days after the end of the calendar month in which the deficiency
is manifest, the Board shall notify the Contractor in writing that the
Contractor has ten (10) days from receipt of the notice to comply.
The ten (10) days shall be designated as the "cure" period.
Liquidated damages of five thousand ($5,000) dollars per day for each
day or part thereof beyond the cure period shall accrue against the
Contractor if the Contractor fails to comply within the "cure" period.
Liquidated damages are not limited to the amount of the monthly
billing. Liquidated damages will be recovered solely against either
the current month's billing, or subsequent monthly billings, or, if
such billings are insufficient to cover such damages, from the face
value of the letter of credit upon the Board's written demand for
payment, as authorized in section 7 of this Agreement.
9 CONFIDENTIALITY OF BOARD-RELATED DOCUMENTS
9.1 CONFIDENTIALITY OF BOARD-RELATED INFORMATION
The Contractor, its officers, agents and employees and subcontractors,
shall treat all workers' compensation documents and information, with
particular emphasis on information relating to claimants, their
employers, and their insurance carriers, which is obtained by it
through its performance under this Agreement, as confidential
information to the extent required by the laws of the State of New
York and the United States and any regulations promulgated thereunder.
Unauthorized disclosure of personal, confidential, and/or medical
information may result in civil and/or criminal penalties under New
York State and Federal laws.
9.1.1 Except as provided in section 9.1.2 herein, all individual
identifiable information relating to any claimant, employer, or
insurance carrier shall be held confidential and shall not be
disclosed by the Contractor, its officers, agents and employees or
subcontractors without the prior written approval of the Executive
Director of the Workers' Compensation Board or a designee.
9.1.2 The use of information obtained by the Contractor in the performance
of its duties under this Agreement shall be limited to purposes
directly connected with such duties.
9.1.3 Contractor agrees its officers, agents, employees and subcontractors
shall not disclose, show or otherwise make available any portion of
the materials or their contents to any one other than its employees
and subcontractors in connection with the performance of its duties
under this Agreement.
9.1.4 The Contractor shall be responsible for assuring that any agreement
between the Contractor and any of its officers, agents, and employees
or subcontractors contains a provision which strictly comports to the
provisions of this section 9 herein.
12
<PAGE> 13
9.1.5 The Contractor shall advise the Board of all requests made to
Contractor for information described in section 9 herein within
twenty-four (24) hours of such request.
13
<PAGE> 14
9.2 CONTRACTOR BREACH OF CONFIDENTIAL INFORMATION
9.2.1 Contractor shall, at its expense, defend and satisfy the amount of any
final judgment for the unauthorized disclosure of workers'
compensation data brought against the State or the Board resulting in
violation of privacy or injury to a claimant, employer or insurer
arising from the actions of Contractor, its officers, agents, and
employees or subcontractors. The Board shall give Contractor written
notice of such claim or suit.
9.2.2 In addition to any penalties as authorized by law, Contractor shall
pay liquidated damages to the Board for the unauthorized disclosure of
workers' compensation data at the rate of ten thousand dollars
($10,000) per instance per claim.
10 PRESERVATION AND SAFEGUARDING OF BOARD DOCUMENTS
10.1 Contractor agrees to locate its paper-to-image conversion
facilities/off-site work area(s) used for the performance of
activities specified under this Agreement within the State of New York
and apprise the Board of the location and address of such facilities.
10.2 If files and/or documents are lost due to the negligence or wrongdoing
of Contractor or subcontractors in failing to preserve or safeguard
such documents prior to their secure destruction as authorized by the
Board, Contractor shall bear the cost of replacing lost files and/or
lost documents therefrom, including the cost of making the Board
and/or claimant whole.
11 DATA TAMPERING
11.1 Contractor acknowledges that "data tampering" is the alteration or
destruction of computerized information without proper authority and
purpose.
11.1.2 Contractor acknowledges that a false record is a misrepresentation.
11.1.3 Contractor agrees not to alter, modify, forge, eliminate information
from or add information to, or otherwise tamper with Board documents.
Contractor further agrees not to destroy documents without proper
authority and purpose from the Board.
11.1.4 Contractor agrees its officers, agents, employees and subcontractors
shall not alter, modify, forge, eliminate information from or add
information to, or otherwise tamper with Board documents. Contractor
further agrees its officers, agents, employees and subcontractors
shall not destroy documents without proper authority and purpose from
the Board.
11.1.5 Contractor shall be responsible for assuring that any agreement
between the Contractor and any of its officers, agents, and employees
or subcontractors contains a provision which strictly comports to the
provisions of this section 11 herein.
11.2 Contractor shall, at its expense, defend and satisfy the amount of any
final judgment for data tampering of workers' compensation data
brought against the State or the Board. The Board shall give
Contractor written notice of such claim or suit.
14
<PAGE> 15
11.3 Contractor shall pay liquidated damages to the Board for data
tampering of workers' compensation data at the rate of ten thousand
dollars ($10,000) per instance per claim.
12 SUBCONTRACTING
12.1 Prior written approval of the Board shall be required for all
subcontracts. This requirement does not apply to individual
employer-employee contracts, or management incentives for same, or
subcontracts executed prior to the date of release of the RFP. Any
subcontract related to performance of this Agreement shall be subject
to the provisions of law set forth in sections 220, 220-d, and 220-e
of the Labor Law of the State of New York, Article 15 of the Executive
Law of the State of New York and to the provisions set forth herein.
The Board reserves the right to request information about any
subcontracting relationship.
12.2 All subcontracts shall be in writing and shall contain provisions
which are consistent with the provisions of this Agreement. All
subcontracts shall contain a provision for assignment of the
subcontract to the Board or its successor contractors.
12.3 A copy of any subcontract, once approved by the Board and executed by
the Contractor and the subcontractor, shall be furnished to the Board
within thirty (30) days of execution.
12.4 The Contractor shall give the Board immediate notice in writing of any
legal action or suit filed, and prompt notice of any claim made,
against the Contractor by any subcontractor or vendor which may result
in litigation related in any way to this Agreement or which may affect
the performance of duties under this Agreement.
12.5 The requirement of prior approval of any subcontract by the Board
under this Agreement shall not make the State of New York a party to
any subcontract or create any right, claim or interest in or by the
subcontractor or proposed subcontractor against the State.
12.6 The Contractor shall be considered the prime contractor and sole point
of contact in regard to any contractual items specified or required in
this Agreement or RFP. Contractor is not to be relieved in any way of
any responsibility, duty or obligation of this Agreement by a
subcontract.
13 SCOPE OF WORK ALTERATION
13.1 The parties agree that the Agreement, including the RFP and the
Proposal, fairly delineates the Scope of Work to be performed under
the Agreement at the prices named in Contractor's Cost Proposal,
Volume 2. However, they further agree that events may occur which
could alter the scope of the operation. If an alteration in scope is
desired by the Board, the Board shall issue a change request in
writing on an Operation Change Request Form. The Board shall then
provide the Operation Change Request Form to the Contractor Operation
Manager. Such change request must include a description of the
proposed change and a statement of why the change is desired.
Contractor will review the change request and provide, at no
additional charge to the Board, a proposal setting forth the impact of
the change request.
13.2 It is recognized that Change Order requests may cause changes in
price. The parties will enter into good faith negotiations in order
to reach agreement on the actions, if any, to be taken in
15
<PAGE> 16
order to achieve an equitable adjustment to the Agreement terms. The
Contractor's Proposal shall be used as the basis for negotiating any
proposed changes in cost related to a Scope of Work Alteration. The
Contractor's rates for such services shall conform to the rates
included in this Agreement.
13.3 Contractor shall implement an operation change request only upon
written agreement of the parties in a Memorandum of Understanding
signed by the Managing Executives specifying the changes, related
prices and revisions to timetables. All substantive changes to the
Statement of Work contained in a Memorandum of Understanding shall
require an Amendment to this Agreement approved by the Comptroller of
the State of New York.
14 BASIS FOR TERMINATION
14.1 The Agreement may be terminated:
(a) By mutual written agreement of the contracting parties.
(b) By the Board, whenever the Contractor shall default in
performance of the Agreement in accordance with its terms and
shall fail to cure such default within a period of ten (10)
days after receipt from the Board of a written notice
specifying the default. If it is subsequently determined for
any reason that the Contractor was not in default or that the
Contractor's failure to perform or make progress in
performances was due to causes beyond the control and without
the fault or negligence of the Contractor, either in part or
in full, the Board shall have the option to either deem the
Notice of Termination to have been issued under section 14.2
herein as a termination for convenience and the rights and
obligations of the parties shall be governed accordingly, or
allow the Contractor to resume performance under this
Agreement. In the event of a termination for default, the
Contractor shall be paid the following:
(1) the per-page cost for the number of pages converted to
images, indexed, and delivered in specified format to the
Board (calculated monthly and not previously paid) minus
any liquidated damages assessed;
(2) costs allowable in the discretion of the Board of
settling and paying subcontractor and supplier claims
arising out of the termination of work when costs were
incurred prior to termination and such claims are
properly chargeable to the terminated portion of the
Agreement.
14.2 The Agreement may be terminated by the Board for any reason. Such
termination shall be referred to herein as "termination for
convenience." Upon receipt of sixty (60) days written notice of
termination for convenience, the Contractor shall be paid the
following:
(a) the per-page cost for the number of pages converted, indexed,
and delivered in specified format to the Board (calculated
monthly and not previously paid) to the date of termination;
(b) costs allowable in the discretion of the Board of settling and
paying subcontractor and
16
<PAGE> 17
supplier claims arising out of the termination of work when
costs were incurred prior to termination and such claims are
properly chargeable to the terminated portion of the
Agreement.
(c) reasonable costs arising from the settlement process,
including accounting, legal, clerical and other justifiable
expenses, necessary for the preparation of settlement claims
and supporting data with respect to the terminated portion of
this Agreement, and for the termination and settlement of
subcontracts thereunder.
14.3 Upon filing of a petition in bankruptcy or insolvency by or against
the Contractor or subcontractor, if such petition is not vacated
within thirty (30) days of its filing, the Board shall deem the
Agreement terminated without termination services or costs, but
payments for services rendered, subject to the status of the Board as
a creditor in possession, shall be made as provided in section 14
herein. The Board shall not be precluded during the thirty (30)-day
vacatur period from terminating the Agreement under other bases
provided for in section 14 herein.
14.4 Should State funds for this Agreement become unavailable, the Board
may deem this Agreement terminated.
15 PROCEDURES FOR TERMINATION
Upon receipt of a written notice of termination, the Contractor shall:
15.1 Make provision for turning over any remaining records to the Board
which are held after the completion of the final accounting as
provided in this section 15 herein. Additionally, the Contractor
shall assist the Board or a successor contractor in completing any
activities undertaken before the termination of the Agreement
including, without limitation, any judicial and administrative
proceedings.
15.2 Stop work under this Agreement on the date and to the extent specified
in the notice of termination.
15.3 Place no further orders or subcontracts for materials, services or
facilities, except as may be necessary for completion of such portion
of the work under this Agreement as is not terminated.
15.4 Terminate all orders and subcontracts to the extent that they relate
to the performance of work terminated by the notice of termination.
15.5 Assign to the Board, in the manner and to the extent directed by the
Board, all of the rights, title and interests of the Contractor under
the orders of subcontracts so terminated, in which case the Board
shall have the right, in its reasonable judgment, to settle or pay any
or all claims arising out of termination of such orders and
subcontracts.
15.6 With the approval or ratification of the Board, to the extent it may
require, which approval or ratification shall be final and conclusive
for all purposes of this clause, settle all outstanding liabilities
and all claims rising out of such termination or orders or
subcontracts, the cost of which would be reimbursable in whole or in
part, in accordance with the provisions of this
17
<PAGE> 18
Agreement.
15.7 Complete the performance of such part of the work as shall not have
been terminated by the notice of termination.
15.8 Take such action as may be necessary, or as the Board may direct, for
the protection and preservation of the property related to the
Agreement which is in the possession or control of the Contractor and
in which the Board has or may acquire an interest.
15.9 After receipt of a notice of termination, the Contractor shall submit
to the Board its termination claim in the form and with the
certification prescribed by the Board. Such claim shall be submitted
promptly but in no event later than two (2) months from the effective
date of termination. Upon failure of the Contractor to submit its
termination claims within the time allowed, the Board may, subject to
any review required by the State's procedures in effect as of the date
of execution of the Agreement, determine, on the basis of information
available to it, the amount, if any, due to the Contractor by reason
of the termination and shall thereupon cause to be paid to the
Contractor the amount so determined.
15.10 Subject to the provisions of section 15.9 herein, and subject to any
review required by the Board's procedures in effect as of the date of
execution of this Agreement, the Contractor and the Board may agree
upon the whole or any part of the amount or amounts to be paid to the
Contractor by reason of the total or partial termination of work
pursuant to section 15 herein. This Agreement shall be amended
accordingly, and the Contractor shall be paid the agreed amount.
15.11 In the event of the failure of the Contractor and the Board to agree
in whole or in part, as provided in section 15.9 herein, as to the
amounts with respect to charges to be paid to the Contractor in
connection with the termination of work pursuant to section 15 herein,
the Board shall determine, on the basis of information available to it
and as provided in section 14, the amount, if any, due to the
Contractor by reason of termination and shall pay to the Contractor
the amount so determined.
15.12 The Contractor shall have the right to appeal under section 19 of the
Agreement, entitled "Disputes," from any such determination made by
the Board, except that, if the Contractor has failed to submit its
claim within the time provided in section 15.9 herein, it shall have
no such right of appeal.
15.13 In any case where the Board has made such determination of the amount
due, the Board shall pay to the Contractor the following:
(a) If no timely appeal has been taken, the amount so determined
by the Board; or
(b) If an appeal has been timely taken, the amount finally
determined on such appeal.
15.14 In arriving at the amount due the Contractor under section 15 herein,
there shall be deducted:
(a) All payments theretofore made to the Contractor, applicable to
the terminated portion of
18
<PAGE> 19
this Agreement and
(b) Any claim which the Board may have against the Contractor in
connection with this Agreement.
15.15 The Board may from time to time, under such terms and conditions as it
may prescribe, make partial payments and payments on account against
costs incurred by the Contractor in connection with the termination
portion of this Agreement whenever, in the opinion of the Board, the
aggregate of such payments shall be within the amount to which the
Contractor will be entitled hereunder. If the total of such payments
is in excess of the amount finally determined to be due under section
15 herein, such excess shall be payable by the Contractor to the Board
upon demand, together with simple interest computed at the rate of
twelve percent (12%) per year, for the period from the date excess
payment is received by the Contractor to the date on which such excess
is repaid to the Board.
16 PARTICIPATION OF CERTAIN BUSINESS ENTERPRISES
In accordance with Article 15-A of the New York State Executive Law,
the Contractor shall ensure that certified minority and women-owned
business enterprises (M/WBEs) are provided the opportunity for
meaningful participation in the performance of the Agreement.
The Board has established a goal of four and one-half percent (4 1/2%)
participation by NYS Certified Minority Business Enterprises on this
contract. The participation goals are expressed as a percentage of
the total bid price of the contract. As set forth in detail in
Appendix J of the RFP, the Contractor shall secure participation in
the work of the contract by M/WBEs in satisfaction of the goals or
document good-faith efforts taken to fulfill the goals. This
participation may be as suppliers of goods. As a monitoring measure,
the contractor shall submit a Contractor utilization report on forms
provided by the Board, as set forth in Appendix J of the RFP. Any
goal percentages established herein are subject to the requirements of
Article 15-A of the Executive Law and regulations adopted pursuant
thereto. The Board and Contractor agree as a condition of the State
contract to be bound by the provisions of section 316 of Article 15-A
of the Executive Law.
17 MACBRIDE FAIR EMPLOYMENT PRINCIPLES
The Contractor must comply with section 165 of the State Finance Law
(MacBride Fair Employment Principles) wherein the Contractor agrees to
stipulate that they have no business in Northern Ireland or, if they
do have business in Northern Ireland, they shall comply with the
MacBride Fair Employment Principles, and shall permit independent
monitoring of such principles.
18 AGREEMENT DURATION
18.1 TERM OF THE AGREEMENT
The effective date of this Agreement shall be the date upon which the
signatures of authorized State officials from the Department of Law
and the Office of the State Comptroller shall be duly
19
<PAGE> 20
affixed to the face of this Agreement, as required under section 33
herein. The term of this Agreement shall be for five (5) years from
such effective date.
19 DISPUTES
This Disputes provision shall apply to any dispute of the parties
relating to performance under the Agreement except liquidated damages.
Any dispute concerning any question of fact or law arising under the
Agreement which is not disposed of by mutual agreement of the parties
shall be initially decided by the designee of the Chair of the Board.
A copy of the written decision shall be furnished to the Contractor.
Upon issuance of such decision, the parties shall proceed diligently
with the performance of the Agreement and shall comply with the
provisions of such decision and continue to so comply pending further
resolution of any such dispute as provided herein. The decision of
the designee of the Chair shall be final and conclusive unless, within
ten days from the receipt of such decision, the Contractor furnishes
the Chair a written appeal. In the event of an appeal, the Chair
shall promptly review the initial decision, and confirm, annul, or
modify it. The decision of the Chair shall be final and conclusive
unless it is overruled or modified by a court of competent
jurisdiction. In connection with any appeal as provided herein, the
Contractor shall be afforded an opportunity to be heard de novo and to
offer evidence in support of its appeal. Pending final decision of
any legal action or proceeding hereunder by a court of competent
jurisdiction, both parties shall proceed diligently with the
performance of the Agreement in accordance with the Chair's decision.
20 ACCESS REQUIREMENTS
20.1 ACCESS TO PREMISES
20.1.1 To assure compliance with this Agreement and for any other reason the
Board deems appropriate for the effective and continuing operation of
the paper-to-image conversion and indexing operation, the Board, the
Office of the State Comptroller, or other State officials, and their
authorized representatives and designees, shall at all times have the
right to enter into any premises of the Contractor used in performance
of this Agreement or such other place where duties under the Agreement
are being performed, to inspect, monitor or otherwise evaluate the
work performed or being performed therein, or to elicit information
concerning the functions and management of this operation. Provisions
shall be made by the Contractor to provide permanent identification
cards for all on-site personnel and a limited number of other State
personnel. No additional access requirements will be imposed on State
personnel that are not required of the Contractor's employees. The
Board shall have final authority in determining the extent of access
to the Contractor's facilities for all on-site personnel, State
personnel, key personnel and any other individuals whom the Board
deems appropriate. For any such instance of access by authorized
representatives or designees of any State agency or successor
contractor, the Contractor shall provide, and shall require any
subcontractor to provide, all reasonable facilities, cooperation and
assistance to such representatives or designees in the performance of
their duties. All such instance of access shall be undertaken in such
a manner as will not unduly disrupt the Contractor's operations or
performance under the Agreement. The right of access provided for
herein shall include on-site visits, as directed and limited by the
Board, by representatives of competitors in the process or procurement
of a successor contractor.
20
<PAGE> 21
20.1.2 Contractor shall give the Board advance notice of all visits to or
tours of the paper-to-image conversion and indexing operations
site(s) by other than Contractor staff.
20.1.3 The Contractor shall be responsible for assuring that the provisions
of this section 20 shall apply to any subcontract related to
performance under this Agreement.
21
<PAGE> 22
21 RECORDS RETENTION
21.1 The Contractor agrees to preserve all Agreement-related records for
the term this Agreement is in effect and for six (6) years thereafter,
with disposal by the Contractor of any records during said period
permitted only upon prior written approval by the Board. Records
involving matters in litigation shall be kept for a period of not less
than three (3) years following the termination of the litigation.
Open-case folders, no-claims documents, reopened cases, and incoming
daily documents do not constitute "Agreement-related records."
Microfilm or imaged copies of any Agreement-related documents may be
substituted for the originals with the prior written approval of the
Board, provided that the microfilming or imaging procedures are
accepted by the Board as reliable and are supported by an adequate
retrieval system.
21.2 The Contractor shall be responsible for assuring that the provisions
of section 21.1 herein shall apply to any subcontract related to
performance under this Agreement.
22 INDEMNIFICATION
The Contractor shall indemnify, defend and save harmless the Board,
the State, its officers, agents or employees from any and all claims
and losses accruing to or resulting from any and all contractors,
subcontractors, materialmen, laborers, and any other person, firm, or
corporation furnishing or supplying work, services, materials, or
supplies in connection with the performance of the Agreement, and from
all claims and losses accruing to or resulting from any person, firm,
or corporation who may be injured or damaged by the Contractor, its
officers, agents, or employees or subcontractors in the performance of
the Agreement and against any liability, including costs and expenses,
for violation of rights of privacy, arising out of the publication,
translation, reproduction, delivery, performance, use or disposition
of any data furnished under the Agreement or based on any libelous or
otherwise unlawful matter contained in such data.
23 GENERAL PROVISIONS
23.1 DOCUMENT INCORPORATION AND ORDER OF PRECEDENCE
23.1.1 The Agreement consists of:
(a) The body of this Agreement;
(b) The appendices attached to the Agreement body;
(c) The Request for Proposal issued by the Board dated September
9, 1997 and entitled Request For Proposal For Paper to Image
Conversion Services as modified by the Board and by official
Board responses to questions (i.e., Questions and Answers),
the foregoing being herein incorporated by reference; and
(d) The Contractor's Proposal submitted to the Board consisting of
a Technical Proposal, Volume 1, and a Cost Proposal, Volume 2,
the foregoing proposal elements being herein incorporated by
reference.
22
<PAGE> 23
23.1.2 In the event of any inconsistency in or conflict among the document
elements of the Agreement identified in section 23.1.1 herein, such
inconsistency or conflict shall be resolved by giving precedence to
the document elements in the following order:
(a) First, Appendix A, Standard Clauses for All New York State
Contracts, attached to the Agreement;
(b) Second, body of the Agreement;
(c) Third, appendices other than Appendix A, attached to the body
of the Agreement;
(d) Fourth, the RFP, as amended; and
(e) Fifth, the Contractor's Proposal.
23.2 INDEPENDENT CAPACITY OF CONTRACTOR
The parties hereto agree that the Contractor is an independent
contractor, and the Contractor, its agents, officers and employees, in
the performance of the Agreement, shall act in an independent capacity
and not as officers or employees of the State or the Board.
23.3 NO THIRD-PARTY BENEFICIARIES
Nothing contained in the Agreement, expressed or implied, is intended
to confer upon any person, corporation or other entity, other than the
parties hereto and their successors in interest and assigns, any
rights or remedies under or by reason of the Agreement.
23.4 NONASSIGNABILITY
In accordance with section 138 of the State Finance Law, this contract
may not be assigned by the Contractor or its right, title, or interest
therein assigned, transferred, conveyed, sublet or otherwise disposed
of without the previous consent, in writing, of the State, which shall
not be unreasonably withheld, and any attempts to assign the contract
without the State's written consent are null and void. The Contractor
may, however, assign its right to receive payment without the State's
prior written consent unless this contract concerns Certificates of
Participation pursuant to Article 5-A of the State Finance Law.
23.5 CONTRACTOR PERSONNEL
The Board reserves the right to require the Contractor to discharge,
from performance of any or all duties under the Agreement, specified
Contractor employees. The Board will not exercise this authority
unreasonably. The Contractor agrees to replace any employee so
discharged with an employee of equal or better qualifications. If the
Board exercises its right under this provision, it agrees to provide
written notice to the Contractor setting forth its reasons with
specificity.
23
<PAGE> 24
23.6 EMPLOYMENT PRACTICES
23.6.1 The Contractor shall comply with the nondiscrimination clause
contained in Federal Executive Order 11246, as amended by Federal
Executive Order 11375, relating to Equal Employment Opportunity for
all persons without regard to race, color, religion, sex or national
origin, and the implementing rules and regulations prescribed by the
Secretary of Labor and with 41 Code of Federal Regulations, Chapter
60. The Contractor and any of its subcontractors shall comply with
the Executive Law of the State of New York, sections 290-299 thereof
and any rules or regulations promulgated in accordance therewith.
23.6.2 The Contractor shall comply with the provisions of the Federal
Americans with Disabilities Act ("ADA"), Public Law 101-336, 42 U.S.C.
12101 et seq., and implementing regulations by the Federal Government
including 29 CFR Part 1630 (equal employment opportunity for
individuals with disabilities), 29 CFR Parts 1602 and 1627 (record
keeping and reporting under Title VII of the Civil Rights Act of 1964
and the ADA), 28 CFR Part 35 (nondiscrimination on the basis of
disability in state and local government services) and 28 CFR Part 36
(nondiscrimination on the basis of disability by public accommodations
and in commercial facilities) as well as regulations issued by the
Secretary of Labor of the United States at 41 CFR Part 60, pursuant to
the provisions of Executive Order 11758 and its Federal Rehabilitation
Act of 1973. The Contractor shall likewise be responsible for
compliance with the above-mentioned regulations by subcontractors with
whom the Contractor enters into a contractual relationship in
furtherance of this Agreement.
23.6.3 The Contractor shall comply with regulations issued by the Secretary
of Labor of the United States in 41 Code of Federal Regulations,
Chapter 60, pursuant to the provisions of Executive Order 11758 and
the Federal Rehabilitation Act of 1973. The Contractor shall likewise
be responsible for compliance with the above- mentioned regulations by
subcontractors with whom the Contractor enters into a contractual
relationship in furtherance of this Agreement.
Employment practices of the Contractor shall be consistent with
corporate personnel policy and shall be uniformly applied to all
contract staff.
23.6.4 The Contractor agrees to cooperate in implementing Board policies
intended to achieve equal opportunity employment and, accordingly,
warrants that it will not discriminate against employees or applicants
for employment because of race, creed, color, national origin, sex,
age, disability, sexual preference or marital status. The Contractor
will state, in all solicitations, or advertisements for employees
placed by or on behalf of the Contractor, that all qualified
applicants will be afforded equal employment opportunities without
discrimination because of race, creed, color, national origin, sex,
age, disability, sexual preference or marital status.
23.6.5 The Contractor agrees to undertake or continue existing programs of
affirmative action to ensure that minority group members and women are
afforded equal employment opportunities without discrimination because
of race, creed, color, national origin, sex, disability or marital
status. For these purposes, affirmative action shall apply in the
areas of recruitment, employment, job assignment, promotion,
upgradings, demotion, transfer, layoff or termination and rates of pay
or other forms of compensation.
24
<PAGE> 25
23.6.6 The Contractor's affirmative action program shall be specified in an
Affirmative Action Plan which shall contain but not be limited to
goals and time frames for employment of protected classes, and
procedures for preparation and submission of periodic affirmative
action reports.
24 LEGAL ASSURANCE OF AUTHORITY TO PERFORM
In consideration of the within premises, the Contractor represents to
the Board that:
(a) The Contractor has corporate authority to perform all duties
required of it by the Agreement; and
(b) The Contractor is qualified to do business in the State of New
York.
The Contractor shall give immediate notice to the Board of any event
or circumstance which may affect the validity of the representations
herein contained and shall take any and all actions required to
preserve its legal authority to perform the Agreement.
25 FORCE MAJEURE
Neither party shall be liable or deemed to be in default for any delay
or failure in performance under the Agreement resulting directly or
indirectly from acts of God, civil or military authority, acts of
public enemy, wars, riots, civil disturbances, insurrections,
earthquakes, the elements, acts or omissions of public utilities, or
strikes, work stoppages, slow downs or other labor interruptions due
to labor/management disputes involving entities other than the parties
to the Agreement, or any other causes not reasonably foreseeable or
beyond the control of a party. The parties are required to use best
efforts to eliminate or minimize the effect of such events during
performance of the Agreement and adhere to the performance standards
as specified in section 2.1.9 of this Agreement.
26 NOTIFICATION
Any notice required by the Agreement to be given between the
Contractor and the Board shall be sent to the Board's Deputy Executive
Director for this operation or the Contractor's designated Operation
Director by registered or certified mail, return receipt requested, or
shall be delivered in hand and a receipt granted.
27 DELEGATIONS OF AUTHORITY
Whenever, by any provision of the Agreement, any right, power or duty
is imposed or conferred on the Board, the right, power or duty so
imposed or conferred shall be possessed and exercised by the Chair of
the Board unless any such right, power or duty is specifically
delegated to the duly appointed agents or employees of the Board. Any
such delegation of authority shall be reduced to writing by the Chair
and a copy thereof furnished to the Contractor.
25
<PAGE> 26
28 PATENT OR COPYRIGHT INFRINGEMENT
28.1 The Contractor, solely at its expense, shall defend any claim or suit
which may be brought against the Board or the State for the
infringement of United States patents or copyrights arising from the
Contractor's or the Board's use of any equipment materials or
information prepared, developed or furnished by the Contractor in
connection with performance of the Agreement, and in any such suit
shall satisfy any final judgement for such infringement. The Board
will give the Contractor written notice of such claim or suit and full
right and opportunity to conduct the defense thereof, together with
full information and all reasonable cooperation.
28.2 If principles of governmental or public law are involved, the State
may participate in the defense of any action identified in section
28.1 herein, but no costs or expense shall be incurred upon the
account of the Contractor without the Contractor's written consent.
28.3 If, in the Contractor's opinion, any equipment, materials or
information mentioned in section 28.1 herein is likely to or does
become the subject of a claim of infringement of a United States
patent or copyright, then, without diminishing the Contractor's
obligation to satisfy final award, the Contractor may, with the
Board's prior written approval, substitute other equally suitable
equipment, materials and information, or at the Contractor's option
and expense, obtain the right for the Board to continue the use of
such equipment, materials and information.
28.4 In the event that an action at law or in equity is commenced against
the State arising out of claim that the State's use of the software
under the Agreement infringes on any patent, copyright or proprietary
right, and such action is forwarded by the State to the Contractor for
defense and indemnification pursuant to section 28 herein, the Board
shall send copies of all pleadings and documents forwarded to the
Contractor, together with the forwarding correspondence, to the Office
of the Attorney General of the State of New York, together with a copy
of the Agreement. If upon receipt of such request for defense, or at
any time thereafter, the Contractor is of the opinion that the
allegations in such action, in whole or in part, are not covered by
the indemnification set forth in section 28 herein, the Contractor
shall immediately notify the Board and the Office of the Attorney
General of the State of New York in writing and shall specify to what
extent the Contractor believes they are and are not obligated to
defend and indemnify under the terms and conditions of the Agreement.
The Contractor shall in such event protect the interests of the State
of New York and secure a continuance to permit the State of New York
to appear and defend its interests in cooperation with the Contractor
as is appropriate, including any jurisdictional defenses which the
State shall have.
29 CONFLICT OF INTEREST
If during the term of the Agreement and any extension thereof the
Contractor becomes aware of an actual or potential relationship which
may be considered a conflict of interest, the Contractor shall notify
the Board in writing immediately. Should the Contractor engage any
current or former New York State Workers' Compensation Board employee
as its own employee or as an independent contractor because of such
employee's knowledge of New York State finances, operations or
knowledge of the Workers' Compensation Board program, or any current
or former New York State Workers' Compensation Board employee who in
the course of his or her State employment had frequent contact with
management level Contractor employees, the Contractor
26
<PAGE> 27
shall notify the Board, in writing, immediately. Should the Board
thereafter determine that such employment is inconsistent with State
or Federal Law, the Board shall so advise the Contractor, in writing,
specifying its basis for so determining, and may request that the
employee's relationship with the Board with respect to matters set
forth in this Agreement be terminated.
In addition, the Contractor shall not offer any Board employee or
agent of the Board any gratuity or benefit without prior written
approval of the Board.
30 STANDARD OF INTERPRETATION
This Agreement shall be subject to liberal interpretation to
accomplish the parties' evident purpose. The Contractor and the Board
shall perform under this Agreement in a manner to fully ensure smooth,
non-disruptive paper-to-image conversion operations of the Board's
documents, whether such operation by the Contractor or by the Board or
a successor contractor, consistent with the terms of this Agreement.
Performance by the Contractor and the Board, under this Agreement
shall at all times be consistent with those fundamental premises and
this Agreement shall be construed accordingly. Disagreement between
the parties concerning interpretation of this Agreement shall be
subject to the "Disputes" provisions set forth in section 19 herein.
31 WAIVER OF BREACH
No term or provision of this Agreement shall be deemed waived and no
breach excused, unless such waiver or consent shall be in writing and
signed by the party claimed to have waived or consented. Any consent
by a party to, or waiver of, a breach under this Agreement shall not
constitute a consent to, a waiver of, or excuse for any other,
different or subsequent breach.
32 TAXES
It shall be understood that the Board, as an agency of the State of
New York, is not liable for the payment of any sales, use, excise or
other form of tax, however designated, levied or imposed and shall
agree to reimburse the Contractor for same only if taxes would have
been incurred through the Board's normal business operations.
33 AGREEMENT APPROVAL
The State Finance Law of the State of New York, section 112, requires
that any contract made by a State department which exceeds ten
thousand dollars in amount be first approved by the Office of the
State Comptroller before becoming effective. The parties recognize
that the Agreement is wholly executory and not binding until and
unless approved by the Office of the State Comptroller, and the
Department of Law.
27
<PAGE> 28
34 CONTRACT EXTENSION WITHIN THE STATE
Contractor acknowledges and agrees that by entering this Agreement, it
grants the State of New York the option to extend this Agreement and
the terms and conditions contained herein to any other state agency
or authorized purchasers pursuant to Article XI of the New York State
Finance Law.
35 CHOICE OF LAW
The parties agree that the Agreement shall be interpreted according to
the laws of the State of New York. The Contractor shall be required
to bring any legal proceeding against the Board or the State arising
from the Agreement in New York State courts.
36 STANDARD NEW YORK STATE CONTRACT CLAUSES
Appendix A, Standard Clauses for all New York State Contracts,
attached hereto, is hereby fully incorporated into the Agreement.
37 SEVERABILITY
Should any provision of the Agreement be declared or found to be
illegal, unenforceable, ineffective or void, then each party shall be
relieved of any obligation arising from such provision; the balance of
the Agreement, if capable of performance, shall remain in full force
and effect.
28
<PAGE> 29
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT THE DAY AND YEAR
WRITTEN BELOW, AND HEREBY ACKNOWLEDGE THAT THEY HAVE REVIEWED THE TERMS AND
CONDITIONS SET FORTH HEREIN AND AGREE TO BE LEGALLY BOUND BY THE SAME.
SIGNATURES
CONTRACT NO. C-140162
-------------------
BOARD CERTIFICATION (IN ADDITION TO THE ACCEPTANCE OF THIS CONTRACT, I ALSO
CERTIFY THAT ORIGINAL COPIES OF THIS SIGNATURE PAGE WILL BE ATTACHED TO ALL
OTHER EXACT COPIES OF THIS CONTRACT).
PRINCIPAL PLACE OF BUSINESS IS THE LOCATION OF THE PRIMARY CONTROL, DIRECTION
AND MANAGEMENT OF THE ENTERPRISE.
STATE OF
-------------------------------
QCSINET's PRINCIPAL PLACE OF BUSINESS
NEW YORK STATE WORKERS' CONTRACTOR
COMPENSATION BOARD
- ---------------------------------- ---------------------------------------
SIGNATURE SIGNATURE
- ---------------------------------- ---------------------------------------
PRINT NAME PRINT NAME
- ---------------------------------- ---------------------------------------
TITLE TITLE
- ---------------------------------- ---------------------------------------
DATE COMPANY
---------------------------------------
ADDRESS
---------------------------------------
CITY STATE/ZIP
---------------------------------------
TELEPHONE NUMBER
---------------------------------------
FEDERAL I.D. NUMBER
---------------------------------------
DATE
DEPARTMENT OF LAW OFFICE OF THE STATE COMPTROLLER
DENNIS C. VACCO H. CARL MCCALL
new YORK STATE NEW YORK STATE
ATTORNEY GENERAL COMPTROLLER
BY: BY:
------------------------------- ------------------------------------
<PAGE> 30
ASSISTANT ATTORNEY GENERAL
- ---------------------------------- ---------------------------------------
DATE DATE
ACKNOWLEDGMENT OF CORPORATION
STATE OF
------------------------
COUNTY OF SS:
---------------------
ON THIS ______ DAY OF ____________________, 1998, BEFORE ME PERSONALLY CAME
_________________________________________ ________, TO ME KNOWN, WHO, BEING BY
ME DULY SWORN, DID DEPOSE AND SAY THAT HE RESIDES IN
_______________________________ ___, THAT HE IS THE
____________________________________ OF QCSINET ACQUISITION CORP. DESCRIBED IN
AND WHICH EXECUTED THE ABOVE INSTRUMENT; THAT HE KNOWS THE SEAL OF SAID
CORPORATION; THAT THE SEAL AFFIXED TO SAID INSTRUMENT IS SUCH CORPORATE SEAL;
THAT IT WAS SO AFFIXED BY ORDER OF THE BOARD OF DIRECTORS OF SAID CORPORATION,
AND THAT HE SIGNED HIS NAME THERETO BY LIKE ORDER.
-------------------------------
NOTARY PUBLIC
<PAGE> 1
EXHIBIT 10.39
FIRST AMENDMENT TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This First Amendment to the Amended and Restated Employment Agreement (the
"Agreement") by and between F.Y.I. Incorporated, a Delaware corporation (the
"Company"), and Ed H. Bowman, Jr. ("Employee") is hereby entered into and
effective as of March 5, 1998.
Paragraph 2(c)(x) is hereby amended and restated as follows:
2. Compensation. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(c) Executive Perquisites, Benefits and Other Compensation.
Employee shall be entitled to receive additional benefits and compensation from
the Company in such form and to such extent as specified below:
(x) The Company shall provide Employee with additional
warrants (the "Additional Warrants") to acquire (i) 50,000 shares of
Common Stock of the Company at an exercise price equal to $20.00 per
share at such time as the Common Stock has closed at or above $20.00
per share for five consecutive days. The Company shall provide
Employee with additional options (the "Additional Options") to acquire
(i) 50,000 shares of Common Stock of the Company at an exercise price
equal to $25.00 per share at such time as the Common Stock has closed
at or above $25.00 per share for five consecutive days; and (ii)
50,000 shares of Common Stock of the Company at an exercise price
equal to $35.00 per share as of March 5, 1998. The Additional
Warrants and the Additional Options shall become exercisable as to 50%
of the underlying shares of Common Stock on the first anniversary of
their issuance and as to the remaining 50% of the shares on the second
anniversary of their issuance. The Additional Warrants expire on the
fifth anniversary of the initial exercise date. The Additional
Options shall expire on the tenth anniversary of the date of grant.
Upon the grant of the Additional Warrants and the Additional Options,
Employee may exercise the Additional Options until they expire.
Dated: March 5, 1998
EMPLOYEE:
/s/ ED H. BOWMAN, JR.
---------------------------------
Ed H. Bowman, Jr.
F.Y.I. INCORPORATED
By: /s/ THOMAS C. WALKER
------------------------------
Title: Chairman and Chief
Development Officer
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
Acadian Consultants Corp.
ACT Medical Record Services, Inc.
APS Services Acquisition Corp.
Associate Record Technician Services Acquisition Corp.
B&B (Baltimore-Washington) Acquisition Corp.
California Medical Record Service Acquisition Corp.
CH Acquisition Corp.
Computer Central Corporation
DeBari Associates Acquisition Corp.
Delaware Major Acquisition Corp.
Deliverex Acquisition Corp.
Deliverex Sacramento Acquisition Corp.
DISC Acquisition Corp.
DPAS Acquisition Corp.
Imagent Acquisition Corp.
Information Management Acquisition Corp.
Input of Texas, Inc.
Leonard Archives Acquisition Corp.
Lifo Systems, Inc.
MAVRICC Management Systems, Inc.
Medicopy Acquisition Corp.
Micro Publication Systems, Inc.
Minnesota Medical Record Service Acquisition Corp.
MMS Escrow and Transfer Agency, Inc.
Permanent Records Acquisition Corp.
Premier Accusation Corp.
QCS Inet Acquisition Corp.
Quality Copy Acquisition Corp.
RAC (California) Acquisition Corp.
Recordex Acquisition Corp.
Researchers Acquisition Corp.
Robert A. Cook Acquisition Corp.
Rust Federal Systems, Inc.
Texas Medical Record Service Acquisition Corp.
The Rust Consulting Group, Inc.
ZIA Information Analysis Group, Inc.
Zip Shred Canada Acquisition Corp.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Annual Report on Form 10-K of F.Y.I. Incorporated for the year ended December
31, 1997. We hereby consent to the incorporation by reference of our report in
Registration Statements Nos. 333-5493 and 333-26785 on Form S-8.
Arthur Andersen LLP
Dallas, Texas
March 9, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,926
<SECURITIES> 0
<RECEIVABLES> 29,468
<ALLOWANCES> 3,122
<INVENTORY> 1,675
<CURRENT-ASSETS> 40,554
<PP&E> 36,352
<DEPRECIATION> 16,464
<TOTAL-ASSETS> 126,238
<CURRENT-LIABILITIES> 18,449
<BONDS> 6,548
0
0
<COMMON> 109
<OTHER-SE> 100,407
<TOTAL-LIABILITY-AND-EQUITY> 126,238
<SALES> 8,318
<TOTAL-REVENUES> 154,142
<CGS> 5,949
<TOTAL-COSTS> 132,566
<OTHER-EXPENSES> (469)
<LOSS-PROVISION> 1,631
<INTEREST-EXPENSE> 1,851
<INCOME-PRETAX> 15,090
<INCOME-TAX> 6,083
<INCOME-CONTINUING> 9,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,007
<EPS-PRIMARY> .86
<EPS-DILUTED> .85
</TABLE>
