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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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F.Y.I. INCORPORATED(R)
(Exact name of registrant as specified in its charter)
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DELAWARE 75-2560895
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ED H. BOWMAN, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
F.Y.I. INCORPORATED
3232 MCKINNEY AVENUE, SUITE 900 3232 MCKINNEY AVENUE, SUITE 900
DALLAS, TEXAS 75204 DALLAS, TEXAS 75204
(214) 953-7555 (214) 953-7555
(Address, including zip code, and telephone (Name, address, including zip code, and
number, including area code, of registrant's telephone number, including area code, of
principal executive offices) agent for service)
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Copy to:
MARGOT T. LEBENBERG, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL CHRISTOPHER T. JENSEN, ESQ.
F.Y.I. INCORPORATED MORGAN, LEWIS & BOCKIUS LLP
3232 MCKINNEY AVENUE, SUITE 900 101 PARK AVENUE
DALLAS, TEXAS 75204 NEW YORK, NEW YORK 10178
(214) 953-7555 (212) 309-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock, $.01 par value.... 914,339 $27.75(1) 25,372,907(1) $7,485
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, and based on
the closing price of the Common Stock reported on The Nasdaq Stock Market on
April 24, 1998.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 28, 1998
914,339 SHARES
F.Y.I. INCORPORATED(R)
COMMON STOCK
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This Prospectus covers 914,339 shares (the "Shares") of common stock, $.01
par value (the "Common Stock"), which may be offered and sold by certain
stockholders (the "Selling Stockholders") of F.Y.I. Incorporated (the "Company"
or "F.Y.I.") from time to time, directly or through one or more broker-dealers,
in one or more transactions. All of the Shares to be sold by any of the Selling
Stockholders were issued in connection with (i) the acquisition by the Company
of various businesses which were previously owned by selected Selling
Stockholders; or (ii) the initial capitalization of the Company.
The Selling Stockholders and any broker-dealer through whom any Shares are
offered and sold may be deemed to be underwriters within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
such offers and sales. The Company will receive none of the proceeds from any
such sales.
Selling Stockholders or pledges, donees, distributees, transferees or other
successors in interest, may sell the Shares being offered hereby from time to
time in transactions (which may involve crosses and block transactions) on The
Nasdaq Stock Market, at market prices prevailing at the time of the sale, at
negotiated prices or otherwise. Selling Stockholders may sell some or all of
such Shares in transactions involving broker-dealers, who may act solely as
agents and/or may acquire Shares as principal. Broker-dealers participating in
such transactions as agent may receive commissions from Selling Stockholders
(and, if any of them act as agent for the purchaser of any such Shares, from
such purchaser), such commissions computed in appropriate cases in accordance
with the applicable rules of The Nasdaq Stock Market, which commissions may be
at negotiated rates where permissible under such rules. Participating
broker-dealers may agree with Selling Stockholders to sell a specified number of
Shares at a stipulated price per share and, to the extent any such broker-dealer
is unable to do so, acting as an agent for a Selling Stockholder, to purchase as
principal any unsold Shares at the price required to fulfill the broker-dealer's
commitment to such Selling Stockholder. In addition or alternatively, Shares may
be sold by Selling Stockholders and/or by or through other broker-dealers in
special offerings, exchange distributions or secondary distributions pursuant to
and in compliance with the governing rules of The Nasdaq Stock Market.
Broker-dealers who acquire Shares as principal may thereafter resell such Shares
from time to time in transactions (which may involve crosses and block
transactions and which may involve sales to or through other broker-dealers,
including transactions of the nature described in the preceding two sentences)
on The Nasdaq Stock Market, at market prices prevailing at the time of sale, at
negotiated prices or otherwise, and in connection with such resales may pay to
or receive commissions from the purchaser of such Shares. Any commissions paid
or concessions allowed to any broker-dealer, and, if any broker-dealer purchases
such Shares as principal, any profits received on the resale of such Shares, may
be deemed to be underwriting discounts and commissions under the Securities Act.
All expenses of registration of the Shares which may be offered hereby
under the Securities Act will be paid by the Company (other than underwriting
discounts and selling commissions, and fees and expenses of advisors to any of
the Selling Stockholders). The Company may agree to indemnify any Selling
Stockholder as an underwriter under the Securities Act against certain
liabilities, including liabilities arising under the Securities Act. Any Selling
Stockholder may indemnify any broker-dealer that participates in transactions
involving sales of the Shares against certain liabilities, including liabilities
arising under the Securities Act.
As of April 20, 1998, the Company had 11,810,344 shares of Common Stock
outstanding. The Common Stock is traded on The Nasdaq Stock Market. On April 24,
1998, the closing price of the Common Stock on The Nasdaq Stock Market was
$27.75 per share, as published in The Wall Street Journal on April 27, 1998.
The Company is a Delaware corporation and all references herein to the
Company refer to the Company and its subsidiaries.
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998
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IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE
COMMON STOCK ON THE NASDAQ STOCK MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza Building,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661- 2511. Copies of such materials can be obtained from the Commission at
Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549, at prescribed
rates. The Commission maintains an Internet Web site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission. The address of that site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is made
to such Registration Statement and exhibits. A copy of the Registration
Statement on file with the Commission may be obtained from the Commission's
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission and through the Commission's Internet Web site.
The Company's Common Stock is traded on The Nasdaq Stock Market. Proxy
statements and other information concerning the Company can also be inspected at
the offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington D.C.
20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company (Commission File No. 0-27444) filed
with the Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 filed with the Commission on March 11, 1998;
(b) The Company's Current Report on Form 8-K filed with the Commission
on March 20, 1998; and
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
December 22, 1995.
In addition, all reports and other documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of effectiveness of the Registration Statement of which
this Prospectus is a part and prior to the termination of the offering made
hereby shall be deemed to be incorporated or deemed to be incorporated by
reference into this Prospectus.
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Any statement contained herein or incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Written requests for such copies should be directed to F.Y.I.
Incorporated, 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204, Attention:
Investor Relations. Telephone requests may be directed to Investor Relations at
(214) 953-7555.
THE COMPANY
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.
The Company is a Delaware corporation. Its executive offices are located at
3232 McKinney Avenue, Suite 900, Dallas, Texas 75204, and its telephone number
is (214) 953-7555.
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RECENT DEVELOPMENTS
Acquisition Activity. Since December 31, 1997, the Company has acquired the
following document and information outsourcing solutions businesses (the "Recent
Acquisitions"): (i) Act Medical Record Services, Inc., a medical release of
information business in Wisconsin; (ii) Lifo Systems, Inc., a database creation
and management business in Texas; (iii) Medicopy, Inc., a medical records
release of information business in Mississippi; (iv) Associate Record Technician
Services, Inc., a medical records temporary staffing agency in California; and
(v) DeBari Associates, Inc., a litigation support and systems integration
company in New York City and St. Vincent, The Grenadines.
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RISK FACTORS
An investment in the Company involves a significant degree of risk.
Prospective investors should consider carefully the following factors in
addition to other information included in this Prospectus before making an
investment in the Common Stock.
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.
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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 Common Stock
to be used as consideration for acquisitions by the Company, of which 1,394,529
shares remained available as of April 23, 1998. 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
April 23, 1998, the availability under the 1998 Credit Agreement was $21,700,000
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,
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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 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 April 20, 1998, the directors and executive officers of the Company
beneficially owned approximately 17.3% 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.
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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. However, certain contractual restrictions shall be removed upon the
effectiveness of this Registration Statement.
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 March 31, 1998, the Company had options to purchase
1,668,351 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
8
<PAGE> 10
liabilities in the future will not have a material adverse effect on the
business, financial condition or results of operations of the Company.
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 Prospectus 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 Prospectus 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.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby.
9
<PAGE> 11
SELLING STOCKHOLDERS
The following table sets forth information with respect to the Selling
Stockholders including: (i) the number and approximate percentage of shares
beneficially owned as of April 20, 1998; (ii) the number of Shares registered
for sale; and (iii) the number and approximate percentage of shares to be owned
after the completion of this Offering. The address of each person listed below
is c/o F.Y.I. Incorporated, 3232 McKinney Avenue, Suite 900, Dallas, Texas
75204. All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED PRIOR OWNED
TO OFFERING AFTER OFFERING
----------------- NUMBER OF SHARES -----------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- ------- ------- ---------------- ------- -------
<S> <C> <C> <C> <C> <C>
Gregory R. Melanson(1) -- Director........ 349,260 3.0% 34,000 315,260 2.7%
Amended and Restated Craig F. Moncher
Revocable Trust......................... 320,000 2.7% 20,000 300,000 2.5%
Kyle C. Kerbawy TTEE for the Kyle C.
Kerbawy TR as Amended & Restated DTD
5/30/1984(2)............................ 270,000 2.3% 20,000 250,000 2.1%
Jonathan B. Shaw -- Director.............. 185,198 1.6% 20,000 165,198 1.4%
Richard Ross.............................. 228,554 1.9% 111,991 116,563 1.0%
Charles J. Bauer, Jr. .................... 147,333 1.2% 72,333 75,000 *
John E. Drury............................. 83,128 * 25,000 58,128 *
Michael P. Wickman........................ 78,242 * 28,242 50,000 *
Dorothy Green............................. 92,536 * 45,342 47,194 *
Daniel O. Barr............................ 90,791 * 44,488 46,303 *
G. Michael Bellenghi -- Director.......... 50,000 * 10,000 40,000 *
Michael J. Bradley(3) -- Director......... 55,000 * 15,000 40,000 *
Gary D. Embretson......................... 78,140 * 38,289 39,851 *
Jeffrey S. Majkrzak....................... 78,140 * 38,289 39,851 *
William D. Slattery....................... 78,140 * 38,289 39,851 *
John M. Witte............................. 76,370 * 37,421 38,949 *
Christopher Groff......................... 76,370 * 37,421 38,949 *
William Jones............................. 73,464 * 36,732 36,732 *
Gerald E. Pierson......................... 46,246 * 10,000 36,246 *
Neil Dean Patterson....................... 40,003 * 5,024 34,979 *
Eduardo A. Leal........................... 59,754 * 29,000 30,754 *
Myrna T. Leal............................. 59,753 * 29,000 30,753 *
Harry M. Green Trust B c/o Dorothy Green
TTEE.................................... 56,716 * 27,791 28,925 *
James Timothy Weeg & Jennifer M. Weeg as
TTEE of the James Timothy Weeg &
Jennifer M. Weeg 1992 Family Trust...... 44,513 * 16,000 28,513 *
Arthur W. Homan & Rebecca Dudman Homan JT
Ten..................................... 27,243 * 12,243 15,000 *
Wendell Ware & Gloria Ware JTWROS......... 16,325 * 7,999 8,326 *
Peter Nguyen(4)........................... 14,800 * 7,252 7,548 *
Christopher R. Yowell(5).................. 32,092 * 25,092 7,000 *
Stanton Williams(6)....................... 9,867 * 4,835 5,032 *
Fernando Carvajal(7)...................... 3,825 * 382 3,443 *
Fernando Leal(8).......................... 3,825 * 800 3,025 *
Steve R. Bostedt(9)....................... 3,885 * 1,500 2,385 *
Linda M. Wetli(10)........................ 968 * 400 568 *
David L. & Lori E. Delgado TTEES FBO The
David L. & Lori E. Delgado 1994
Revocable LV TR Agreement............... 64,184 * 64,184 0 *
</TABLE>
- ---------------
* Represents less than 1%.
(1) Does not include 15,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days. Mr. Melanson is also a Senior Vice
President of the Company.
10
<PAGE> 12
(2) Mr. Kerbawy is also a Director of the Company.
(3) Does not include 5,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(4) Does not include 3,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(5) Does not include 3,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(6) Does not include 3,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(7) Does not include 3,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(8) Does not include 5,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(9) Does not include 3,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
(10) Does not include 1,000 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
The Company has agreed to use its best efforts to keep this Registration
Statement effective generally for a period of six months.
PLAN OF DISTRIBUTION
The shares of Common Stock registered hereunder and owned by the Selling
Stockholders may be offered and sold by means of this Prospectus from time to
time as market conditions permit in the over-the-counter market, or otherwise at
prices and terms then prevailing or at prices related to the then-current market
price, or in negotiated transactions. These shares may be sold by one or more of
the following methods, without limitation: (a) a block trade in which a broker
or dealer so engaged will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) a purchase by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits a purchase; and (d)
face-to-face transactions between sellers and purchasers without a broker or
dealer. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from Selling
Stockholders in amounts to be negotiated.
The Selling Stockholders and any brokers or dealers who act in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of 2(11) of the Securities Act, and any commissions received by them
or any profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Company may
agree to indemnify the Selling Stockholders and may agree to indemnify any such
broker or dealer who may be deemed to be an underwriter against certain
liabilities, including liabilities under the Securities Act as an underwriter or
otherwise.
11
<PAGE> 13
The Company has advised the Selling Stockholders that, during such time as
they may be engaged in a distribution of the shares of Common Stock included
herein, they must comply with the applicable provisions of Regulation M under
the Exchange Act, as amended ("Regulation M"), and, in connection therewith, the
Selling Stockholders may not engage in any stabilization activity in connection
with any securities of the Company, that they must furnish copies of this
Prospectus to each broker-dealer through which the shares of Common Stock
included herein may be offered, and that they may not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company except as permitted under Regulation M. The Selling
Stockholders have also agreed to inform the Company and broker-dealers through
whom sales may be made hereunder when the distribution of the shares is
completed.
Rules 102 and 103 under Regulation M prohibit participants in a
distribution from bidding for or purchasing for any account in which the
participant has a beneficial interest any of the of the securities that are the
subject of the distribution.
Rule 104 under Regulation M governs bids and purchases made to stabilize
the price of a security in connection with a distribution of the security.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by this
Prospectus has been passed upon for the Company by Morgan, Lewis & Bockius LLP,
New York, New York.
EXPERTS
The consolidated financial statements for the year ended December 31, 1997
incorporated by reference in this Prospectus and elsewhere in this Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
12
<PAGE> 14
======================================================
NO DEALER, REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
The Company........................... 3
Recent Developments................... 4
Risk Factors.......................... 5
Use of Proceeds....................... 9
Selling Stockholders.................. 10
Plan of Distribution.................. 11
Legal Matters......................... 12
Experts............................... 12
</TABLE>
======================================================
======================================================
======================================================
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the distribution
of the Common Stock covered by this Registration Statement, all which will be
paid by the Company, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 7,485
Printing and Engraving Costs................................ 5,000
Legal Fees and Expenses..................................... 5,000
Accounting Fees and Expenses................................ 5,000
Miscellaneous............................................... 20,000
-------
Total............................................. $42,485
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Amended and Restated By-Laws provide that the Company shall,
to the fullest extent permitted by Section 145 of the General Corporation Law of
the State of Delaware, as amended from time to time, indemnify all persons whom
it may indemnify pursuant thereto.
Section 145 of the General Corporation Law of the State of Delaware permits
a corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not apposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Article Six of the Company's Amended and Restated Certificate of
Incorporation provides that the Company's directors will not be personally
liable to the Company or its stockholders for monetary damages resulting from
breaches of their fiduciary duty as directors except (a) for any breach of the
duty of loyalty to the Company or its stockholders, (b) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (c) under Section 174 of the General Corporation Law of the State of
Delaware, which makes directors liable for unlawful dividends or unlawful stock
repurchases or redemptions or (d) for transactions from which directors derive
improper personal benefit.
In accordance with Delaware law, the Company has entered into
indemnification agreements with its directors pursuant to which it has agreed to
pay certain expenses, including attorneys' fees, judgments, fines and amounts
paid in settlement, incurred by such directors in connection with certain
actions, suits or proceedings. These agreements require directors to repay the
amount of any expenses advanced if it shall be determined that they shall not
have been entitled to indemnification.
The Company maintains liability insurance for the benefit of its directors
and officers.
II-1
<PAGE> 16
ITEM 16. EXHIBITS
<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>
II-2
<PAGE> 17
<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 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)
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>
II-3
<PAGE> 18
<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)
5 -- Opinion of Morgan, Lewis & Bockius LLP
10.1 -- F.Y.I. Incorporated 1995 Stock Option Plan, as amended.
21 -- List of subsidiaries of F.Y.I. Incorporated (Incorporated
by reference to Exhibit 21 to the Company's Annual Report
on Form 10-K filed on March 11, 1998)
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Morgan, Lewis & Bockius LLP (Contained in
Exhibit 5)
24 -- Power of Attorney (included with the signature page
hereof)
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
II-4
<PAGE> 19
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any other material change to such information in the registration
statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement;
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities being offered
therein and the offering of such securities at the time may be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which are being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or caused to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed by
the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-5
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, Texas, on April 28, 1998.
Date: April 28, 1998
F.Y.I. INCORPORATED
By: /s/ ED H. BOWMAN, JR.
----------------------------------
Ed H. Bowman, Jr.
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Ed H. Bowman, Jr.
and Margot T. Lebenberg, and both of them, either of whom may act without the
joinder of the other, as his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and any other
registration statement for the same offering filed pursuant to Rule 462 under
the Securities Act of 1933, and to file the same, with all exhibits thereto and
all other documents in connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing appropriate or necessary to be done, as fully and
for all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date or dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----
<C> <S> <C>
/s/ ED H. BOWMAN, JR. Director, President and Chief April 28, 1998
- ----------------------------------------------------- Executive Officer (Principal
Ed H. Bowman, Jr. Executive Officer)
/s/ DAVID LOWENSTEIN Director, Executive Vice April 28, 1998
- ----------------------------------------------------- President and Treasurer
David Lowenstein (Principal Financial
Officer)
/s/ TIMOTHY J. BARKER Senior Vice President and April 28, 1998
- ----------------------------------------------------- Chief Financial Officer
Timothy J. Barker (Principal Accounting
Officer)
/s/ THOMAS C. WALKER Director April 28, 1998
- -----------------------------------------------------
Thomas C. Walker
/s/ DONALD F. MOOREHEAD, JR. Director April 28, 1998
- -----------------------------------------------------
Donald F. Moorehead, Jr.
/s/ GREGORY R. MELANSON Director and Senior Vice April 28, 1998
- ----------------------------------------------------- President
Gregory R. Melanson
/s/ G. MICHAEL BELLENGHI Director April 28, 1998
- -----------------------------------------------------
G. Michael Bellenghi
/s/ JERRY F. LEONARD, JR. Director April 28, 1998
- -----------------------------------------------------
Jerry F. Leonard, Jr.
</TABLE>
II-6
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----
<C> <S> <C>
/s/ JONATHAN B. SHAW Director April 28, 1998
- -----------------------------------------------------
Jonathan B. Shaw
/s/ MICHAEL J. BRADLEY Director April 28, 1998
- -----------------------------------------------------
Michael J. Bradley
/s/ HON. EDWARD M. ROWELL Director April 28, 1998
- -----------------------------------------------------
Hon. Edward M. Rowell
/s/ KYLE C. KERBAWY Director April 28, 1998
- -----------------------------------------------------
Kyle C. Kerbawy
</TABLE>
II-7
<PAGE> 22
INDEX TO EXHIBITS
<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> 23
<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 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)
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> 24
<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)
5 -- Opinion of Morgan, Lewis & Bockius LLP
10.1 -- F.Y.I. Incorporated 1995 Stock Option Plan, as amended.
21 -- List of subsidiaries of F.Y.I. Incorporated (Incorporated
by reference to Exhibit 21 to the Company's Annual Report
on Form 10-K filed on March 11, 1998)
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Morgan, Lewis & Bockius LLP (Contained in
Exhibit 5)
24 -- Power of Attorney (included with the signature page
hereof)
</TABLE>
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]
April 28, 1998
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900 Dallas, Texas 75204
Re: Issuance of Shares Pursuant to
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to F.Y.I. Incorporated, a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
of a Registration Statement on Form S-3 (the "Registration Statement") relating
to the secondary offering by certain Selling Stockholders of an aggregate of
914,339 shares (the "Shares") of the Company's Common Stock, $.01 par value per
share.
In so acting, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of the Amended and Restated Certificate of
Incorporation of the Company and the Amended and Restated By-Laws of the Company
and such other documents or instruments as we have deemed necessary for purposes
of the opinions expressed below. We have assumed that the Shares have been
issued against receipt of the consideration approved by the Board of Directors
of the Company or a committee thereof, which was no less than the par value
thereof, and were in compliance with applicable federal and state securities
laws.
Based on the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.
2. The Shares have been duly authorized and validly issued and are fully
paid and non-assessable.
We are expressing the opinions above as members of the Bar of the State of
New York and express no opinion as to any law other than the General Corporation
Law of the State of Delaware.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Registration Statement.
Very truly yours,
/s/ MORGAN, LEWIS & BOCKIUS LLP
<PAGE> 1
EXHIBIT 10.1
F.Y.I. INCORPORATED
1995 STOCK OPTION PLAN*
SECTION 1. Purpose
The Plan (i) authorizes the Committee to provide to Employees and
Consultants of the Corporation and its Subsidiaries, who are in a position to
contribute materially to the long-term success of the Corporation, with options
to acquire Common Stock, par value $.01 per share, of the Corporation, and (ii)
provides for the automatic grant of options to Non-Employee Directors of the
Corporation in accordance with the terms specified herein. The Corporation
believes that this incentive program will cause those persons to increase their
interest in the Corporation's welfare, and aid in attracting and retaining
Employees, Consultants and Directors of outstanding ability.
SECTION 2. Definitions
Unless the context clearly indicates otherwise, the following terms, when
used in this Plan, shall have the meanings set forth in this Section:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Corporation or an employee benefit plan
of the Corporation, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Exchange Act) of any voting
security of the Corporation 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 Corporation;
(ii) the individuals (A) who, as of the closing date of the Initial
Public Offering, 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 the Corporation shall approve a merger,
consolidation, recapitalization, or reorganization of the Corporation, 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 Corporation 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 Corporation shall approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or a substantial portion of the
Corporation's assets (i.e., 50% or more of the total assets of the
Corporation).
(c) "Code" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
- ---------------
* Incorporating amendments through March 5, 1998.
<PAGE> 2
(d) "Committee" shall mean the Board, or any Committee of two or more
Directors that may be designated by the Board to administer the Plan.
(e) "Consultant" shall mean (i) any person who is engaged to perform
services for the Corporation or its Subsidiaries, other than as an Employee or
Director, or (ii) any person who has agreed to become a consultant within the
meaning of clause (i).
(f) "Control Person" shall mean any person who, as of the date of grant of
an Option, owns (within the meaning of Section 422(b)(6) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power or
value of all classes of stock of the Corporation or of any parent or Subsidiary.
(g) "Corporation" shall mean F.Y.I. Incorporated, a Delaware corporation.
(h) "Director" shall mean any member of the Board.
(i) "Employee" shall mean (i) any full-time employee of the Corporation or
its Subsidiaries (including Directors who are otherwise employed on a full-time
basis by the Corporation or its Subsidiaries), or (ii) any person who has agreed
to become an employee within the meaning of clause (i).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934 as it may
be amended from time to time.
(k) "Fair Market Value" of the Stock on a given date shall be based upon:
(i) if the Stock is listed on a national securities exchange or quoted in an
interdealer quotation system, the last sales price or, if unavailable, the
average of the closing bid and asked prices per share of the Stock on such date
(or, if there was no trading or quotation in the Stock on such date, on the next
preceding date on which there was trading or quotation) as provided by one of
such organizations; or (ii) if the Stock is not listed on a national securities
exchange or quoted in an interdealer quotation system, as determined by the
Board in good faith in its sole discretion; provided, however, that the "fair
market value" of Stock on the date on which shares of Stock are first issued and
sold pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission shall be the Initial Public Offering
price of the shares so issued and sold, as set forth in the first final
prospectus used in such offering.
(l) "Grantee" shall mean a person granted an Option under the Plan.
(m) "Initial Public Offering" shall mean an initial public offering of
shares of Stock in a firm commitment underwriting registered with the Securities
and Exchange Commission in compliance with the provisions of the 1933 Act.
(n) "ISO" shall mean an Option granted pursuant to the Plan to purchase
shares of the Stock and intended to qualify as an incentive stock option under
Section 422 of the Code, as now or hereafter constituted.
(o) "1933 Act" shall mean the Securities Act of 1933, as amended.
(p) "Non-Employee Director" shall mean a Director of the Corporation who is
not an Employee, nor has been an Employee at any time during the prior one year
period.
(q) "NQSO" shall mean an Option granted pursuant to the Plan to purchase
shares of the Stock that is not an ISO.
(r) "Options" shall refer collectively to NQSOs and ISOs issued under and
subject to the Plan.
(s) "Parent" shall mean any parent corporation as defined in Section 424 of
the Code.
(t) "Plan" shall mean this 1995 Stock Option Plan as set forth herein and
as amended from time to time.
(u) "Stock" shall mean shares of the Common Stock of the Corporation.
2
<PAGE> 3
(v) "Stock Option Agreement" shall mean a written agreement between the
Corporation and the Grantee, or a certificate accepted by the Grantee,
evidencing the grant of an Option hereunder and containing such terms and
conditions, not inconsistent with the Plan, as the Committee shall approve.
(w) "Subsidiary" shall mean (i) any corporation with respect to which the
Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of such corporation, or (ii) any entity
which the Committee reasonably expects to become a subsidiary within the meaning
of clause (i).
SECTION 3. Shares of Stock Subject to the Plan
The total amount of Stock that may be subject to outstanding Options,
determined immediately after the grant of any Option, shall not exceed the
greater of 650,000 shares or sixteen percent (16%) of the total number of shares
of Stock outstanding. Notwithstanding the foregoing, the number of shares that
may be delivered upon exercise of ISOs shall not exceed 650,000, provided,
however, that shares subject to ISOs shall not be deemed delivered if such
Options are forfeited, expire or otherwise terminate without delivery of shares
to the Grantee. Any shares of Stock delivered pursuant to an Option may consist,
in whole or in part, of authorized and unissued shares or treasury shares.
SECTION 4. Administration of the Plan
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have the authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of Stock Option Agreements
thereunder and to make all other determinations necessary or advisable for the
administration of the Plan. Any controversy or claim arising out of or related
to this Plan or the Options granted thereunder shall be determined unilaterally
by, and at the sole discretion of, the Committee. Any action of the Committee
with respect to the Plan shall be final, conclusive, and binding on all persons,
including the Corporation, its Subsidiaries, Grantees, any person claiming any
rights under the Plan from or through any Grantee, and stockholders. The express
grant of any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Corporation
or any Subsidiary of the Corporation the authority, subject to such terms as the
Committee shall determine, to perform such functions as the Committee may
determine, to the extent permitted under applicable law. Other provisions of the
Plan notwithstanding, the Board may perform any function of the Committee under
the Plan. In any case in which the Board is performing a function of the
Committee under the Plan, each reference to the Committee herein shall be deemed
to refer to the Board.
SECTION 5. Types of Options
Options granted under the Plan may be of two types: ISOs or NQSOs. The
Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs or both, but shall clearly designate the nature of
each Option at the time of grant in the Stock Option Agreement. Grantees who are
not Employees (determined with reference to Section 2(i)(i) only) of the
Corporation or a Subsidiary (determined with reference to Section 2(w)(i) only)
on the date an Option is granted shall only receive NQSOs.
SECTION 6. Grant of Options to Employees and Consultants
(a) Employees and Consultants of the Corporation and its Subsidiaries shall
be eligible to receive Options under the Plan.
(b) The exercise price per share of Stock subject to an Option granted to
an Employee or Consultant shall be determined by the Committee and specified in
the Stock Option Agreement, provided, however, that the exercise price of each
share subject to an Option shall be not less than 100%, or, in the case of an
ISO granted to a Control Person, 110%, of the Fair Market Value of a share of
the Stock on the date such Option is granted.
3
<PAGE> 4
(c) The term of each Option granted to an Employee or Consultant shall be
determined by the Committee and specified in a Stock Option Agreement, provided
that no Option shall be exercisable more than ten years from the date such
Option is granted, and provided further that no ISO granted to a Control Person
shall be exercisable more than five years from the date of Option grant.
(d) The Committee shall determine and designate from time to time Employees
or Consultants who are to be granted Options, and shall specify in the Stock
Option Agreement the nature of each Option granted and the number of shares of
Stock subject to each such Option, provided, however, that in any calendar year,
no Employee or Consultant may be granted an Option to purchase more than 500,000
shares of Stock (determined without regard to when such Option is exercisable),
subject to adjustment pursuant to Section 10.
(e) Notwithstanding any other provisions hereof, the aggregate Fair Market
Value (determined at the time the ISO is granted) of the Stock with respect to
which ISOs are exercisable for the first time by any Employee during any
calendar year under all plans of the Corporation and any Parent or Subsidiary
corporation shall not exceed $100,000. To the extent the limitation set forth in
the preceding sentence is exceeded, the Options with respect to such excess
shall be treated as NQSOs.
(f) The Committee shall determine whether any Option granted to an Employee
or Consultant shall become exercisable in one or more installments and specify
the installment dates in the Stock Option Agreement. The Committee may also
specify in the Stock Option Agreement such other provisions, not inconsistent
with the terms of this Plan, as it may deem desirable, including such provisions
as it may deem necessary to qualify any ISO under the provisions of Section 422
of the Code. Unless otherwise determined by the Committee and specified in the
Stock Option Agreement, all Options shall immediately become exercisable upon a
Change in Control.
(g) All Options granted hereunder prior to the Initial Public Offering
shall be conditional upon, and for all purposes hereunder, deemed granted upon,
the Initial Public Offering.
(h) The Committee may, at any time, grant new or additional options to any
eligible Employee or Consultant who has previously received Options under this
Plan, or options under other plans, whether such prior Options or other options
are still outstanding, have been exercised previously in whole or in part, or
have been canceled. The exercise price of such new or additional Options may be
established by the Committee, subject to Section 6(b) hereof, without regard to
such previously granted Options or other options.
SECTION 7. Grants of Options to Non-Employee Directors
(a) Non-Employee Directors of the Corporation shall be eligible to receive
Options under the Plan only pursuant to the provisions of this Section 7. Each
individual who agrees to become a Non-Employee Director prior to the
consummation of the Corporation's Initial Public Offering shall receive, without
the exercise of the discretion of any person, an NQSO under the Plan relating to
the purchase of 10,000 shares of Stock at an exercise price per share equal to
the Initial Public Offering price per share. Such option grant shall be
conditional upon, and for all purposes hereunder, deemed granted upon, the
Initial Public Offering. Thereafter, on the day after the first annual meeting
of stockholders next following the date of an Initial Public Offering, and no
later than the day after each subsequent annual meeting, each person who is a
continuing Non-Employee Director on any such date shall receive, without the
exercise of the discretion of any person, an NQSO under the Plan relating to the
purchase of 5,000 shares of Stock, and each person who is a new, first-time
Non-Employee Director on any such date shall receive, without the exercise of
the discretion of any person, an NQSO under the Plan relating to the purchase of
10,000 shares of Stock. In the event that there are not sufficient shares
available under this Plan to allow for the grant to each Non-Employee Director
of an NQSO for the number of shares provided herein, each Non-Employee Director
shall receive an NQSO for his pro rata share of the total number of shares of
Stock available under the Plan.
(b) Except as set forth in Section 7(a), the exercise price of each share
of Stock subject to an Option granted to a Non-Employee Director shall equal the
Fair Market Value of a share of Stock on the date such Option is granted.
Payment of the exercise price for the shares being purchased shall be made in
cash.
4
<PAGE> 5
(c) Each Option granted to a Non-Employee Director shall become exercisable
in equal annual installments on the date of grant and on each of the first two
anniversaries of the date of grant; provided, however, that each such Option
shall immediately become exercisable upon a Change in Control. The Option shall
have a term of five years from the date of grant; provided, however, that upon
termination of a Non-Employee Director's period of directorship for any reason,
such Non-Employee Director may exercise any Options until the earlier to occur
of (i) the end of such five year period, or (ii) the date which is three-months
after the date of such termination, but only to the extent such Option was
exercisable immediately prior to such termination.
SECTION 8. Exercise of Options
(a) A Grantee shall exercise an Option by delivery of written notice to the
Corporation setting forth the number of shares with respect to which the Option
is to be exercised, together with cash, certified check, bank draft, wire
transfer, or postal or express money order payable to the order of the
Corporation for an amount equal to the Option price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price by delivery of
Stock or other property (including notes or other contractual obligations of
Grantees to make payment on a deferred basis, such as through "cashless
exercise" arrangements, to the extent permitted by applicable law), and the
methods by which Stock will be delivered or deemed to be delivered to Grantees.
(b) Except as provided pursuant to Section 9(a), no Option granted to an
Employee or Consultant shall be exercised unless at the time of such exercise
the Grantee is then an Employee (determined with reference to Section 2(i)(i)
only) or Consultant (determined with reference to Section 2(e)(i) only) of the
Corporation or a Subsidiary (determined with reference to Section 2(w)(i) only).
(c) Except as provided in Section 9(a), no Option granted to a Non-Employee
Director shall be exercised unless at the time of such exercise the Grantee is
then a Non-Employee Director.
SECTION 9. Exercise of Options upon Termination
(a) Unless otherwise determined by the Committee, upon termination of
(other than a Non-Employee Director) with the Corporation and its Subsidiaries,
such Grantee may exercise any Options during the three month period following
such termination, but only to the extent such Option was exercisable immediately
prior to such termination. Notwithstanding the foregoing, if the Committee
determines that such termination is for cause, all Options held by such Grantee
shall immediately terminate. In addition, all Options granted on the basis of
clause (ii) of Section 2(e), (i) or (w) shall immediately terminate if the
Committee determines, in its sole discretion, that the Consultant, Employee, or
Subsidiary, as the case may be, will not become a Consultant, Employee or
Subsidiary within the meaning of clause (i) of such Sections.
(b) Unless otherwise determined by the Committee and specified in the Stock
Option Agreement, in no event shall any Option be exercisable for more than the
maximum number of shares that the Grantee was entitled to purchase at the date
of termination of the relationship with the Corporation and its Subsidiaries.
(c) The sale of any Subsidiary shall be treated as a termination of
employment with respect to any Grantee employed by such Subsidiary.
(d) Subject to the foregoing, in the event of death, Options may be
exercised by a Grantee's legal representative.
SECTION 10. Adjustment Upon Changes in Capitalization
In the event of any dividend or other distribution (whether in the form of
cash, Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Grantees under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares of Stock deemed to be available thereafter for grants of Options
under Section 3, (ii) the
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number and kind of shares of Stock that may be delivered or deliverable in
respect of outstanding Options, (iii) the number of shares with respect to which
Options may be granted to a given Grantee in the specified period as set forth
in Section 6(d), and (iv) the exercise price (or, if deemed appropriate, the
Committee may make provision for a cash payment with respect to any outstanding
Option). In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Options (including,
without limitation, cash payments in exchange for an Option or substitution of
Options using stock of a successor or other entity) in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence) affecting the Corporation or any Subsidiary or the financial
statements of the Corporation or any Subsidiary, or in response to changes in
applicable laws, regulations, or accounting principles.
SECTION 11. Restrictions on Issuing Shares
The Corporation shall not be obligated to deliver Stock upon the exercise
or settlement of any Option or take other actions under the Plan until the
Corporation shall have determined that applicable federal and state laws, rules,
and regulations have been complied with and such approvals of any regulatory or
governmental agency have been obtained and contractual obligations to which the
Option may be subject have been satisfied. The Corporation, in its discretion,
may postpone the issuance or delivery of Stock under any Option until completion
of such stock exchange listing or registration or qualification of such Stock or
other required action under any federal or state law, rule, or regulation as the
Corporation may consider appropriate, and may require any Grantee to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Stock under the Plan.
SECTION 12. Tax Withholding
The Corporation shall have the right to require that the Grantee make such
provision, or furnish the Corporation such authorization, necessary or desirable
so that the Corporation may satisfy its obligation, under applicable laws, to
withhold or otherwise pay for income or other taxes of the Grantee attributable
to the grant or exercise of Options granted under the Plan or the sale of Stock
issued with respect to Options. This authority shall include authority to
withhold or receive Stock or other property and to make cash payments in respect
thereof in satisfaction of a Grantee's tax obligations.
SECTION 13. Transferability
Unless otherwise determined by the Committee, no Option shall be subject to
anticipation, sale, assignment, pledge, encumbrance, charge or transfer except
by will or the laws of descent and distribution, and an Option shall be
exercisable during the Grantee's lifetime only by the Grantee. In the case of
any transfer, the transferee's rights and obligations with respect to the Option
shall be determined by reference to the Grantee and the Grantee's rights and
obligations with respect to the Option had no transfer been made.
Notwithstanding such transfer, the Grantee shall remain obligated pursuant to
Section 12 if required by applicable law.
SECTION 14. General Provisions
(a) Each Option shall be evidenced by a Stock Option Agreement. The terms
and provisions of such Stock Option Agreements may vary among Grantees and among
different Options granted to the same Grantee.
(b) The grant of an Option in any year shall not give the Grantee any right
to similar grants in future years, any right to continue such Grantee's
employment relationship with the Corporation or its Subsidiaries, or, until such
Option is exercised and share certificates are issued, any rights as a
Stockholder of the Corporation. All Grantees shall remain subject to discharge
to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation or its
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Subsidiaries, or any shares of Stock allocated or reserved for the purposes of
the Plan or subject to any Option except as set forth herein. The Corporation
shall not be required to establish any fund or make any other segregation of
assets to assure the payment of any Option.
(d) The issuance of shares of Stock to Grantees or to their legal
representatives shall be subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.
SECTION 15. Amendment or Termination
The Board may, at any time, alter, amend, suspend, discontinue or terminate
this Plan; provided, however, that no such action shall adversely affect the
rights of Grantees to Options previously granted hereunder and, provided
further, however, that any shareholder approval necessary or desirable in
connection with any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Common Stock may then be
listed or quoted, shall be obtained in an appropriate manner. The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Option theretofore granted and any Stock Option Agreement
relating thereto; provided, however, that, without the consent of an affected
Grantee, no such action may materially impair the rights of such Grantee under
such Option.
SECTION 16. Effective Date of Plan
This Plan is effective upon its adoption by the Board and shall continue in
effect until terminated by the Board. No ISO may be granted more than ten years
after such date.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-3 of our reports dated
February 20, 1998, included in the F.Y.I. Incorporated Form 10-K for the year
ended December 31, 1997, and to all references to our firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
April 27, 1998
