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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-27444
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F.Y.I. INCORPORATED
(Exact name of Registrant as specified in its charter)
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DELAWARE 75-2560895
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(State or other jurisdiction of (I.R.S. Employer
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incorporation or organization) Identification No.)
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3232 MCKINNEY AVE., SUITE 900, DALLAS, TEXAS 75204
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(Address of principal executive offices) (zip code)
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(214) 953-7555
Registrant's telephone number,
including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE
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TITLE OF EACH CLASS ON WHICH REGISTERED
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None None
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Securities registered pursuant to Section 12(g) of the Act:
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes /X/ No / /
The aggregate market value of voting stock held by non-affiliates of the
Registrant as of February 18, 2000 was $438,439,593, based on the last sale
price of $31.63 of the Registrant's Common Stock, $.01 par value per share, on
the Nasdaq National Market on February 18, 2000.
As of February 18, 2000, 14,589,769 shares of the Registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission not later than 120 days
after the end of our fiscal year ended December 31, 1999 are incorporated by
reference into Part III of this Form 10-K.
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F.Y.I. INCORPORATED
1999 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business.......................................................... 1
Item 2. Properties........................................................ 12
Item 3. Legal Proceedings................................................. 12
Item 4. Submission of Matters to a Vote of Security Holders............... 12
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters............................................... 13
Item 6. Selected Financial Data........................................... 13
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........ 21
Item 8. Financial Statements and Supplementary Data....................... 21
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.......................................... 40
PART III
Item 10. Directors and Executive Officers of the Registrant................ 41
Item 11. Executive Compensation............................................ 41
Item 12. Security Ownership of Certain Beneficial Owners and
Management........................................................ 41
Item 13. Certain Relationships and Related Transactions.................... 41
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.. 42
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PART I
This Report contains certain forward-looking statements such as our
intentions, hopes, beliefs, expectations, strategies, predictions or any other
variation thereof or comparable phraseology of our future activities or other
future events or conditions within the meaning of Section 27A of the Securities
Act of 1993, as amended (the "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 our stock price, development by competitors of
new or superior products or services, the entry into the market by new
competitors, the sufficiency of our working capital and our ability to realize
benefits from consolidating certain general and administrative functions, to
assimilate and integrate acquisitions, to continue our acquisition program, to
retain management, to implement our focused business strategy to expand our
document and information management services geographically, to attract and
retain customers, to increase revenue by cross-selling services and to
successfully defend our company in ongoing and future litigation. Although we
believe that the assumptions underlying the forward-looking statements contained
herein are reasonable, any of the assumptions could be inaccurate, and,
therefore, there can be no assurance that the forward-looking statements
included in this Report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved.
ITEM 1. BUSINESS
GENERAL
We are a market leader in document and information outsourcing
solutions. We offer customers in information-intensive industries - such as
healthcare, law, banking, insurance, retailing, high tech, manufacturing and
government - the solutions to manage their document and information needs,
enabling these organizations to concentrate on their core competencies.
As a national, single-source provider, we operate approximately 120
facilities nationwide with approximately 10,500 employees providing services in
43 states, Washington, D.C., Puerto Rico, Mexico and the Caribbean.
We serve a diverse and high-profile client base, delivering the
resources of a strong national company through relationships, on which clients
have come to rely. Since multiple document and information management functions
can be outsourced to us, companies no longer have to deal with a multitude of
vendors. As a full-service alternative, our clients can rely on us to be a
single point of accountability.
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, we believe
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.
Our target clients generate large volumes of documents and information
that require specialized processing, distribution, storage and retrieval of
these documents and the information they contain. We believe that these clients
will continue to increase their outsourcing of document and information
management needs 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 technologies.
The document and information outsourcing solutions business
continues to be fragmented. We believe that many small document management
and information services businesses: (i) have insufficient capital for
expansion; (ii) cannot keep abreast of rapidly changing technologies; (iii)
lack effective marketing programs; and (iv) are
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unable to meet the needs of large, geographically dispersed clients. In
addition, there are a limited number of options for owners of these
businesses to obtain liquidity by selling their businesses. As a result, we
believe that many owners of these businesses will continue to be receptive to
our acquisition program which will selectively focus on specific companies
that we believe will add significant synergies to our existing operating base.
BUSINESS STRATEGY
Our goal is to become the leading national, single source provider of
document and information outsourcing solutions to information and document
intensive industries, including: healthcare, law, banking, insurance, retailing,
high tech, manufacturing and government. In order to achieve this goal, we have
implemented the following focused business strategy which we believe will
attract and retain clients:
ECONOMIES AND EFFICIENCIES. We intend to deliver better services,
cheaper and faster than our competitors.
SCOPE AND SCALE. We plan to continue to establish a full range of
document management operations to meet the diverse needs of targeted
metropolitan areas by implementing a "fill-in-the-grid" strategy through
expansion of existing businesses and selected acquisitions. We intend to
continue to handle large volume projects.
FLEXIBLE SERVICE DELIVERY. We intend to continue to provide systems
integration, outsourced service bureaus, on-site facility management and
dedicated operations.
INFORMATION AND TECHNOLOGY LIFECYCLES. We intend to continue to be
involved during the stages of the information lifecycle from data capture,
conversion and storage to analysis and output processing. In addition, we expect
to continue to be involved in the technology lifecycles from analog and
electronic to web-based technology.
CAPITALIZE ON CROSS-SELLING OPPORTUNITIES. We intend to capitalize on
cross-selling opportunities in two primary ways. First, we intend to continue to
sell our existing clients additional document and information solutions provided
by our other businesses. Second, we intend to use our knowledge with respect to
specific industry segments to sell such services to new clients. We provide
services along the information lifecycle from data capture, conversion, storage
to analysis and output processing, such as print and mail.
ACHIEVE COST SAVINGS THROUGH CONSOLIDATION AND ECONOMIES OF SCALE. We
believe that we will continue to achieve significant savings by combining a
number of general and administrative functions at the corporate level, such as
accounting, tax, human resources and legal, by reducing or eliminating redundant
functions and facilities, and by implementing corporate purchasing programs. For
example, we have implemented an insurance plan, employee benefits programs and
purchasing plans for certain items, such as paper, microfilm, storage racks,
long distance services, computer equipment and overnight delivery for us and our
subsidiaries, on a combined basis. To the extent that we are able to expand
through the acquisition of additional document and information management
businesses, we believe that these cost savings will continue to improve.
INTERNET. We intend to continue to utilize web-based technologies. Our
plans include business-to-business e-commerce enabler products to provide
critical back office functions to traditional bricks and mortar companies and
new e-commerce entities. Our e-business strategy revolves around five areas; (i)
order entry and status; (ii) transfer of data; (iii) web conversion services;
(iv) web storage and retrieval; and (v) implementation of web-based solutions.
OPERATE WITH STRATEGIC BUSINESS UNITS AND LOCAL MANAGEMENT. We
believe that the experienced local management teams of our operating
companies have a valuable understanding of their respective markets and
businesses and can capitalize on their existing client relationships.
Accordingly, we are operating and expect to continue to operate with
strategic business units and local management. Subject to certain corporate
approval and oversight guidelines, local management will remain empowered to
make most of the day-to-day operating decisions at each location and will be
primarily responsible for the profitability and growth of that location.
Although we intend to have local management operate with a high degree of
autonomy, we believe that regular communication between the individual
businesses and our executive management team or business unit leader is
integral to realizing the benefits afforded by the consolidation of these
businesses into a single company. We are organized around strategic business
units focused on providing common services to common customer bases and
achieving synergies and cross-selling opportunities. Because it is important
to maintain a balance between professional leadership and
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creative entrepreneurial business, during the past few years we have hired or
promoted experienced executives to manage the business units. Recently, we
created the position of Chief Operating Officer to oversee and professionally
manage the business unit leaders that manage our operating companies.
ACQUISITION STRATEGY
We have transitioned to an operating company with a strategic
acquisition focus. Since our inception, we have acquired 63 companies. We
believe that there are significant opportunities to continue to add the
capabilities and resources of selected additional document and information
outsourcing solutions businesses with the intent of providing customers with a
single source document and information outsourcing solution. Accordingly, we are
screening companies in conjunction with our operating management team to acquire
those candidates that meet certain strategic requirements. These criteria
include geographic need, additional technology, added management strength,
industry expertise, service expansion to broaden service offerings and the
expansion of our customer base.
We believe that we will continue to be a successful acquirer of other
document and information outsourcing solutions companies due to our strategy of
retaining selected owners and management of acquired companies, our access to
growth capital and our ability to offer sellers cash for their business as well
as an ongoing equity stake in our company. Nevertheless, there are numerous
risks associated with our acquisition program. See "Risk Factors."
SERVICES OFFERED
We provide a wide variety of document and information outsourcing
solutions and draw upon our available services to develop solutions for our
clients based on their specific needs. The current document and information
outsourcing solutions that we provide are generally divided into the following
strategic business units: F.Y.I. HealthSERVE; F.Y.I. Legal; F.Y.I. Image; and
F.Y.I. Direct.
F.Y.I. HEALTHSERVE. Our services include medical records release
services or processing a request for a patient's medical records from a
physician, insurance company, attorney, healthcare institution or individual.
The medical records release service provider initially verifies that the
release is properly authorized, coordinates the retrieval of the record,
determines the relevant parts of the record to be copied and delivers the
copied records (or portions thereof) to the requesting party. Medical records
release services are provided on-site and off-site pursuant to contracts with
hospitals, other large healthcare institutions and insurance companies. The
medical records release service provider bills the recipient directly and
sometimes pays a fee to the hospital.
Additional services include archival records storage and management,
document and data conversion, archiving and imaging services to hospital
radiology departments, temporary staffing services for hospital information
management departments, and managed care payment compliance reviews.
We also provide services for retrieval of attending physician
statements (APS) for life and health insurance underwriting, which includes
the capability of receiving Internet requests. Additionally, services are
offered to state governments to generate digital images of medical record
information and facilitate image processing for several state agencies.
Our record management services consist primarily of active or open
shelf storage. Active or open shelf storage services involve the storage,
processing (i.e., indexing and formatting), retrieval, delivery and return to
storage of documents on a rapid time frame. Many of these services are
provided electronically. Representative uses for open shelf storage include
active files. In many instances, open shelf storage is offered as an
outsourced file room service, where documents are requested and retrieved
frequently and, often, transmitted via facsimile or electronically due to the
urgency of the request. Service fees generally include a monthly fee based on
activity levels and volumes stored, with extra billing for specialized
requests. To a smaller extent, we store inactive documents.
F.Y.I. LEGAL. We supply a broad range of services to the legal
industry. Litigation often involves the production and management of
thousands of pages of documents, extracted in their original working form
from the offices and files of litigating parties and their experts, advisors
and legal counsel. Legal services include managing the logistics of high
volume document production, microfilming and/or electronic imaging, document
coding,
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computer indexing, automated document retrieval and high speed, multiple-set
reproduction of documents, as well as high level consulting services ranging
from labor discrimination, mortgage discrimination and forensic analysis to
trial support for law firms, corporations, and utility companies.
Additional legal services include subpoena of business documents and
service of process, deposition reporting services, discovery assistance, and
other trial support services to law firms, corporations and regulated
entities. These clients typically look to legal services companies to
supplement their internal operations and capabilities on an as-needed,
job-by-job basis.
Also included in F.Y.I. Legal is employee and investor services
which provides administration, record-keeping and information processing
services. We maintain detailed employee and/or investor records on behalf of
(i) general partners to service their investors in limited partnerships,
REITs and master limited partnerships; (ii) corporations to provide turnkey
outsourced administration of employee stock purchase plans and employee stock
option plans; and (iii) banks and broker/dealers to provide complete
record-keeping and administrative services for additional brokerage and IRA
accounts.
F.Y.I. IMAGE. Our group offers comprehensive information solutions
including electronic imaging, analog services, data capture and database
management, claims processing, as well as integrated solutions to customers
in a wide range of industries, including financial services, retail,
insurance and government.
Electronic Imaging Services involve the conversion of paper or
microfilm documents into digitized information through optical scanners.
Digitized information can be stored as an image or converted to code through
optical character recognition (OCR) or digital imaging storage and retrieval
technologies. Conversion to code provides additional processing capabilities,
such as manipulation of data. In both cases, the digitized information can be
stored on either a magnetic medium, such as a computer diskette, or on
optical laser discs, such as compact discs. Electronic imaging is generally
used because of the storage media's high speed of retrieval, its multiple
indexing and text search formatting capabilities and its ability to be used
to distribute output to multiple locations. Additionally, images may be
stored and accessed via internet-based repositories. Electronic imaging
services are typically billed on a job-by-job basis, based on the number of
images and complexity of the retrieval applications.
Analog Services involve: (i) the conversion of paper documents into
microfilm images; (ii) film processing; and (iii) computer-based indexing and
formatting. Typically, customers select micrographic services as a
cost-competitive technology to reduce the physical size of stored records,
for their long-term (over 100 years) archival capabilities and as an
intermediate step in certain imaging or reprographic applications. We also
act as distributor of a wide range of microfilm and business imaging supplies.
Data Capture and Database Management Services involve data capture
(manually or through scanning or other electronic media), data consolidation
and elimination, storage, maintenance, formatting and report creation. Data
capture includes the conversion of text and handwritten paper media into
digital files. An advantage of digital files is the ability to manipulate
large amounts of data quickly and efficiently. In some cases, database
services include statistical analysis of data.
Claims Processing Services include the compiling of databases, mail
campaigns and call centers. We identify and notify members of a class action
lawsuit or other group, answer questions, track and record contact with class
action or other group members, process claims and distribute settlement
funds. This specialized service gives us the ability to extend relationships
beyond legal settlements.
Integrated solutions offer technical services with a specific focus
on document imaging, work flow, COLD and document and information management
systems using third party imaging systems.
F.Y.I. DIRECT. This group provides (i) direct mail and fulfillment
services; (ii) printing services; and (iii) statement processing.
Direct Mail and Fulfillment Services provide customers with rapid,
reliable and cost-effective methods for making large-scale distributions of
items such as corporate advertising, political campaign literature, consumer
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notices and annual reports for its customers. The direct mail service also
includes the ability to deliver efficient postal routing to fulfill consumer
requests for specific information. In addition, we have the ability to send
blast e-mail services, including high level graphics and sound to supplement
our existing services.
Full Service Commercial Printing involves a broad range of printing
and related services including complete electronic prepress services, such as
large format image setting, full-color annual report production, flyers and
catalogs.
Statement Processing Services involve sending out millions of bills
or statements each month. We are currently offering electronic bill
presentation and payment services that allow our customers to send out
invoices using either traditional mail or e-mail based delivery that allows
their customers the option to pay the bill immediately on-line.
Material Contracts. We have been awarded several contracts by
government agencies in the state of New York to provide document imaging
services to various state agencies.
SALES AND MARKETING
We have a broad customer base. Only one of our clients accounted for
more than 3.0% (but less than 5%) of revenue for the year ended December 31,
1999. Historically, our sales efforts have been implemented on a
location-by-location basis and typically have been coordinated either through
separate sales personnel or as part of the local management's responsibilities.
Our existing local sales efforts are supplemented through local sales
representatives who are in the process of regional and/or national sales
training. We continue to strive to increase our client base by attracting
clients away from small, single business operators as a result of our ability to
offer a broader range of solutions for our clients' document management needs.
In addition, we intend to continue to focus on increasing revenue from our
existing clients by cross-selling our services and broadening our product
offerings. We will continue to augment local sales and marketing efforts through
the implementation of a national sales/account program. We intend to continue to
focus on national sales and marketing efforts in 2000 and have created a large
account management program or LAMP to focus on such opportunities.
COMPETITION
The document and information outsourcing solutions businesses in which
we compete and expect to compete are highly competitive. A significant source of
competition is the in-house document handling capability of our target client
base. There can be no assurance that these businesses will outsource more of
their document management needs or that they will not bring in-house services
that they currently outsource. In addition, certain of our competitors are
larger businesses and have greater financial resources than we do. Certain of
these competitors operate in broader geographic areas than we do, and others may
choose to enter our areas of operation in the future. In addition, we intend to
continue to enter new geographic areas through internal growth and acquisition
and expect to encounter significant competition from established competitors in
each of such areas. As a result of this highly competitive environment, we may
lose clients or have difficulty in acquiring new customers and new companies and
our results of operations may be adversely affected.
We believe that the principal competitive factors in document and
information outsourcing solutions services include accuracy, reliability and
security of service, client segment specific knowledge and price. We compete
primarily on the basis of quality of service and client segment specific
knowledge as well as our ability to handle large volumes and projects, and
believe that we compete favorably with respect to these factors.
EMPLOYEES
As of December 31, 1999, we had approximately 8,000 full-time and 2,500
part-time employees. As of such date, we had approximately 185 employees
represented by labor unions. We consider our relations with our employees to be
good.
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OUR EXECUTIVE OFFICERS
The following table sets forth certain information concerning each of
our executive officers:
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NAME AGE POSITION
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Thomas C. Walker.....................67 Chairman of the Board and Chief
Development Officer
Ed H. Bowman, Jr.....................53 President and Chief Executive Officer;
Director
Timothy J. Barker....................37 Executive Vice President and Chief
Financial Officer
Joe A. Rose..........................49 Executive Vice President, Chief
Operating Officer and Director
David M. Byerley.....................38 Senior Vice President - Corporate
Development
Margot T. Lebenberg..................32 Senior Vice President, General Counsel
and Secretary
Ronald Zazworsky.....................55 Senior Vice President - HealthSERVE
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THOMAS C. WALKER has been our Chairman of the Board since our inception
in September 1994 and has been our Chief Development Officer since November
1995. From September 1994 until November 1995, Mr. Walker held the position of
our President and Chief Executive Officer. From August 1991 to December 1994,
Mr. Walker was Vice President, Corporate Development, of Laidlaw Waste Systems,
Inc., a subsidiary of Laidlaw, Inc., a waste management company, where he was
responsible for its acquisition and divestiture program in the United States and
Mexico. During his career, Mr. Walker has been responsible for the acquisition
or divestiture of several hundred businesses over a 30-year period. Mr. Walker
holds a B.S. in Industrial Engineering from Lafayette College.
ED H. BOWMAN, JR. has been our President and Chief Executive Officer and a
Director since November 1995. From May 1993 to June 1995, Mr. Bowman was
Executive Vice President and Chief Operating Officer of the Health Systems Group
of First Data Corporation, a financial services company. Mr. Bowman was
responsible for the day-to-day operations of research and development, marketing
and customer service. From 1983 to 1993, Mr. Bowman served in a number of
executive positions with HBOC, including VP -- International, VP -- Marketing,
Senior VP -- Customer Services, Group Senior VP -- Research and Development, and
last serving as Executive Vice President and Chief Operating Officer with
responsibility for domestic operations. Prior to joining HBOC, Mr. Bowman was
with Andersen Consulting for 10 years, where he was elected a Partner. Mr.
Bowman became a C.P.A. in 1973 and holds an M.S. from Georgia Institute of
Technology and a B.B.A. from Georgia State University. Mr. Bowman is a board
member of 711.Net, an Internet company, and he is an investor and former board
member of several early-stage, high-technology companies.
TIMOTHY J. BARKER has been an Executive Vice President since January
2000 and a Senior Vice President and Chief Financial Officer since November
1997. From November 1995 to November 1997, Mr. Barker held the positions of
Chief Accounting Officer and Controller. Prior to joining us as a full-time
consultant in June 1995, Mr. Barker was a manager with Arthur Andersen LLP,
where he served in various capacities over a nine-year period. Mr. Barker
served as Vice President of Financial Planning and Analysis for Sunbelt
National Mortgage Corporation
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from June 1993 to October 1994. Mr. Barker holds a B.A. in Accounting from
Texas Tech University and has been a C.P.A. since 1985.
JOE A. ROSE has been a Director since March 2000 and our Chief Operating
Officer since January 2000. From August 1999 through December 1999, Mr. Rose was
an Executive Vice President. From June 1997 through August 1999, Joe was a
Senior Vice President. From May 1995 through January 1997, Mr. Rose was
President and CEO of FormMaker Software, Inc., a document technology company
which merged with Image Sciences Corp. to form Docucorp International. From May
1993 through May 1995, Mr. Rose was Corporate Vice President of John H. Harland
Company, a financial services company, and President and CEO of its subsidiary,
Formation Technology, Inc. From July 1988 through May 1993, Mr. Rose served as
Executive Vice President of National Data Corporation where he was responsible
for the credit card and cash management divisions. Mr. Rose began his
information services career at EDS in sales. Mr. Rose holds a B.A. from Texas
Tech University.
DAVID M. BYERLEY has been our Senior Vice President - Corporate Development
since November 1998. From August 1996 until October 1998, Mr. Byerley was
Executive Vice President of IKON's Business Information Services Division. From
February 1995 until August 1996, Mr. Byerley was Senior Vice President of
Product Development and Marketing with Dataplex Corporation, a wholly-owned
subsidiary of Affiliated Computer Services. From August 1994 until February
1995, Mr. Byerley was employed by Eastman Kodak. Mr. Byerley holds a B.S. degree
from Dickinson College, a M.S. degree from Temple University, and a J.D. from
Temple University Law School.
MARGOT T. LEBENBERG has been our Senior Vice President, General Counsel,
and Secretary since October 1998. From May 1996 until October 1998, Ms.
Lebenberg held the positions of Vice President, General Counsel, and Secretary.
From 1992 until joining us, Ms. Lebenberg was an attorney with Morgan, Lewis &
Bockius LLP in New York, where she practiced law in the business and finance
group primarily in the areas of securities and mergers and acquisitions. Ms.
Lebenberg holds a B.A. in Economics and History from the State University of New
York at Binghamton and a J.D. from Fordham University School of Law.
RONALD ZAZWORSKY has been our Senior Vice President - HealthSERVE since
October 1997. From February 1994 until July 1997, Mr. Zazworsky was Senior Vice
President at Medaphis Corporation. From April 1992 to February 1994, Mr.
Zazworsky was President and CEO at Habersham Banking Solutions, Inc. Prior to
1992, Mr. Zazworsky was employed at HBO as Regional Vice President for eight
years. Previously, Mr. Zazworsky held various sales, marketing and management
positions at IBM. Mr. Zazworsky holds a B.A. from Gettysburg College and an
M.B.A. from Emory University.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE HURT, THE PRICE OF OUR
SECURITIES COULD DECLINE, WE MAY NOT BE ABLE TO REPAY OUR DEBT SECURITIES, AND
YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. YOU SHOULD ALSO REFER TO THE OTHER
INFORMATION CONTAINED IN THIS REPORT AND INCORPORATED IN THIS REPORT BY
REFERENCE, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED
NOTES.
WE MAY NOT BE ABLE TO CONTINUE TO EFFECTIVELY INTEGRATE ALL OF OUR OPERATING
COMPANIES
Our growth and future financial performance depend on our ability to
continue to integrate all of our operating companies. We may not achieve
integration unless we effectively combine the operations of all our operating
companies. A number of our operating companies offer different services, use
different capabilities and technologies and target different geographic markets
and client segments. These differences increase the risk in successfully
completing the integration of our operating companies. We need to centralize
certain functions to achieve cost savings and develop programs and processes
that will promote cooperation and the sharing of opportunities and resources.
Any difficulties we encounter in the integration process could adversely affect
us; and
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we cannot assure you that our operating results will match or exceed the
combined individual operating results achieved by our operating companies
prior to their acquisition.
WE MAY NOT BE ABLE TO MANAGE OUR RAPID GROWTH
We cannot be sure that our management group will effectively be able
to oversee us and implement our operating or growth strategies. Further, to
the extent that we are able to implement our acquisition strategy, our growth
will continue to place significant demands on management and on our internal
systems and controls. We cannot assure you that our management group will
effectively be able to direct us through a continued period of significant
growth. In addition, we cannot assure you that our current systems will be
adequate for our future needs or that we will be successful in implementing
new systems or converting existing systems. If we fail to implement these
systems, procedures and controls on a timely basis, we may not be able to
service our clients' needs, hire and retain new employees, pursue new
business, complete future acquisitions or operate our business effectively.
We could also trigger contractual credits to clients. Failure to properly
integrate acquired operations with vendors' systems could result in increased
cost. As a result of any of these problems associated with expansion, our
business, financial condition and results of operations could be materially
and adversely affected.
WE NEED TO BE ABLE TO ACQUIRE COMPANIES SUCCESSFULLY
An element of our growth strategy is the acquisition of additional
companies that will complement our existing businesses. We cannot assure you
that we will be able to identify or reach mutually agreeable terms with
acquisition candidates and their owners, or that we will be able to profitably
manage additional businesses or successfully integrate such additional
businesses into us without substantial costs, delays or other problems.
Acquisitions may involve a number of special risks including: (a) adverse
short-term effects on our reported operating results; (b) diversion of
management's attention; (c) dependence on retention, hiring and training of key
personnel; (d) departure of key clients; (e) risks associated with unanticipated
problems or legal liabilities; and (f) amortization of acquired intangible
assets. Some or all of these risks could have a material adverse effect on our
operations and financial performance. In addition, to the extent that
consolidation becomes more prevalent in the industry, the prices for attractive
acquisition candidates may continue to be bid up to higher levels. In addition,
we may find that there will be fewer suitable acquisition candidates at
acceptable prices. In any event, we cannot assure you that businesses acquired
in the future will achieve sales and profitability that justify the investment
therein. Governmental and regulatory constraints could prevent acquisitions in
the future. We cannot assure you that any acquisitions, if consummated, will be
advantageous to us. Without additional acquisitions, we may not be able to grow
at historical rates. If our acquisition strategy fails, our business, financial
condition and results of operations could be materially and adversely affected.
WE NEED TO FINANCE OUR POTENTIAL GROWTH THROUGH ACQUISITIONS
We currently intend to finance future acquisitions by using cash and
our common stock for all or a portion of the consideration to be paid. In the
event that our common stock does not maintain sufficient value, or potential
acquisition candidates are unwilling to accept our common stock as consideration
for the sale of their businesses, we may be required to use more cash, if
available, in order to continue our acquisition program. If we do not have
sufficient cash, our growth could be limited unless we are able to obtain
capital through additional debt or equity financings. Under our line of credit
with Paribas, we and our subsidiaries could borrow, on a revolving credit basis,
loans in an aggregate outstanding principal amount of $150.0 million for working
capital, general corporate purposes and acquisitions, subject to certain
restrictions in our line of credit. As of December 31, 1999, the availability
under the line of credit was approximately $55.7 million. We cannot assure you,
however, that funds available under our line of credit will be sufficient for
our needs.
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE
The price of our common stock may be volatile. Our quarterly results of
operations may vary materially as a result of the timing and structure of our
acquisitions, the timing and magnitude of costs related to acquisitions, the
gain or loss of material client relationships and variations in the prices
charged by us for our services. In addition, since a significant portion of our
revenue is generated on a project-by-project basis, the timing or completion of
material projects could result in fluctuations in our results of operations for
particular quarterly periods. Fluctuations
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<PAGE>
in operating results may adversely affect the market price of our common
stock. The market price for our common stock may also fluctuate in response
to material announcements by us or our significant clients or competitors,
changes in the economic or other conditions impacting our 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 our common stock.
WE DEPEND ON CERTAIN CLIENT INDUSTRIES
We derive our revenue primarily from document and information intensive
industries. Fundamental changes in the business practices of any of these client
industries, whether due to regulatory, technological, the internet or other
developments, could cause a material reduction in demand by our clients for the
services offered by us. Any reduction in demand would have a material adverse
effect on our results of operations. The document and information management
services industry is characterized by technological change, evolving client
needs and emerging technical standards. Although we believe that we will be able
to continue to offer services based on the newest technologies, we cannot assure
you that we will be able to obtain any of these technologies, that we will be
able to effectively implement these technologies on a cost-effective or timely
basis or that such technologies will not render obsolete our role as a third
party provider of document and information management services.
Our success depends substantially upon retaining our significant
clients. Generally, we may lose clients due to a merger or acquisition, business
failure, contract expiration, conversion to a competitor or conversion to an
in-house system. We cannot guarantee that we will be able to retain long-term
relationships or secure renewals of short-term relationships with our
significant clients in the future.
We incur a high level of fixed costs related to our technology
outsourcing and business process outsourcing clients. These fixed costs result
from significant investments, including computer hardware platforms, computer
software, facilities, and client service infrastructure. The loss of any one of
our significant clients could leave us with a significantly higher level of
fixed costs than is necessary to serve our remaining clients, thereby reducing
our profitability.
WE FACE INTENSE COMPETITION
The document and information management services industry is highly
competitive. We cannot guarantee that we will be able to compete successfully in
the future. A significant source of competition is the in-house document
handling capability of our targeted client base. We cannot assure you that these
businesses will outsource more of their document and information management
needs or that such businesses will not bring in-house, services that they
currently outsource. In addition, certain of our competitors are larger
businesses and have greater financial resources than we do. Certain of these
competitors operate in broader geographic areas than we do, and others may
choose to enter our areas of operation in the future. In addition, we intend to
enter new geographic areas through internal growth and acquisitions and expect
to encounter significant competition from established competitors in each new
area. Many of our competitors have a greater international presence than us and
offer a broader range of services in certain segments. As a result of this
highly competitive environment, we may lose clients or have difficulty in
acquiring new clients and new companies, and our results of operations may be
adversely affected. In addition, we may be forced to lower our pricing or if
demand for our services decreases our business, financial condition and results
of operations will be materially and adversely affected.
WE HAVE SIGNIFICANT INVESTMENTS IN SOME CLIENT CONTRACTS WHICH EXPOSE US TO THE
RISK OF THESE CLIENTS' FINANCIAL CONDITIONS
We must make significant capital investments in order to attract and
retain large outsourcing agreements. We sometimes must purchase assets such as
computing equipment and software, assume financial obligations such as computer
lease and software maintenance obligations or property leases, incur capital
expenditures or incur expenses necessary to provide outsourcing services to a
client. If any of these agreements were to terminate, we may not be able to
realize a return on the assets and investments acquired or financial obligations
assumed.
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OUR ABILITY TO MEET CHANGES IN TECHNOLOGY COULD BE EXPENSIVE AND, IF WE DO NOT
KEEP UP WITH THESE CHANGES, WE COULD LOSE EXISTING CLIENTS AND BE UNABLE TO
ATTRACT CLIENTS
The markets for our document and information technology services are
subject to rapid technological changes and rapid changes in client requirements.
To compete, we commit substantial resources to operating multiple hardware
platforms, to customizing third-party software programs and to training client
personnel and our personnel in the use of new technologies. Future hardware,
software and other products may be able to manipulate large amounts of documents
and information more cost effectively than existing products which we use.
Information processing is shifting toward client-server and web-based systems,
in which individual computers or groups of personal computers and mid-range
systems replace older systems. This trend could adversely affect our business
and financial results and result in us losing clients and being unable to
attract clients. We have committed substantial resources to developing
outsourcing solutions for these distributed computing environments. We cannot
guarantee that we will be successful in customizing products and services that
incorporate new technology on a timely basis. We also cannot guarantee that we
will continue to be able to deliver the services and products demanded by the
marketplace. Technology costs have also dropped significantly in recent years
due in large part to hardware technology advances.
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD REQUIRE US TO INCUR SUBSTANTIAL
COSTS TO DEFEND THE CLAIMS, CHANGE OUR SERVICES, CHANGE THE TRADEMARKS UNDER
WHICH OUR SERVICES ARE PROVIDED, PURCHASE NEW LICENSES OR REDESIGN OUR USE OF
CHALLENGED TECHNOLOGY
We and other companies in our industry rely heavily on the use of
intellectual property. We own registrations for and/or use certain trademarks in
connection with the operations of our business. Should any third parties assert
claims that our use of our trademarks infringe said third parties' trademark
rights, we could incur substantial costs to defend these claims and, if any such
third party claims are ultimately successful, we could be enjoined from further
use of certain of our trademarks. We have received notice from one such third
party that our registered trademark F.Y.I. INCORPORATED infringes certain of
said third party's trademark rights. We do not believe that our business,
financial condition and results of operations will be materially and adversely
affected by this claim. However, the outcome cannot always be predicted and
there is no assurance that this will be the case. We do not own the majority of
the software that we use to run our business; instead we license this software
from a number of vendors. If these vendors assert claims that we or our clients
are infringing on their software or related intellectual property, we could
incur substantial costs to defend these claims. In addition, if any of our
vendors' infringement claims are ultimately successful, our vendors could
require us (i) to cease selling or using products or services that incorporate
the challenged software or technology; (ii) to obtain a license or additional
licenses from our vendors; or (iii) to redesign our products and services which
rely on the challenged software or technology. We are not currently involved in
any material intellectual property litigation, but could be in the future to
protect our trade secrets, trademarks or know-how, or to defend ourselves or our
clients against alleged infringement claims.
WE DEPEND ON OUR PERSONNEL
Our operations are dependent on the continued efforts of our
executive officers and on senior management of our operating companies. Also,
we will likely depend on the senior management of businesses acquired in the
future. If any of these people are unable or unwilling to continue in their
present role, or if we are unable to attract and retain additional managers
and skilled employees, our business could be adversely affected. We do not
currently have key person life insurance covering any of our executive
officers.
Our success depends, to a significant extent, upon our ability to
attract, retain and motivate highly skilled and qualified personnel. If we fail
to attract, train, and retain sufficient numbers of these technically-skilled
people, our business, financial condition, and results of operations will be
materially and adversely affected. Competition for personnel is intense in the
document and information services industry, and recruiting and training
personnel require substantial resources. We must continue to grow internally by
hiring and training technically-skilled people in order to perform services
under our existing and future contracts. We have to pay an increasing amount to
hire and retain a skilled workforce. Our business also experiences significant
turnover of technically-skilled people.
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WE MAY BE LIABLE FOR BREACH OF CONFIDENTIALITY
A substantial portion of our business involves the handling of
documents containing confidential and other sensitive information. Although
we have established procedures intended to prevent any unauthorized
disclosure of confidential information and, in some cases, have contractually
limited our potential liability for unauthorized disclosure of such
information, we cannot assure you that unauthorized disclosures will not
result in material liability to us.
WE MAY HAVE BUSINESS INTERRUPTIONS
Certain of our operations are performed at a single location and are
dependent on continuous computer, electrical, and telephone service. As a
result, any disruption of our day-to-day operations could have a material
adverse effect upon us. We cannot assure you that a fire, flood, earthquake,
power loss, telephone service loss, problems caused by computer or technology
issues or other event affecting one or more of our facilities would not
disable these services. Any significant damage to any facility or other
failure that causes significant interruptions in our operations may not be
covered by insurance. Any uninsured or underinsured loss could have a
material adverse effect on our business, financial condition or results of
operations.
GOVERNMENT REGULATIONS MAY HINDER OUR ABILITY TO CHANGE PRICES
In our medical records release of information business, there is state
legislation from time to time aimed at fixing the price which can be charged for
copying and distributing medical records information. Depending on the severity
of such pricing legislation, there can be significant pressure on the profit
margins associated with providing medical records release services. Today, some
form of pricing legislation exists in many states in the United States.
OUR CONTRACTS CONTAIN TERMINATION PROVISIONS AND PRICING RISKS THAT CREATE
UNCERTAIN REVENUE STREAMS AND COULD DECREASE OUR REVENUES AND PROFITABILITY
Some of our contracts with clients permit termination in the event our
performance is not consistent with service levels specified in those contracts.
Some of our government and other clients can terminate their contracts for any
reason or no reason. In addition, public sector contracts are subject to
detailed regulatory requirements and public policies, as well as to funding
priorities. Our clients' ability to terminate contracts creates an uncertain
revenue stream. If clients are not satisfied with our level of performance, our
reputation in the industry may suffer, which could also materially and adversely
affect our business, financial condition, and results of operations. Some of our
contracts contain pricing provisions that require the client to pay a set fee
for our services regardless of whether our costs to perform these services
exceed the amount of the set fee. Many of our document and information
outsourcing contracts provide for credits for our clients if we fail to achieve
specific contract standards. Some of our contracts contain re-pricing provisions
which can result in reductions of our fees for performing our services. In these
situations, we could incur significant unforeseen costs or financial penalties
in performing the contract.
MANAGEMENT EXERCISES SUBSTANTIAL CONTROL OVER OUR AFFAIRS
As of December 31, 1999, our directors and executive officers owned
approximately 11.0% of the shares of our common stock. Our directors and
executive officers exercise substantial control over our affairs. If these
persons act together, they might be able to elect a sufficient number of
directors to control our Board of Directors and to approve or disapprove any
matter submitted to a vote of our stockholders.
FUTURE SALES OF OUR SHARES MAY ADVERSELY AFFECT OUR STOCK PRICE
The market price of our common stock could be adversely affected by the
sale of substantial amounts of our common stock 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.
If a significant number of shares of our 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
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are sold by stockholders in the market as soon as their shares became freely
transferable, the price of our common stock could be adversely affected.
WE MAY HAVE ENVIRONMENTAL LIABILITIES IN THE FUTURE
We are subject to regulations and ordinances that govern activities
or operations that may have adverse environmental effects, such as discharges
to air and water. We are 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 our business, financial condition
or results of operations. However, we cannot assure you that environmental
liabilities in the future will not have a material adverse effect on our
business, financial condition or results of operations.
OUR BOARD OF DIRECTORS MAY BE ABLE TO DELAY OR PREVENT TAKEOVERS
Our Board of Directors 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 us by means of a
tender offer, merger, proxy contest or otherwise.
OTHER RISKS, UNKNOWN OR IMMATERIAL TODAY, MAY BECOME KNOWN OR MATERIAL IN THE
FUTURE
We have attempted to identify material risk factors currently affecting
us. However, additional risks that we do not yet know of, or that we currently
think are immaterial, may occur or become material. These risks could impair our
business operations or adversely affect revenues or profitability.
ITEM 2. PROPERTIES
As of December 31, 1999, we operated in excess of 120 document and
information management service facilities in 24 states. Except for the two
facilities we own, all of these facilities were leased and were principally used
for operations and general administrative functions. See Note 8 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries for
further information relating to these leases.
As of December 31, 1999, we also operated on-site at over 690 client
locations and from time to time at many other client locations for specific
projects.
In order to secure our obligations under our current line of credit with
Paribas, we granted to Paribas and Bank of America Texas, N.A., as co-agents for
our lenders, a lien on substantially all of our properties and other assets. See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources."
We believe that our properties are generally well maintained, in good
condition and adequate for our present needs. Furthermore, we believe that
suitable additional or replacement space will be available when required.
ITEM 3. LEGAL PROCEEDINGS
We are, from time to time, a party to litigation. We believe that none
of these actions will have a material adverse effect on our business, financial
condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the year ended December 31, 1999, no
matters were submitted to a vote of the security holders.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our common stock trades on The Nasdaq Stock Market under the symbol
"FYII." The following table sets forth, for our fiscal periods indicated, the
range of high and low last reported sale prices for our common stock.
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
FISCAL YEAR 1998
First Quarter...............................................$27.38 $24.00
Second Quarter..............................................$29.50 $25.00
Third Quarter...............................................$35.75 $23.50
Fourth Quarter..............................................$32.06 $24.13
FISCAL YEAR 1999
First Quarter...............................................$39.00 $28.44
Second Quarter..............................................$32.13 $26.56
Third Quarter...............................................$34.81 $31.63
Fourth Quarter..............................................$35.75 $31.50
FISCAL YEAR 2000
First Quarter (through February 18, 2000)...................$35.00 $29.25
</TABLE>
HOLDERS
On February 18, 2000, the last reported sale price of our common stock on
the Nasdaq Stock Market was $31.63 per share. At February 18, 2000, there were
170 holders of record of our common stock and 14,589,769 shares outstanding.
DIVIDENDS
We have not declared any cash dividends on our common stock. We do not
anticipate paying any cash dividends on our common stock in the foreseeable
future and intend to retain our earnings, if any, to finance the expansion of
our business and for general corporate purposes. Any payment of future dividends
will be at the discretion of our Board of Directors and will depend upon, among
other things, our earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions and other factors that our Board of
Directors deems relevant.
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
We were founded in September 1994, and we effectively began our
operations on February 1, 1996, following the completion of our initial public
offering ("IPO"). We acquired, simultaneously with and as a condition to the
closing of the IPO, seven Founding Companies (the "Acquisitions"). The
Acquisitions have been accounted for in accordance with generally accepted
accounting principles ("GAAP") as a combination of the Founding Companies at
historical cost. For accounting purposes and for the purposes of the
presentation of the financial data herein, January 31, 1996, has been used as
the effective date of the Acquisitions.
Since the IPO, and through December 31, 1999, we acquired nine
companies in transactions that were accounted for as poolings-of-interests: (i)
The Rust Consulting Group, Inc. ("Rust") in December 1996; (ii) MAVRICC
Management Systems, Inc. and a related company, MMS Escrow and Transfer Agency,
Inc. (collectively, "MAVRICC") in March 1997; (iii) Input of Texas, Inc.
("Input") in March 1997; (iv) Micro Publishing Systems ("MPS") in December 1997;
(v) Lifo Systems, Inc. ("Lifo") in February 1998; (vi) Creative
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Mailings, Inc. ("CMI") in September 1998; (vii) Economic Research Services,
Inc. ("ERS") in October 1998; (viii) TCH Mailhouse, Inc. and G&W Enterprise,
Inc. (collectively, "TCH") in December 1998; and (ix) Advanced Digital
Graphics, Inc. ("ADG") in December 1998 (collectively, the "Pooled
Companies"). Our consolidated financial statements for all periods presented
have been restated to include the accounts of MAVRICC, Input, CMI, and ERS.
As a result, we are reporting financial results in periods prior to the date
we effectively began operations. Our consolidated financial statements were
not restated for the Rust, MPS, and Lifo acquisitions for the periods prior
to January 1, 1996, 1997, and 1998, respectively, due to their financial
immateriality. The financial results for periods presented were also not
restated prior to October 1, 1998, for the acquisitions of TCH and ADG due to
their financial immateriality. We and the Pooled Companies were not under
common control or management during the periods prior to their respective
mergers. Our results of operations for the periods presented may not be
indicative of the results in the future because of (i) the impact of
acquisitions recorded as purchases, whose results are only included
subsequent to the purchase date; and (ii) the impact of acquisitions recorded
as poolings-of-interests, whose predecessor companies were not under common
control or management.
Subsequent to the IPO and through December 31, 1999, we acquired 45
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.
Our Selected Financial Data for the years ended December 31, 1996,
1997, 1998, and 1999, have been derived from our consolidated financial
statements which have been audited by Arthur Andersen LLP. Our Selected
Financial Data for the year ended December 31, 1995, has been derived from
our audited financial statements plus the financial statements of CMI and
ERS. Our Selected Financial Data are based on available information and
certain assumptions described in the footnotes set forth below, all of which
we believe are reasonable.
Our Selected Financial Data provided below should be read in
conjunction with our historical financial statements, including the related
notes thereto, and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" that appear elsewhere in this Report.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue.......................................... $ 26,583 $106,625 $177,272 $247,462 $354,811
Cost of services................................. 14,841 65,109 112,161 153,815 218,695
Depreciation..................................... 494 2,176 3,730 5,889 8,815
------------ ----------- ----------- ----------- -----------
Gross profit................................. 11,248 39,340 61,381 87,758 127,301
Selling, general and administrative expenses (1) 6,127 26,459 37,956 56,299 78,577
(2)
Gain on sale of assets of subsidiary, net (3).... -- -- -- (4,394) --
Amortization (4)................................. -- 599 1,835 4,845 4,748
-------------------------- ----------- ----------- -----------
Operating income (1)......................... 5,121 12,282 21,590 31,008 43,976
Interest and other (income) expense, net (5)..... (29) 672 1,176 990 3,975
---------- ------------ ----------- ------------ -----------
Income before income taxes (1) (5)............... 5,150 11,610 20,414 30,018 40,001
Provision for income taxes (6)................... 1,960 4,714 8,266 12,007 16,000
----------- ----------- ----------- ---------- ----------
Net income (1) (5) (6)........................... $ 3,190 $ 6,896 $ 12,148 $ 18,011 $ 24,001
=========== ========== ========= ========= =========
Net income per common share......................
Basic (1) (5) (6)............................ $ 0.97 $ 0.81 $ 1.01 $ 1.35 $ 1.70
Diluted (1) (5) (6).......................... $ 0.97 $ 0.80 $ 1.00 $ 1.31 $ 1.60
Weighted average common shares outstanding.......
Basic........................................ 3,297 8,504 12,018 13,370 14,149
Diluted...................................... 3,297 8,632 12,196 13,731 14,990
BALANCE SHEET DATA:
Working capital.................................. $ 2,835 $ 26,743 $ 26,642 $ 37,793 $ 20,113
Total assets..................................... 15,411 113,148 139,106 206,970 369,355
Long-term obligations, net of current maturities. 914 4,911 5,892 31,498 85,172
Stockholders' equity............................. 7,000 83,254 107,564 138,735 175,009
</TABLE>
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(1) Gives effect to the Compensation Differential. See Note 2 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
(2) Selling, general and administrative expenses for the year ended
December 31, 1998 include charges totaling $2.5 million relating to:
(i) severance and other costs, $1.7 million; (ii) facilities closing
costs, $0.5 million; and (iii) other write-downs and impairments, $0.3
million. See Note 6 of Notes to Consolidated Financial Statements of
F.Y.I. Incorporated and Subsidiaries.
(3) Reports the gain on the sale of assets of Leonard Archives Acquisition
Corp. ("Leonard"). The gain on the sale, net of other charges included
in (2) and (4), was $145,000 before taxes. See Note 6 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
(4) Amortization for the year ended December 31, 1998 includes acceleration
of goodwill amortization of $1.8 million. See Note 6 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
(5) Interest expense for the year ended December 31, 1997, includes the
write-off of approximately $1.2 million ($0.7 million, net of taxes,
and $0.07 per share) of unamortized debt issuance costs related to our
Credit Agreement in place at the time. See Note 7 to Consolidated
Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(6) Gives effect to certain tax adjustments related to the taxation of
certain Founding and Pooled Companies as S corporations or sole
proprietorships prior to the consummation of the Acquisitions and the
tax impact of the Compensation Differential in each period. See Note 2
of Notes to Consolidated Financial Statements of F.Y.I. Incorporated
and Subsidiaries.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our
financial statements and the related notes thereto and "Item 6. Selected
Financial Data" appearing elsewhere in this Report. Additional information
concerning factors that could cause results to differ materially from those in
the forward-looking statements is contained under "Item 1. Business -- Risk
Factors."
INTRODUCTION
We were 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, high tech manufacturing and government. We acquired seven
document management services businesses (the "Founding Companies")
simultaneously with the closing of our initial public offering (the "IPO") on
January 26, 1996, and effectively began operations at that time. The
consideration for the Founding Companies consisted of a combination of cash and
common stock (the "Common Stock") of our Company.
Since the IPO, and through December 31, 1999, we acquired nine
companies in transactions that were accounted for as poolings-of-interests:
(i) Rust in December 1996; (ii) MAVRICC in March 1997; (iii) Input in March
1997; (iv) MPS in December 1997; (v) Lifo in February 1998; (vi) CMI in
September 1998; (vii) ERS in October 1998; (viii) TCH in December 1998; and
(ix) ADG in December 1998. Our consolidated financial statements for all
periods presented have been restated to include the accounts of MAVRICC,
Input, CMI and ERS. As a result, we are reporting financial results in
periods prior to the date we effectively began our operations. Our
consolidated financial statements were not restated for the Rust, MPS and
Lifo acquisitions for the periods prior to January 1, 1996, 1997, and 1998,
respectively, due to their financial immateriality. Periods presented were
also not restated prior to October 1, 1998, for the acquisitions of TCH and
ADG due to their financial immateriality. We and the Pooled Companies were
not under common control or management during the periods prior to their
respective mergers. Our results of operations for the periods presented may
not be indicative of the results in the future because of (i) the impact of
acquisitions recorded as purchases, whose results are only included
subsequent to the purchase date; and (ii) the impact of acquisitions recorded
as poolings-of-interests, whose predecessor companies were not under common
control or management.
Subsequent to the IPO and through December 31, 1999, we acquired 45
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.
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Our revenue relates to the following segments: F.Y.I. HealthSERVE;
F.Y.I. Legal; F.Y.I. Image; and F.Y.I. Direct. Revenue relates to the
following services, by segment:
F.Y.I. HEALTHSERVE: (i) processing a request for a patient's
medical records from a physician, insurance company, attorney,
healthcare institution or individual; (ii) off-site active storage of a
healthcare institutions medical records; (iii) online delivery of
images of selected medical records for healthcare institutions; (iv)
document and data conversion services for healthcare institutions; (v)
document conversion services for state government disability,
workers compensation claims and other government agencies; (vi)
temporary staffing services; (vii) providing attending physicians'
statements for life and health insurance underwriting; and (viii)
managed care compliance reviews.
F.Y.I. LEGAL: (i) automated litigation support, including
document conversion, computer indexing and automated document
retrieval; (ii) litigation consulting services such as discovery
assistance, labor discrimination, forensic analysis and other trial
support services; (iii) high-speed, multiple-set reproduction of
documents; (iv) records acquisition in the form of subpoena of
business documents service of process; and (v) employee and investor
services which provides administration, record keeping and information
processing services.
F.Y.I. IMAGE: (i) electronic imaging services, involving the
conversion of paper or microfilm documents into digitized information,
database management and indexing; (ii) analog services involving the
conversion of paper documents into microfilm images, film processing
and computer based indexing and formatting; (iii) data capture and
database management services involving data capture, data
consolidation and elimination, storage, maintenance, formatting and
report creation; (iv) claims processing; and (v) integrated solutions,
which deliver technical services with a focus on document imaging,
work flow, COLD and document information management systems using
third party imaging systems.
F.Y.I. DIRECT: (i) direct mail, which includes direct mail and
fulfillment services to clients who need rapid, reliable and
cost-effective methods for making large scale distributions of
advertising, literature and other information; (ii) full service
commercial printing, including printing and related services such as
electronic prepress services, full-color report production of annual
reports, flyers and catalogs; and (iii) statement processing.
Cost of services consists primarily of compensation and benefits to
employees providing goods and services to our clients, occupancy costs,
equipment costs and supplies. Our cost of services also includes the cost of
products sold for micrographics supplies and equipment, computer hardware and
software and business imaging supplies and equipment.
Selling, general and administrative expenses ("SG&A") consist primarily
of: (i) compensation and related benefits to sales and marketing, executive
management, accounting, human resources and other administrative employees; (ii)
other sales and marketing costs; (iii) communications costs; (iv) insurance
costs; and (v) legal and accounting professional fees and expenses.
16
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain items as shown in "Item 6.
Selected Financial Data" expressed as a percentage of total revenue for the
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Revenue.................................................................. 100.0% 100.0% 100.0%
Cost of services......................................................... 63.3 62.1 61.6
Depreciation ............................................................ 2.1 2.4 2.5
---------- -------- --------
Gross profit................................................... 34.6 35.5 35.9
Selling, general and administrative expenses (1) (2)..................... 21.4 22.8 22.2
Gain on sale of assets of subsidiary, net (3)............................ -- (1.8) --
Amortization (4)......................................................... 1.0 2.0 1.3
---------- -------- --------
Operating income (1) .................................................... 12.2 12.5 12.4
Interest and other expense, net (5)...................................... 0.7 0.4 1.1
---------- -------- --------
Income before income taxes (1) (5)....................................... 11.5 12.1 11.3
Provision for income taxes (6)........................................... 4.6 4.8 4.5
---------- -------- --------
Net income (1) (5) (6)................................................... 6.9% 7.3% 6.8%
======= ======== ========
</TABLE>
(1) Gives effect to the Compensation Differential. See Note 2 to
Consolidated Financial Statements of F.Y.I.Incorporated and Subsidiaries.
(2) Selling, general and administrative expenses for the year ended December
31, 1998 include charges totaling 1.0% of revenue. See Note 6 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(3) Reports the gain on the sale of Leonard. The gain on sale, net of other
charges included in (2) and (4), was 0.06% of revenue. See Note 6 of Notes
to Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
(4) Amortization for the year ended December 31, 1998 includes goodwill
acceleration of 0.7% of revenue. See Note 6 of Notes to Consolidated
Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(5) Interest expense for the year ended December 31, 1997 includes the
write-off of unamortized debt issuance costs of 0.7% of revenue, or 0.4%
net of the associated income tax effect. See Note 7 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(6) Gives effect to certain tax adjustments related to the taxation of certain
Founding Companies and Pooled Companies as S corporations or sole
proprietorships prior to the consummation of the Acquisitions and the tax
impact of the Compensation Differential in each period. See Note 2 of Notes
to Consolidated Financial Statements of F.Y.I. Incorporated and
Subsidiaries.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
REVENUE
Revenue increased 43.4%, from $247.5 million for the year ended
December 31, 1998 to $354.8 million for the year ended December 31, 1999.
This increase was largely due to: (i) revenue from the acquisitions completed
subsequent to December 31, 1998, accounted for under the purchase method of
accounting and their subsequent growth, primarily in the class action claims
processing area; and (ii) internal growth of 13.0% in revenue at the
companies owned greater than one year based on the acquisition anniversary
date. This internal growth was primarily attributable to: (i) an increase in
document conversion services relating to government agencies in the state of
New York; (ii) an increase in healthcare services revenue due to expansion
into additional healthcare institutions throughout the markets we serve; and
(iii) an overall increase in data capture and imaging revenue, partially due
to claims processing services performed.
GROSS PROFIT
Gross profit increased 45.1%, from $87.8 million for the year ended
December 31, 1998 to $127.3 million for the year ended December 31, 1999,
largely due to the increases in revenue discussed above. Gross profit as a
percentage of revenue increased from 35.5% for the year ended December 31, 1998
to 35.9% for the year ended December 31, 1999.
17
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A increased 39.6%, from $56.3 million, or 22.8% of revenue, for the
year ended December 31, 1998 to $78.6 million, or 22.2% of revenue, for the year
ended December 31, 1999, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1998. SG&A for the year ended December 31, 1998,
includes the following charges and impairments totaling $2.5 million: (i)
severance payments due on acquisition related employment contracts terminated or
not renewed and other costs, $1.7 million; (ii) facilities closings costs, $0.5
million; and (iii) other write-downs and impairments, $0.3 million. Excluding
these charges, and after giving effect to the Compensation Differential in 1998,
SG&A increased 45.9% from $53.8 million, or 21.8% of revenue, for the year ended
December 31, 1998, to $78.6 million, or 22.2% of revenue, for the year ended
December 31, 1999. This increase as a percentage of revenue was a result of
increased corporate overhead required to manage the consolidated group of
companies. This increase was partially offset by decreased SG&A as a percentage
of revenue in the companies owned greater than one year.
OPERATING INCOME
Operating income increased 41.8%, from $31.0 million, or 12.5% of
revenue, for the year ended December 31, 1998 to $44.0 million, or 12.4% of
revenue, for the year ended December 31, 1999, largely attributable to the
factors discussed above.
INTEREST AND OTHER EXPENSE
Interest expense increased 302%, from $1.0 million for the year ended
December 31, 1998 to $4.0 million for the year ended December 31, 1999,
due to the higher outstanding balance related to our credit agreement entered
into in April 1996, with Paribas, as agent, and the lenders named therein (the
"1998 Credit Agreement") in 1999. The outstanding balance on the credit
agreement increased due to cash paid for acquisitions in 1999. The average
interest rate on borrowings decreased from 6.5% in 1998 to 6.4% in 1999.
INCOME BEFORE INCOME TAXES AND PRO FORMA NET INCOME
Income before income taxes increased 33.3% from $30.0 million for the
year ended December 31, 1998 to $40.0 million for the year ended December 31,
1999, and pro forma net income adjusted for pro forma provision for taxes
increased 33.3% from $18.0 million for the year ended December 31, 1998 to $24.0
million for the year ended December 31, 1999, largely attributable to the
factors discussed above.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
REVENUE
Revenue increased 39.6%, from $177.3 million for the year ended
December 31, 1997 to $247.5 million for the year ended December 31, 1998. This
increase was largely due to: (i) revenue from the acquisitions completed
subsequent to December 31, 1997 accounted for under the purchase method of
accounting; (ii) internal growth of 9.3% in revenue at the companies owned
greater than one year based on the acquisition anniversary date; and (iii)
growth at the companies owned less than one year as reflected in pro forma
internal revenue growth of 14.7% assuming all companies were owned as of January
1, 1997. Internal growth at the companies owned greater than one year was
primarily attributable to: (i) an increase in government services revenue
related to the State of New York document imaging contract; (ii) an increase in
litigation consulting and imaging revenue in California; and (iii) an increase
in healthcare records release services revenue due to expansion into additional
healthcare institutions throughout the markets that we serve.
GROSS PROFIT
Gross profit increased 43.0% from $61.4 million for the year ended
December 31, 1997 to $87.8 million for the year ended December 31, 1998, largely
due to the increases in revenue discussed above. Gross profit as a
18
<PAGE>
percentage of revenue increased from 34.6% for the year ended December 31,
1997 to 35.5% for the year ended December 31, 1998, primarily due to higher
gross profit margins experienced in the acquisitions accounted for under the
purchase method of accounting added in 1998.
GAIN ON SALE OF ASSETS OF SUBSIDIARY
In October 1998, we entered into an agreement to exchange certain
assets and related liabilities of Leonard for cash and certain assets and
related liabilities of Copyright, Inc., a Philadelphia-based provider of
healthcare release of information services. The divestiture of Leonard, which
primarily offered archival records storage, was consistent with our strategic
objective of focusing our activities on higher value-added document and
information management and outsourcing solutions. The book value of the net
assets disposed was approximately $4.1 million, and we recorded a gain before
taxes of $4.4 million on the transaction, net of costs associated with the
transaction.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A increased 44.4% from $39.0 million, or 22.0% of revenue, for the
year ended December 31, 1997 to $56.3 million, or 22.8% of revenue, for the year
ended December 31, 1998, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1997. SG&A for the year ended December 31, 1998,
includes the following charges and impairments totaling $2.5 million: (i)
severance payments due on acquisition related employment contracts terminated or
not renewed and other costs, $1.7 million; (ii) facilities closings costs, $0.5
million; and (iii) other write-downs and impairments, $0.3 million. Excluding
these charges, and after giving effect to the Compensation Differential in each
period, SG&A increased 42.0% from $38.0 million, or 21.4% of revenue, for the
year ended December 31, 1997 to $53.8 million, or 21.7% of revenue, for the year
ended December 31, 1998. This increase as a percentage of revenue was a result
of: (i) higher SG&A expenses associated with the acquisitions accounted for
under the purchase method of accounting added in 1998; (ii) increased corporate
overhead required to manage the consolidated group of companies; and (iii) deal
costs related to the acquisition of the Pooled Companies. These increases in
SG&A were partially offset by decreased SG&A as a percentage of revenue in the
companies owned greater than one year.
OPERATING INCOME
Operating income adjusted for the Compensation Differential increased
43.6% from $21.6 million, or 12.2% of revenue, for the year ended December 31,
1997 to $31.0 million, or 12.5% of revenue, for the year ended December 31,
1998, largely attributable to the factors discussed above.
INTEREST AND OTHER EXPENSE
Interest expense decreased 15.8% from $1.2 million for the year ended
December 31, 1997 to $1.0 million for the year ended December 31, 1998,
primarily due to the write-off of unamortized debt issue costs related to our
credit agreement in place during 1997. Interest on borrowings increased $0.9
million from $0.5 million in 1997 to $1.4 million in 1998, as our debt levels
increased due to cash paid for acquisitions in 1998. The average interest rate
on borrowings decreased from 8.1% in 1997 to 6.5% in 1998, as we negotiated more
favorable interest terms in early 1998.
INCOME BEFORE INCOME TAXES AND NET INCOME
Income before income taxes adjusted for the Compensation Differential
increased 47.0% from $20.4 million for the year ended December 31, 1997, to
$30.0 million for the year ended December 31, 1998, and net income adjusted for
both the Compensation Differential and provision for income taxes increased
48.3% from $12.1 million for the year ended December 31, 1997, to $18.0 million
for the year ended December 31, 1998, largely attributable to the factors
discussed above.
19
<PAGE>
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
Revenue from our services shows no significant seasonal variations.
However, service revenue can vary from period to period due to the impact of
specific projects, primarily in the F.Y.I. Legal and F.Y.I. Image segments.
Quarterly results may also vary as a result of the timing of acquisitions and
the timing and magnitude of costs related to such acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, we had $20.1 million of working capital and $9.4
million of cash. Cash flows provided by operating activities for the year ended
December 31, 1999 were $26.7 million. Net cash provided by operating activities
for the year ended December 31, 1999 was primarily impacted by an increase in
earnings and an increase in accounts payable and accrued liabilities. These
increases were offset in part by an increase in accounts receivable which was
attributable to the increase in revenue for the year. Net cash used in investing
activities was $80.4 million for the year ended December 31, 1999, and consisted
primarily of payments of $63.1 million for acquisitions, net of cash acquired,
and the purchase of property, plant and equipment. Net cash provided by
financing activities was $48.5 million, as we utilized our credit facility to
fund our acquisition program. Net borrowings on the credit facility were $44.0
million for the year.
At December 31, 1998, we had $37.8 million of working capital and $14.6
million of cash. Cash flows provided by operating activities for the year ended
December 31, 1998 were $19.1 million. Net cash provided by operating activities
for the year ended December 31, 1998 was primarily impacted by (i) an increase
in revenue and a corresponding increase in accounts receivable; and (ii) an
increase in prepaid expenses and other assets. Net cash used in investing
activities was $37.1 million for the year ended December 31, 1998, and was
primarily used for the purchase of property, plant and equipment and payments of
$29.8 million for acquisitions, net of cash acquired. These uses were partially
offset by the $6.6 million received from the sale of the assets of Leonard. Net
cash provided by financing activities was $21.6 million, as we utilized our
credit facility to fund our acquisition program. Net borrowings on the credit
facility were $26.0 million for the year.
Cash flows provided by operating activities for the year ended December
31, 1997, were $10.0 million. Net cash used in investing activities was $14.5
million for the year ended December 31, 1997, and was primarily used for the
purchase of property, plant and equipment and payments of $8.0 million for
acquisitions, net of cash acquired. Net cash used in financing activities was
$10.1 million.
In February 1998, we entered into our line of credit with Paribas
(the "1998 Credit Agreement"). Under the 1998 Credit Agreement, we could
borrow on a revolving credit basis loans in an aggregate outstanding
principal amount up to $65.0 million, subject to certain customary borrowing
capacity requirements. In April 1999 and August 1999, the 1998 Credit
Agreement was amended to increase the aggregate outstanding principal limit
to $100.0 million and $125.0 million, respectively. In November 1999, we
further amended the 1998 Credit Agreement, increasing the aggregate principal
limit to $150.0 million. The availability under the 1998 Credit Agreement as
of February 18, 2000 was $46.7 million for acquisitions, working capital and
general corporate purposes. Depending on the mix of stock and cash used to
execute our acquisition program, we may need to seek additional financing
through the public or private sale of equity or debt securities. There can be
no assurance we could secure such financing if and when it is needed or on
terms we deem acceptable. In January 2000, we registered on Form S-4
(Registration No. 333-92981) 3,012,217 shares of common stock for issuance in
our acquisition program (the "Acquisition Shelf") of which all shares were
available at December 31, 1999.
IMPACT OF THE YEAR 2000 ISSUE
We are aware of the issues associated with the programming code in many
existing computer systems and devices with embedded technology. The "Year 2000"
issue concerns the inability of the information and technology-based operating
systems to properly recognize and process date-sensitive information beyond
December 31, 1999. The conversion from calendar year 1999 to calendar year 2000
occurred without any material disruption to our operations or business systems.
We will continue to monitor any Year 2000 issues, both internally and with third
party dependencies with respect to vendors, suppliers, customers and other
significant business relationships. Such monitoring will be ongoing and
encompassed in normal operations. The total cost incurred to date in the
20
<PAGE>
assessment, evaluation and remediation of the Year 2000 matters was
approximately $4.3 million. We do not anticipate any further material costs
to be incurred related to the Year 2000 problem.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not ordinarily use financial instruments, such as derivatives, to
manage the impact of interest rate changes or other market risks in our
business.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
F.Y.I. INCORPORATED AND SUBSIDIARIES
Report of Independent Public Accountants..................................................... 22
Consolidated Balance Sheets.................................................................. 23
Consolidated Statements of Operations........................................................ 24
Consolidated Statements of Stockholders' Equity.............................................. 25
Consolidated Statements of Cash Flows........................................................ 26
Notes to Consolidated Financial Statements................................................... 27
</TABLE>
21
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of F.Y.I. Incorporated:
We have audited the accompanying consolidated balance sheets of F.Y.I.
Incorporated (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1998 and 1999, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
F.Y.I. Incorporated and subsidiaries as of December 31, 1998 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
February 11, 2000
22
<PAGE>
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31,
---------------------
1998 1999
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................................. $ 14,592 $ 9,396
Accounts receivable and notes receivable, less allowance for
doubtful accounts of $4,705 and $8,835, respectively.................... 51,683 82,863
Notes receivable, shareholders-- short term............................... 479 269
Current portion of deferred tax asset..................................... -- 2,890
Inventories............................................................... 2,408 5,695
Prepaid expenses and other current assets................................. 3,079 5,506
---------- ---------
Total current assets............................................ 72,241 106,619
PROPERTY, PLANT AND EQUIPMENT, net........................................ 29,372 46,512
GOODWILL AND OTHER INTANGIBLES, net of amortization of
$5,980 and $10,728 respectively......................................... 96,652 212,316
OTHER NONCURRENT ASSETS................................................... 8,705 3,908
---------- ---------
Total assets.................................................... $206,970 $369,355
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities.................................. $ 30,095 $ 78,280
Current maturities of long-term obligations............................... 1,258 1,204
Income taxes payable...................................................... 2,881 7,022
Current portion of deferred income taxes.................................. 214 --
---------- ---------
Total current liabilities....................................... 34,448 86,506
LONG-TERM OBLIGATIONS, net of current maturities.......................... 31,498 85,172
DEFERRED INCOME TAXES, net of current portion............................. 1,479 2,017
OTHER LONG-TERM OBLIGATIONS............................................... 810 20,651
---------- ---------
Total liabilities............................................... 68,235 194,346
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares -- --
authorized, 0 shares issued and outstanding.............................
Common stock, $.01 par value, 26,000,000 shares authorized, 14,046,725 and
14,581,639 shares issued and outstanding at
December 31, 1998 and 1999, respectively................................ 140 146
Additional paid-in-capital................................................ 107,912 120,179
Retained earnings......................................................... 31,184 55,185
---------- ---------
139,236 175,510
Less -- Treasury stock, $.01 par value, 36,670 shares at December 31,
1998 and 1999........................................................... (501) (501)
---------- ---------
Total stockholders' equity...................................... 138,735 175,009
---------- ---------
Total liabilities and stockholders' equity...................... $206,970 $369,355
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
REVENUE......................................................................... $177,272 $247,462 $354,811
COST OF SERVICES................................................................ 112,161 153,815 218,695
DEPRECIATION ................................................................... 3,730 5,889 8,815
-------- -------- --------
Gross profit.................................................................. 61,381 87,758 127,301
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 6)........................... 39,000 56,299 78,577
GAIN ON SALE OF ASSETS OF SUBSIDIARY (Note 6)................................... -- (4,394) --
AMORTIZATION (Note 6)........................................................... 1,835 4,845 4,748
-------- -------- --------
Operating income.............................................................. 20,546 31,008 43,976
OTHER (INCOME) EXPENSE:
Interest expense.............................................................. 1,919 1,468 4,246
Interest income............................................................... (660) (316) (423)
Other (income) expense, net................................................... (83) (162) 152
-------- -------- --------
Income before income taxes................................................. 19,370 30,018 40,001
PROVISION FOR INCOME TAXES...................................................... 6,507 10,987 16,000
------- ------- -------
NET INCOME...................................................................... $12,863 $19,031 $24,001
======= ======= =======
PRO FORMA DATA (Unaudited -- See Note 2):
Historical net income......................................................... $12,863 $19,031 $24,001
Pro forma compensation differential........................................... 1,044 -- --
Pro forma provision for income taxes.......................................... 1,759 1,020 --
------- ------- -------
PRO FORMA NET INCOME............................................................ $12,148 $18,011 $24,001
======= ======= =======
NET INCOME PER COMMON SHARE.....................................................
BASIC..................................................................... $ 1.07 $ 1.42 $ 1.70
========= ========= =========
DILUTED................................................................... $ 1.05 $ 1.39 $ 1.60
========= ========= =========
PRO FORMA NET INCOME PER COMMON SHARE...........................................
BASIC..................................................................... $ 1.01 $ 1.35 $ 1.70
========= ========= =========
DILUTED................................................................... $ 1.00 $ 1.31 $ 1.60
========= ========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......................................
BASIC..................................................................... 12,018 13,370 14,149
========= ========= =========
DILUTED................................................................... 12,196 13,731 14,990
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK TREASURY STOCK
------------------ ---------------- ---------------- TOTAL
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT APIC R/E S/E
------ ------ ------ ------ ------ ------ ---- --- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996... 11,308,726 $ 113 -- $ -- 36,670 $ (501) $ 74,570 $ 9,072 $ 83,254
Pooling-of-interests
adjustments at January 1,
1997...................... 326,506 3 -- -- -- -- 608 (294) 317
Common stock issued in
connection with
acquisitions.............. 804,128 8 -- -- -- -- 13,209 -- 13,217
Dividends declared to
shareholders of pooled
companies................. -- -- -- -- -- -- -- (3,680) (3,680)
Exercise of options, net..... 86,926 1 -- -- -- -- 1,533 -- 1,534
Capital contributions by
shareholders of pooled
companies................. -- -- -- -- -- -- 59 -- 59
Net income................... -- -- -- -- -- -- -- 12,863 12,863
---------- -------- ------ ------- ------ ------- -------- ------- --------
Balance, December 31, 1997... 12,526,286 125 -- -- 36,670 (501) 89,979 17,961 107,564
Pooling-of-interests
adjustments at January 1,
1998...................... 326,659 3 -- -- -- -- 1,548 (2,226) (675)
Common stock issued in
connection with
acquisitions.............. 634,486 7 -- -- -- -- 12,839 -- 12,846
Dividends paid to
shareholders of pooled
companies................. -- -- -- -- -- -- -- (3,499) (3,499)
Capital contributions by
shareholders of pooled
companies................. -- -- -- -- -- -- 12 -- 12
Exercise of options, net..... 142,770 1 -- -- -- -- 3,035 -- 3,036
Pooling-of-interests
adjustments at October 1,
1998...................... 416,524 4 -- -- -- -- 499 (83) 420
Net income................... -- -- -- -- -- -- 19,031 19,031
---------- -------- ------ ------- ------ ------- -------- ------- --------
Balance, December 31, 1998... 14,046,725 140 -- -- 36,670 (501) 107,912 31,184 138,735
Common stock issued in
connection with
acquisitions.... 279,879 3 -- -- -- -- 7,204 -- 7,207
Exercise of awards, net...... 255,035 3 -- -- -- -- 5,954 -- 5,957
S corporation to C
corporation conversion
for pooled company......... -- -- -- -- -- -- (891) -- (891)
Net income................... -- -- -- -- -- -- -- 24,001 24,001
---------- -------- ------ ------- ------ ------- -------- ------- --------
Balance, December 31, 1999 14,581,639 $ 146 -- $ -- 36,670 $ (501) $120,179 $55,185 $175,009
========== ======== ====== ======= ====== ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
F.Y.I. INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................... $12,863 $19,031 $24,001
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................................. 5,565 10,734 13,563
Gains from sale of assets of subsidiary.................................... -- (4,394) --
Deferred tax (provision) benefit........................................... (944) 1,454 25
Change in operating assets and liabilities:
Accounts receivable and notes receivable................................... (7,324) (9,964) (12,436)
Prepaid expenses and other assets.......................................... 477 (3,045) (1,648)
Accounts payable and accrued liabilities................................... (596) 5,295 3,227
-------- -------- --------
Net cash provided by operating activities............................... 10,041 19,111 26,732
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of operating company assets............................. -- 6,626 --
Purchase of property, plant and equipment.................................. (7,637) (13,896) (17,298)
Proceeds from maturity of marketable security.............................. 984 -- --
Distribution from partnership.............................................. 60 -- --
Cash paid for acquisitions, net of cash acquired........................... (7,956) (29,834) (63,113)
--------- -------- --------
Net cash used for investing activities.................................. (14,549) (37,104) (80,411)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance, net of underwriting
discounts and other costs................................................ 814 2,275 4,750
Proceeds from short-term obligations....................................... 446 -- --
Proceeds from long-term obligations........................................ 3,000 32,000 86,000
Cash paid for debt issuance costs.......................................... -- (450) (329)
Dividends paid to shareholders of pooled companies......................... (3,680) (3,499) --
Principal payments on short-term obligations............................... (262) -- --
Principal payments on long-term obligations................................ (10,382) (8,723) (41,938)
-------- -------- --------
Net cash (used in) provided by financing activities..................... (10,064) 21,603 48,483
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS......................... (14,572) 3,610 (5,196)
CASH AND CASH EQUIVALENTS, beginning of period............................... 25,554 10,982 14,592
-------- -------- --------
CASH AND CASH EQUIVALENTS, end of period..................................... $10,982 $14,592 $ 9,396
======== ======== ========
SUPPLEMENTAL DATA:
Cash paid for:
Income taxes............................................................. $ 7,565 $10,875 $14,959
Interest................................................................. $ 468 $ 1,261 $ 4,019
NONCASH FINANCING TRANSACTIONS:
Debt assumed in acquisitions............................................... $ 8,030 $ 2,993 $ 9,154
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
26
<PAGE>
F.Y.I. INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
F.Y.I. Incorporated (the "Company" or "F.Y.I.") was founded in
September 1994, to create a national, single source provider of document and
information outsourcing solutions to document and information intensive
industries, including: healthcare, law, banking, insurance, retailing, high tech
manufacturing and government. We acquired seven document management services
businesses (the "Founding Companies") simultaneously with the closing of our
initial public offering (the "IPO") on January 26, 1996, and effectively began
operations at that time. The consideration for the Founding Companies consisted
of a combination of cash and common stock (the "Common Stock") of our Company.
Since the IPO, we acquired nine companies in transactions that were
accounted for as poolings-of-interests: (i) The Rust Consulting Group, Inc.
("Rust") in December 1996; (ii) MAVRICC Management Systems, Inc. and a related
company, MMS Escrow and Transfer Agency, Inc. (collectively, "MAVRICC") in March
1997; (iii) Input of Texas, Inc. ("Input") in March 1997; (iv) Micro Publishing
Systems, Inc. ("MPS") in December 1997; (v) Lifo Systems, Inc. ("Lifo") in
February 1998; (vi) Creative Mailings, Inc. ("CMI") in September 1998; (vii)
Economic Research Services ("ERS") in October 1998; (viii) TCH Mailhouse, Inc.
and G&W Enterprise, Inc. (collectively, "TCH"); in December 1998; and (ix)
Advanced Digital Graphics, Inc. ("ADG") in December 1998 (collectively, the
"Pooled Companies"). The consolidated financial statements for all periods
presented have been restated to include the accounts of MAVRICC, Input, CMI and
ERS. Our consolidated financial statements were not restated for the Rust, MPS,
and Lifo acquisitions for the periods prior to January 1, 1996, 1997 and 1998,
respectively, due to their financial immateriality. Periods presented were also
not restated prior to October 1, 1998, for the acquisitions of TCH and ADG due
to their financial immateriality. The Pooled Companies and our Company were not
under common control or management during the periods prior to their respective
mergers. The results of operations for the periods presented may not be
indicative of the results in the future because of (i) the impact of
acquisitions recorded as purchases, whose results are only included subsequent
to the purchase date; and (ii) the impact of acquisitions recorded as
poolings-of-interests, whose predecessor companies were not under common control
or management.
Subsequent to the IPO and through December 31, 1999, we acquired 45
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
We consider highly liquid investments with original maturities of three
months or less to be cash equivalents. Cash equivalents are carried at cost,
which approximates market value.
FUNCTIONAL CURRENCY AND FOREIGN CURRENCY TRANSACTIONS
Our functional currency and that of all of our operating companies is
the U.S. dollar. Certain of our operating companies conduct transactions in
foreign currencies. Foreign currency transaction gains and losses are recorded
as other income and expense on the income statement.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are depreciated over the lesser of the estimated
useful life or the term of the lease.
27
<PAGE>
INTANGIBLE ASSETS
Intangible assets consist primarily of excess purchase price over net
assets, which are amortized over periods not to exceed 30 years. In conformance
with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," our management continually evaluates whether events and circumstances
indicate the remaining estimated useful life of intangible assets may warrant
revisions or that the remaining balance of intangibles or other long-lived
assets may not be recoverable. To make this evaluation, management uses an
estimate of undiscounted net income over the remaining life of the intangibles
or other long-lived assets.
REVENUE RECOGNITION
Revenue is recognized when the services are rendered, or products are
delivered to our customers. Unearned revenue represents certain services which
are billed in advance.
INCOME TAXES
Income taxes are accounted for using the asset and liability method
pursuant to SFAS No. 109, "Accounting for Income Taxes." Deferred taxes are
recognized for tax consequences of temporary differences by applying enacted
statutory tax rates applicable in future years to differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities.
NET INCOME PER SHARE
Net income per common share has been computed in accordance with SFAS
No. 128, "Earnings Per Share," which requires the disclosure of basic and
diluted net income per share. Basic net income per share has been computed by
dividing income by the weighted average number of common shares outstanding for
the period. Diluted net income per share has been computed by dividing income by
the weighted average number of common shares and common stock equivalents
outstanding for the period.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires our management to make
estimates and assumptions that affect the reported amounts of certain assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to make their
presentation consistent with the current year.
CONSOLIDATION
The accompanying financial statements and related notes to consolidated
financial statements include the accounts of F.Y.I. Incorporated and our
subsidiaries. All significant intercompany balances and transactions have been
eliminated.
PRO FORMA NET INCOME (UNAUDITED)
We acquired the Pooled Companies in transactions that were accounted
for as poolings-of-interests. The Pooled Companies were managed through their
acquisition dates as independent private companies and represent a variety of
tax structures. Therefore, selling, general and administrative expenses for the
historical periods reflect compensation and related benefits that the former
owners have received from the business during those periods. In connection with
the acquisitions, the owners may have entered into employment agreements that
provide for
28
<PAGE>
compensation and benefits at levels lower than the historical amounts (the
"Compensation Differential"). The unaudited pro forma data present
compensation at the level the owners have agreed to receive subsequent to the
acquisition. In addition, the pro forma data presents the incremental
provision for income taxes as if all entities had been subject to federal and
state income taxes and the related income tax impact of the Compensation
Differential discussed above.
3. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND NOTES RECEIVABLE:
The activity in the allowance for doubtful accounts and notes receivable
is as follows (in thousands):
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING BALANCE COSTS AND AT END OF
OF PERIOD ACQUIRED EXPENSES WRITE-OFFS PERIOD
----------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Twelve months ended December 31, 1997...... $ 1,531 $ 2,046 $ 1,647 $ 1,868 $ 3,356
======== ======== ======== ======== ========
Twelve months ended December 31, 1998...... $ 3,356 $ 363 $ 3,262 $ 2,276 $ 4,705
======== ========= ======== ======== ========
Twelve months ended December 31, 1999...... $ 4,705 $ 1,660 $ 6,325 $ 3,855 $ 8,835
======== ======== ======== ======== ========
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES -------------------
IN YEARS 1998 1999
-------- ---- ----
<S> <C> <C> <C>
Land...................................................... N/A $934 $ 934
Buildings and improvements................................ 7--18 3,172 3,991
Leasehold improvements.................................... Life of lease 2,830 3,563
Vehicles.................................................. 5--7 2,022 2,500
Machinery and equipment................................... 5--15 25,371 35,367
Computer equipment and software........................... 3--7 18,671 30,596
Furniture and fixtures.................................... 5--15 2,485 3,896
-------- ----------
55,485 80,847
Less-- Accumulated depreciation and amortization.......... 26,113 34,335
-------- ---------
$29,372 $ 46,512
======= ========
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Accounts payable and accrued liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- --------
<S> <C> <C>
Accounts payable and accrued liabilities............................... $11,254 $ 24,253
Accrued compensation and benefits...................................... 9,338 12,683
Customer deposits...................................................... 4,234 3,327
Unearned revenue....................................................... 1,968 8,641
Accrued liabilities from acquisitions.................................. 2,858 29,017
Accrued professional fees.............................................. 443 359
---------- -------
$30,095 $78,280
========== =======
</TABLE>
29
<PAGE>
6. BUSINESS COMBINATIONS:
1999 ACQUISITIONS
During 1999, we acquired 12 document management businesses, all of which
were accounted for as purchases. These acquisitions were Northern Minnesota
Medical Records Services, Inc., PMI Imaging Systems, Inc., Quality Data
Conversions, Inc., MSI Imaging Solutions, Inc., Information Management Services,
Inc., Managed Care Professionals, Inc., American Economics Group, Inc., Data
Entry and Informational Services, Inc., Rust Consulting, Inc., Newport Beach
Data Entry, Inc., Copy Right, Inc. and Exigent Computer Group, Inc. (the "1999
Acquisitions"). The aggregate consideration paid for the acquisitions consisted
of $66.8 million in cash and 255,626 shares of common stock. The preliminary
allocation of the purchase price is set forth below (in thousands):
<TABLE>
<S> <C>
Consideration Paid..................................................... $73,811
Estimated Fair Value of Tangible Assets................................ 34,069
Estimated Fair Value of Liabilities.................................... 30,603
Goodwill............................................................... 70,345
</TABLE>
The weighted average fair market values of the shares of common stock
used in calculating the consideration paid was $25.28 per share, which
represents a 20% discount from the average trading price of the common stock
based on the length and type of restrictions in the purchase agreements.
The estimated fair market values reflected above are based on
preliminary estimates and assumptions and are subject to revision. In
management's opinion, the preliminary allocations are not expected to be
materially different than the final allocations. Certain of the acquisitions are
subject to adjustments in their overall consideration based upon performance
against specified earning targets over one to three year periods.
1998 ACQUISITIONS
During 1998, we acquired 13 document management businesses, eight of which
were accounted for as purchases (the "Purchased Companies") and five of which
were accounted for under the pooling-of-interests method. The eight acquisitions
accounted for as purchases were Medicopy, Inc. ("Medicopy"), Associate Record
Technician Services, Inc. ("ARTS"), DeBari Associates, Inc. ("DeBari"), ACT
Medical Record Services, Inc. ("ACT"), Eagle Legal Services, Inc. ("Eagle"),
Doctex, Inc. ("Doctex"), Copyright, Inc. ("Copyright"), and certain assets of
Olicon Imaging Systems, Inc. ("Radiology"). The aggregate consideration paid
for the Purchased Companies consisted of $187.2 million in cash and 644,762
shares of common stock. The preliminary allocation of the purchase price is
set forth below (in thousands):
<TABLE>
<S> <C>
Consideration Paid................................................... $ 32,855
Estimated Fair Value of Tangible Assets.............................. 7,925
Estimated Fair Value of Liabilities.................................. 8,754
Goodwill............................................................. 33,684
</TABLE>
The weighted average fair market values of the shares of common stock
used in calculating the consideration paid was $20.28 per share which
represented a 20% discount from the average trading price of the common stock
based on the length and type of restrictions in the purchase agreements.
The estimated fair market values reflected above are based on
preliminary estimates and assumptions and are subject to revision. In
management's opinion, the preliminary allocations are not expected to be
materially different than the final allocations. Certain of the acquisitions are
subject to additional consideration based upon achievement of specified earning
targets over a one to three year period.
The acquisitions of CMI in September 1998 and ERS in October 1998
for 745,000 and 835,000 shares of common stock, respectively, were accounted
for as poolings-of-interests. The consolidated financial statements for all
periods presented have been restated to include the accounts of CMI and ERS.
Pro forma net income reflects adjustments for the Compensation Differential
and the related income tax effect and the incremental provision for income
taxes as if all entities had been subject to federal and state income taxes.
30
<PAGE>
The acquisition of Lifo in February 1998 for 326,659 shares of common
stock was accounted for as a pooling-of-interests. Our consolidated financial
statements were not restated for periods prior to January 1, 1998, due to the
financial immateriality of Lifo.
The acquisitions of TCH and ADG in December 1998 for 416,524 shares of
common stock were accounted for as poolings-of-interests. Our consolidated
financial statements were not restated for periods prior to October 1, 1998, due
to the financial immateriality of TCH and ADG.
1998 DISPOSITIONS AND OTHER CHARGES
In October 1998, we entered into an agreement to exchange certain
assets and related liabilities of Leonard Archives Acquisition Corp.
("Leonard") for cash and certain assets and related liabilities of Copyright,
Inc., a Philadelphia-based provider of healthcare release of information
services. The divestiture of Leonard, which primarily offered archival records
storage, was consistent with our strategic objective of focusing our activities
on higher value-added document and information management and outsourcing
solutions. The book value of the net assets disposed was approximately $4.1
million, and we recorded a gain of $4.4 million on the transaction, net of costs
associated with the transaction.
Also in the fourth quarter, we recorded the write-down of certain
intangible and fixed assets and recorded severance and other costs. The goodwill
impairments related to the Computer Central Corporation, Microfilm Associates,
Ltd. and Octo, Inc. acquisitions and a customer list associated with a Founding
Company acquisition in which the customer base associated with the intangible
asset had deteriorated to the extent that the assets were considered impaired
under SFAS 121. The severance represented payments due on acquisition-related
employment contracts terminated or not renewed. The charges totaling $4.3
million are presented in the consolidated statement of operations as follows:
(i) acceleration of goodwill amortization, $1.8 million; (ii) accrual for
severance and other costs, $1.7 million; (iii) facilities closings costs, $0.5
million; and (iv) other write-downs and impairments, $0.3 million. The gain on
sale of the assets of Leonard, net of the above charges, was $145,000 before
taxes.
1997 ACQUISITIONS
During 1997, we acquired 11 document management businesses, eight of
which were accounted for as purchases and three of which were accounted for
under the pooling-of-interests method. The eight acquisitions accounted for as
purchases were Acadian Consultants, Inc., Computer Central Corporation,
Deliverex of San Francisco, Information Management Corporation, Major Legal
Services, Quality Copy Service, QCSInet, Inc. and affiliates, APS Services, and
ZipShred, Inc. and ZipShred of America, LLC . The aggregate consideration paid
for these eight acquisitions consisted of $9.5 million in cash and 737,935
shares of common stock. The preliminary allocation of the purchase price is set
forth below (in thousands):
<TABLE>
<S> <C>
Consideration Paid....................................................... $21,248
Estimated Fair Value of Tangible Assets.................................. 8,153
Estimated Fair Value of Liabilities...................................... 11,932
Goodwill................................................................. 25,027
</TABLE>
The weighted average fair market values of the shares of common stock
used in calculating the consideration paid was $16.79 per share which
represented a 30-35% discount from the average trading price of the common stock
based on the length and type of restrictions in the purchase agreements.
The acquisitions of MAVRICC and Input in March 1997, for 820,000 and
263,636 shares of common stock, respectively, were accounted for as
poolings-of-interests. The consolidated financial statements for all periods
presented have been restated to include the accounts of MAVRICC and Input.
The acquisition of MPS in December 1997, for 326,506 shares of common
stock was accounted for as a pooling-of-interests. Our consolidated financial
statements were not restated for periods prior to January 1, 1997, due to the
financial immateriality of MPS.
31
<PAGE>
CONTINGENT CONSIDERATION
Certain of our acquisitions are subject to adjustments in their
overall consideration based upon the achievement of specified earning targets
over one to three year periods. During 1999, we paid consideration of $0.6
million in cash and 24,740 shares of common stock at an average price of
$30.36 per share in relation to contingent consideration agreements that have
been settled. Based upon the evaluation of cumulative earnings through
December 31, 1999, against the specified earnings targets, we have accrued
aggregate contingent consideration of approximately $44.4 million, of which
$25.1 million is classified as accounts payable and accrued liabilities on
our balance sheet; the remaining $19.3 million is classified as other
long-term obligations. All of the periods applicable for the earnout targets
have not been completed, and the amounts paid at the conclusion are likely to
be different from amounts presently accrued.
INTANGIBLE ASSETS
All intangibles are considered enterprise goodwill. Based on the
historical profitability of the purchased companies and trends in the legal,
healthcare and other industries to outsource document management functions in
the foreseeable future, the enterprise goodwill is being amortized over periods
not to exceed 30 years. Management continually evaluates whether events and
circumstances indicate that the remaining estimated useful life of intangible
assets may warrant revisions or that the remaining balance of intangibles or
other long-lived assets may not be recoverable. To make this evaluation,
management uses an estimate of undiscounted net income over the remaining life
of the intangibles or other long-lived assets. The goodwill associated with a
majority of our acquisitions is not deductible for income tax purposes.
PRO FORMA FINANCIAL DATA
Set forth below are unaudited pro forma financial data for the years
ended December 31, 1998 and 1999. The unaudited pro forma data give effect to:
(i) the 1999 Acquisitions and the 1998 acquisitions of ACT, Medicopy, ARTS,
DeBari, Eagle, Doctex, Copyright, Radiology, TCH and ADG; and (ii) compensation
and tax adjustments for all transactions as if these transactions had occurred
on January 1, 1998.
<TABLE>
<CAPTION>
PRO FORMA YEAR ENDED
--------------------
DECEMBER 31,
------------
1998 1999
---- ----
(UNAUDITED, IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Revenue....................................... $ 346,938 $ 396,465
Income before income taxes.................... 40,161 47,799
Net income.................................... 24,097 28,680
Net income per common share:
Basic....................................... $ 1.75 $ 1.99
Diluted..................................... $ 1.71 $ 1.88
Weighted average common shares outstanding:
Basic....................................... 13,751 14,403
Diluted..................................... 14,112 15,244
</TABLE>
The pro forma information is provided for informational purposes only
and does not purport to present our results of operations had the transactions
assumed therein occurred on or as of the dates indicated, nor are they
necessarily indicative of the results of operations which may be achieved in the
future.
32
<PAGE>
7. CREDIT FACILITIES:
LONG-TERM OBLIGATIONS
Long-term obligations consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1999
---- ----
<S> <C> <C>
Line of credit, expiring at March 2003, interest at prime or the
Eurodollar rate plus 0.5% (5.56% to 7.75%) at December 31,
1998, and interest at prime or the Eurodollar rate plus
0.75% (5.50% to 7.19%) at December 31, 1999...................... $28,000 $82,000
Industrial Revenue Bonds: Variable Rate (3.4% at December 31, 1998 and 3.1%
at December 31, 1999) Demand/Fixed Rate Revenue Bonds, Prince George's
County, Maryland; due beginning in 1996 through 2014 secured by all real
estate equipment and other tangible property of a subsidiary of the
Company........................................................... 2,244 2,144
All other obligations................................................. 2,512 2,232
------- -------
Total........................................................... 32,756 86,376
Less-- Current maturities of long-term obligations.................... 1,258 1,204
------- -------
Total long-term obligations..................................... $31,498 $85,172
======= =======
</TABLE>
In February 1998, we entered into a credit agreement (the "1998 Credit
Agreement") with Paribas and Bank of America Texas, N.A., as co-agents and
lenders named therein. Under the 1998 Credit Agreement, we and our subsidiaries
could borrow on a revolving credit basis loans in an aggregate outstanding
principal amount up to $65.0 million, subject to certain customary borrowing
capacity requirements. In April 1999 and August 1999, the 1998 Credit Agreement
was amended to increase the aggregate outstanding principal limit to $100.0
million and $125.0 million, respectively. In November 1999, we further amended
the 1998 Credit Agreement, increasing the aggregate principal limit to $150.0
million. The 1998 Credit Agreement is secured by the assets and/or stock of our
Company and our subsidiaries. The availability under the 1998 Credit Agreement
as of December 31, 1999, was $55.7 million.
The commitment to fund revolving credit loans under the 1998 Credit
Agreement expires February 18, 2001. The annual interest rate applicable to
borrowings under this facility is, at our option, (i) the prime rate or (ii)
grid pricing ranging from 0.5% to 1.50% plus the Eurodollar rate based on the
ratio of debt to EBITDA (as defined in the 1998 Credit Agreement). The 1998
Credit Agreement requires mandatory prepayments in certain circumstances. The
outstanding principal balance of revolving credit loans is due and payable on
March 31, 2003.
We also have outstanding an irrevocable letter of credit in the amount
of approximately $2.3 million to serve as guarantee for periodic principal and
interest payments related to the Industrial Revenue Bonds. In January 1998, we
entered into a letter of credit in the amount of $10.0 million to serve as a
guarantee for performance under a contract with New York State Workers
Compensation Board. In April 1999, the amount of the letter of credit was
reduced to $5.0 million. Additionally, in November 1999, we entered into a
letter of credit in the amount of $5.0 million to serve as a guarantee for
performance under a contract with the New York State Teachers' Retirement
System.
We capitalized certain costs associated with our 1996 Credit Agreement.
The unamortized costs of approximately $1.2 million were expensed in the fourth
quarter of 1997 when we agreed to terms on the 1998 Credit Agreement.
The weighted average interest rate on long-term obligations at December
31, 1998 and 1999, was 6.0% and 6.4%, respectively. The 1998 Credit Agreement
contains certain reporting requirements and financial covenants, including
requirements that we maintain minimum levels of net worth and other financial
ratios. As of December 31, 1998, we had complied with all loan covenants. In the
fourth quarter of 1999 we exceeded our covenant for allowable capital
expenditures. We received a waiver for this covenant for the period ended
December 31, 1999.
33
<PAGE>
MATURITIES OF LONG-TERM OBLIGATIONS
As of December 31, 1999, maturities of long-term obligations are as
follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
<S> <C>
2000.................................................................. $ 1,204
2001.................................................................. 19,344
2002.................................................................. 14,428
2003.................................................................. 49,334
2004.................................................................. 122
Thereafter............................................................ 1,944
---------
Total................................................................. $ 86,376
========
</TABLE>
8. LEASE COMMITMENTS:
Our operating companies lease various office buildings, machinery,
equipment and vehicles. Future minimum lease payments under capital leases and
noncancelable operating leases are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
----------------------------
CAPITAL OPERATING
YEARS ENDING DECEMBER 31, LEASES LEASES
------------------------- ---------- -----------
<S> <C> <C>
2000............................................................. $ 1,059 $ 13,518
2001............................................................. 539 11,512
2002............................................................. 217 9,008
2003............................................................. 91 6,156
2004............................................................. 0 3,918
Thereafter....................................................... 0 5,054
----------- ---------
Total minimum lease payments..................................... 1,906 $ 49,166
=========
Less-- Amounts representing interest............................. 242
-----------
Net minimum lease payments....................................... 1,664
Less-- Current portion of obligations under capital leases....... 939
-----------
Long-term portion of obligations under capital leases............ $ 725
===========
</TABLE>
Rent expense for all operating leases for the years ended
December 31, 1997, 1998 and 1999 was approximately $8.7 million, $11.7
million, and $15.1 million, respectively.
9. INCOME TAXES:
The provision for federal and state income taxes consists of the
following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Federal --
Current....................................... $ 5,314 $ 10,453 $ 13,301
Deferred...................................... 902 (1,233) (21)
State --
Current....................................... 249 1,988 2,724
Deferred...................................... 42 (221) (4)
-------- --------- ---------
$ 6,507 $ 10,987 $ 16,000
======== ========= =========
</TABLE>
34
<PAGE>
The differences in income taxes provided and the amounts determined by
applying the federal statutory tax rate to income before income taxes result
from the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Tax at statutory rate.................... $6,586 $10,506 $13,970
Add (deduct)--
State income taxes.................. 623 1,148 1,768
Nondeductible expenses.............. 459 920 875
Income (loss) of S corporations..... (1,161) (1,130) (599)
Other............................... -- (457) (14)
------ ------- -------
$6,507 $10,987 $16,000
====== ======= =======
</TABLE>
The components of deferred income tax liabilities and assets are as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
---- ----
<S> <C> <C>
Deferred income tax liabilities --
Tax over book depreciation and amortization............... $1,479 $ 2,017
Cash to accrual differences, net.......................... 1,280 712
Other, net................................................ 947 860
------- -------
Total deferred income tax liabilities................. 3,706 3,589
Deferred income tax assets--
Allowance for doubtful accounts........................... 1,723 3,058
Accrued liabilities....................................... 277 1,369
Other reserves, net..................................... 13 35
------- -------
Total deferred income tax assets...................... 2,013 4,462
------- -------
Total net deferred income tax (liabilities)/assets.......... $(1,693) $ 873
======= =======
Current portion of deferred income tax (liabilities)/assets. $ (214) $ 2,890
Long-term deferred tax assets/(liabilities)................. (1,479) (2,017)
------- -------
$(1,693) $ 873
======= =======
</TABLE>
10. STOCKHOLDERS' EQUITY:
STOCK OPTIONS AND WARRANTS:
At December 31, 1999, we had one stock-based compensation plan, the
1995 Stock Option Plan, as amended (the "Plan"), which is described below. We
have also issued warrants (the "Warrants") to certain key employees and
employees of our subsidiaries. We refer to these options and warrants
collectively as "Awards." We apply APB Opinion 25 and related interpretations
in accounting for awards. Awards are granted at the market price of the
common stock on the date of grant. Accordingly, no compensation cost has been
recognized for the awards. Had compensation cost been determined based upon
the fair value at grant dates for these awards consistent with the method of
SFAS No. 123, "Accounting for Stock Based Compensation," our net income and
earnings per share would have been as follows (in thousands, except for per
share data):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net income under SFAS 123............................ $11,439 $16,626 $20,914
Diluted net income per common share under SFAS 123... $0.94 $1.21 $1.40
Actual net income.................................... $12,863 $19,031 $24,001
Actual diluted net income per common share........... $1.05 $1.39 $1.60
</TABLE>
The fair value of the Awards was estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions for
1997: risk free interest rate ranging from 5.7% to 6.6%, no dividend yield,
35
<PAGE>
expected life of three years, and volatility of 33%. The following
assumptions were used for 1998: risk free interest rate ranging from 4.0% to
5.7%, no dividend yield, average expected life of three years, and volatility
of 40%. The following assumptions were used for 1999: risk free interest rate
ranging from 4.5% to 6.1%, no dividend yield, average expected life of three
years, and volatility of 35%.
In October 1995, our Board of Directors and our stockholders approved
the Plan, which became effective on the date of the IPO. The Plan provides
awards of options to purchase common stock and may include incentive stock
options ("ISOs") and/or non-qualified stock options.
The Plan also provides for automatic option grants to directors who are
not otherwise employed by us or our subsidiaries. Upon commencement of service
(or upon agreeing to serve in the case of the initial non-employee directors), a
non-employee director will receive a non-qualified option to purchase 10,000
shares of common stock, and continuing non-employee directors will receive
annual options to purchase 5,000 shares of common stock. Options granted to
non-employee directors become exercisable one-third on the date of grant and
one-third on each of the next two anniversaries of the date of grant.
Non-employee directors' options have a term of five years from the date of
grant.
The maximum number of shares of common stock that may be subject to
outstanding options under the Plan, determined immediately after the grant of
any option, is the greater of 650,000 shares or 16% of the aggregate number of
shares of our common stock outstanding provided, however, that options to
purchase no more than 650,000 shares of common stock may be granted as ISOs. At
December 31, 1998 and 1999, approximately 144,000 and 417,000 shares,
respectively, were available for issuance.
We had 2,814,284 and 2,830,410 Awards outstanding at December 31, 1998,
and 1999, respectively. These Awards, other than those granted to employee
directors, have 10-year expirations and various vesting schedules.
<TABLE>
<CAPTION>
AWARDS OUTSTANDING
---------------------------------------
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Balance, December 31, 1996................................... 856 $ 15.41
Granted...................................................... 1,087 $ 21.85
Exercised.................................................... 87 $ 14.28
Forfeited.................................................... 42 $ 19.20
--------------- ------------
Balance, December 31, 1997................................... 1,814 $ 19.23
Granted...................................................... 1,205 $ 26.53
Exercised.................................................... 143 $ 17.22
Forfeited.................................................... 62 $ 21.22
--------------- ------------
Balance, December 31, 1998................................... 2,814 $ 22.42
Granted...................................................... 480 $ 27.95
Exercised.................................................... 255 $ 18.62
Forfeited.................................................... 209 $ 23.69
--------------- ------------
Balance, December 31, 1999................................... 2,830 $ 23.60
--------------- ------------
Exercisable, December 31, 1999............................... 1,278 $ 20.74
=============== ============
</TABLE>
36
<PAGE>
The following table summarizes information about Awards granted under
the Plan that were outstanding at December 31, 1999:
<TABLE>
<CAPTION>
AWARDS OUTSTANDING AWARDS EXERCISABLE
----------------------------------------------- -------------------------------
NUMBER WEIGHTED-AVERAGE WEIGHTED NUMBER
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE WEIGHTED AVERAGE
EXERCISE PRICES AT 12/31/99 CONTRACTUAL LIFE EXERCISE PRICE AT 12/31/99 EXERCISE PRICE
--------------- ----------- ---------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
$10.00-$21.00 679,000 5.71 $16.67 512,640 $15.44
$21.50-$23.50 811,997 8.22 $22.54 450,716 $22.19
$23.75-$28.00 652,425 8.83 $25.83 177,995 $25.27
$28.50-$35.75 686,988 8.88 $29.60 136,638 $29.88
</TABLE>
NET INCOME PER SHARE
Basic and diluted net income per share were computed in accordance with
SFAS No. 128, "Earnings Per Share." The differences between basic weighted
average common shares and diluted weighted average common shares and common
stock equivalents are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Basic weighted average common shares.... 12,018 13,370 14,149
Weighted average options and warrants... 178 336 486
Other contingent consideration.......... -- 25 355
------ ------ ------
Diluted weighted average common shares.. 12,196 13,731 14,990
====== ====== ======
</TABLE>
11. EMPLOYEE BENEFIT PLANS:
We established a defined contribution plan (the "401(k) plan") in
January 1997. The 401(k) plan covers our employees and the employees of some
of our subsidiaries. The employees must be at least 21 years of age and work
at least 1,000 hours per year with one year of service to be eligible for the
plan. In addition, we established a non-qualified plan in December 1996. The
non-qualified compensation plan permits eligible officers and certain highly
compensated employees to defer a portion of their compensation. Contributions
to both the 401(k) plan and the non-qualified compensation plan consist of
employee pre-tax contributions determined as a percentage of each
participating employee's compensation. We may make contributions to either or
both plans at the discretion of our Board of Directors. We have not made any
contributions to the 401(k) plan or the deferred compensation plan. We offer
no post-employment or post-retirement benefits.
Certain of the operating companies have qualified defined contribution
employee benefit plans (the "Plans"), the majority of which allow for voluntary
pre-tax contributions by employees. The subsidiaries pay all general and
administrative expenses of the Plans and, in some cases, the subsidiaries make
matching and discretionary contributions to the Plans. The subsidiaries offer no
post-employment or post-retirement benefits. The expense incurred by us related
to the Plans was approximately $449,000, $610,000, and $887,000 for the years
ended December 31, 1997, 1998 and 1999 respectively.
12. RELATED PARTY TRANSACTIONS:
LEASING TRANSACTIONS
Certain of our operating companies lease their operating facilities,
along with certain equipment, from selling parties who remained our employees or
directors. These leases are for various lengths and annual amounts. The rental
expense for these operating leases for the years ended December 31, 1997, 1998
and 1999 was approximately $834,000, $647,000 and $1,362,348, respectively.
37
<PAGE>
NOTES RECEIVABLE
In the acquisition of the Founding Companies, we acquired $642,000 of
notes receivable from two Founding Company shareholders. When we effectively
began our operations, the shareholders entered into new notes receivable with a
stated interest rate (5%) and principal payment schedules. Principal and
interest were paid in full by the shareholders in 1999 and early 2000.
13. COMMITMENTS AND CONTINGENCIES:
LITIGATION
We are, from time to time, a party to litigation. Our management
believes that none of these actions will have a material adverse effect on our
business, financial condition or results of operations.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject us to concentration of
credit risk consist primarily of cash and cash equivalents and trade
receivables. The Company maintains cash and cash equivalents and certain other
financial instruments at various major financial institutions across many
geographic areas. Credit risk on trade receivables is minimized as a result of
the large number of entities comprising our client base and their dispersion
across many industries and geographic areas.
14. SEGMENT REPORTING:
We and our subsidiaries are principally engaged in document and
information outsourcing services. We have identified segments based on
management responsibility as follows:
F.Y.I. IMAGE: (i) electronic imaging services, involving the
conversion of paper or microfilm documents into digitized information,
database management and indexing; (ii) analog services involving the
conversion of paper documents into microfilm images, film processing and
computer based indexing and formatting; (iii) data capture and database
management services involving data capture, data consolidation and
elimination, storage, maintenance, formatting and report creation; (iv)
claims processing; and (v) integrated solutions, which deliver technical
services with a focus on document imaging, work flow, COLD and document
information management systems using third party imaging systems.
F.Y.I. LEGAL: (i) automated litigation support, including document
conversion, computer indexing and automated document retrieval; (ii)
litigation consulting services such as discovery assistance, labor
discrimination, forensic analysis and other trial support services; (iii)
high-speed, multiple-set reproduction of documents; (iv) records acquisition
in the form of subpoena of business documents service of process; and (v)
employee and investor services which provides administration, record keeping
and information processing services.
F.Y.I. HEALTHSERVE: (i) processing a request for a patient's medical
records from a physician, insurance company, attorney, healthcare institution
or individual; (ii) off-site active storage of a healthcare institutions
medical records; (iii) online delivery of images of selected medical records
for healthcare institutions; (iv) document and data conversion services for
healthcare institutions; (v) document conversion services for state
government disability, workers compensation claims and other government
agencies; (vi) temporary staffing services; (vii) providing attending
physicians' statements for life and health insurance underwriting; and (viii)
managed care compliance reviews.
F.Y.I. DIRECT: (i) direct mail, which includes direct mail and
fulfillment services to clients who need rapid, reliable and cost-effective
methods for making large scale distributions of advertising, literature and
other information; (ii) full service commercial printing, including printing
and related services such as electronic prepress services, full-color report
production of annual reports, flyers and catalogs; and (iii) statement
processing.
38
<PAGE>
We have a broad client base. One of our clients accounted for
approximately $12.8 million, or 3.6%, of our revenue for the year ended December
31, 1999. No other clients accounted for more than 3.0% of revenue for the year
then ended.
We measure segment profit as earnings before taxes. Information on
segments follows (in thousands):
<TABLE>
<CAPTION>
Year ended December 31, 1999
F.Y.I. IMAGE F.Y.I. LEGAL F.Y.I. HEALTHSERVE F.Y.I. DIRECT CONSOLIDATED
------------ -------------- ------------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $115,792 $ 82,500 $108,912 $ 47,607 $354,811
Depreciation and
amortization 4,960 2,823 4,722 1,058 13,563
Operating income 17,593 9,621 13,312 3,450 43,976
Interest expense 1,669 888 1,196 493 4,246
Income before income 15,919 8,826 12,201 3,055 40,001
taxes
Total assets $133,734 $ 77,542 $129,134 $ 28,945 $369,355
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1998 (1)
F.Y.I. IMAGE F.Y.I. LEGAL F.Y.I. HEALTHSERVE F.Y.I. DIRECT CONSOLIDATED
------------ -------------- ------------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 48,897 $ 80,036 $ 87,749 $ 30,780 $247,462
Depreciation and
amortization 2,679 2,865 3,613 1,577 10,734
Operating income 7,265 11,252 8,718 3,773 31,008
Interest expense 279 491 379 319 1,468
Income before income 7,261 10,907 8,124 3,726 30,018
taxes
Total assets $ 34,875 $ 73,147 $ 78,126 $ 20,822 $206,970
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1997 (1)
F.Y.I. IMAGE F.Y.I. LEGAL F.Y.I. HEALTHSERVE F.Y.I. DIRECT CONSOLIDATED
------------ -------------- ------------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 42,325 $ 60,972 $ 52,821 $ 21,154 $177,272
Depreciation and
amortization 1,164 1,685 2,122 594 5,565
Operating income 3,453 10,334 5,451 1,308 20,546
Interest expense 392 875 482 170 1,919
Income before income 3,133 9,807 5,166 1,264 19,370
taxes
Total assets $ 27,363 $ 44,120 $ 53,135 $ 14,488 $139,106
</TABLE>
(1) The 1998 and 1997 segments have been reclassified to conform to our 1999
segment structure.
39
<PAGE>
15. QUARTERLY INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
F.Y.I. INCORPORATED
-------------------------------------------------------------------------------------
1998 Quarter Ended 1999 Quarter Ended
-------------------- --------------------
MAR 31 JUN 30 SEP 30 DEC 31 MAR 31 JUN 30 SEP 30 DEC 31
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue........... $56,504 $61,055 $63,264 $66,639 $71,612 $81,587 $96,940 $104,672
Gross profit............ 19,538 21,677 23,204 23,339 25,600 29,707 34,321 37,673
Income before income taxes 6,487 7,465 8,030 8,036 8,789 9,561 10,627 11,024
Net income ............. 4,095 4,868 5,247 4,821 5,273 5,737 6,376 6,615
Pro forma earnings
before taxes.......... 6,487 7,465 8,030 8,036 8,789 9,561 10,627 11,024
Pro forma net
Income................ 3,894 4,478 4,818 4,821 5,273 5,737 6,376 6,615
Net income per common share -
Basic............. $ 0.31 $ 0.36 $ 0.39 $ 0.36 $ 0.38 $ 0.41 $ 0.45 $ 0.46
Diluted........... $ 0.30 $ 0.35 $ 0.38 $ 0.35 $ 0.36 $ 0.39 $ 0.42 $ 0.43
Pro forma net income per
common share -
Basic............. $ 0.30 $ 0.33 $ 0.36 $ 0.36 $ 0.38 $ 0.41 $ 0.45 $ 0.46
Diluted........... $ 0.29 $ 0.33 $ 0.35 $ 0.35 $ 0.36 $ 0.39 $ 0.42 $ 0.43
Weighted average common
shares outstanding-
Basic............. 13,189 13,385 13,505 13,401 13,940 14,028 14,277 14,350
Diluted........... 13,477 13,717 13,881 13,850 14,579 14,710 15,190 15,482
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
40
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information called for by Item 10 will be set forth under the caption
"Election of Directors" in our 2000 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended December 31, 1999,
and which is incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
Information called for by Item 11 will be set forth under the caption
"Executive Compensation" in our 2000 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended December 31, 1999,
and which is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information called for by Item 12 will be set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in our 2000
Proxy Statement, which will be filed not later than 120 days after the end of
our fiscal year ended December 31, 1999, and which is incorporated herein by
this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information called for by Item 13 will be set forth under the caption
"Certain Relationships and Related Transactions" in our 2000 Proxy Statement,
which will be filed not later than 120 days after the end of our fiscal year
ended December 31, 1999, and which is incorporated herein by this reference.
41
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are being filed as part of this Report:
(a)(1) Consolidated Financial Statements
See Index to Consolidated Financial Statements on page 21.
All other schedules are omitted because they are not applicable, not
required or the required information is in the Financial Statements or the
Notes thereto.
(a)(3) The following Exhibits are filed as part of this Report as
required by Item 601 of Regulation S-K. The Exhibits designated by an
asterisk are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this Report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
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)
42
<PAGE>
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)
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
43
<PAGE>
(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)
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 -- First Amendment to Amended and Restated By-Laws of
F.Y.I. Incorporated (Incorporated by reference to
Exhibit 3.2 to the Company's Form 10-Q filed on
August 8, 1997)
4 -- Form of certificate evidencing ownership of
Common Stock of F.Y.I. Incorporated (Incorporated
by reference to Exhibit 4.2 to Amendment No. 1 to
the Company's Registration Statement on Form
S-1 (Registration No. 33-98608) effective January
12, 1996)
10.1* -- F.Y.I. Incorporated 1995 Stock Option Plan
(Incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12,
1996)
44
<PAGE>
10.8 -- Form of Indemnification Agreement between F.Y.I.
and each director (Incorporated by reference to
Exhibit 10.8 to Company's Registration Statement on
Form S-1 (Registration No. 33-98608) effective
January 12, 1996)
10.10 -- Form of Registration Rights Agreement, dated as of
November 14, 1995, by and among Thomas C. Walker,
David Lowenstein and the persons named therein
(Incorporated by reference to Exhibit 10.10 to
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.12 -- Five Year Media Purchase Agreement, dated as of
August 9, 1994, between Eastman Kodak Company and
Jonathan B. Shaw (Incorporated by reference to
Exhibit 10.12 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
10.15 -- Lease Agreement between F.Y.I. Incorporated and
One McKinney Plaza, Inc. (Incorporated by
reference to Exhibit 10.15 to Post-Effective
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-1084)
effective April 30, 1996)
10.21 -- Separation Agreement, dated July 17, 1996, by and
between F.Y.I. Incorporated and Robert C. Irvine
(Incorporated by reference to Exhibit 10.21 to the
Company's Registration Statement on Form S-1
(Registration No. 333-16057) effective December 11,
1996)
10.26* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.26 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.27* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.27 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.28* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Timothy J. Barker (Incorporated by
reference to Exhibit 10.28 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.37 -- Amended and Restated Credit Agreement, dated as of
February 17, 1998, by and among F.Y.I. Incorporated,
Banque Paribas, Bank of America Texas, N.A. and the
Lenders named therein (Incorporated by referenced to
Exhibit 10.37 to the Company's Form 10-K filed on
March 11, 1998)
10.38 -- Agreement between New York State Workers'
Compensation Board and QCSInet Acquisition Corp.,
dated January 21, 1998 (Incorporated by reference to
Exhibit 10.38 to the Company's Form 8-K filed on
March 20, 1998)
10.47* -- Amended and Restated Employment Agreement
between F.Y.I. Incorporated and Jonathan B. Shaw
(Incorporated by reference to Exhibit 10.47 of the
Company's Form 10-K filed on March 17, 1999)
45
<PAGE>
10.48 -- First Amendment to Amended and Restated Credit
Agreement, dated August 3, 1998, by and among F.Y.I.
Incorporated, Banque Paribas, Bank of America Texas,
N.A. and the Lenders named therein (Incorporated
by reference to Exhibit 10.48 of the Company's
Form 10-K filed on March 17, 1999)
10.49 -- Second Amendment to Amended and Restated Credit
Agreement, dated April 13, 1999, by and among F.Y.I.
Incorporated, Banque Paribas, Nations Bank, N.A.
d/b/a Bank of America National Association, and Bank
One, Texas, N.A. and the Lenders named therein.
(Incorporated by reference to Exhibit 10.49 of the
Company's Form 10-Q filed on May 13, 1999)
10.51 -- Third Amendment to Amended and Restated Credit
Agreement, dated August 13, 1999, by and among F.Y.I.
Incorporated and Paribas, Nations Bank, N.A. d/b/a
Bank of America National Association, and Bank One,
Texas, N.A. and the Lenders named therein.
(Incorporated by reference to Exhibit 10.51 of the
Company's Form 8-K filed on August 20, 1999)
10.53 -- Fourth Amendment, dated November 10, 1999, to the
Amended and Restated Credit Agreement by and among
F.Y.I. Incorporated, Paribas, Nations Bank, N.A.
d/b/a Bank of America National Association, and Bank
One, Texas, N.A. and the Lenders named therein
(Incorporated by reference to Exhibit 10.53 to the
Company's Form 10-Q filed on November 11, 1999)
10.54* -- Warrant issued to Joe A. Rose, dated May 19, 1999
(Incorporated by reference to Exhibit 4.3 of the
Company's Form 10-Q filed on November 11, 1999)
10.55* -- Warrant issued to Ronald Zazworsky, dated May 19,
1999 (Incorporated by reference to Exhibit 4.4 of the
Company's Form 10-Q filed on November 11, 1999)
10.56* -- Warrant issued to Timothy J. Barker, dated May 19,
1999 (Incorporated by reference to Exhibit 4.5 of the
Company's Form 10-Q filed on November 11, 1999)
10.57* -- Warrant issued to Margot T. Lebenberg, dated May
19, 1999 (Incorporated by reference to Exhibit 4.6 of
the Company's Form 10-Q filed on November 11, 1999)
10.58* -- Warrant issued to Gary Patton, dated May 19, 1999
(Incorporated by reference to Exhibit 4.7 of the
Company's Form 10-Q filed on November 11, 1999)
10.59* -- Warrant issued to Thomas C. Walker, dated May 19,
1999 (Incorporated by reference to Exhibit 4.8 of the
Company's Form 10-Q filed on November 11, 1999)
10.60* -- Warrant issued to Ed H. Bowman, Jr. dated May
19, 1999 (Incorporated by reference to Exhibit 4.9
of the Company's Form 10-Q filed on November 11,
1999)
10.61* -- Special Warrant issued to Joe A. Rose, dated May
19, 1999 (Incorporated by reference to Exhibit 5.0 of
the Company's Form 10-Q filed on November 11, 1999)
46
<PAGE>
10.62* -- Special Warrant issued to Timothy J. Barker, dated
May 19, 1999 (Incorporated by reference to Exhibit
5.1 of the Company's Form 10-Q filed on November 11,
1999)
10.63* -- Amended and Restated Employment Agreement
between F.Y.I. Incorporated and Ed H. Bowman, Jr.
10.64* -- Amended and Restated Employment Agreement
between F.Y.I Incorporated and Thomas C. Walker
10.65* -- Consulting Agreement between F.Y.I.
Incorporated and David Lowenstein
10.66* -- Amended and Restated Employment Agreement
between F.Y.I Incorporated and Margot Lebenberg
10.67* -- Amended and Restated Employment Agreement
between F.Y.I. Incorporated and Ron Zazworsky
10.68* -- Amended and Restated Employment Agreement
between F.Y.I. Incorporated and Joe A. Rose
10.69* -- Amended and Restated Employment Agreement
between F.Y.I. Incorporated and Timothy J. Barker
10.70* -- Amended and Restated Employment Agreement
between F.Y.I Incorporated and David Byerley
10.71* -- Warrant issued to Margot T. Lebenberg, dated
March 16, 2000
10.72* -- Warrant issued to Ron Zazworsky, dated March 16,
2000
10.73* -- Warrant issued to Timothy J. Barker, dated
March 16, 2000
10.74* -- Warrant issued to Joe A. Rose, dated March 16,
2000
10.75* -- Warrant issued to David Byerley, dated March 16,
2000
10.76* -- Warrant issued to Jonathan Shaw, dated March 16, 2000
21 -- List of subsidiaries of F.Y.I. Incorporated
23.1 -- Consent of Arthur Andersen LLP
24 -- Power of Attorney (included with the signature
page hereof)
27.1 -- Financial Data Schedule
27.2 -- Restated 1998 Financial Data Schedule
27.3 -- Restated 1997 Financial Data Schedule
</TABLE>
47
<PAGE>
(b) Reports on Form 8-K:
We did not file any Form 8-K Current Reports during the last quarter of the
fiscal year ended December 31, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
F.Y.I. INCORPORATED
By: /s/ ED H. BOWMAN, JR.
----------------------------
Ed H. Bowman, Jr.,
President and Chief Executive Officer
Date: March 23, 2000
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and
constitutes Ed H. Bowman, Jr. and Margot T. Lebenberg, and each of them
singly, his true and lawful attorneys-in-fact with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign and file any and all amendments to this report with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and he hereby ratifies and confirms all
that said attorneys-in-fact or any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- --------- ------------------------ ----
<S> <C> <C>
/s/ THOMAS C. WALKER Chairman of the Board and March 23, 2000
- -------------------- Chief Development Officer
Thomas C. Walker
/s/ ED H. BOWMAN, JR. Director, President and Chief March 23, 2000
- --------------------- Executive Officer (Principal
Ed H. Bowman, Jr. Executive Officer)
/s/ DAVID LOWENSTEIN Director and Founder March 23, 2000
- --------------------
David Lowenstein
/s/ JOE A. ROSE Director , Executive Vice March 23, 2000
- ------------------ President and Chief Operating
Joe A. Rose Officer
/s/ TIMOTHY J. BARKER Executive Vice President and March 23, 2000
- --------------------- Chief Financial Officer
Timothy J. Barker Principal Financial and Accounting
Officer)
</TABLE>
48
<PAGE>
<TABLE>
<S> <C> <C>
/s/ G. MICHAEL BELLENGHI Director March 23, 2000
- ------------------------
G. Michael Bellenghi
/s/ MICHAEL J. BRADLEY Director March 23, 2000
- ----------------------
Michael J. Bradley
/s/ GREGORY R. MELANSON Director March 23, 2000
- -----------------------
Gregory R. Melanson
/s/ DONALD F. MOOREHEAD, JR. Director March 23, 2000
- ----------------------------
Donald F. Moorehead, Jr.
/s/ HON. EDWARD M. ROWELL Director March 23, 2000
- --------------------------
Hon. Edward M. Rowell
/s/ JONATHAN B. SHAW Director March 23, 2000
- --------------------
Jonathan B. Shaw
</TABLE>
49
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
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)
2.7 -- 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)
50
<PAGE>
2.9 -- First Amendment to Agreement and Plan of
Reorganization, dated as of October 25, 1995, by and
among F.Y.I. Incorporated, Leonard Archives Inc.,
Leonard Acquisition Corp. and the Stockholders named
therein (Incorporated by reference to Exhibit 2.9 to
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No.
33-98608) effective January 12, 1996)
2.10 -- First Amendment to Agreement and Plan of
Reorganization, dated as of November 14, 1995, by
and among F.Y.I. Incorporated, C. & T. Management
Services, Inc., Qualidata, Inc., DPAS Acquisition
Corp., and the Stockholders named therein
(Incorporated by reference to Exhibit 2.10 to
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
2.11 -- Agreement and Plan of Reorganization, dated as
of May 31, 1996, by and among F.Y.I. Incorporated,
B&B (Baltimore-Washington) Acquisition Corp., B&B
Information and Image Management, Inc. and Charles
J. Bauer, Jr. (Incorporated by reference to
Exhibit 10.17 to Post-Effective Amendment No. 2 to
the Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11,
1996)
2.12 -- Agreement and Plan of Reorganization, dated as
of May 31, 1996, by and among F.Y.I. Incorporated,
Premier Acquisition Corp., Premier Document
Management, Inc., PDM Services, Inc., Brian E.
Whiteside, Christopher S. Moore, Lynnette C.
Pomerville and Gary T. Sievert (Incorporated by
reference to Exhibit 10.18 to Post-Effective
Amendment No. 2 to the Company's Registration
Statement on Form S-1 (Registration No. 333-1084)
effective July 11, 1996)
2.13 -- Asset Purchase Agreement, dated as of June
28, 1996, by and among F.Y.I. Incorporated,
Robert A. Cook Acquisition Corp., Robert A. Cook
and Staff, Inc. and RAC Services, Inc., Robert
A. Cook and Robert A. Cook and Anna M. Cook, as
Co-Trustees of the Cook 1993 Living Trust
(Incorporated by reference to Exhibit 10.19
to Post-Effective Amendment No. 2 to the
Company's Registration Statement on Form S-1
(Registration No. 333-1084) effective July 11,
1996)
2.14 -- Agreement and Plan of Reorganization, dated as of
August 30, 1996, by and among F.Y.I. Incorporated,
California Medical Record Service Acquisition Corp.,
C.M.R.S. Incorporated and Alan Simon (Incorporated by
reference to Exhibit 2.14 to Post-Effective Amendment
No. 3 to the Company's Registration Statement on Form
S-1 (Registration No. 333-1084) effective September
11, 1996)
2.15 -- Agreement and Plan of Reorganization, dated as of
August 30, 1996, by and among F.Y.I. Incorporated,
Texas Medical Record Service Acquisition Corp., Texas
Medical Record Service, Inc., California Medical
Record Service Acquisition Corp. and Karen Jill Simon
(Incorporated by reference to Exhibit 2.15 to
Post-Effective Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No.
333-1084) effective September 11, 1996)
2.16 -- Agreement and Plan of Reorganization, dated as
of August 30, 1996, by and among F.Y.I.
Incorporated, Minnesota Medical Record Service
51
<PAGE>
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)
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 -- First Amendment to Amended and Restated By-Laws of
F.Y.I. Incorporated (Incorporated by reference to
Exhibit 3.2 to the Company's Form 10-Q filed on
August 8, 1997)
4 -- Form of certificate evidencing ownership of
Common Stock of F.Y.I. Incorporated (Incorporated
by reference to Exhibit 4.2 to Amendment No. 1 to
the Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12,
1996)
10.1* -- F.Y.I. Incorporated 1995 Stock Option Plan
(Incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-1
(Registration No. 33-98608) effective January 12,
1996)
10.8 -- Form of Indemnification Agreement between F.Y.I.
and each director (Incorporated by reference to
Exhibit 10.8 to Company's Registration Statement on
Form S-1 (Registration No. 33-98608) effective
January 12, 1996)
10.10 -- Form of Registration Rights Agreement, dated as of
November 14, 1995, by and among Thomas C. Walker,
David Lowenstein and the persons named therein
(Incorporated by reference to Exhibit 10.10 to
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.12 -- Five Year Media Purchase Agreement, dated as of
August 9, 1994, between Eastman Kodak Company and
Jonathan B. Shaw
52
<PAGE>
(Incorporated by reference to Exhibit 10.12 to
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-98608)
effective January 12, 1996)
10.15 -- Lease Agreement between F.Y.I. Incorporated and
One McKinney Plaza, Inc. (Incorporated by
reference to Exhibit 10.15 to Post-Effective
Amendment No. 1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-1084)
effective April 30, 1996)
10.21 -- Separation Agreement, dated July 17, 1996, by
and between F.Y.I. Incorporated and Robert C.
Irvine (Incorporated by reference to Exhibit 10.21
to the Company's Registration Statement on Form
S-1 (Registration No. 333-16057) effective
December 11, 1996)
10.26* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.26 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.27* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Ed H. Bowman, Jr. (Incorporated by
reference to Exhibit 10.27 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.28* -- Amended and Restated Warrant issued by F.Y.I.
Incorporated to Timothy J. Barker (Incorporated by
reference to Exhibit 10.28 to the Company's Current
Report on Form 8-K filed on April 9, 1997)
10.37 -- Amended and Restated Credit Agreement, dated as of
February 17, 1998, by and among F.Y.I. Incorporated,
Banque Paribas, Bank of America Texas, N.A. and the
Lenders named therein (Incorporated by referenced to
Exhibit 10.37 to the Company's Form 10-K filed on
March 11, 1998)
10.38 -- Agreement between New York State Workers'
Compensation Board and QCSInet Acquisition Corp.,
dated January 21, 1998 (Incorporated by reference to
Exhibit 10.38 to the Company's Form 8-K filed on
March 20, 1998)
10.47* -- Amended and Restated Employment Agreement
between F.Y.I. Incorporated and Jonathan B. Shaw
(Incorporated by reference to Exhibit 10.47 of the
Company's Form 10-K filed on March 17, 1999)
10.48 -- First Amendment to Amended and Restated Credit
Agreement, dated August 3, 1998, by and among F.Y.I.
Incorporated, Banque Paribas, Bank of America Texas,
N.A. and the Lenders named therein (Incorporated
by reference to Exhibit 10.48 of the Company's
Form 10-K filed on March 17, 1999)
10.49 -- Second Amendment to Amended and Restated Credit
Agreement, dated April 13, 1999, by and among F.Y.I.
Incorporated, Banque Paribas, Nations Bank, N.A.
d/b/a Bank of America National Association, and Bank
One, Texas, N.A. and the Lenders named therein.
(Incorporated by reference to Exhibit 10.49 of the
Company's Form 10-Q filed on May 13, 1999)
10.51 -- Third Amendment to Amended and Restated Credit
Agreement, dated August 13, 1999, by and among F.Y.I.
Incorporated and Paribas, Nations Bank, N.A. d/b/a
Bank of America National Association, and Bank One,
Texas, N.A. and the Lenders named therein.
(Incorporated
53
<PAGE>
by reference to Exhibit 10.51 of the Company's
Form 8-K filed on August 20, 1999)
10.53 -- Fourth Amendment, dated November 10, 1999, to the
Amended and Restated Credit Agreement by and among
F.Y.I. Incorporated, Paribas, Nations Bank, N.A.
d/b/a Bank of America National Association, and Bank
One, Texas, N.A. and the Lenders named therein
(Incorporated by reference to Exhibit 10.53 to the
Company's Form 10-Q filed on November 11, 1999)
10.54* -- Warrant issued to Joe A. Rose, dated May 19, 1999
(Incorporated by reference to Exhibit 4.3 of the
Company's Form 10-Q filed on November 11, 1999)
10.55* -- Warrant issued to Ronald Zazworsky, dated May 19,
1999 (Incorporated by reference to Exhibit 4.4 of the
Company's Form 10-Q filed on November 11, 1999)
10.56* -- Warrant issued to Timothy J. Barker, dated May 19,
1999 (Incorporated by reference to Exhibit 4.5 of the
Company's Form 10-Q filed on November 11, 1999)
10.57* -- Warrant issued to Margot T. Lebenberg, dated May
19, 1999 (Incorporated by reference to Exhibit 4.6 of
the Company's Form 10-Q filed on November 11, 1999)
10.58* -- Warrant issued to Gary Patton, dated May 19, 1999
(Incorporated by reference to Exhibit 4.7 of the
Company's Form 10-Q filed on November 11, 1999)
10.59* -- Warrant issued to Thomas C. Walker, dated May 19,
1999 (Incorporated by reference to Exhibit 4.8 of the
Company's Form 10-Q filed on November 11, 1999)
10.60* -- Warrant issued to Ed H. Bowman, Jr.
dated May 19, 1999 (Incorporated by reference
to Exhibit 4.9 of the Company's Form 10-Q filed
on November 11, 1999)
10.61* -- Special Warrant issued to Joe A. Rose, dated May
19, 1999 (Incorporated by reference to Exhibit 5.0 of
the Company's Form 10-Q filed on November 11, 1999)
10.62* -- Special Warrant issued to Timothy J. Barker, dated
May 19, 1999 (Incorporated by reference to Exhibit
5.1 of the Company's Form 10-Q filed on November 11,
1999)
10.63* -- Amended and Restated Employment
Agreement between F.Y.I. Incorporated and Ed
H. Bowman, Jr.
10.64* -- Amended and Restated Employment
Agreement between F.Y.I Incorporated and
Thomas C. Walker
10.65* -- Consulting Agreement between F.Y.I.
Incorporated and David Lowenstein
54
<PAGE>
10.66* -- Amended and Restated Employment
Agreement between F.Y.I Incorporated and
Margot Lebenberg
10.67* -- Amended and Restated Employment
Agreement between F.Y.I. Incorporated and Ron
Zazworsky
10.68* -- Amended and Restated Employment
Agreement between F.Y.I. Incorporated and Joe
A. Rose
10.69* -- Amended and Restated Employment
Agreement between F.Y.I. Incorporated and
Timothy J. Barker
10.70* -- Amended and Restated Employment
Agreement between F.Y.I Incorporated and David
Byerley
10.71* -- Warrant issued to Margot T. Lebenberg, dated
March 16, 2000
10.72* -- Warrant issued to Ron Zazworsky, dated March 16,
2000
10.73* -- Warrant issued to Timothy J. Barker, dated
March 16, 2000
10.74* -- Warrant issued to Joe A. Rose, dated March 16,
2000
10.75* -- Warrant issued to David Byerley, dated March 16,
2000
10.76* -- Warrant issued to Jonathan Shaw, dated March 16, 2000
21 -- List of subsidiaries of F.Y.I. Incorporated
23.1 -- Consent of Arthur Andersen LLP
24 -- Power of Attorney (included with the signature
page hereof)
27.1 -- Financial Data Schedule
27.2 -- Restated 1998 Financial Data Schedule
27.3 -- Restated 1997 Financial Data Schedule
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
BOARD OF DIRECTORS CORPORATE OFFICERS
<S> <C>
Thomas C. Walker Thomas C. Walker
Chairman of the Board and Chief Chairman of the Board and Chief Development
Officer Development Officer
F.Y.I.
Ed H. Bowman, Jr.
Ed H. Bowman, Jr. President and Chief Executive Officer
President and Chief Executive Officer
F.Y.I. Timothy J. Barker
Executive Vice President and Chief
David Lowenstein Financial Officer
Founder and Consultant
F.Y.I. Joe A. Rose
Executive Vice President and Chief
G. Michael Bellenghi Operating Officer
Former Chief Executive Officer
Recordex David M. Byerley
Senior Vice President--Corporate
Michael J. Bradley Development
Executive Associate to the President
MCP Hahnemann University Margot T. Lebenberg
Vice-Chairman and Director of Republic Bancorp Inc. Senior Vice President, General
Former Executive Vice President Counsel and Secretary
Mercy Health Corporation of Southwest Pennsylvania
Ronald Zazworsky
Gregory R. Melanson Senior Vice President--F.Y.I.
Former Senior Vice President F.Y.I. HealthSERVE
Former President and Chief Executive Officer
Researchers Gary R. Patton
Vice President--Human Resources and
Donald F. Moorehead, Jr. Corporate Programs
Chairman of the Board and Chief Executive Officer
EarthCare
The Hon. Edward M. Rowell
Former U.S. Ambassador, President,
Association for Diplomatic Studies
And Training and
Senior Associate, Global Business Access, Ltd.
Jonathan B. Shaw
Group Vice President of F.Y.I. IMAGE
Former Chief Executive Officer
Imagent
Joe A. Rose
Executive Vice President and Chief
Operating Officer
F.Y.I.
</TABLE>
56
<PAGE>
EXHIBIT 10.63
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between F.Y.I.
Incorporated, a Delaware corporation (the "Company"), and Ed H. Bowman, Jr.
("Employee") is hereby entered into and effective as of January 1, 2000.
This Agreement hereby supersedes any other employment agreements or
understandings, written or oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the business of providing document and information management outsourcing
solutions.
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the
Company, has and will continue to become familiar with and aware of
information as to the Company's customers, specific manner of doing business,
including the processes, techniques and trade secrets utilized by the
Company, and future plans with respect thereto, all of which has been and
will be established and maintained at great expense to the Company; this
information is a trade secret and constitutes the valuable goodwill of the
Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as President and Chief
Executive Officer. As such, Employee shall have responsibilities, duties and
authority reasonably accorded to and expected of a President and Chief
Executive Officer and will report directly to the Board of Directors of the
Company (the "Board"). Employee hereby accepts this employment upon the
terms and conditions herein contained and, subject to paragraph 1(b), agrees
to devote his working time, attention and efforts to promote and further the
business of the Company.
(b) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the extent that such activity (i) does
not interfere with Employee's duties and responsibilities hereunder and (ii)
does not violate paragraph 3 hereof. The foregoing limitations shall not be
construed as prohibiting Employee from serving on the boards of directors of
other companies or
1
<PAGE>
making personal investments in such form or manner as will require his
services, other than to a minimal extent, in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) BASE SALARY. The base salary payable to Employee shall be
$460,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than bi-monthly. On at
least an annual basis, the Board will review Employee's performance and may
make increases to such base salary if, in its discretion, any such increase
is warranted. Such recommended increase would, in all likelihood, require
approval by the Board or a duly constituted committee thereof.
(b) INCENTIVE BONUS PLAN. Employee shall be eligible for a bonus
opportunity of up to 100% of his annual base salary in accordance with the
Company's Incentive Bonus Plan as modified from time to time. The bonus
payment and the Company's targeted performance shall be determined by the
Board or the compensation committee thereof. For 2000, Employee has already
been awarded Warrant No. 22 as payment in full for any 2000 Bonus opportunity.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION.
Employee shall be entitled to receive additional benefits and compensation
from the Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and his
dependent family members under health, hospitalization, disability,
dental, life and other insurance plans that the Company may have in
effect from time to time, and not less favorable than the benefits
provided to other Company executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (prorated for any year in which Employee is employed for
less than the full year).
(iv) An automobile allowance in the amount of $500 per month.
(v) The Company shall reimburse Employee up to $300 per month
for club dues actually incurred by Employee, PROVIDED that such club is
used at least 50% of the time for business purposes.
(vi) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation
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in all other Company-wide employee benefits as available from time to
time, which will include participation in the Company's Incentive
Compensation Plan.
(vii) The Company shall provide Employee with reasonable
assistance in personal tax planning from Arthur Andersen LLP.
(viii) Participation in the Company's 401(k) Plan and
Non-Qualified Plan.
(ix) The Company shall, under Employee's direction, establish a
Supplemental Retirement Plan/Survivor Protection Plan to be placed inside
the Company's Non-Qualified Plan and provide Employee with such benefit.
3. NON-COMPETITION AGREEMENT.
(a) Subject to Section 3(a), Employee will not, during the period
of his employment by or with the Company, and for a period of two (2) years
immediately following the termination of his employment under this Agreement,
for any reason whatsoever, directly or indirectly, for himself or on behalf
of or in conjunction with any other person, company, partnership,
corporation, business or entity of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business selling any products or services in
direct competition with the Company, within 100 miles of (i) the
principal executive offices of the Company or (ii) any place to which the
Company provides products or services or in which the Company (including
the subsidiaries thereof) is in the process of initiating business
operations during the term of this covenant (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company (including the subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company
(including the subsidiaries thereof), provided that Employee shall be
permitted to call upon and hire any member of his immediate family;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of the
Company (including the subsidiaries thereof) within the Territory for the
purpose of soliciting or selling products or services in direct
competition with the Company within the Territory;
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate was
either called upon by the Company (including the subsidiaries thereof) or
for which the Company made an acquisition analysis, for the purpose of
acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of
the Company (or the subsidiaries thereof) to any person, firm,
partnership, corporation or business for any reason or purpose
whatsoever.
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Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than three
percent (3%) of the capital stock of a competing business, whose stock is
traded on a national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company for
which it would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by the Company in the event of breach by
him by injunctions and restraining orders without the necessity of posting
any bond therefor.
(c) It is agreed by the parties that the foregoing covenants in
this paragraph 3 impose a reasonable restraint on Employee in light of the
activities and business of the Company (including the Company's subsidiaries)
on the date of the execution of this Agreement and the current plans of the
Company (including the Company's subsidiaries); but it is also the intent of
the Company and Employee that such covenants be construed and enforced in
accordance with the changing activities, business and locations of the
Company (including the Company's subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment
of Employee, subject to the following paragraph. For example, if, during the
Term of this Agreement, the Company (including the Company's subsidiaries)
engages in new and different activities, enters a new business or established
new locations for its current activities or business in addition to or other
than the activities or business enumerated under the Recitals above or the
locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business
or from such new location and from directly competing with such new business
within 100 miles of its then-established operating location(s) through the
term of this covenant.
It is further agreed by the parties hereto that, in the event
that Employee shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company
(including the Company's subsidiaries), or similar activities or business in
locations the operation of which, under such circumstances, does not violate
clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Employee's obligations under this paragraph 3, if any, Employee shall not be
chargeable with a violation of this paragraph 3 if the Company (including the
Company's subsidiaries) shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
(d) The covenants in this paragraph 3 are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed to such
extent.
(e) All of the covenants in this paragraph 3 shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise,
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shall not constitute a defense to the enforcement by the Company of such
covenants. It is specifically agreed that the period of two (2) years
following Employee's employment set forth at the beginning of this paragraph
3, during which the agreements and covenants of Employee made in this
paragraph 3 shall be effective, shall be computed by excluding from such
computation any time during which Employee is in violation of any provision
of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee's place of employment is the Company's headquarters in
Dallas, Texas. Employee understands that he may be requested by the Board to
relocate from his present residence to another geographic location in order
to more efficiently carry out his duties and responsibilities under this
Agreement or as part of a promotion or other increase in duties and
responsibilities. In the event that Employee is requested to relocate and
agrees to do so, the Company will pay all relocation costs to move Employee,
his immediate family and their personal property and effects. Such costs may
include, by way of example, but are not limited to, pre-move visits to search
for a new residence, investigate schools or for other purposes; temporary
lodging and living costs prior to moving into a new permanent residence;
duplicate home carrying costs; all closing costs on the sale of Employee's
present residence and on the purchase of a comparable residence in the new
location; and added income taxes that Employee may incur, as a result of any
payment hereunder, to the extent any relocation costs are not deductible for
tax purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use his best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and his family.
(b) Notwithstanding the above, if Employee is requested by the
Board to relocate and Employee refuses, such refusal shall not constitute
"good cause" for termination of this Agreement under the terms of paragraph
5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue through December 31,
2004, and, unless terminated sooner as herein provided, shall continue
thereafter on a five-year rolling basis on the same terms and conditions
contained herein until written notice is given by the Company or Employee,
not less than sixty (60) days prior to the December 31st of any anniversary
date of this Agreement during the Initial Term or thereafter, that the
balance of the term of the Agreement shall be five (5) years from the January
1st following such notice (the "Term"). This Agreement and Employee's
employment may be terminated in any one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from his
full-time duties hereunder for four (4) consecutive months, then thirty
(30) days after receiving written notice (which notice may occur before
or after the end of such four (4) month period, but which shall not be
effective earlier than the last day of such four (4) month period), the
Company may
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terminate Employee's employment hereunder provided Employee is unable
to resume his full-time duties at the conclusion of such notice
period. Also, Employee may terminate his employment hereunder if his
health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or
mental health or his life, provided that Employee shall have furnished
the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made
within thirty (30) days of the date of such written statement,
Employee shall submit to an examination by a doctor selected by the
Company who is reasonably acceptable to Employee or Employee's doctor
and such doctor shall have concurred in the conclusion of Employee's
doctor. In the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of
termination, the base salary at the rate then in effect for whatever
time period is remaining under the Term of this Agreement or for one
(1) year, whichever amount is greater.
(c) GOOD CAUSE. The Company may terminate the Agreement ten
(10) days after written notice to Employee for good cause, which shall
be: (1) Employee's material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional
nonperformance (continuing for ten (10) days after receipt of the written
notice) of any of Employee's material duties and responsibilities
hereunder; (3) Employee's dishonesty, fraud or misconduct with respect to
the business or affairs of the Company which materially and adversely
affects the operations or reputation of the Company; (4) Employee's
conviction of a felony crime; or (5) chronic alcohol abuse or illegal
drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance
compensation.
(d) WITHOUT CAUSE. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the Employee. Should Employee be terminated by the Company
without cause, Employee shall receive from the Company, in a lump-sum
payment due on the effective date of termination, the base salary at the
rate then in effect for whatever time period is remaining under the Term
of this Agreement or for two (2) years, whichever amount is greater
("Severance Pay"). Further, any termination without cause by the Company
shall operate to shorten the period set forth in paragraph 3(a) and
during which the terms of paragraph 3 apply to one (1) year from the date
of termination of employment.
(e) CHANGE IN CONTROL. Refer to paragraph 12 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate his employment hereunder for "Good Reason." As used herein,
"Good Reason" shall mean the continuance of any of the following after
ten (10) days' prior written notice by Employee to the Company,
specifying the basis for such Employee's having Good Reason to terminate
this Agreement:
(i) the assignment to Employee of any duties materially and
adversely inconsistent with Employee's position as specified in paragraph
1 hereof (or such other
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position to which he may be promoted), including status, offices,
responsibilities or persons to whom Employee reports as contemplated
under paragraph 1 of this Agreement, or any other action by the
Company which results in a material and adverse change in such
position, status, offices, titles or responsibilities;
(ii) Employee's removal from, or failure to be reappointed or
reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 5(a), (b), (c) and (e); or
(iii) any other material breach of this Agreement by the Company
that is not cured within the ten (10) day time period set forth in
paragraph 5(f) above, including the failure to pay Employee on a timely
basis the amounts to which he is entitled under this Agreement.
In the event of any termination by the Employee for Good Reason, as
determined by a court of competent jurisdiction or pursuant to the provisions
of paragraph 16 below, the Company shall pay all amounts and damages to which
Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred
by Employee to enforce his rights hereunder. In addition, Employee shall be
entitled to receive Severance Pay for whatever time period is remaining under
the Term of this Agreement or for two (2) years, whichever amount is greater.
Further, none of the provisions of paragraph 3 shall apply in the event this
Agreement is terminated by Employee for Good Reason.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns
or otherwise terminates his employment without Good Reason pursuant to
paragraph 5(f), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation
earned and all benefits vested and reimbursements due through the effective
date of termination. Additional compensation subsequent to termination, if
any, will be due and payable to Employee only to the extent and in the manner
expressly provided above or in paragraph 16. All other rights and
obligations of the Company and Employee under this Agreement shall cease as
of the effective date of termination, except that the Company's obligations
under paragraph 9 herein and Employee's obligations under paragraphs 3, 6, 7,
8 and 10 herein shall survive such termination in accordance with their terms.
6. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company
(including the Company's subsidiaries) or its representatives, vendors or
customers which pertain to the business of the Company (including the
Company's subsidiaries) shall be and remain the property of the Company and
be subject at all times to its discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company (including the Company's subsidiaries) which is collected by Employee
shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
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7. INVENTIONS. Employee shall disclose promptly to the Company
any and all significant conceptions and ideas for inventions, improvements
and valuable discoveries, whether patentable or not, which are conceived or
made by Employee, solely or jointly with another, during the period of
employment or within one (1) year thereafter, and which are directly related
to the business or activities of the Company (including the Company's
subsidiaries) and which Employee conceives as a result of his employment by
the Company. Employee hereby assigns and agrees to assign all his interests
therein to the Company or its nominee. Whenever requested to do so by the
Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and
obtain letters patent of the United States or any foreign country or to
otherwise protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that he will not, during or
after the term of this Agreement with the Company, disclose the specific
terms of the Company's (including the Company's subsidiaries) relationships
or agreements with its significant vendors or customers or any other
significant and material trade secret of the Company (including the Company's
subsidiaries), whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever,
except as is disclosed in the ordinary course of business.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the
Company against Employee), by reason of the fact that he is or was performing
services under this Agreement, then the Company shall indemnify Employee
against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Employee
in connection therewith. In the event that both Employee and the Company are
made a party to the same third-party action, complaint, suit or proceeding,
the Company agrees to engage competent legal representation, and Employee
agrees to use the same representation, provided that if counsel selected by
the Company shall have a conflict of interest that prevents such counsel from
representing Employee, Employee may engage separate counsel and the Company
shall pay all attorneys' fees of such separate counsel. Further, while
Employee is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Employee cannot be held liable to
the Company for errors or omissions made in good faith where Employee has not
exhibited gross, willful and wanton negligence and misconduct or performed
criminal and fraudulent acts which materially damage the business of the
Company.
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants
to the Company that the execution of this Agreement by Employee and his
employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Employee agrees to indemnify the
Company for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may
now have or may hereafter come to have against the Company based upon or
arising out of any non-competition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date
of this Agreement.
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11. ASSIGNMENT; BINDING EFFECT. Employee understands that he has
been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject
to the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
12. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged
or consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the
Employee has not received written notice at least fifteen (15) business days
prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of the
Company's business and/or assets that such successor is willing as of the
closing to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company is
hereby required to perform, such Change in Control shall be deemed to be a
termination of this Agreement by the Company and the amount of the lump-sum
severance payment due to Employee shall be ten (10) times Employee's annual
salary immediately prior to the Change in Control and the non-competition
provisions of paragraph 3 shall not apply whatsoever. Payment shall be made
either at closing of the transaction if notice is served at least five (5)
days before closing or within ten (10) days of Employee's written notice.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such pending
successor is willing to assume the Company's obligations hereunder or
Employee receives notice after the Change in Control that Employee is being
terminated, Employee may nonetheless, at his sole discretion, elect to
terminate this Agreement by providing written notice to the Company at any
time prior to closing of the transaction and up to two (2) years after the
closing of the transaction giving rise to the Change in Control. In such
case, the amount of the lump-sum severance payment due to Employee shall be
ten times Employee's annual salary immediately prior to the Change in Control
and the non-competition provisions of paragraph 3 shall all apply. Payment
shall be made either at closing if notice is served at least five (5) days
before closing or within ten (10) days of written notice by Employee.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in
order to comply with the Securities and Exchange Commission's regulations to
elect whether to exercise and sell all or any of his vested options to
purchase Common Stock of the Company, including any options with accelerated
vesting under the provisions of the Company's 1995 Stock Option Plan, as
amended or any warrants, such that he may convert the options or warrants to
shares of
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Common Stock of the Company at or prior to the closing of the transaction
giving rise to the Change in Control, if he so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination
for election, to the Board of Directors of the Company was approved by
a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors
also becoming "Additional Original Directors" immediately following
their election), cease for any reason to constitute a majority of the
members of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company
(including the Company's subsidiaries)).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in
Control may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to stock
options, warrants and other long-term incentives (in the aggregate "Total
Payments") would be subject to the excise tax imposed by Section 4999 of the
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Code, as amended (or any similar tax that may hereafter be imposed) or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under this
paragraph to an additional amount (the "Gross-Up Payment") such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any Excise Tax, imposed upon such additional amount,
Employee will retain an amount equal to the Excise Tax imposed on the Total
Payments.
For purposes of this paragraph Employee's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt
of the Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the
assumptions to be used in determining the Gross-Up Payment, shall be made by
the Company's current independent accounting firm, or such other firm as the
Company may designate in writing prior to a Change in Control (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and Employee within twenty business days of the receipt of
notice from Employee that there will likely be a Change in Control, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the party effecting
the Change in Control or is otherwise unavailable, Employee may appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
with respect to such determinations described above shall be borne solely by
the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by
the Internal Revenue Service that Employee owes an amount of Excise Tax
greater than the amount determined pursuant to this paragraph; PROVIDED, that
Employee shall be entitled to reimbursement by the Company of all fees and
expenses reasonably incurred by Employee in contesting such determination.
In the event the Internal Revenue Service or any court of competent
jurisdiction determines that Employee owes an amount of Excise Tax that is
either greater than the amount previously taken into account and paid under
this Agreement, the Company shall promptly pay to Employee the amount of such
shortfall. In the case of any payment that the Company is required to make
to Employee pursuant to the preceding sentence (a "Later Payment"), the
Company shall also pay to Employee an additional amount such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing authority,
on such additional amount, Employee will retain an amount equal to the total
of Employee's applicable Federal, state and local taxes, including any
interest and penalties assessed by any taxing authority, arising due to the
Later Payment.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or
agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous oral or written
agreements, including without limitation Employee's Amended and Restated
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Employment Agreement dated January 1, 1999, which is superseded and replaced
in its entirety by this Agreement. This written Agreement may not be later
modified except by a further writing signed by a duly authorized officer of
the Company and Employee, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
with a copy to: Margot T. Lebenberg, Esq.
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
with a copy to: Charles C. Reeder, Esq.
Locke Liddell & Sapp LLP
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
To Employee: Ed H. Bowman, Jr.
3102 Drexel Drive
Dallas, Texas 75205
Notice shall be deemed given and effective three (3) days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only
and are not intended in any way to describe, interpret, define or limit the
extent or intent of the Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order
back-pay, severance compensation, vesting of options (or cash
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compensation in lieu of vesting of options), reimbursement of costs,
including those incurred to enforce this Agreement, and interest thereon in
the event the arbitrators determine that Employee was terminated without
disability or good cause, as defined in paragraphs 5(b) and 5(c),
respectively, or that the Company has otherwise materially breached this
Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The costs of any arbitration proceeding shall be borne
by the party or parties not prevailing in such proceeding as determined by
the arbitrators.
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17. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Delaware.
EMPLOYEE:
/s/Ed H. Bowman, Jr.
-----------------------------
Ed H. Bowman, Jr.
F.Y.I. INCORPORATED
By: /s/Thomas C. Walker
----------------------
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EXHIBIT 10.64
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between F.Y.I.
Incorporated, a Delaware corporation (the "Company"), and Thomas C. Walker
("Employee") is hereby entered into and effective as of January 1, 2000.
This Agreement hereby supersedes any other employment agreements or
understandings, written or oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the business of providing document and information management outsourcing
solutions.
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the
Company, has and will continue to become familiar with and aware of
information as to the Company's customers, specific manner of doing business,
including the processes, techniques and trade secrets utilized by the
Company, and future plans with respect thereto, all of which has been and
will be established and maintained at great expense to the Company; this
information is a trade secret and constitutes the valuable goodwill of the
Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Chairman of the Board
and Chief Development Officer. As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and expected of
a Chairman of the Board and Chief Development Officer and will report
directly to the Board of Directors of the Company (the "Board"). Employee
hereby accepts this employment upon the terms and conditions herein contained
and, subject to paragraph 1(b), agrees to devote his working time, attention
and efforts to promote and further the business of the Company.
(b) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the extent that such activity (i) does
not interfere with Employee's duties and responsibilities hereunder and (ii)
does not violate paragraph 3 hereof. The foregoing limitations shall not be
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construed as prohibiting Employee from serving on the boards of directors of
other companies or making personal investments in such form or manner as will
require his services, other than to a minimal extent, in the operation or
affairs of the companies or enterprises in which such investments are made
nor violate the terms of paragraph 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) BASE SALARY. The base salary payable to Employee shall be
$300,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than bi-monthly.
(b) INCENTIVE BONUS PLAN. Employee shall be eligible for a bonus
opportunity of up to 50% of his annual base salary in accordance with the
Company's Incentive Bonus Plan as modified from time to time. The bonus
payment and the Company's targeted performance shall be determined by the
Board or the compensation committee thereof. For 2000, Employee has already
been awarded Warrant No. 21 as payment in full for any 2000 Bonus opportunity.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION.
Employee shall be entitled to receive additional benefits and compensation
from the Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and his
dependent family members under health, hospitalization, disability,
dental, life and other insurance plans that the Company may have in
effect from time to time, and not less favorable than the benefits
provided to other Company executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (prorated for any year in which Employee is employed for
less than the full year).
(iv) An automobile allowance in the amount of $500 per month.
(v) The Company shall reimburse Employee up to $300 per month
for club dues actually incurred by Employee, PROVIDED that such club is
used at least 50% of the time for business purposes.
(vi) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide employee benefits
as available from time to time, which will include participation in the
Company's Incentive Compensation Plan.
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(vii) The Company shall provide Employee with reasonable
assistance in personal tax planning from Arthur Andersen LLP.
(viii) Participation in the Company's 401(k) Plan and
Non-Qualified Plan.
(ix) The Company shall, under Employee's direction, establish a
Supplemental Retirement Plan/Survivor Protection Plan to be placed inside
the Company's Non-Qualified Plan and provide Employee with such benefit.
3. NON-COMPETITION AGREEMENT.
(a) Subject to Section 3(a), Employee will not, during the period
of his employment by or with the Company, and for a period of two (2) years
immediately following the termination of his employment under this Agreement,
for any reason whatsoever, directly or indirectly, for himself or on behalf
of or in conjunction with any other person, company, partnership,
corporation, business or entity of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business selling any products or services in
direct competition with the Company, within 100 miles of (i) the
principal executive offices of the Company or (ii) any place to which the
Company provides products or services or in which the Company (including
the subsidiaries thereof) is in the process of initiating business
operations during the term of this covenant (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company (including the subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company
(including the subsidiaries thereof), provided that Employee shall be
permitted to call upon and hire any member of his immediate family;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of the
Company (including the subsidiaries thereof) within the Territory for the
purpose of soliciting or selling products or services in direct
competition with the Company within the Territory;
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate was
either called upon by the Company (including the subsidiaries thereof) or
for which the Company made an acquisition analysis, for the purpose of
acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of
the Company (or the subsidiaries thereof) to any person, firm,
partnership, corporation or business for any reason or purpose
whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than three
percent (3%) of the capital stock
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of a competing business, whose stock is traded on a national securities
exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company for
which it would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by the Company in the event of breach by
him by injunctions and restraining orders without the necessity of posting
any bond therefor.
(c) It is agreed by the parties that the foregoing covenants in
this paragraph 3 impose a reasonable restraint on Employee in light of the
activities and business of the Company (including the Company's subsidiaries)
on the date of the execution of this Agreement and the current plans of the
Company (including the Company's subsidiaries); but it is also the intent of
the Company and Employee that such covenants be construed and enforced in
accordance with the changing activities, business and locations of the
Company (including the Company's subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment
of Employee, subject to the following paragraph. For example, if, during the
Term of this Agreement, the Company (including the Company's subsidiaries)
engages in new and different activities, enters a new business or established
new locations for its current activities or business in addition to or other
than the activities or business enumerated under the Recitals above or the
locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business
or from such new location and from directly competing with such new business
within 100 miles of its then-established operating location(s) through the
term of this covenant.
It is further agreed by the parties hereto that, in the event
that Employee shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company
(including the Company's subsidiaries), or similar activities or business in
locations the operation of which, under such circumstances, does not violate
clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Employee's obligations under this paragraph 3, if any, Employee shall not be
chargeable with a violation of this paragraph 3 if the Company (including the
Company's subsidiaries) shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
(d) The covenants in this paragraph 3 are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed to such
extent.
(e) All of the covenants in this paragraph 3 shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is
specifically agreed that the period of two (2) years following Employee's
employment set forth
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at the beginning of this paragraph 3, during which the agreements and
covenants of Employee made in this paragraph 3 shall be effective, shall be
computed by excluding from such computation any time during which Employee is
in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee's place of employment is the Company's headquarters in
Dallas, Texas. Employee understands that he may be requested by the Board to
relocate from his present residence to another geographic location in order
to more efficiently carry out his duties and responsibilities under this
Agreement or as part of a promotion or other increase in duties and
responsibilities. In the event that Employee is requested to relocate and
agrees to do so, the Company will pay all relocation costs to move Employee,
his immediate family and their personal property and effects. Such costs may
include, by way of example, but are not limited to, pre-move visits to search
for a new residence, investigate schools or for other purposes; temporary
lodging and living costs prior to moving into a new permanent residence;
duplicate home carrying costs; all closing costs on the sale of Employee's
present residence and on the purchase of a comparable residence in the new
location; and added income taxes that Employee may incur, as a result of any
payment hereunder, to the extent any relocation costs are not deductible for
tax purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use his best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and his family.
(b) Notwithstanding the above, if Employee is requested by the
Board to relocate and Employee refuses, such refusal shall not constitute
"good cause" for termination of this Agreement under the terms of paragraph
5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue through December 31,
2001 (the "Term"). This Agreement and Employee's employment may be
terminated earlier in any one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from his
full-time duties hereunder for four (4) consecutive months, then thirty
(30) days after receiving written notice (which notice may occur before
or after the end of such four (4) month period, but which shall not be
effective earlier than the last day of such four (4) month period), the
Company may terminate Employee's employment hereunder provided Employee
is unable to resume his full-time duties at the conclusion of such notice
period. Also, Employee may terminate his employment hereunder if his
health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental
health or his life, provided that Employee shall have furnished the
Company with a written statement from a qualified doctor to such effect
and provided, further, that, at the
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Company's request made within thirty (30) days of the date of such
written statement, Employee shall submit to an examination by a doctor
selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is
terminated as a result of Employee's disability, Employee shall
receive from the Company, in a lump-sum payment due within ten (10)
days of the effective date of termination, the base salary at the rate
then in effect for whatever time period is remaining under the Term of
this Agreement or for one (1) year, whichever amount is greater.
(c) GOOD CAUSE. The Company may terminate the Agreement ten
(10) days after written notice to Employee for good cause, which shall
be: (1) Employee's material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional
nonperformance (continuing for ten (10) days after receipt of the written
notice) of any of Employee's material duties and responsibilities
hereunder; (3) Employee's dishonesty, fraud or misconduct with respect to
the business or affairs of the Company which materially and adversely
affects the operations or reputation of the Company; (4) Employee's
conviction of a felony crime; or (5) chronic alcohol abuse or illegal
drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance
compensation.
(d) WITHOUT CAUSE. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the Employee. Should Employee be terminated by the Company
without cause, Employee shall receive from the Company, in a lump-sum
payment due on the effective date of termination, the base salary at the
rate then in effect for two (2) years ("Severance Pay"). Further, any
termination without cause by the Company shall operate to shorten the
period set forth in paragraph 3(a) and during which the terms of
paragraph 3 apply to one (1) year from the date of termination of
employment.
(e) CHANGE IN CONTROL. Refer to paragraph 12 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate his employment hereunder for "Good Reason." As used herein,
"Good Reason" shall mean the continuance of any of the following after
ten (10) days' prior written notice by Employee to the Company,
specifying the basis for such Employee's having Good Reason to terminate
this Agreement:
(i) the assignment to Employee of any duties materially and
adversely inconsistent with Employee's position as specified in paragraph
1 hereof (or such other position to which he may be promoted), including
status, offices, responsibilities or persons to whom Employee reports as
contemplated under paragraph 1 of this Agreement, or any other action by
the Company which results in a material and adverse change in such
position, status, offices, titles or responsibilities;
(ii) Employee's removal from, or failure to be reappointed or
reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 5(a),
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(b), (c) and (e); or
(iii) any other material breach of this Agreement by the Company
that is not cured within the ten (10) day time period set forth in
paragraph 5(f) above, including the failure to pay Employee on a timely
basis the amounts to which he is entitled under this Agreement.
In the event of any termination by the Employee for Good Reason, as
determined by a court of competent jurisdiction or pursuant to the provisions
of paragraph 16 below, the Company shall pay all amounts and damages to which
Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred
by Employee to enforce his rights hereunder. In addition, Employee shall be
entitled to receive Severance Pay for two (2) years. Further, none of the
provisions of paragraph 3 shall apply in the event this Agreement is
terminated by Employee for Good Reason.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns
or otherwise terminates his employment without Good Reason pursuant to
paragraph 5(f), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation
earned and all benefits vested and reimbursements due through the effective
date of termination. Additional compensation subsequent to termination, if
any, will be due and payable to Employee only to the extent and in the manner
expressly provided above or in paragraph 16. All other rights and
obligations of the Company and Employee under this Agreement shall cease as
of the effective date of termination, except that the Company's obligations
under paragraph 9 herein and Employee's obligations under paragraphs 3, 6, 7,
8 and 10 herein shall survive such termination in accordance with their terms.
6. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company
(including the Company's subsidiaries) or its representatives, vendors or
customers which pertain to the business of the Company (including the
Company's subsidiaries) shall be and remain the property of the Company and
be subject at all times to its discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company (including the Company's subsidiaries) which is collected by Employee
shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
7. INVENTIONS. Employee shall disclose promptly to the Company
any and all significant conceptions and ideas for inventions, improvements
and valuable discoveries, whether patentable or not, which are conceived or
made by Employee, solely or jointly with another, during the period of
employment or within one (1) year thereafter, and which are directly related
to the business or activities of the Company (including the Company's
subsidiaries) and which Employee conceives as a result of his employment by
the Company. Employee hereby assigns and agrees to assign all his interests
therein to the Company or its nominee. Whenever requested to do so by the
Company, Employee shall execute any and all
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applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain letters patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that he will not, during or
after the term of this Agreement with the Company, disclose the specific
terms of the Company's (including the Company's subsidiaries) relationships
or agreements with its significant vendors or customers or any other
significant and material trade secret of the Company (including the Company's
subsidiaries), whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever,
except as is disclosed in the ordinary course of business.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the
Company against Employee), by reason of the fact that he is or was performing
services under this Agreement, then the Company shall indemnify Employee
against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Employee
in connection therewith. In the event that both Employee and the Company are
made a party to the same third-party action, complaint, suit or proceeding,
the Company agrees to engage competent legal representation, and Employee
agrees to use the same representation, provided that if counsel selected by
the Company shall have a conflict of interest that prevents such counsel from
representing Employee, Employee may engage separate counsel and the Company
shall pay all attorneys' fees of such separate counsel. Further, while
Employee is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Employee cannot be held liable to
the Company for errors or omissions made in good faith where Employee has not
exhibited gross, willful and wanton negligence and misconduct or performed
criminal and fraudulent acts which materially damage the business of the
Company.
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants
to the Company that the execution of this Agreement by Employee and his
employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Employee agrees to indemnify the
Company for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may
now have or may hereafter come to have against the Company based upon or
arising out of any non-competition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date
of this Agreement.
11. ASSIGNMENT; BINDING EFFECT. Employee understands that he has
been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject
to the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
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12. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged
or consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the
Employee has not received written notice at least fifteen (15) business days
prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of the
Company's business and/or assets that such successor is willing as of the
closing to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company is
hereby required to perform, such Change in Control shall be deemed to be a
termination of this Agreement by the Company and the amount of the lump-sum
severance payment due to Employee shall be six (6) times Employee's annual
salary immediately prior to the Change in Control and the non-competition
provisions of paragraph 3 shall not apply whatsoever. Payment shall be made
either at closing of the transaction if notice is served at least five (5)
days before closing or within ten (10) days of Employee's written notice.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such pending
successor is willing to assume the Company's obligations hereunder or
Employee receives notice after the Change in Control that Employee is being
terminated, Employee may nonetheless, at his sole discretion, elect to
terminate this Agreement by providing written notice to the Company at any
time prior to closing of the transaction and up to one (1) year after the
closing of the transaction giving rise to the Change in Control. In such
case, the amount of the lump-sum severance payment due to Employee shall be
six (6) times Employee's annual salary immediately prior to the Change in
Control and the non-competition provisions of paragraph 3 shall all apply.
Payment shall be made either at closing if notice is served at least five (5)
days before closing or within ten (10) days of written notice by Employee.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in
order to comply with the Securities and Exchange Commission's regulations to
elect whether to exercise and sell all or any of his vested options to
purchase Common Stock of the Company, including any options with accelerated
vesting under the provisions of the Company's 1995 Stock Option Plan, as
amended or any warrants, such that he may convert the options or warrants to
shares of Common Stock of the Company at or prior to the closing of the
transaction giving rise to the Change in Control, if he so desires.
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(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination
for election, to the Board of Directors of the Company was approved by
a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors
also becoming "Additional Original Directors" immediately following
their election), cease for any reason to constitute a majority of the
members of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company
(including the Company's subsidiaries)).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in
Control may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to stock
options, warrants and other long-term incentives (in the aggregate "Total
Payments") would be subject to the excise tax imposed by Section 4999 of the
Code, as amended (or any similar tax that may hereafter be imposed) or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under
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this paragraph to an additional amount (the "Gross-Up Payment") such that
after payment by Employee of all of Employee's applicable Federal, state and
local taxes, including any Excise Tax, imposed upon such additional amount,
Employee will retain an amount equal to the Excise Tax imposed on the Total
Payments.
For purposes of this paragraph Employee's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt
of the Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the
assumptions to be used in determining the Gross-Up Payment, shall be made by
the Company's current independent accounting firm, or such other firm as the
Company may designate in writing prior to a Change in Control (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and Employee within twenty business days of the receipt of
notice from Employee that there will likely be a Change in Control, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the party effecting
the Change in Control or is otherwise unavailable, Employee may appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
with respect to such determinations described above shall be borne solely by
the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by
the Internal Revenue Service that Employee owes an amount of Excise Tax
greater than the amount determined pursuant to this paragraph; PROVIDED, that
Employee shall be entitled to reimbursement by the Company of all fees and
expenses reasonably incurred by Employee in contesting such determination.
In the event the Internal Revenue Service or any court of competent
jurisdiction determines that Employee owes an amount of Excise Tax that is
either greater than the amount previously taken into account and paid under
this Agreement, the Company shall promptly pay to Employee the amount of such
shortfall. In the case of any payment that the Company is required to make
to Employee pursuant to the preceding sentence (a "Later Payment"), the
Company shall also pay to Employee an additional amount such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing authority,
on such additional amount, Employee will retain an amount equal to the total
of Employee's applicable Federal, state and local taxes, including any
interest and penalties assessed by any taxing authority, arising due to the
Later Payment.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or
agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous oral or written
agreements, including without limitation Employee's Amended and Restated
Employment Agreement dated January 1, 1999, which is superseded and replaced
in its entirety by this Agreement. This written Agreement may not be later
modified except by a further writing signed by a duly authorized officer of
the Company and Employee, and no term of this
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Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
with a copy to: Margot T. Lebenberg, Esq.
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
with a copy to: Charles C. Reeder, Esq.
Locke Liddell & Sapp LLP
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
To Employee: Thomas C. Walker
3510 Turtle Creek Blvd., #10-A
Dallas, Texas 75219
Notice shall be deemed given and effective three (3) days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only
and are not intended in any way to describe, interpret, define or limit the
extent or intent of the Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order
back-pay, severance compensation, vesting of options (or cash compensation in
lieu of vesting of options), reimbursement of costs, including those incurred
to enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee was terminated without disability or good cause, as
defined in paragraphs 5(b) and 5(c),
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respectively, or that the Company has otherwise materially breached this
Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The costs of any arbitration proceeding shall be borne
by the party or parties not prevailing in such proceeding determined by the
arbitrators.
[BALANCE OF SHEET INTENTIONALLY LEFT BLANK]
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17. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Delaware.
EMPLOYEE:
/s/Thomas C. Walker
-----------------------------
Thomas C. Walker
F.Y.I. INCORPORATED
By:/s/Ed H. Bowman, Jr.
--------------------------
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EXHIBIT 10.65
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") between F.Y.I.
Incorporated, a Delaware corporation ("Company"), and David Lowenstein
("Consultant") is hereby entered into and effective as of January 1, 2000.
The Agreement hereby supersedes any other employment or consulting agreement
or understanding, written or oral, between the Company or its subsidiaries
and Consultant.
NOW, THEREFORE, for and in consideration of the mutual promises,
terms, covenants and conditions set forth herein and the performance of each,
it is hereby agreed as follows:
1. ENGAGEMENT AND DUTIES.
(a) The Company hereby engages Consultant as a merger and
acquisition consultant, to assist the Company in implementing its growth
strategies and plans. Specific projects will be identified as required.
EXHIBIT "A" sets forth in summary form a nonexclusive list of the duties
and services that the Company and Consultant contemplate that Consultant
will provide to the Company under this Agreement.
(b) The consulting activities will be provided solely by
Consultant. Consultant hereby accepts this engagement upon the terms and
conditions herein contained and agrees to devote such time as the Company
and Consultant shall reasonably determine to be necessary for Consultant
to render such services.
2. FEES.
(a) The Company shall compensate Consultant on an annual basis
with respect to acquisition transactions closed during each calendar year
during the Term hereof based upon the product of the earnings before
interest and taxes of the acquired entity or assets EBIT (before
deducting Goodwill associated with the subject transactions amortized
over thirty (30) years) ("Acquired EBIT") multiplied by 1.5% (such
product, the "Consulting Compensation").
(b) Within forty-five (45) business days following the end of each
fiscal quarter of the Company, the Company shall determine the estimated
annual aggregate Acquired EBIT and pay Consultant an amount equal to 75%
of the aggregate Consulting Compensation (each such payment, an "Initial
Consulting Compensation Payment"), and shall provide Consultant with
documentation setting forth the Company's calculations for such payment.
At the one-year anniversary of each acquisition, the Company shall
determine the actual aggregate Acquired EBIT recognized by the Company as
adjusted for any post-closing adjustments pursuant to the transaction
documents governing such acquisitions, accounting adjustments or
otherwise ("Final Acquired EBIT"), and shall
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provide Consultant with documentation setting forth the Company's
calculations for such payments. If the aggregate Consulting
Compensation payable with respect to such acquisition based upon Final
Acquired EBIT is greater than the Initial Consulting Compensation
Payment previously made by the Company to Consultant, the Company
shall deliver the balance to Consultant within forty-five (45)
business days following the one-year anniversary; and in the event
that the Initial Consulting Compensation Payment previously made by
the Company to the Consultant with respect to such acquisition is
greater than the aggregate Consulting Compensation payable with
respect to such acquisition based upon Final Acquired EBIT, Consultant
shall deliver to the Company an amount equal to the excess within
forty-five (45) business days following such one-year anniversary, or
this amount may be offset against payments to be made in a subsequent
quarter.
(c) If Consultant objects to the calculation of the Consulting
Compensation based upon Final Acquired EBIT, he shall notify the Company
within ten (10) business days following his receipt of the Company's
calculations, setting forth in writing in specific detail the basis for
his objection and his proposal for any adjustments thereto. The Company
and Consultant shall use their respective best efforts to reach agreement
as to any such adjustments or that no such adjustments are necessary. If
agreement is reached with respect to such matters, the parties shall make
such adjustments and payments as shall have been agreed upon. If the
Company and Consultant are unable to reach agreement within twenty (20)
business days, then Arthur Andersen LLP shall be engaged to review the
disagreement and shall make a determination as to the resolution of the
matter. All resolutions shall represent either agreement with the
position taken by the Company or by Consultant or a compromise of such
positions. The determination of Arthur Andersen LLP shall be final,
conclusive and binding upon the Company and Consultant. Within five (5)
business days following the conclusion of Arthur Andersen LLP, any amount
determined to be owing to Consultant or the Company, whichever the case
may be, shall be paid by the appropriate party. The costs of Arthur
Andersen LLP for its services as described in this paragraph 2(c) shall
be borne by the Company.
(d) In no event shall the aggregate Consulting Compensation
paid to Consultant for each calendar year during the term of this
Agreement exceed $250,000.
(e) The Company shall reimburse Consultant for all ordinary and
necessary business expenses lawfully and reasonably incurred by
Consultant in the performance of its services. Consultant shall document
in reasonable detail all reimbursable expenses upon submission of any
request for reimbursement.
3. AGREEMENTS CONCERNING OPTIONS AND WARRANTS.
(a) Any and all outstanding options for the Company's Common Stock
granted to Consultant prior to the date of termination of this Agreement
(including without limitation any Early Termination) shall continue to
vest through December 31, 2001 in accordance with their respective
vesting schedules notwithstanding the change in
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Consultant's relationship with the Company from that of an employee to
a consultant and (to the extent vested on or before December 31, 2001)
shall remain exercisable through such date; provided, however, that in
the event that the Company achieves net income per common share
diluted of $1.93 for the fiscal year ended December 31, 2000,
Consultant's options for 20,000 shares of the Company's Common Stock
granted to Consultant in May 1999 shall become 100% vested effective
upon the Company's public announcement of such net income per share or
upon action by the Company's Board certifying that such target
earnings for 2000 has been achieved. The Company shall take all
actions and execute all documents reasonably necessary to evidence the
foregoing agreements.
(b) The Company and Consultant agree that the warrants to
purchase 20,000 shares of the Company's Common Stock issued in May 1999
shall be cancelled effective upon execution of this Agreement, and that
Consultant shall take all actions and execute all documents reasonably
requested by the Company to evidence such cancellation.
4. TERM; TERMINATION.
(a) The term of this Agreement shall begin on the date of this
Agreement and continue until December 31, 2001 unless earlier terminated
as described below, and shall continue thereafter on a year-to-year basis
until written notice of termination is given by the Company or Consultant
on or before October 1 of each year to terminate this Agreement effective
as of December 31st of such year. Notwithstanding the foregoing, the
Company may terminate this Agreement effective as of December 31, 2000 by
providing written notice of termination to Consultant on or before
October 1, 2000 (such termination being hereinafter referred to as an
"Early Termination").
(b) Upon termination of this Agreement, including an Early
Termination, the Company shall pay Consultant all aggregate Consulting
Compensation and other amounts due and owing to Consultant with respect
to acquisitions closed on or before the effective date of termination in
accordance with the provisions of paragraph 2 hereof. All other rights
and obligations of the Company and Consultant under this Agreement shall
cease as of the effective date of termination, except that the Company's
obligations under paragraph 3 and 9 herein and Consultant's obligations
under paragraphs 2, 6, 7 and 8 herein shall survive such termination in
accordance with their terms.
5. RELATIONSHIP OF PARTIES. It is mutually understood and agreed
that in the performance of his services under this Agreement, Consultant is
at all times performing his services as an independent contractor, and
acknowledges that he is responsible for payment of his income tax, employment
taxes and social security taxes, if any. Further, Consultant will comply
with all applicable taxing authorities, regulations and laws, whether
federal, state or local or otherwise. Consultant shall not take any actions
or make any representations to any person that would suggest that an
employer-employee or principal-agent relationship exists between the Company
and Consultant; PROVIDED, HOWEVER, that the Company and Consultant agree that
Consultant's activities under this Agreement shall be performed by Consultant
under the titles of "Founder"
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and "Director," and that the Company shall describe Consultant in such manner
to third parties and provide Consultant with business cards featuring such
titles. Consultant shall have no right or authority to assume or create any
obligations on behalf of the Company, express or implied, nor shall
Consultant represent to any person that he has such authority or that he
serves the Company in any capacity other than as an outside consultant or in
the manner described in the proviso of the immediately preceding sentence. In
addition, the Company shall not be liable for any injuries suffered by
Consultant while Consultant is consulting for the Company.
6. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. Except
as required by the nature of Consultant's duties or with the prior written
approval of an authorized officer of the Company, Consultant will not during
the term of this Agreement or thereafter use or disclose any confidential or
proprietary information of the Company or its subsidiaries, any of its
customers or any potential acquisition candidates, including without
limitation customer lists, market research, strategic plans or other
information or discoveries, inventions, improvements, know-how, methods or
other trade secrets, whether developed by Consultant or others. Consultant
will comply with the Company's policies and procedures from time to time in
effect for the protection of confidential or proprietary information.
7. NON-COMPETITION AGREEMENT.
(a) Consultant will not, during the term of this Agreement and
for a period of two (2) years immediately following the termination of
Consultant's engagement under this Agreement, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in conjunction
with any other person, company, partnership, corporation, business or
entity of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business selling any products or services in
direct competition with the Company, within 100 miles of (i) the
principal executive offices of the Company or (ii) any place to which the
Company (including the subsidiaries thereof) provides products or
services or in which the Company (including the subsidiaries thereof) is
in the process of initiating business operations during the term of this
covenant (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company (including the subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company
(including the subsidiaries thereof), provided that Consultant shall be
permitted to call upon and hire any member of his immediate family;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of the
Company (including the subsidiaries thereof) within the Territory for the
purpose of soliciting or selling products or services in direct
competition with the Company within the Territory;
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(iv) call upon any prospective acquisition candidate, on
Consultant's own behalf or on behalf of any competitor, which candidate
was either called upon by the Company (including the subsidiaries
thereof) or for which the Company made an acquisition analysis, for the
purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of
the Company (or the subsidiaries thereof) to any person, firm,
partnership, corporation or business for any reason or purpose
whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Consultant from acquiring as an investment not more than three
percent (5%) of the capital stock of a competing business, whose stock is
traded on a national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to
the Company for which it would have no other adequate remedy, Consultant
agrees that the foregoing covenant may be enforced by the Company in the
event of breach by him by injunctions and restraining orders without the
necessity of posting any bond therefor.
(c) It is agreed by the parties that the foregoing covenants
in this paragraph 7 impose a reasonable restraint on Consultant in
light of the activities and business of the Company (including the
Company's subsidiaries) on the date of the execution of this Agreement
and the current plans of the Company (including the Company's
subsidiaries); but it is also the intent of the Company and Consultant
that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company (including
the Company's subsidiaries) throughout the term of this covenant,
whether before or after the date of termination of Consultant's
engagement hereunder, subject to the following paragraph. For
example, if, during the term of this Agreement, the Company (including
the Company's subsidiaries) engages in new and different activities,
enters a new business or established new locations for its current
activities or businesses in addition to or other than the activities
or businesses in which the Company and its subsidiaries are engaged as
of the date hereof or the locations currently established therefor,
then Consultant will be precluded from soliciting the customers or
employees of such new activities or businesses or from such new
location and from directly competing with such new businesses within
100 miles of its then-established operating locations through the term
of this covenant.
It is further agreed by the parties hereto that, in the event that
Consultant shall cease to be engaged hereunder, and shall enter into a
business or pursue other activities not in competition with the Company
(including the Company's subsidiaries) or similar activities or business in
locations the operation of which, under such circumstances, does not violate
clause (i) of this paragraph 7, and in any event such new business,
activities or location are not in violation of this
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paragraph 7 or of Consultant's obligations under this paragraph 7, Consultant
shall not be chargeable with a violation of this paragraph 7 if the Company
(including the Company's subsidiaries) shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
(d) The covenants in this paragraph 7 are severable and
separate, and the unenforceability of any specific covenant shall not
affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable, and the Agreement shall
thereby be reformed to such extent.
(e) All of the covenants in this paragraph 7 shall be construed
as an agreement independent of any other provision in this Agreement, and
the existence of any claim or cause of action of Consultant against the
Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of such covenants.
It is specifically agreed that the period of two (2) years following
Consultant's engagement set forth at the beginning of this paragraph 7,
during which the agreements and covenants of Consultant made in this
paragraph 7 shall be effective, shall be computed by excluding from such
computation any time during which Consultant is in violation of any
provision of this paragraph 7.
8. USE AND RETURN OF DOCUMENTS. Consultant will not disclose any
documents, record, tapes and other media that contain confidential
information and will not copy any such material or remove it from the
Company's offices except as approved by an authorized officer of the Company.
Upon termination of this Agreement, Consultant will return to the Company
all copies of documents, records, tapes and other media that contain
confidential information.
9. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to
(c) below, Consultant understands and acknowledges that the Company may
be merged or consolidated with or into another entity and that such
entity shall automatically succeed to the rights and obligations of the
Company hereunder.
(b) In the event of a pending Change in Control wherein
Consultant has not received written notice at least fifteen (15) business
days prior to the anticipated closing date of the transaction giving rise
to the Change in Control from the successor to all or a substantial
portion of the Company's business and/or assets that such successor is
willing as of the closing to assume and agree to perform the Company's
obligations under this Agreement in the same manner and to the same
extent that the Company is hereby required to perform, such Change in
Control shall be deemed to be a termination of this Agreement by the
Company and the amount of the lump-sum termination payment due to
Consultant shall be $1.5 million and the non-competition provisions of
paragraph 7 shall
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all apply. Payment shall be made either at closing of the transaction
if notice is served at least five (5) days before closing or within
ten (10) days of Consultant's written notice.
(c) In any Change in Control situation in which (i) Consultant
has received written notice from the successor to the Company that such
pending successor is willing to assume the Company's obligations
hereunder or (ii) Consultant receives notice after the Change in Control
that Consultant is being terminated, Consultant may nonetheless, at his
sole discretion, elect to terminate this Agreement by providing written
notice to the Company at any time prior to closing of the transaction
and, subject to the termination provisions of paragraph 3 hereof, up to
one (1) year after the closing of the transaction giving rise to the
Change in Control. In such case, the amount of the lump-sum termination
payment due to Consultant shall be $1.5 million and the non-competition
provisions of paragraph 7 shall all apply. Payment shall be made either
at closing if notice is served at least five (5) days before closing or
within ten (10) days of written notice by Consultant.
(d) For purposes of applying paragraph 3 under the
circumstances described in (b) and (c)(ii) above, the effective date of
termination will be the closing date of the transaction giving rise to
the Change in Control, and all fees, reimbursements and lump-sum payments
due Consultant must be paid in full by the Company at such time.
Further, Consultant will be given sufficient time in order to comply with
the Securities and Exchange Commission's regulations to elect whether to
exercise and sell all or any of his vested options to purchase Common
Stock of the Company, including any options with accelerated vesting
under the provisions of the Company's 1995 Long-Term Incentive
Compensation Plan or any warrants, such that he may convert the options
or warrants to shares of Common Stock of the Company at or prior to the
closing of the transaction giving rise to the Change in Control, if he so
desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are
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elected to the Board of Directors of the Company and whose election,
or nomination for election, to the Board of Directors of the Company
was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election), cease for any reason to constitute a
majority of the members of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company
(including the Company's subsidiaries)).
(f) The Company shall notify Consultant in writing at any time
that the Company or any member of its Board anticipates that a Change in
Control is reasonably likely to take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to
stock options, warrants and other long-term incentives (in the aggregate
"Total Payments") would be subject to the excise tax imposed by
Section 4999 of the Code, as amended (or any similar tax that may
hereafter be imposed) or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then Consultant shall be entitled under this paragraph to an additional
amount (the "Gross-Up Payment") such that after payment by Consultant of
all of Consultant's applicable Federal, state and local taxes, including
any Excise Tax, imposed upon such additional amount, Consultant will
retain an amount equal to the Excise Tax imposed on the Total Payments.
For purposes of this paragraph Consultant's applicable Federal,
state and local taxes shall be computed at the maximum marginal rates,
taking into account the effect of any loss of personal exemptions
resulting from receipt of the Gross-Up Payment.
All determinations required to be made under this Agreement,
including whether a Gross-Up Payment is required under this paragraph,
and the assumptions to be used in
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determining the Gross-Up Payment, shall be made by the Company's
current independent accounting firm, or such other firm as the Company
may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to
the Company and Consultant within twenty business days of the receipt
of notice from Consultant that there will likely be a Change in
Control, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for
the party effecting the Change in Control or is otherwise unavailable,
Consultant may appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm with respect to such
determinations described above shall be borne solely by the Company.
Consultant agrees (unless requested otherwise by the Company) to
use reasonable efforts to contest in good faith any subsequent
determination by the Internal Revenue Service that Consultant owes an
amount of Excise Tax greater than the amount determined pursuant to this
paragraph; PROVIDED, that Consultant shall be entitled to reimbursement
by the Company of all fees and expenses reasonably incurred by Consultant
in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Consultant
owes an amount of Excise Tax that is either greater than the amount
previously taken into account and paid under this Agreement, the Company
shall promptly pay to Consultant the amount of such shortfall. In the
case of any payment that the Company is required to make to Consultant
pursuant to the preceding sentence (a "Later Payment"), the Company shall
also pay to Consultant an additional amount such that after payment by
Consultant of all of Consultant's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing
authority, on such additional amount, Consultant will retain an amount
equal to the total of Consultant's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing
authority, arising due to the Later Payment.
10. REMEDIES. Consultant acknowledges that in the event of a
violation by him of this Agreement the harm to the Company could be
irreparable. Consultant agrees that, in addition to any other remedies
provided by law, the Company will be entitled to obtain injunctive relief
against any such violation without having to post a bond.
11. COMPLETE AGREEMENT. There are no oral representations,
understandings, or agreements with the Company or any of its officers,
directors or representatives covering the same subject matter as this
Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the agreement between the Company and Consultant
and of all the terms of this Agreement, and it cannot be varied, contradicted
or supplemented by evidence of any prior or contemporaneous oral or written
agreements. This written Agreement may not be later modified except by a
further writing signed by the Company and Consultant, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such terms.
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12. NO WAIVER. No waiver by the parties hereto of any default or
breach of any term, condition or covenant of this Agreement shall be deemed
to be a waiver of any subsequent default or breach of the same or any other
term, condition or covenant contained herein.
13. NOTICES. Whenever any notice is required hereunder, it shall
be given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, TX 75204
Attention: Margot T. Lebenberg
Senior Vice President and General Counsel
To Consultant: David Lowenstein
1 Palace Pier Court, Suite 2303
Etobicoke, Ontario M8V 3W9
Notice shall be deemed given and effective five (5) days after the deposit in
the mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only
and are not intended in the way to describe, interpret, defined or limit the
extent or intent of this Agreement or of any part hereof.
15. GOVERNING LAW; PLACE OF PERFORMANCE. This Agreement shall in
all respects be construed according to the laws of the State of Texas and
Consultant accepts Texas jurisdiction.
16. ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. The direct expense of any arbitration proceeding
shall be borne by the Company.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
F.Y.I. INCORPORATED CONSULTANT
By: /s/Ed H. Bowman, Jr. /s/David Lowenstein
-------------------------- ----------------------------
Ed H. Bowman, Jr. David Lowenstein
11
<PAGE>
EXHIBIT "A"
Set forth below is a nonexclusive list in summary form of certain of
Consultant's responsibilities under the Consulting Agreement dated as of
January 1, 2000, it being understood and agreed by the parties to the
Consulting Agreement that in light of the fluid nature of acquisition
transactions additional services may be requested and that certain of the
services described below may not be applicable.
- Consultant will consult with the Company's executives concerning
the tone and direction of the Company's acquisition program with
respect to all business units (now or hereafter existing) of the
Company and its subsidiaries
- On selected acquisition transactions, Consultant will work as an
acquisition team with Thomas C. Walker, the Company's Chairman of
the Board and Chief Development Officer
- Consultant will provide advice and guidance to David M. Byerley,
the Company's Senior Vice President-Corporate Development, or any
successor thereto, with respect to acquisition transactions
- Consultant will review the details of all pending acquisition
transactions of the Company and its subsidiaries concerning the
terms thereof and the strategic goals to be effected thereby,
including without limitation the following:
- Whether or not to go forward with the pending acquisition
on the proposed terms thereof or to modify the terms
- The most advantageous tax, corporate and managerial
structure of the proposed transaction and of the acquired
entity or assets on a post-acquisition basis
- The status of the negotiations with respect to the
acquisition and the suggested resolutions of outstanding
issues with respect thereto, in light of the transaction at
issue, the Company's objectives and the Company's past
acquisitions
- Compliance with the Company's goals, standards and best
practices
- Final review and approval of transactions prior to closing
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- Consultant shall assist the Company and its representatives in
selected investor relations activities and events as reasonably
determined by the Company and Consultant
- Consultant, in his capacity as a Director of the Company, shall
serve on the Executive Committee of the Board of Directors of the
Company
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EXHIBIT 10.66
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between F.Y.I.
Incorporated, a Delaware corporation (the "Company"), and Margot T. Lebenberg
("Employee") is hereby entered into and effective as of January 1, 2000.
This Agreement hereby supersedes any other employment agreements or
understandings; written or oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in the
business of providing document management services.
Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of her employment with the Company, has and
will continue to become familiar with and aware of information as to the
Company's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company, and future
plans with respect thereto, all of which has been and will be established and
maintained at great expense to the Company; this information is a trade
secret and constitutes the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed
as follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Senior Vice President,
Secretary and General Counsel. As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and expected of
a Senior Vice President, Secretary and General Counsel and will report
directly to the Chief Executive Officer of the Company. Employee hereby
accepts this employment upon the terms and conditions herein contained and,
subject to paragraph 1(b), agrees to devote her working time, attention and
efforts to promote and further the business of the Company.
<PAGE>
(b) Employee shall not, during the term of her employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the extent that such activity (i) does
not interfere with Employee's duties and responsibilities hereunder and (ii)
does not violate paragraph 3 hereof. The foregoing limitations shall not be
construed as prohibiting Employee from serving on the boards of directors of
other companies or making personal investments in such form or manner as will
require her services, other than to a minimal extent, in the operation or
affairs of the companies or enterprises in which such investments are made
nor violate the terms of paragraph 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) BASE SALARY. The base salary payable to Employee shall be
$200,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than bi-monthly. On at
least an annual basis, the Board of Directors of the Company (the "Board")
will review Employee's performance and may make increases to such base salary
if, in its discretion, any such increase is warranted. Such recommended
increase would, in all likelihood, require approval by the Board or a duly
constituted committee thereof.
(b) INCENTIVE BONUS PLAN. For 2000 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan setting forth the
criteria under which Employee and other officers and key employees will be
eligible to receive year-end bonus awards. Employee shall be eligible for a
bonus opportunity of up to 50% of her base salary in accordance with this
Incentive Bonus Plan. The award of any bonus shall be based on the total
performance of the Company, but shall be related to the earnings per share
growth of the Company and shall be payable in various increments based on the
performance of the Company versus targeted goals. The incremental payments
and the Company's targeted performance shall be determined by the Board or
the compensation committee thereof. For 2000, Employee has already been
awarded Warrant No. 18 as partial payment for any 2000 Bonus opportunity. In
addition, a $7,500 cash bonus will be paid if the Company makes the 2000 EPS
target of $1.93.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION.
Employee shall be entitled to receive additional benefits and compensation
from the Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
her dependent family members under health, hospitalization,
disability, dental, life and other employee benefit plans that the
Company may have in effect from time to time, with benefits provided
to Employee under this clause (i) to be at least comparable to the
benefits afforded to Employee in her current position (and to include
coverage for all pre-existing conditions) and not less favorable than
the benefits provided to other Company executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of her services pursuant to this
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Agreement. All reimbursable expenses shall be appropriately
documented in reasonable detail by Employee upon submission of any
request for reimbursement, and in a format and manner consistent with
the Company's expense reporting policy.
(iii) Four (4) weeks paid vacation for each year during the period
of employment or such greater amount as may be afforded officers and key
employees generally under the Company's policies in effect from time to
time (pro rated for any year in which Employee is employed for less than
the full year).
(iv) An automobile allowance in the amount of $500 per month.
(v) The Company shall reimburse Employee up to $200 per month
for club dues actually incurred by Employee, PROVIDED that such club is
used at least 50 percent of the time for business purposes.
(vi) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide employee benefits
as available from time to time, which will include participation in the
Company's 2000 Long-Term Incentive Compensation Plan.
(vii) The Company shall provide Employee with reasonable
assistance in personal tax planning from Arthur Andersen.
(viii) The Company established a 401(k) Plan and the Employee may
participate in this 401(k) Plan. The terms of such Plan shall be
approved by the Board or by the compensation committee thereof.
(ix) [Intentionally omitted.]
(ix) The Company shall provide Employee with computer hardware
and software which would in Employee's judgement add to her productivity,
subject to the reasonable approval of the Chief Executive Officer.
(x) The Company shall pay for all of Employee's fees for
the American Bar Association and other state and local bar associations.
(xi) The Company shall pay for Employee's attendance at up to
three continuing education seminars to the extent that Employees'
schedule allows and reimburse Employee for (x) any registration fee and
(y) travel and lodging to the extent such seminars are not available in
Dallas, Texas.
(xii) The Company shall make funds available for the
purchase of relevant legal publications and other resource material on an
as-needed basis as determined in good faith by the Employee.
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<PAGE>
(xiii) The Company shall cover Employee under its Director
and Officer Insurance Policy at the same level of coverage as other
comparably situated executives and will purchase appropriate riders to
such policy to cover malpractice claims.
(xiv) The Company shall employ an administrative
assistant/paralegal of the Employee's choosing to assist the Employee, on
terms and conditions of employment similar to those for assistants to
other comparably situated executives.
(xv) The Company shall provide Employee with such other
compensation as may be determined by the Board or the compensation
committee thereof.
3. NON-COMPETITION AGREEMENT.
(a) Subject to Section 5(d), Employee will not, during the period of
her employment by or with the Company, and for a period of two (2) years
immediately following the termination of her employment under this Agreement,
for any reason whatsoever, directly or indirectly, for herself or on behalf of
or in conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business selling any products or services in
direct competition with the Company, within 100 miles of (i) the
principal executive offices of the Company or (ii) any place to which the
Company provides products or services or in which the Company is in the
process of initiating business operations during the term of this
covenant (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company (including the subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company
(including the subsidiaries thereof), provided that Employee shall be
permitted to call upon and hire any member of her immediate family;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of the
Company (including the subsidiaries thereof) within the Territory for the
purpose of soliciting or selling products or services in direct
competition with the Company within the Territory;
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate was
either called upon by the Company (including the subsidiaries thereof) or
for which the Company made an acquisition analysis, for the purpose of
acquiring such entity; or
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<PAGE>
(v) disclose customers, whether in existence or proposed, of
the Company (or the Subsidiaries thereof) to any person, firm,
partnership, corporation or business for any reason or purpose
whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than three percent
(3%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company for
which it would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by the Company in the event of breach by
her by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in
this paragraph 3 impose a reasonable restraint on Employee in light of the
activities and business of the Company (including the Company's subsidiaries)
on the date of the execution of this Agreement and the current plans of the
Company (including the Company's subsidiaries); but it is also the intent of
the Company and Employee that such covenants be construed and enforced in
accordance with the changing activities, business and locations of the
Company (including the Company's subsidiaries) throughout the term of this
covenant, whether before or after the date of termination of the employment
of Employee, subject to the following paragraph. For example, if, during the
term of this Agreement, the Company (including the Company's subsidiaries)
engages in new and different activities, enters a new business or established
new locations for its current activities or business in addition to or other
than the activities or business enumerated under the Recitals above or the
locations currently established therefore, then Employee will be precluded
from soliciting the customers or employees of such new activities or business
or from such new location and from directly competing with such new business
within 100 miles of its then-established operating location(s) through the
term of this covenant.
It is further agreed by the parties hereto that, in the event
that Employee shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with the Company
(including the Company's subsidiaries), or similar activities or business in
locations the operation of which, under such circumstances, does not violate
clause (i) of this paragraph 3, and in any event such new business,
activities or location are not in violation of this paragraph 3 or of
Employee's obligations under this paragraph 3, if any, Employee shall not be
chargeable with a violation of this paragraph 3 if the Company (including the
Company's subsidiaries) shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
(d) The covenants in this paragraph 3 are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
parties that such
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<PAGE>
restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is
specifically agreed that the period of two (2) years stated at the beginning
of this paragraph 3, during which the agreements and covenants of Employee
made in this paragraph 3 shall be effective, shall be computed by excluding
from such computation any time during which Employee is in violation of any
provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that she may be again requested by the
Board to relocate from her present residence to another geographic location
in order to more efficiently carry out her duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In the event that Employee is requested to relocate and
agrees to do so, the Company will pay all relocation costs to move Employee,
her immediate family and their personal property and effects. Such costs may
include, by way of example, but are not limited to, pre-move visits to search
for a new residence, investigate schools or for other purposes; temporary
lodging and living costs prior to moving into a new permanent residence;
duplicate home carrying costs; all closing costs on the sale of Employee's
present residence and on the purchase of a comparable residence in the new
location; and added income taxes that Employee may incur, as a result of any
payment hereunder, to the extent any relocation costs are not deductible for
tax purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use her best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and her family.
(b) Notwithstanding the above, if Employee is requested by the
Board to relocate and Employee refuses, such refusal shall not constitute
"good cause" for termination of this Agreement under the terms of paragraph
5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for two (2) years (the
"Initial Term"), and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein. This Agreement and Employee's employment may be terminated
in any one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
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<PAGE>
(b) DISABILITY. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from her
full-time duties hereunder for four (4) consecutive months, then thirty
(30) days after receiving written notice (which notice may occur before
or after the end of such four (4) month period, but which shall not be
effective earlier than the last day of such four (4) month period), the
Company may terminate Employee's employment hereunder provided Employee
is unable to resume her full-time duties at the conclusion of such notice
period. Also, Employee may terminate her employment hereunder if her
health should become impaired to an extent that makes the continued
performance of her duties hereunder hazardous to her physical or mental
health or her life, provided that Employee shall have furnished the
Company with a written statement from a qualified doctor to such effect
and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to
an examination by a doctor selected by the Company who is reasonably
acceptable to Employee or Employee's doctor and such doctor shall have
concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated as a result of Employee's disability, Employee
shall receive from the Company, in a lump-sum payment due within ten (10)
days of the effective date of termination, the base salary at the rate
then in effect for whatever time period is remaining under the Initial
Term of this Agreement or for one (1) year, whichever amount is greater.
(c) GOOD CAUSE. The Company may terminate the Agreement ten
(10) days after written notice to Employee for good cause, which shall
be: (1) Employee's material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional
nonperformance (continuing for ten (10) days after receipt of the written
notice) of any of Employee's material duties and responsibilities
hereunder; (3) Employee's dishonesty, fraud or misconduct with respect to
the business or affairs of the Company which materially and adversely
affects the operations or reputation of the Company; (4) Employee's
conviction of a felony crime; or (5) chronic alcohol abuse or illegal
drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance
compensation.
(d) WITHOUT CAUSE. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the Company. Should Employee be terminated by the Company
without cause, Employee shall receive from the Company, in a lump-sum
payment due on the effective date of termination, the base salary at the
rate then in effect for whatever time period is remaining under the
Initial Term of this Agreement or for two (2) years, whichever amount is
greater ("Severance Pay"). Further, any termination without cause by the
Company shall operate to shorten the period set forth in paragraph 3(a)
and during which the terms of paragraph 3 apply to one (1) year from the
date of termination of employment.
(e) CHANGE IN CONTROL. Refer to paragraph 12 below.
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<PAGE>
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. The Employee may
terminate her employment hereunder for "Good Reason." As used herein,
"Good Reason" shall mean the continuance of any of the following after 10
days' prior written notice by Employee to the Company, specifying the
basis for such Employee's having Good Reason to terminate this Agreement:
(i) the assignment to Employee of any duties materially
and adversely inconsistent with the Employee's position as
specified in paragraph 1 hereof (or such other position to which
she may be promoted), including status, offices, responsibilities
or persons to whom the Employee reports as contemplated under
paragraph 1 of this Agreement, or any other action by the Company
which results in a material and adverse change in such position,
status, offices, titles or responsibilities;
(ii) Employee's removal from, or failure to be
reappointed or reelected to, Employee's position under this
Agreement, except as contemplated by paragraphs 5(a), (b), (c) and
(e); or
(iii) any other material breach of this Agreement by the
Company, including the failure to pay Employee on a timely basis
the amounts to which she is entitled under this Agreement.
In the event of any termination by the Employee for Good Reason, as
determined by a court of competent jurisdiction or pursuant to the provisions
of paragraph 16 below, the Company shall pay all amounts and damages to which
Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred
by Employee to enforce her rights hereunder, provided, that Employee need not
seek any such determination prior to terminating her employment for Good
Reason and receiving the Severance Pay set forth in the following sentence.
In addition, Employee shall be entitled to receive Severance Pay for two (2)
years. Further, none of the provisions of paragraph 3 shall apply in the
event this Agreement is terminated by Employee for Good Reason.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns
or otherwise terminates her employment without Good Reason pursuant to
paragraph 5(f), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation
earned and all benefits vested and reimbursements due through the effective
date of termination. Additional compensation subsequent to termination, if
any, will be due and payable to Employee only to the extent and in the manner
expressly provided above or in paragraph 16. All other rights and
obligations of the Company and Employee under this Agreement shall cease as
of the effective date of termination, except that the Company's obligations
under paragraph 9 herein and Employee's obligations, if any, under paragraphs
3, 6, 7, 8 and 10 herein shall survive such termination in accordance with
their terms.
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6. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company
or its representatives, vendors or customers which pertain to the business of
the Company shall be and remain the property of the Company and be subject at
all times to its discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data
pertaining to the business, activities or future plans of the Company which
is collected by Employee shall be delivered promptly to the Company without
request by it upon termination of Employee's employment.
7. INVENTIONS. Employee shall disclose promptly to the Company
any and all significant conceptions and ideas for inventions, improvements
and valuable discoveries, whether patentable or not, which are conceived or
made by Employee, solely or jointly with another, during the period of
employment or within one (1) year thereafter, and which are directly related
to the business or activities of the Company and which Employee conceives as
a result of her employment by the Company. Employee hereby assigns and
agrees to assign all her interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and
all applications, assignments or other instruments that the Company shall
deem necessary to apply for and obtain Letters Patent of the United States or
any foreign country or to otherwise protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that she will not, during or
after the term of this Agreement with the Company, disclose the specific
terms of the Company's relationships or agreements with its significant
vendors or customers or any other significant and material trade secret of
the Company, whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever,
except as is disclosed in the ordinary course of business, unless compelled
by court order or upon advice of counsel.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the
Company against Employee), by reason of the fact that she is or was
performing services under this Agreement or is or was an officer of the
Company, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement,
as actually and reasonably incurred by Employee in connection therewith to
the fullest extent authorized by Delaware law. In the event that both
Employee and the Company are made a party to the same third-party action,
complaint, suit or proceeding, the Company agrees to engage competent legal
representation, and Employee agrees to use the same representation, provided
that if counsel selected by the Company shall have a conflict of interest
that prevents such counsel from representing Employee, Employee may engage
separate counsel and the Company shall pay all attorneys' fees of such
separate counsel. Further, while Employee is expected at all times to use
her best efforts to faithfully discharge her duties under this Agreement,
Employee cannot be held liable to the Company for errors or omissions made in
good faith where Employee has not exhibited gross, willful and wanton
negligence and misconduct or performed criminal and fraudulent acts which
materially damage the business of the Company.
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10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants
to the Company that the execution of this Agreement by Employee and her
employment by the Company and the performance of her duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Employee agrees to indemnify the
Company for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may
now have or may hereafter come to have against the Company based upon or
arising out of any non-competition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date
of this Agreement.
11. ASSIGNMENT; BINDING EFFECT. Employee understands that she has
been selected for employment by the Company on the basis of her personal
qualifications, experience and skills. Employee agrees, therefore, she
cannot assign all or any portion of her performance under this Agreement.
Subject to the preceding two (2) sentences and the express provisions of
paragraph 12 below, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns.
12. CHANGE IN CONTROL.
(a) Unless she elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged
or consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the
Employee has not received written notice at least fifteen (15) business days
prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of the
Company's business and/or assets that such successor is willing as of the
closing to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company is
hereby required to perform, such Change in Control shall be deemed to be a
termination of this Agreement by the Company and the amount of the lump-sum
severance payment due to Employee shall be six (6) times Employee's annual
salary immediately prior to the Change in Control and the non-competition
provisions of paragraph 3 shall not apply whatsoever. Payment shall be made
either at closing of the transaction if notice is served at least five (5)
days before closing or within ten (10) days of Employee's written notice.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such pending
successor is willing to assume the Company's obligations hereunder or
Employee receives notice after the Change in Control that Employee is being
terminated, Employee may nonetheless, at her sole discretion, elect to
terminate this Agreement by providing written notice to the Company at any
time prior to closing of the transaction and up to one (1) year after the
closing of the transaction giving rise to the Change in Control. In such
case, the amount of the lump-sum severance payment due to
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Employee shall be three (3) times Employee's annual salary immediately prior
to the Change in Control and the non-competition provisions of paragraph 3
shall all apply. Payment shall be made either at closing if notice is served
at least five (5) days before closing or within ten (10) days of written
notice by Employee.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in
order to comply with the Securities and Exchange Commission's regulations to
elect whether to exercise and sell all or any of her vested options to
purchase Common Stock of the Company, including any options with accelerated
vesting under the provisions of the Company's 1995 Stock Option Plan, as
amended or any warrants, such that she may convert the options or warrants to
shares of Common Stock of the Company at or prior to the closing of the
transaction giving rise to the Change in Control, if she so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination
for election, to the Board of Directors of the Company was approved by
a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors
also becoming "Additional Original Directors" immediately following
their election), cease for any reason to constitute a majority of the
members of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity
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<PAGE>
outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in
Control may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to stock
options, warrants and other long-term incentives (in the aggregate "Total
Payments") would be subject to the excise tax imposed by Section 4999 of the
Code, as amended (or any similar tax that may hereafter be imposed) or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under this
paragraph to an additional amount (the "Gross-Up Payment") such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any Excise Tax, imposed upon such additional amount,
Employee will retain an amount equal to the Excise Tax imposed on the Total
Payments.
For purposes of this paragraph Employee's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt
of the Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the
assumptions to be used in determining the Gross-Up Payment, shall be made by
the Company's current independent accounting firm, or such other firm as the
Company may designate in writing prior to a Change in Control (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and Employee within twenty business days of the receipt of
notice from Employee that there will likely be a Change in Control, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the party effecting
the Change in Control or is otherwise unavailable, Employee may appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
with respect to such determinations described above shall be borne solely by
the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by
the Internal Revenue Service that Employee owes an amount of Excise Tax
greater than the amount determined pursuant to this paragraph; PROVIDED, that
Employee shall be entitled to reimbursement by the Company of all fees and
expenses reasonably incurred by Employee in contesting such determination.
In the
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event the Internal Revenue Service or any court of competent jurisdiction
determines that Employee owes an amount of Excise Tax that is either greater
than the amount previously taken into account and paid under this Agreement,
the Company shall promptly pay to Employee the amount of such shortfall. In
the case of any payment that the Company is required to make to Employee
pursuant to the preceding sentence (a "Later Payment"), the Company shall
also pay to Employee an additional amount such that after payment by Employee
of all of Employee's applicable Federal, state and local taxes, including any
interest and penalties assessed by any taxing authority, on such additional
amount, Employee will retain an amount equal to the total of Employee's
applicable Federal, state and local taxes, including any interest and
penalties assessed by any taxing authority, arising due to the Later Payment.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or
agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous oral or written
agreements. This written Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the Company and
Employee, and no term of this Agreement may be waived except by writing
signed by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
with a copy to: Charles C. Reeder, Esq.
Locke Purnell Rain Harrell
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
To Employee: Margot T. Lebenberg
6528 Mimosa Lane
Dallas, TX 75230
Notice shall be deemed given and effective three (3) days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph 14.
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<PAGE>
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only
and are not intended in any way to describe, interpret, define or limit the
extent or intent of the Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order
back-pay, severance compensation, vesting of options (or cash compensation in
lieu of vesting of options), reimbursement of costs, including those incurred
to enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee was terminated without disability or good cause, as
defined in paragraphs 5(b) and 5(c), respectively, or that the Company has
otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on
the arbitrators' award in any court having jurisdiction. The direct expense
of any arbitration proceeding shall be borne by the Company.
17. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Delaware.
EMPLOYEE:
/s/Margot T. Lebenberg
------------------------------------
Margot T. Lebenberg
F.Y.I. INCORPORATED
/s/Ed H. Bowman, Jr.
------------------------------------
By: Ed H. Bowman, Jr.
Title: President and Chief Executive
Officer
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<PAGE>
EXHIBIT 10.67
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(RONALD ZAZWORSKY)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of January 1, 2000 by and between Ronald Zazworsky ("Employee")
and F.Y.I. Incorporated, a Delaware corporation (the "Company"). This
Agreement hereby supersedes any other employment agreements or
understandings, written or oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the document and information management services business (the "Business").
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the
Company, has and will continue to become familiar with and aware of
information as to the Company's customers, specific manner of doing business,
including the processes, techniques and trade secrets utilized by the
Company, and future plans with respect thereto, all of which has been and
will be established and maintained at great expense to the Company; this
information is a trade secret and constitutes the valuable goodwill of the
Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as a Senior Vice
President-Business Unit Executive and Officer of the Company. As such,
Employee shall have responsibilities, duties and authority reasonably
accorded to and expected of a Senior Vice President-Business Unit Executive
and Officer of the Company. Employee hereby accepts this employment upon the
terms and conditions herein contained and, subject to paragraph 1(b), agrees
to devote his working time, attention and efforts to promote and further the
business of the Company.
(b) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the extent that such activity does not
interfere with Employee's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Employee from
making personal
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<PAGE>
investments in such form or manner as will neither require his services in
the operation or affairs of the companies or enterprises in which such
investments are made.
2. COMPENSATION. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) BASE SALARY; ANNUAL BONUS. The base salary payable to Employee
shall be $250,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly (pro-rated
for any year in which Employee is employed for less than the full year)
beginning January 1, 2000. On at least an annual basis the Board of
Directors (the "Board") will review Employee's performance and make increases
to such base salary if, in its discretionary, any such increase is warranted.
For 2000 and subsequent years, it is the Company's intent to develop a
written Incentive Bonus Plan setting forth the criteria under which Employee
and other officers and key employees will be eligible to receive year-end
bonus awards. Employee shall be eligible for a bonus opportunity of up to 50%
of Employee's annual base salary payable in cash and or equity at the
Company's discretion beginning January 1, 2000 in accordance with this
Incentive Bonus Plan. Such recommended increase would, in all likelihood,
require approval by the Board or a duly constituted committee thereof. For
2000 Employee has already been awarded Warrant No. 16 as partial payment for
any 2000 Bonus opportunity. In addition, Employee shall be eligible for up
to an additional $15,000 cash bonus. The award of any bonus shall be based
on the Company's overall performance and the total performance of the
business unit managed and shall be payable in various increments based on the
performance. The incremental payments and the Company's targeted performance
shall be determined by the Board or the compensation committee thereof.
(b) OTHER COMPENSATION. Employee shall be entitled to receive
additional benefits and compensation from the Company in such form and to
such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental and other insurance plans that the Company may have in
effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement and a $500 per
month car allowance (determined on a pre-tax basis). All reimbursable
expenses shall be appropriately documented in reasonable detail by
Employee upon submission of any request for reimbursement, and in a
format and manner consistent with the Company's expense reporting
policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (pro-rated for any year in which Employee is employed for
less than the full year).
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<PAGE>
(iv) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide employee benefits
as available from time to time.
3. [INTENTIONALLY LEFT BLANK]
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for three (3) years.
On the annual anniversary, the agreement shall automatically renew for a two
(2) year period, unless prior written notice is provided to Employee that it
will not be renewed (the "Term"). This Agreement and Employee's employment
may be terminated in any one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate the
Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. The Company will make efforts to reasonably
accommodate Employee as required by applicable state or federal disability
laws. However, the parties irrebutably presume that, given Employee's
position, it would be an undue hardship to the Company if Employee is absent
for more than three (3) consecutive months. Therefore, if as a result of
incapacity due to physical or mental illness or injury, Employee shall have
been absent from his full-time duties hereunder for three (3) consecutive
months, then thirty (30) days after receiving written notice (which notice
may occur before or after the end of such three (3) month period, but which
shall not be effective earlier than the last day of such three (3) month
period), the Company may terminate Employee's employment hereunder provided
Employee is unable to resume his full-time duties at the conclusion of such
notice period. Also, Employee may terminate his employment hereunder if his
health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental
health or his life, provided that Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect and provided,
further, that at the Company's request made within thirty (30) days of the
date of such written statement, Employee shall submit to an examination by a
doctor selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion of
Employee's doctor. In the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company, in a lump-sum
payment due within ten (10) days of the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for six (6) months, whichever amount is
greater.
(c) GOOD CAUSE. The Company may terminate the Agreement five (5)
days after written notice to Employee for good cause, which shall be: (i)
Employee's breach of this Agreement; (ii) Employee's negligence in the
performance or nonperformance (continuing for five (5) days after receipt of
the written notice) of any of Employee's material duties and responsibilities
hereunder; (iii) Employee's dishonesty, fraud or misconduct with respect to
the business or affairs of the Company that adversely affects the operations
or reputation of the Company; (iv) Employee's conviction of a felony crime;
or (v) chronic alcohol abuse or illegal
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<PAGE>
drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance compensation.
(d) WITHOUT CAUSE. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective ten (10) days after written notice is
provided to Employee. Employee may only be terminated without cause by the
Company during the Term hereof if such termination is approved by the Board
of Directors of the Company. Should Employee be terminated by the Company
without cause, Employee shall receive from the Company, in a lump-sum payment
due on the effective date of termination, the base salary at the rate then in
effect for whatever time period is remaining under the Term of this Agreement.
(e) CHANGE IN CONTROL. Refer to paragraph 20 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate his employment hereunder for "Good Reason." As used herein, "Good
Reason" shall mean the continuance of any of the following after fifteen (15)
days' prior written notice by Employee to the Company, specifying the basis
for such Employee's having Good Reason to terminate this Agreement:
(i) Employee's removal from, or failure to be reappointed or
reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 4(a), (b), (c) and (e); or
(ii) Any other material breach of this Agreement by the Company
that is not cured within the fifteen (15) day time period set forth in
paragraph 4(f) above, including the failure to pay Employee on a timely
basis the amounts to which he is entitled under this Agreement.
In the event of any dispute with respect to the termination by the Employee
for Good Reason, such dispute shall be resolved pursuant to the provisions of
paragraph 16 below. In the event that it is determined that Good Reason did
exist, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Should Employee terminate his employment for
Good Reason, Employee shall receive from the Company, in a lump-sum payment
due on the effective date of termination, the base salary at the rate then in
effect for whatever time period is remaining under the Term of this Agreement
or for six (6) months, whichever amount is greater.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns or
otherwise terminates his employment without Good Reason pursuant to paragraph
4(f), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation
earned and all benefits and reimbursements vested or due through the
effective date of termination. Additional compensation subsequent to
termination, if any, will be due and payable to Employee only to the
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<PAGE>
extent and in the manner expressly provided above or in paragraph 16. All
other rights and obligations of the Company and Employee under this Agreement
shall cease as of the effective date of termination, except that the
Company's obligations under paragraph 10 herein and Employee's obligations
under paragraphs 5, 6, 7, 8, 9 and 11 herein shall survive such termination
in accordance with their terms.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company
(including the Company's subsidiaries) or their representatives, vendors or
customers which pertain to the business of the Company (including the
Company's subsidiaries) shall be and remain the property of the Company, as
the case may be, and be subject at all times to their discretion and control.
Likewise, all correspondence, reports, records, charts, advertising
materials and other similar data pertaining to the business, activities or
future plans of the Company (including the Company's subsidiaries) that is
collected by Employee shall be delivered promptly to the Company without
request by it upon termination of Employee's employment.
6. INVENTIONS. Employee shall disclose promptly to the Company
any and all significant conceptions and ideas for inventions, improvements
and valuable discoveries, whether patentable or not, which are conceived or
made by Employee, solely or jointly with another, during the period of
employment or within one (1) year thereafter, and which are directly related
to the business or activities of the Company (including the Company's
subsidiaries) and that Employee conceives as a result of his employment by
the Company. Employee hereby assigns and agrees to assign all his interests
therein to the Company or its nominee. Whenever requested to do so by the
Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and
obtain letters patent of the United States or any foreign country or to
otherwise protect the Company's interest therein.
7. TRADE SECRETS. Employee agrees that he will not, during or
after the term of this Agreement with the Company, disclose the specific
terms of the Company's (including the Company's subsidiaries) relationships
or agreements with their respective significant vendors or customers or any
other significant and material trade secret of the Company (including the
Company's subsidiaries), whether in existence or proposed, to any person,
firm, partnership, corporation or business for any reason or purpose
whatsoever.
8. DISCLOSURE OF INFORMATION. Employee agrees that for a period
of three (3) years after the date hereof or during the Term of this Agreement
and for a period of three (3) years thereafter, whichever is longer, without
the prior written consent of the Company, Employee shall not, directly or
indirectly, through any form of ownership, in any individual or
representative or affiliated capacity whatsoever, except as may be required
by law, reveal, divulge, disclose or communicate to any person, firm,
association, corporation or other entity in any manner whatsoever information
of any kind, nature or description concerning: (i) the names of any prior or
present suppliers or customers with respect to the Business, (ii) the prices
for products or services with respect to the Business, (iii) the names of
personnel with respect to the Business, (iv) the manner of operation with
respect to the Business, (v) the plans, trade secrets, or other data of any
kind, nature or description, whether tangible or intangible, with respect to
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<PAGE>
the Business, or (vi) any other financial, statistical or other information
regarding the business acquired by the Company that the Company designates or
treats as confidential or proprietary. The agreements set forth herein shall
not apply to any information that at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Employee in violation of this
Agreement). Without regard to whether any or all of the foregoing matters
would be deemed confidential, material or important, the parties hereto
stipulate that as between them, the same are important, material and
confidential and gravely affect the effective and successful conduct of the
Business and its goodwill.
9. NONCOMPETITION. (a) Employee agrees that during the Term of
this Agreement and, upon termination of Employee's employment by the Company
for a period of three (3) years thereafter, he shall not:
(i) Call upon, solicit, divert, take away or attempt to call
upon, solicit, divert or take away any existing customers, suppliers,
businesses, or accounts of the Business in connection with any business
substantially similar to the Business in the territory defined as 100
miles in and around the Company's and its affiliates' operations (the
"Territory");
(ii) Hire, attempt to hire, contact or solicit with respect to
hiring for himself or on behalf of any other person any present employee
of the Company in the Business;
(iii) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the
Business in the Territory;
(iv) Do any act that Employee knew or reasonably should have
known might directly injure the Company in any material respect or that
might divert customers, suppliers or employees from the Business; and
(v) Without limiting the generality of the foregoing
provisions, conduct a business substantially similar to the Business
under the name "F.Y.I. Incorporated" or any other trade names, trademarks
or service marks heretofore used by the Company or its affiliates.
The covenants in subsections (i) through (v) are intended to restrict
Employee from competing in any manner with the Company or the Business in the
activities that have heretofore been carried on by the Company or its
affiliates. The obligations set forth in subsections (i) through (v) above
shall apply to actions by Employee, through any form of ownership, and
whether as principal, officer, director, agent, employee, employer,
consultant, stockholder or holder of any equity security (beneficially or as
trustee of any trust), lender, partner, joint venturer or in any other
individual or representative or affiliated capacity whatsoever. However,
none of the foregoing shall prevent Employee from being the holder of up to
5.0% in the aggregate of any class of securities of any corporation engaged
in the activities described in subsection (i) through (v) above, provided
that such securities are listed on a national securities exchange or reported
on the Nasdaq National Market.
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10. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the
Company against Employee), by reason of the fact that he is or was performing
services under this Agreement, then the Company shall indemnify Employee
against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Employee
in connection therewith. In the event that both Employee and the Company are
made a party to the same third-party action, complaint, suit or proceeding,
the Company agrees to engage competent legal representation, and Employee
agrees to use the same representation, provided that if counsel selected by
the Company shall have a conflict of interest that prevents such counsel from
representing Employee, Employee may engage separate counsel and the Company
shall pay all attorneys' fees of such separate counsel. Further, while
Employee is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Employee shall not be held liable
to the Company for errors or omissions made in good faith where Employee has
not exhibited negligence or performed criminal and fraudulent acts which
damage the business of the Company.
11. NO PRIOR AGREEMENTS. Employee hereby represents and warrants
to the Company that the execution of this Agreement by Employee and his
employment by the Company and the performance of his duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Employee agrees to indemnify the
Company for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may
now have or may hereafter come to have against the Company based upon or
arising out of any non-competition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date
of this Agreement.
12. ASSIGNMENT; BINDING EFFECT. Employee understands that he has
been selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject
to the preceding, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or
agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous oral or written
agreements. This Agreement may not be later modified except by a further
writing signed by a duly authorized officer of the Company and Employee, and
no term of this Agreement may be waived except by writing signed by the party
waiving the benefit of such term.
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14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attn: Margot T. Lebenberg, Esq.
To Employee: Ronald Zazworsky
456 Ivy Park Lane
Atlanta, Georgia 30342
Notice shall be deemed given and effective three (3) days after the deposit
in the United States mail of a writing addressed as above and sent first
class mail, certified, return receipt requested, or when actually received.
Either party may change the address for notice by notifying the other party
of such change in accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference purposes only
and are not intended in any way to describe, interpret, define or limit the
extent or intent of the Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order
back-pay, severance compensation, vesting of options (or cash compensation in
lieu of vesting of options), reimbursement of costs, including those incurred
to enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee was terminated without disability or good cause, as
defined in paragraphs 4(b) and 4(c), respectively, or that the Company has
otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on
the arbitrators' award in any court having jurisdiction. The costs of any
arbitration proceeding shall be borne by the party or parties not prevailing
in such proceeding as determined by the arbitrators.
17. GOVERNING LAW. This Agreement shall in all respects be
construed according to the laws of the State of Texas.
18. COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same instrument.
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19. ATTORNEYS' FEES. In the event of any litigation or arbitration
arising under or in connection with this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees as determined by the court or
arbitration panel, as the case may be. Each party to this Agreement
represents and warrants that it has been represented by counsel in the
negotiation and execution of this Agreement, including without limitation the
provisions set forth in this paragraph 19.
20. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged
or consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the
Employee has not received written notice at least fifteen (15) business days
prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of the
Company's business and/or assets that such successor is willing as of the
closing to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company is
hereby required to perform, such Change in Control shall be deemed to be a
termination of this Agreement by the Company and the amount of the lump-sum
severance payment due to Employee shall be 2-1/2 times Employee's annual
salary immediately prior to the Change in Control and the non-competition
provisions of paragraph 9 shall not apply whatsoever. Payment shall be made
either at closing of the transaction if notice is served at least five (5)
days before closing or within ten (10) days of Employee's written notice.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such pending
successor is willing to assume the Company's obligations hereunder or
Employee receives notice after the Change in Control that Employee is being
terminated, Employee may nonetheless, at his sole discretion, elect to
terminate this Agreement by providing written notice to the Company at any
time prior to closing of the transaction and up to two (2) years after the
closing of the transaction giving rise to the Change in Control. In such
case, the amount of the lump-sum severance payment due to Employee shall be
2 1/2 times Employee's annual salary immediately prior to the Change in Control
and the non-competition provisions of paragraph 9 shall all apply. Payment
shall be made either at closing if notice is served at least five (5) days
before closing or within ten (10) days of written notice by Employee.
(d) For purposes of applying paragraph 4 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in
order to comply with then Securities and Exchange Commission's regulations to
elect whether to exercise and sell all or any of his vested options to
purchase Common Stock of the Company, including any options with accelerated
vesting under the provisions of the Company's 1995 Stock Option Plan,
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as amended or any warrants, such that he may convert the options or warrants
to shares of Common Stock of the Company at or prior to the closing of the
transaction giving rise to the Change in Control, if he so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination
for election, to the Board of Directors of the Company was approved by
a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors
also becoming "Additional Original Directors" immediately following
their election), cease for any reason to constitute a majority of the
members of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company
(including the Company's subsidiaries)).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in
Control may take place.
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(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to stock
options, warrants and other long-term incentives (in the aggregate "Total
Payments") would be subject to the excise tax imposed by Section 4999 of the
Code, as amended (or any similar tax that may hereafter be imposed) or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under this
paragraph to an additional amount (the "Gross-Up Payment") such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any Excise Tax, imposed upon such additional amount,
Employee will retain an amount equal to the Excise Tax imposed on the Total
Payments.
For purposes of this paragraph Employee's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt
of the Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the
assumptions to be used in determining the Gross-Up Payment, shall be made by
the Company's current independent accounting firm, or such other firm as the
Company may designate in writing prior to a Change in Control (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and Employee within twenty business days of the receipt of
notice from Employee that there will likely be a Change in Control, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the party effecting
the Change in Control or is otherwise unavailable, Employee may appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
with respect to such determinations described above shall be borne solely by
the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by
the Internal Revenue Service that Employee owes an amount of Excise Tax
greater than the amount determined pursuant to this paragraph; PROVIDED, that
Employee shall be entitled to reimbursement by the Company of all fees and
expenses reasonably incurred by Employee in contesting such determination.
In the event the Internal Revenue Service or any court of competent
jurisdiction determines that Employee owes an amount of Excise Tax that is
either greater than the amount previously taken into account and paid under
this Agreement, the Company shall promptly pay to Employee the amount of such
shortfall. In the case of any payment that the Company is required to make
to Employee pursuant to the preceding sentence (a "Later Payment"), the
Company shall also pay to Employee an additional amount such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing authority,
on such additional amount, Employee will retain an amount equal to the total
of Employee's applicable Federal, state and local taxes, including any
interest and penalties assessed by any taxing authority, arising due to the
Later Payment.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
---------------------------------------
Title:
EMPLOYEE:
/s/Ronald Zazworsky
-------------------------------------------
RONALD ZAZWORSKY
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EXHIBIT 10.68
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(JOE A. ROSE)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of January 2000 by and between Joe A. Rose ("Employee") and
F.Y.I. Incorporated, a Delaware corporation (the "Company"). This Agreement
hereby supersedes any other employment agreements or understandings, written or
oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in the
document and information management services business (the "Business").
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the Company,
has and will continue to become familiar with and aware of information as to the
Company's customers, specific manner of doing business, including the processes,
techniques and trade secrets utilized by the Company, and future plans with
respect thereto, all of which has been and will be established and maintained at
great expense to the Company; this information is a trade secret and constitutes
the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as an Executive Vice President
and Chief Operating Officer. As such, Employee shall have responsibilities,
duties and authority reasonably accorded to and expected of an Executive Vice
President and Chief Operating Officer. Employee hereby accepts this employment
upon the terms and conditions herein contained and, subject to paragraph 1(b),
agrees to devote his working time, attention and efforts to promote and further
the business of the Company.
(b) Employee shall not, during the term of his employment hereunder,
be engaged in any other business activity pursued for gain, profit or other
pecuniary advantage except to the extent that such activity does not interfere
with Employee's duties and responsibilities hereunder. The foregoing
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limitations shall not be construed as prohibiting Employee from making
personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made.
2. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(a) BASE SALARY; ANNUAL BONUS. The base salary payable to Employee
shall be $330,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly (pro-rated
for any year in which Employee is employed for less than the full year). On
at least an annual basis the Board (as defined below) will review Employee's
performance and make increases to such base salary if, in its discretionary,
any such increase is warranted. Such recommended increase would, in all
likelihood, require approval by the Board of Directors (the "Board") or a
duly constituted committee thereof. For 2000 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan setting forth the
criteria under which Employee and other officers and key employees will be
eligible to receive year-end bonus awards. Employee shall be eligible for a
bonus opportunity of up to 50% of Employee's annual base salary payable in
cash and or equity at the Company's discretion beginning January 1, 2000 in
accordance with this Incentive Bonus Plan. For 2000 Employee has already
been awarded Warrant No. 17 as partial payment for any 2000 Bonus
opportunity. In addition, a $30,000 cash bonus will be paid if F.Y.I. makes
the 2000 EPS target of $1.93. The award of any bonus shall be based on the
Company's overall performance and shall be payable in various increments
based on the performance. The incremental payments and the Company's targeted
performance shall be determined by the Board or the compensation committee
thereof.
(b) OTHER COMPENSATION. Employee shall be entitled to receive
additional benefits and compensation from the Company in such form and to such
extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental and other insurance plans that the Company may have in
effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the performance
of his services pursuant to this Agreement and a $500 per month car
allowance (determined on a pre-tax basis). All reimbursable expenses
shall be appropriately documented in reasonable detail by Employee upon
submission of any request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (pro-rated for any year in which Employee is employed for
less than the full year).
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(iv) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide employee benefits
as available from time to time.
3. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board of
Directors of the Company (the "Board") to relocate from his then current
residence to another geographic location in order to more efficiently carry
out his duties and responsibilities under this Agreement or as part of a
promotion or other increase in duties and responsibilities. In such event,
if Employee agrees to relocate, the Company will pay relocation costs up to
$30,000 to move Employee, his immediate family and their personal property
and effects. Such costs may include, by way of example, but are not limited
to, pre-move visits to search for a new residence, investigate schools or for
other purposes; temporary lodging and living costs prior to moving into a new
permanent residence; duplicate home carrying costs; and closing costs on the
sale of Employee's present residence and on the purchase of a comparable
residence in the new location. The general intent of the foregoing is to
assist Employee with the cost of the relocation, with an understanding that
Employee will use his best efforts to incur only those costs which are
reasonable and necessary to effect a smooth, efficient and orderly relocation
with minimal disruption to the business affairs of the Company and the
personal life of Employee and his family.
(b) Notwithstanding the above, if Employee is requested by the Board
to relocate and Employee refuses, such refusal shall not constitute "good cause"
for termination of this Agreement under the terms of paragraph 4(c).
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for three years (the
"Term"). On the annual anniversary, the agreement shall automatically renew for
a three-year period, unless written notice is given that it will not be renewed.
This Agreement and Employee's employment may be terminated in any one of the
following ways:
(a) DEATH. The death of Employee shall immediately terminate the
Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. The Company will make efforts to reasonably
accommodate Employee as required by applicable state or federal disability
laws. However, the parties irrebutably presume that, given Employee's
position, it would be an undue hardship to the Company if Employee is absent
for more than three (3) consecutive months. Therefore, if as a result of
incapacity due to physical or mental illness or injury, Employee shall have
been absent from his full-time duties hereunder for three (3) consecutive
months, then thirty (30) days after receiving written notice (which notice
may occur before or after the end of such three (3) month period, but which
shall not be effective earlier than the last day of such three (3) month
period), the Company may terminate Employee's employment hereunder provided
Employee is unable to resume his full-time duties at the conclusion of such
notice period. Also, Employee may terminate his employment hereunder if
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his health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental
health or his life, provided that Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect and provided,
further, that at the Company's request made within thirty (30) days of the
date of such written statement, Employee shall submit to an examination by a
doctor selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion of
Employee's doctor. In the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company, in a lump-sum
payment due within ten (10) days of the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement.
(c) GOOD CAUSE. The Company may terminate the Agreement five (5) days
after written notice to Employee for good cause, which shall be: (i) Employee's
breach of this Agreement; (ii) Employee's negligence in the performance or
nonperformance (continuing for five (5) days after receipt of the written
notice) of any of Employee's material duties and responsibilities hereunder;
(iii) Employee's dishonesty, fraud or misconduct with respect to the business or
affairs of the Company that adversely affects the operations or reputation of
the Company; (iv) Employee's conviction of a felony crime; or (v) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a termination
for good cause, as enumerated above, Employee shall have no right to any
severance compensation.
(d) WITHOUT CAUSE. At any time after the commencement of employment,
the Company may, without cause, terminate this Agreement and Employee's
employment, effective ten (10) days after written notice is provided to
Employee. Employee may only be terminated without cause by the Company during
the Term hereof if such termination is approved by the Board of Directors of the
Company. Should Employee be terminated by the Company without cause, Employee
shall receive from the Company, in a lump-sum payment due on the effective date
of termination equivalent to the remaining term or two years salary at the rate
then in effect, whichever is greater.
(e) CHANGE IN CONTROL. Refer to paragraph 20 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may terminate
his employment hereunder for "Good Reason." As used herein, "Good Reason" shall
mean the continuance of any of the following after fifteen (15) days' prior
written notice by Employee to the Company, specifying the basis for such
Employee's having Good Reason to terminate this Agreement:
(i) Employee's removal from, or failure to be reappointed or
reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 4(a), (b), (c) and (e); or
(ii) Any other material breach of this Agreement by the Company
that is not cured within the fifteen (15) day time period set forth in
paragraph 4(f), including the failure to pay Employee on a timely basis
the amounts to which he is entitled under this Agreement.
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In the event of any dispute with respect to the termination by the Employee for
Good Reason, such dispute shall be resolved pursuant to the provisions of
paragraph 16 below. In the event that it is determined that Good Reason did
exist, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Should Employee terminate his employment for Good
Reason, Employee shall receive from the Company, in a lump-sum payment due on
the effective date of termination equivalent to the remaining term or two years
salary at the rate then in effect, whichever is greater.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns or
otherwise terminates his employment without Good Reason pursuant to paragraph
4(f), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation earned
and all benefits and reimbursements vested or due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in the manner expressly
provided above or in paragraph 16. All other rights and obligations of the
Company and Employee under this Agreement shall cease as of the effective date
of termination, except that the Company's obligations under paragraph 10 herein
and Employee's obligations under paragraphs 5, 6, 7, 8, 9 and 11 herein shall
survive such termination in accordance with their terms.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company or
their representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company, as the case may be, and
be subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company that is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
6. INVENTIONS. Employee shall disclose promptly to the Company any
and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of the Company and that Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
letters patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
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7. TRADE SECRETS. Employee agrees that he will not, during or after
the term of this Agreement with the Company, disclose the specific terms of the
Company's relationships or agreements with their respective significant vendors
or customers or any other significant and material trade secret of the Company,
whether in existence or proposed, to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever.
8. DISCLOSURE OF INFORMATION. Employee agrees that for a period of
three (3) years after the date hereof or during the term of this Agreement and
for a period of three (3) years thereafter, whichever is longer, without the
prior written consent of the Company, Employee shall not, directly or
indirectly, through any form of ownership, in any individual or representative
or affiliated capacity whatsoever, except as may be required by law, reveal,
divulge, disclose or communicate to any person, firm, association, corporation
or other entity in any manner whatsoever information of any kind, nature or
description concerning: (i) the names of any prior or present suppliers or
customers with respect to the Business, (ii) the prices for products or services
with respect to the Business, (iii) the names of personnel with respect to the
Business, (iv) the manner of operation with respect to the Business, (v) the
plans, trade secrets, or other data of any kind, nature or description, whether
tangible or intangible, with respect to the Business, or (vi) any other
financial, statistical or other information regarding the business acquired by
the Company that the Company designates or treats as confidential or
proprietary. The agreements set forth herein shall not apply to any information
that at the time of disclosure or thereafter is generally available to and known
by the public (other than as a result of a disclosure directly or indirectly by
Employee in violation of this Agreement). Without regard to whether any or all
of the foregoing matters would be deemed confidential, material or important,
the parties hereto stipulate that as between them, the same are important,
material and confidential and gravely affect the effective and successful
conduct of the Business and its goodwill.
9. NONCOMPETITION. (a) Employee agrees that during the term of this
Agreement and, upon termination of Employee's employment by the Company for a
period of three (3) years thereafter, he shall not:
(i) Call upon, solicit, divert, take away or attempt to call
upon, solicit, divert or take away any existing customers, suppliers,
businesses, or accounts of the Business in connection with any business
substantially similar to the Business in the territory defined as 100 miles in
and around the Company's and its affiliates operations (the "Territory");
(ii) Hire, attempt to hire, contact or solicit with respect to
hiring for himself or on behalf of any other person any present employee of the
Company in the Business;
(iii) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business in
the Territory;
(iv) Do any act that Employee knew or reasonably should have
known might directly injure the Company in any material respect or that might
divert customers, suppliers or employees from the Business; and
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(v) Without limiting the generality of the foregoing
provisions, conduct a business substantially similar to the Business under the
name "F.Y.I. Incorporated" or any other trade names, trademarks or service marks
heretofore used by the Company or its affiliates.
The covenants in subsections (i) through (v) are intended to restrict
Employee from competing in any manner with the Company or the Business in the
activities that have heretofore been carried on by the Company or its
affiliates. The obligations set forth in subsections (i) through (v) above
shall apply to actions by Employee, through any form of ownership, and whether
as principal, officer, director, agent, employee, employer, consultant,
stockholder or holder of any equity security (beneficially or as trustee of any
trust), lender, partner, joint venturer or in any other individual or
representative or affiliated capacity whatsoever. However, none of the
foregoing shall prevent Employee from being the holder of up to 5.0% in the
aggregate of any class of securities of any corporation engaged in the
activities described in subsection (i) through (v) above, provided that such
securities are listed on a national securities exchange or reported on the
Nasdaq National Market.
10. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement, then the Company shall indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all times
to use his best efforts to faithfully discharge his duties under this Agreement,
Employee shall not be held liable to the Company for errors or omissions made in
good faith where Employee has not exhibited negligence or performed criminal and
fraudulent acts which damage the business of the Company.
11. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and his employment
by the Company and the performance of his duties hereunder will not violate or
be a breach of any agreement with a former employer, client or any other person
or entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any non-competition
agreement, invention or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
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12. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding, this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Employee and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This Agreement may not be later modified except by
a further writing signed by a duly authorized officer of the Company and
Employee, and no term of this Agreement may be waived except by writing signed
by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
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<TABLE>
<S> <C>
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attn: Margot T. Lebenberg, Esq.
To Employee: Joe A. Rose
3924 Southwestern Boulevard
Dallas, Texas 75225
</TABLE>
Notice shall be deemed given and effective three (3) days after the deposit in
the United States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas, Texas,
in accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from,
or modify any provision hereof nor to award punitive damages to any injured
party. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in
paragraphs 4(b) and 4(c), respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any arbitration
proceeding shall be borne by the Company.
17. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
18. COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
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19. ATTORNEYS' FEES. In the event of any litigation or arbitration
arising under or in connection with this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees as determined by the court or
arbitration panel, as the case may be. Each party to this Agreement represents
and warrants that it has been represented by counsel in the negotiation and
execution of this Agreement, including without limitation the provisions set
forth in this paragraph 19.
20. CHANGE IN CONTROL.
(a) Employee understands and acknowledges that the Company may be
merged or consolidated with or into another entity.
(b) In the event of a pending Change in Control wherein the Employee
has not received written notice at least fifteen (15) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of the Company's business
and/or assets that such successor is willing as of the closing to assume and
agree to perform the Company's obligations under this Agreement in the same
manner and to the same extent that the Company is hereby required to perform,
such Change in Control shall be deemed to be a termination of this Agreement by
the Company and the amount of the lump-sum severance payment due to Employee
shall be four (4) times the Employee's annual salary immediately prior to Change
in Control and the non-competition provisions of paragraph 9 shall not apply
whatsoever. Payment shall be made either at closing of the transaction if
notice is served at least five (5) days before closing or within ten (10) days
of Employee's written notice.
(c) In any Change in Control situation in which Employee has received
written notice from the successor to the Company that such pending successor is
willing to assume the Company's obligations hereunder or Employee receives
notice after the Change in Control that Employee is being terminated, Employee
may nonetheless, at his sole discretion, elect to terminate this Agreement by
providing written notice to the Company at any time prior to closing of the
transaction and up to two (2) years after the closing of the transaction giving
rise to the Change in Control. In such case, the amount of the lump-sum
severance payment due to Employee shall be four times Employee's annual salary
immediately prior to Change in Control and the non-competition provisions of
paragraph 9 shall all apply. Payment shall be made either at closing if notice
is served at least five (5) days before closing or within ten (10) days of
written notice by Employee.
(d) For purposes of applying paragraph 4 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in order
to comply with then Securities and Exchange Commission's regulations to elect
whether to exercise and sell all or any of his vested options to purchase Common
Stock of the Company, including any options with accelerated vesting under the
provisions of the Company's 1995 Stock Option Plan, as amended or any warrants,
such that he may convert the options or warrants to shares of Common Stock of
the Company at or prior to the closing of the transaction giving rise to the
Change in Control, if he so desires.
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(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the "Original
Directors") or (B) who thereafter are elected to the Board of Directors
of the Company and whose election, or nomination for election, to the
Board of Directors of the Company was approved by a vote of at least
two-thirds (2/3) of the Original Directors then still in office (such
directors becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board of Directors of the
Company and whose election, or nomination for election, to the Board of
Directors of the Company was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election), cease for any reason to
constitute a majority of the members of the Board of Directors of the
Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other agreement
with, or plan of the Company, including but not limited to stock options,
warrants and other long-term incentives (in the aggregate
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"Total Payments") would be subject to the excise tax imposed by Section 4999
of the Code, as amended (or any similar tax that may hereafter be imposed) or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under this
paragraph to an additional amount (the "Gross-Up Payment") such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any Excise Tax, imposed upon such additional amount,
Employee will retain an amount equal to the Excise Tax imposed on the Total
Payments.
For purposes of this paragraph Employee's applicable Federal, state and
local taxes shall be computed at the maximum marginal rates, taking into account
the effect of any loss of personal exemptions resulting from receipt of the
Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the assumptions
to be used in determining the Gross-Up Payment, shall be made by the Company's
current independent accounting firm, or such other firm as the Company may
designate in writing prior to a Change in Control (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and Employee
within twenty business days of the receipt of notice from Employee that there
will likely be a Change in Control, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the party effecting the Change in Control or is otherwise
unavailable, Employee may appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm with respect to such determinations described above shall be
borne solely by the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by the
Internal Revenue Service that Employee owes an amount of Excise Tax greater than
the amount determined pursuant to this paragraph; PROVIDED, that Employee shall
be entitled to reimbursement by the Company of all fees and expenses reasonably
incurred by Employee in contesting such determination. In the event the
Internal Revenue Service or any court of competent jurisdiction determines that
Employee owes an amount of Excise Tax that is either greater than the amount
previously taken into account and paid under this Agreement, the Company shall
promptly pay to Employee the amount of such shortfall. In the case of any
payment that the Company is required to make to Employee pursuant to the
preceding sentence (a "Later Payment"), the Company shall also pay to Employee
an additional amount such that after payment by Employee of all of Employee's
applicable Federal, state and local taxes, including any interest and penalties
assessed by any taxing authority, on such additional amount, Employee will
retain an amount equal to the total of Employee's applicable Federal, state and
local taxes, including any interest and penalties assessed by any taxing
authority, arising due to the Later Payment.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
----------------------
Title:
EMPLOYEE:
/s/Joe A. Rose
-----------------------
JOE A. ROSE
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EXHIBIT 10.69
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") by and between
F.Y.I. Incorporated, a Delaware corporation (the "Company"), and Timothy J.
Barker ("Employee") is hereby entered into and effective as of January 1, 2000.
This Agreement hereby supersedes any other employment agreements or
understandings; written or oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in the
business of providing document management services.
Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of his employment with the Company, has and will
continue to become familiar with and aware of information as to the Company's
customers, specific manner of doing business, including the processes,
techniques and trade secrets utilized by the Company, and future plans with
respect thereto, all of which has been and will be established and maintained at
great expense to the Company; this information is a trade secret and constitutes
the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Executive Vice President
and Chief Financial Officer. As such, Employee shall have responsibilities,
duties and authority reasonably accorded to and expected of an Executive Vice
President and Chief Financial Officer and will report directly to the Chief
Executive Officer of the Company. Employee hereby accepts this employment upon
the terms and conditions herein contained and, subject to paragraph 1(b), agrees
to devote his working time, attention and efforts to promote and further the
business of the Company.
<PAGE>
(b) Employee shall not, during the term of his employment hereunder,
be engaged in any other business activity pursued for gain, profit or other
pecuniary advantage except to the extent that such activity (i) does not
interfere with Employee's duties and responsibilities hereunder and (ii) does
not violate paragraph 3 hereof. The foregoing limitations shall not be
construed as prohibiting Employee from serving on the boards of directors of
other companies or making personal investments in such form or manner as will
require his services, other than to a minimal extent, in the operation or
affairs of the companies or enterprises in which such investments are made nor
violate the terms of paragraph 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(a) BASE SALARY. The base salary payable to Employee shall be
$255,000 per year, payable on a regular basis in accordance with the Company's
standard payroll procedures but not less than bi-monthly. On at least an annual
basis, the Board of Directors of the Company (the "Board") will review
Employee's performance and may make increases to such base salary if, in its
discretion, any such increase is warranted. Such recommended increase would, in
all likelihood, require approval by the Board or a duly constituted committee
thereof.
(b) INCENTIVE BONUS PLAN. For 1999 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan setting forth the
criteria under which Employee and other officers and key employees will be
eligible to receive year-end bonus awards. Employee shall be eligible for a
bonus opportunity of up to 50% of his base salary in accordance with this
Incentive Bonus Plan. For 2000, Employee has already been awarded
Warrant No. 15 as partial payment for any 2000 Bonus opportunity. In addition,
a $15,000 cash bonus will be paid if the Company makes the 2000 EPS earning
target of $1.93. The award of any bonus shall be based on the total performance
of the Company, but shall be related to the earnings per share growth of the
Company and shall be payable in various increments based on the performance of
the Company versus targeted goals. The incremental payments and the Company's
targeted performance shall be determined by the Board or the compensation
committee thereof.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and his
dependent family members under health, hospitalization, disability,
dental, life and other employee benefit plans that the Company may have
in effect from time to time, with benefits provided to Employee under
this clause to include coverage for all pre-existing conditions and not
less favorable than the benefits provided to other Company executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the performance
of his services pursuant to this
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Agreement. All reimbursable expenses shall be appropriately documented
in reasonable detail by Employee upon submission of any request for
reimbursement, and in a format and manner consistent with the Company's
expense reporting policy.
(iii) Four (4) weeks paid vacation for each year during the period
of employment or such greater amount as may be afforded officers and key
employees generally under the Company's policies in effect from time to
time (pro rated for any year in which Employee is employed for less than
the full year).
(iv) An automobile allowance in the amount of $500 per month.
(v) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide employee benefits
as available from time to time, which will include participation in the
Company's 1995 Long-Term Incentive Compensation Plan.
(vi) The Company shall establish a 401(k) Plan and Non-Qualified
Savings Plan and the Employee may participate in this 401(k) Plan and
Non-Qualified Savings Plan. The terms of such Plan shall be approved by
the Board or by the compensation committee thereof.
(vii) The Company shall pay for Employee's attendance at
continuing education seminars to maintain Certified Public Accounting
certification to the extent that Employees' schedule allows and reimburse
Employee for (a) any registration fee and (b) travel and lodging to the
extent such seminars are not available in Dallas, Texas, and (c) fees for
AICPA and other state and local CPA associations.
(viii) The Company shall cover Employee under its Director and
Officer Insurance Policy at the same level of coverage as other
comparably situated executives and will purchase appropriate riders to
such policy to cover malpractice claims.
(ix) The Company shall provide Employee with such other
compensation as may be determined by the Board or compensation committee.
3. NON-COMPETITION AGREEMENT.
(a) Subject to Section 5(d), Employee will not, during the
period of his employment by or with the Company, and for a period of two (2)
years immediately following the termination of his employment under this
Agreement, for any reason whatsoever, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
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<PAGE>
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as
an employee, independent contractor, consultant or advisor, or as
a sales representative, in any business selling any products or
services in direct competition with the Company, within 100 miles
of (i) the principal executive offices of the Company or (ii) any
place to which the Company provides products or services or in
which the Company is in the process of initiating business
operations during the term of this covenant (the "Territory");
(ii) call upon any person who is, at that time, within
the Territory, an employee of the Company (including the
subsidiaries thereof) in a managerial capacity for the purpose or
with the intent of enticing such employee away from or out of the
employ of the Company (including the subsidiaries thereof),
provided that Employee shall be permitted to call upon and hire
any member of his immediate family;
(iii) call upon any person or entity which is, at that
time, or which has been, within one (1) year prior to that time, a
customer of the Company (including the subsidiaries thereof)
within the Territory for the purpose of soliciting or selling
products or services in direct competition with the Company within
the Territory;
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which
candidate was either called upon by the Company (including the
subsidiaries thereof) or for which the Company made an acquisition
analysis, for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or
proposed, of the Company (or the Subsidiaries thereof) to any
person, firm, partnership, corporation or business for any reason
or purpose whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than three percent
(3%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company for which
it would have no other adequate remedy, Employee agrees that the foregoing
covenant may be enforced by the Company in the event of breach by his by
injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company (including the Company's subsidiaries) on the date
of the execution of this Agreement and the current plans of the Company
(including the Company's subsidiaries); but it is also the intent of the Company
and
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Employee that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company (including the
Company's subsidiaries) throughout the term of this covenant, whether before
or after the date of termination of the employment of Employee, subject to
the following paragraph. For example, if, during the term of this Agreement,
the Company (including the Company's subsidiaries) engages in new and
different activities, enters a new business or established new locations for
its current activities or business in addition to or other than the
activities or business enumerated under the Recitals above or the locations
currently established therefore, then Employee will be precluded from
soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business
within 100 miles of its then-established operating location(s) through the
term of this covenant.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company (including the
Company's subsidiaries), or similar activities or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of Employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company (including the Company's subsidiaries) shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is specifically
agreed that the period of two (2) years stated at the beginning of this
paragraph 3, during which the agreements and covenants of Employee made in this
paragraph 3 shall be effective, shall be computed by excluding from such
computation any time during which Employee is in violation of any provision of
this paragraph 3.
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<PAGE>
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be again requested by the Board
to relocate from his present residence to another geographic location in order
to more efficiently carry out his duties and responsibilities under this
Agreement or as part of a promotion or other increase in duties and
responsibilities. In the event that Employee is requested to relocate and
agrees to do so, the Company will pay all relocation costs to move Employee, his
immediate family and their personal property and effects. Such costs may
include, by way of example, but are not limited to, pre-move visits to search
for a new residence, investigate schools or for other purposes; temporary
lodging and living costs prior to moving into a new permanent residence;
duplicate home carrying costs; all closing costs on the sale of Employee's
present residence and on the purchase of a comparable residence in the new
location; and added income taxes that Employee may incur, as a result of any
payment hereunder, to the extent any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use his best efforts to incur only those costs
which are reasonable and necessary to effect a smooth, efficient and orderly
relocation with minimal disruption to the business affairs of the Company and
the personal life of Employee and his family.
(b) Notwithstanding the above, if Employee is requested by the Board
to relocate and Employee refuses, such refusal shall not constitute "good cause"
for termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for three years (the
"Initial Term"). On the Annual anniversary, the Agreement shall automatically
renew for a two-year period, unless a written notice is given that it will not
be renewed. This Agreement and Employee's employment may be terminated in any
one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from his
full-time duties hereunder for four (4) consecutive months, then thirty
(30) days after receiving written notice (which notice may occur before
or after the end of such four (4) month period, but which shall not be
effective earlier than the last day of such four (4) month period), the
Company may terminate Employee's employment hereunder provided Employee
is unable to resume his full-time duties at the conclusion of such notice
period. Also, Employee may terminate his employment hereunder if his
health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental
health or his life, provided that Employee shall have furnished the
Company with a written statement
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<PAGE>
from a qualified doctor to such effect and provided, further, that, at
the Company's request made within thirty (30) days of the date of such
written statement, Employee shall submit to an examination by a doctor
selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion
of Employee's doctor. In the event this Agreement is terminated as a
result of Employee's disability, Employee shall receive from the Company,
in a lump-sum payment due within ten (10) days of the effective date of
termination, the base salary at the rate then in effect for two years.
(c) GOOD CAUSE. The Company may terminate the Agreement ten
(10) days after written notice to Employee for good cause, which shall
be: (1) Employee's material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional
nonperformance (continuing for ten (10) days after receipt of the written
notice) of any of Employee's material duties and responsibilities
hereunder; (3) Employee's dishonesty, fraud or misconduct with respect to
the business or affairs of the Company which materially and adversely
affects the operations or reputation of the Company; (4) Employee's
conviction of a felony crime; or (5) chronic alcohol abuse or illegal
drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance
compensation.
(d) WITHOUT CAUSE. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the Employee. Should Employee be terminated by the Company
without cause, Employee shall receive from the Company, in a lump-sum
payment due on the effective date of termination, the base salary at the
rate then in effect for two (2) years ("Severance Pay"). Further, any
termination without cause by the Company shall operate to shorten the
period set forth in paragraph 3(a) and during which the terms of
paragraph 3 apply to one (1) year from the date of termination of
employment.
(e) CHANGE IN CONTROL. Refer to paragraph 12 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. The Employee may
terminate his employment hereunder for "Good Reason." As used herein,
"Good Reason" shall mean the continuance of any of the following after 10
days' prior written notice by Employee to the Company, specifying the
basis for such Employee's having Good Reason to terminate this Agreement:
(i) the assignment to Employee of any duties materially
and adversely inconsistent with the Employee's position as
specified in paragraph 1 hereof (or such other position to which
he may be promoted), including status, offices, responsibilities
or persons to whom the Employee reports as contemplated under
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paragraph 1 of this Agreement, or any other action by the Company
which results in a material and adverse change in such position,
status, offices, titles or responsibilities;
(ii) Employee's removal from, or failure to be
reappointed or reelected to, Employee's position under this
Agreement, except as contemplated by paragraphs 5(a), (b), (c) and
(e); or
(iii) any other material breach of this Agreement by the
Company, including the failure to pay Employee on a timely basis
the amounts to which he is entitled under this Agreement.
In the event of any termination by the Employee for Good Reason, as determined
by a court of competent jurisdiction or pursuant to the provisions of paragraph
16 below, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder, provided, that Employee need not seek any such
determination prior to terminating his employment for Good Reason and receiving
the Severance Pay set forth in the following sentence. In addition, Employee
shall be entitled to receive Severance Pay for two (2) years. Further, none of
the provisions of paragraph 3 shall apply in the event this Agreement is
terminated by Employee for Good Reason.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns
or otherwise terminates his employment without Good Reason pursuant to
paragraph 5(f), Employee shall give a minimum of thirty (30) days written
notice to the Company and shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation earned
and all benefits vested and reimbursements due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in the manner expressly
provided above or in paragraph 16. All other rights and obligations of the
Company and Employee under this Agreement shall cease as of the effective date
of termination, except that the Company's obligations under paragraph 9 herein
and Employee's obligations, if any, under paragraphs 3, 6, 7, 8 and 10 herein
shall survive such termination in accordance with their terms.
6. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company or
its representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company and be subject at all
times to its discretion and control. Likewise, all correspondence, reports,
records, charts, advertising materials and other similar data pertaining to the
business, activities or future plans of the Company which is collected by
Employee shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
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7. INVENTIONS. Employee shall disclose promptly to the Company any
and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of the Company and which Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that he will not, during or after
the term of this Agreement with the Company, disclose the specific terms of the
Company's relationships or agreements with its significant vendors or customers
or any other significant and material trade secret of the Company, whether in
existence or proposed, to any person, firm, partnership, corporation or business
for any reason or purpose whatsoever, except as is disclosed in the ordinary
course of business, unless compelled by court order or upon advice of counsel.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement or is or was an officer of the Company, then the Company
shall indemnify Employee against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, as actually and reasonably
incurred by Employee in connection therewith to the fullest extent authorized by
Delaware law. In the event that both Employee and the Company are made a party
to the same third-party action, complaint, suit or proceeding, the Company
agrees to engage competent legal representation, and Employee agrees to use the
same representation, provided that if counsel selected by the Company shall have
a conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all times
to use his best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to the Company for errors or omissions made in
good faith where Employee has not exhibited gross, willful and wanton negligence
and misconduct or performed criminal and fraudulent acts which materially damage
the business of the Company.
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and his employment
by the Company and the performance of his duties hereunder will not violate or
be a breach of any agreement with a former employer, client or any other person
or entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company
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<PAGE>
based upon or arising out of any non-competition agreement, invention or
secrecy agreement between Employee and such third party which was in
existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
12. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the Employee
has not received written notice at least fifteen (15) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of the Company's business
and/or assets that such successor is willing as of the closing to assume and
agree to perform the Company's obligations under this Agreement in the same
manner and to the same extent that the Company is hereby required to perform,
such Change in Control shall be deemed to be a termination of this Agreement by
the Company and the amount of the lump-sum severance payment due to Employee
shall be 2 1/2 times Employee's annual salary immediately prior to the Change in
Control and the non-competition provisions of paragraph 3 shall not apply
whatsoever. Payment shall be made either at closing of the transaction if
notice is served at least five (5) days before closing or within ten (10) days
of Employee's written notice.
(c) In any Change in Control situation in which Employee has received
written notice from the successor to the Company that such pending successor is
willing to assume the Company's obligations hereunder or Employee receives
notice after the Change in Control that Employee is being terminated, Employee
may nonetheless, at his sole discretion, elect to terminate this Agreement by
providing written notice to the Company at any time prior to closing of the
transaction and up to two (2) years after the closing of the transaction giving
rise to the Change in Control. In such case, the amount of the lump-sum
severance payment due to Employee shall be 2 1/2 times Employee's annual salary
immediately prior to the Change in Control and the non-competition provisions of
paragraph 3 shall all apply. Payment shall be made either at closing if notice
is served at least five (5) days before closing or within ten (10) days of
written notice by Employee.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
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<PAGE>
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in order
to comply with then Securities and Exchange Commission's regulations to elect
whether to exercise and sell all or any of his vested options to purchase Common
Stock of the Company, including any options with accelerated vesting under the
provisions of the Company's 1995 Stock Option Plan, as amended or any warrants,
such that he may convert the options or warrants to shares of Common Stock of
the Company at or prior to the closing of the transaction giving rise to the
Change in Control, if he so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the "Original
Directors") or (B) who thereafter are elected to the Board of Directors
of the Company and whose election, or nomination for election, to the
Board of Directors of the Company was approved by a vote of at least
two-thirds (2/3) of the Original Directors then still in office (such
directors becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board of Directors of the
Company and whose election, or nomination for election, to the Board of
Directors of the Company was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election), cease for any reason to
constitute a majority of the members of the Board of Directors of the
Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a
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<PAGE>
substantial portion of the Company's assets (i.e., 50% or more of the
total assets of the Company).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other agreement
with, or plan of the Company, including but not limited to stock options,
warrants and other long-term incentives (in the aggregate "Total Payments")
would be subject to the excise tax imposed by Section 4999 of the Code, as
amended (or any similar tax that may hereafter be imposed) or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Employee shall be entitled under this paragraph to an
additional amount (the "Gross-Up Payment") such that after payment by Employee
of all of Employee's applicable Federal, state and local taxes, including any
Excise Tax, imposed upon such additional amount, Employee will retain an amount
equal to the Excise Tax imposed on the Total Payments.
For purposes of this paragraph Employee's applicable Federal, state and
local taxes shall be computed at the maximum marginal rates, taking into account
the effect of any loss of personal exemptions resulting from receipt of the
Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the assumptions
to be used in determining the Gross-Up Payment, shall be made by the Company's
current independent accounting firm, or such other firm as the Company may
designate in writing prior to a Change in Control (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and Employee
within twenty business days of the receipt of notice from Employee that there
will likely be a Change in Control, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the party effecting the Change in Control or is otherwise
unavailable, Employee may appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm with respect to such determinations described above shall be
borne solely by the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by the
Internal Revenue Service that Employee owes an amount of Excise Tax greater than
the amount determined pursuant to this paragraph; PROVIDED, that Employee shall
be entitled to reimbursement by the Company of all fees and expenses reasonably
incurred by Employee in contesting such determination. In the event the
Internal Revenue Service or any court of competent jurisdiction determines that
Employee owes an amount of Excise Tax that is either greater than the amount
previously taken into account and paid under this Agreement, the Company shall
promptly pay to Employee the amount of such shortfall. In the case of any
payment that the Company is required to make to Employee pursuant to the
preceding sentence (a "Later Payment"), the Company shall also pay to Employee
an additional amount such that after payment by Employee of all of Employee's
applicable Federal, state and local taxes,
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<PAGE>
including any interest and penalties assessed by any taxing authority, on
such additional amount, Employee will retain an amount equal to the total of
Employee's applicable Federal, state and local taxes, including any interest
and penalties assessed by any taxing authority, arising due to the Later
Payment.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Employee and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This written Agreement may not be later modified
except by a further writing signed by a duly authorized officer of the Company
and Employee, and no term of this Agreement may be waived except by writing
signed by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
<TABLE>
<S> <C>
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attn. Margot Lebenberg, General Counsel
with a copy to: Charles C. Reeder, Esq.
Locke Liddell & Sapp LLP
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
To Employee: Timothy J. Barker
358 Hearthstone Lane
Coppell, TX 75019
</TABLE>
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
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<PAGE>
16. ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order
back-pay, severance compensation, vesting of options (or cash compensation in
lieu of vesting of options), reimbursement of costs, including those incurred
to enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee was terminated without disability or good cause, as
defined in paragraphs 5(b) and 5(c), respectively, or that the Company has
otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on
the arbitrators' award in any court having jurisdiction. The direct expense
of any arbitration proceeding shall be borne by the Company.
17. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Delaware.
EMPLOYEE:
/s/Timothy J. Barker
------------------------------------
F.Y.I. INCORPORATED
/s/Ed H. Bowman, Jr.
------------------------------------
By: Ed H. Bowman, Jr.
Title: President and Chief Executive
Officer
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<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(DAVID BYERLEY)
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into effective as of January 1, 2000 by and between David
Byerley ("Employee") and F.Y.I. Incorporated, a Delaware corporation (the
"Company"). This Agreement hereby supersedes any other employment agreements
or understandings, written or oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily
in the document management services business (the "Business").
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the
Company, has and will continue to become familiar with and aware of
information as to the Company's customers, specific manner of doing business,
including the processes, techniques and trade secrets utilized by the
Company, and future plans with respect thereto, all of which has been and
will be established and maintained at great expense to the Company; this
information is a trade secret and constitutes the valuable goodwill of the
Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as a Senior Vice
President-Corporate Development. As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and expected of
a Senior Vice President-Corporate Development. Employee hereby accepts this
employment upon the terms and conditions herein contained and, subject to
paragraph 1(b), agrees to devote his working time, attention and efforts to
promote and further the business of the Company.
(b) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain, profit
or other pecuniary advantage except to the extent that such activity does not
interfere with Employee's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting Employee from
making personal investments in such form or manner as will neither require
his services in the operation or affairs of the companies or enterprises in
which such investments are made.
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<PAGE>
2. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(a) BASE SALARY; ANNUAL BONUS. The base salary payable to
Employee shall be $165,000 per year, payable on a regular basis in accordance
with the Company's standard payroll procedures but not less than monthly
(pro-rated for any year in which Employee is employed for less than the full
year) beginning January 1, 2000. On at least an annual basis the Board of
Directors (the "Board") will review Employee's performance and make increases
to such base salary if, in its discretionary, any such increase is warranted.
For 2000 and subsequent years, a written Bonus Plan attached hereto on
EXHIBIT A sets forth the criteria under which Employee will be eligible to
receive year-end bonus awards. The incremental payments and the Company's
targeted performance shall be determined by the Board or the compensation
committee thereof.
(b) OTHER COMPENSATION. Employee shall be entitled to receive
additional benefits and compensation from the Company in such form and to
such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental and other insurance plans that the Company may have
in effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement and a $500 per
month car allowance (determined on a pre-tax basis). All reimbursable
expenses shall be appropriately documented in reasonable detail by
Employee upon submission of any request for reimbursement, and in a
format and manner consistent with the Company's expense reporting
policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (pro-rated for any year in which Employee is employed for
less than the full year).
(iv) Provided that Employee is employed by the Company at
November 1, 2000, Employee shall be granted options to acquire 10,000
shares of Common Stock of the Company at the fair market value thereof
under the terms of the Company's 1995 Stock Option Plan (the "1995
Plan"). Such options shall be exercisable in twenty percent (20%)
increments on each anniversary of the date of grant for so long as
Employee is employed by the Company and in accordance with the terms
set forth in the related Stock Option Grant Certificate and the 1995
Plan.
(v) The Company shall provide Employee with other
executive perquisites as may be available to or deemed appropriate for
Employee by the
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<PAGE>
Board and participation in all other Company-wide employee benefits as
available from time to time.
3. PLACE OF PERFORMANCE. [INTENTIONALLY OMITTED.]
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue until December 31, 2001
(the "Term"). This Agreement and Employee's employment may be terminated in
any one of the following ways:
(a) DEATH. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
However, any bonuses or incentive payments from companies being acquired or
acquired through the direct and material efforts of Employee prior to death
will remain due and payable to the Employee's estate in accordance with the
schedule listed on Exhibit A.
(b) DISABILITY. The Company will make efforts to reasonably
accommodate Employee as required by applicable state or federal disability
laws. However, the parties irrebutably presume that, given Employee's
position, it would be an undue hardship to the Company if Employee is absent
for more than three (3) consecutive months. Therefore, if as a result of
incapacity due to physical or mental illness or injury, Employee shall have
been absent from his full-time duties hereunder for three (3) consecutive
months, then thirty (30) days after receiving written notice (which notice
may occur before or after the end of such three (3) month period, but which
shall not be effective earlier than the last day of such three (3) month
period), the Company may terminate Employee's employment hereunder provided
Employee is unable to resume his full-time duties at the conclusion of such
notice period. Also, Employee may terminate his employment hereunder if his
health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental
health or his life, provided that Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect and provided,
further, that at the Company's request made within thirty (30) days of the
date of such written statement, Employee shall submit to an examination by a
doctor selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion of
Employee's doctor. In the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company, in a lump-sum
payment due within ten (10) days of the effective date of termination, the
base salary at the rate then in effect for six (6) months. In addition, any
bonuses or incentive payments from companies being acquired or acquired
through the direct and material efforts of Employee prior to termination for
disability will remain due and payable in accordance with the schedule listed
on Exhibit A.
(c) GOOD CAUSE. The Company may terminate the Agreement five (5)
days after written notice to Employee for good cause, which shall be: (i)
Employee's material breach of this Agreement; (ii) Employee's negligence in the
performance or nonperformance (continuing for five (5) days after receipt of the
written notice) of any of Employee's material duties and responsibilities
hereunder; (iii) Employee's dishonesty, breach of confidentiality, including but
not limited to any discussions of the Company's strategy, acquisitions or
acquisition candidates, a breach of any non competition agreement, fraud or
misconduct with respect to the business or affairs of the Company that adversely
affects the operations or reputation of the Company; (iv)
Page 3
<PAGE>
Employee's conviction of a felony crime; or (v) chronic alcohol abuse or
illegal drug abuse by Employee. In the event of a termination for good cause,
as enumerated above, Employee shall have no right to any severance
compensation.
(d) WITHOUT CAUSE. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement and
Employee's employment, effective ten (10) days after written notice is
provided to Employee. Employee may only be terminated without cause by the
Company during the Term hereof if such termination is approved by the Board
of Directors of the Company. Should Employee be terminated by the Company
without cause, Employee shall receive from the Company, in a lump-sum payment
due on the effective date of termination, the base salary at the rate then in
effect for whatever time period is remaining under the Term of this Agreement
or for six (6) months, whichever is greater. In addition, any bonuses or
incentive payments from companies being acquired or acquired through the
direct and material efforts of Employee prior to termination without cause
will remain due and payable in accordance with the schedule listed on Exhibit A.
(e) CHANGE IN CONTROL. See paragraph 20 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate his employment hereunder for "Good Reason." As used herein, "Good
Reason" shall mean the continuance of any of the following after fifteen (15)
days' prior written notice by Employee to the Company, specifying the basis
for such Employee's having Good Reason to terminate this Agreement:
(i) Employee's removal from, or failure to be reappointed
or reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 4(a), (b), (c) and (e); or
(ii) Any other material breach of this Agreement by the
Company that is not cured within the fifteen (15) day time period set
forth in paragraph 4(f) above, including the failure to pay Employee on
a timely basis the amounts to which he is entitled under this
Agreement.
In the event of any dispute with respect to the termination by the Employee
for Good Reason, such dispute shall be resolved pursuant to the provisions of
paragraph 16 below. In the event that it is determined that Good Reason did
exist, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Should Employee terminate his employment for
Good Reason, Employee shall receive from the Company, in a lump-sum payment
due on the effective date of termination, the base salary at the rate then in
effect for whatever time period is remaining under the Term of this Agreement
or for six (6) months, whichever amount is greater. In addition, any bonuses
or incentive payments from companies being acquired or acquired through the
direct and material efforts of Employee prior to termination will remain due
and payable in accordance with the schedule listed on Exhibit A.
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<PAGE>
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns
or otherwise terminates his employment without Good Reason pursuant to
paragraph 4(f) or if this Agreement is not renewed at the end of the Term,
Employee shall receive no severance compensation. However, any bonuses or
incentive payments from companies being acquired or acquired through the
direct and material efforts of Employee prior to termination by employee
without cause will remain due and payable to Employee in accordance with the
schedule listed on Exhibit A. Upon termination of this Agreement for any
reason provided in clauses (a) through (g) above, Employee shall be entitled
to receive all compensation earned and all benefits and reimbursements vested
or due through the effective date of termination. Additional compensation
subsequent to termination, if any, will be due and payable to Employee only
to the extent and in the manner expressly provided above or in paragraph 16.
All other rights and obligations of the Company and Employee under this
Agreement shall cease as of the effective date of termination, except that
the Company's obligations under paragraph 10 herein and Employee's
obligations under paragraphs 5, 6, 7, 8, 9 and 11 herein shall survive such
termination in accordance with their terms.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company
(including the Company's subsidiaries) or their representatives, vendors or
customers, acquisition candidate lists and all related documentation which
pertain to the business of the Company (including the Company's subsidiaries)
shall be and remain the property of the Company, as the case may be, and be
subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company (including the Company's subsidiaries) that is collected by Employee
shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
6. INVENTIONS. Employee shall disclose promptly to the Company any
and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made
by Employee, solely or jointly with another, during the period of employment
or within one (1) year thereafter, and which are directly related to the
business or activities of the Company (including the Company's subsidiaries)
and that Employee conceives as a result of his employment by the Company.
Employee hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to apply for and obtain letters patent of
the United States or any foreign country or to otherwise protect the
Company's interest therein.
7. TRADE SECRETS. Employee agrees that he will not, during or after
the term of this Agreement with the Company, disclose the specific terms of
the Company's (including the Company's subsidiaries) relationships or
agreements with their respective significant vendors or customers or any
other significant and material trade secret of the Company (including the
Company's subsidiaries), whether in existence or proposed, to any person,
firm, partnership, corporation or business for any reason or purpose
whatsoever.
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<PAGE>
8. DISCLOSURE OF INFORMATION. Employee agrees that for a period of
three (3) years after the date hereof or during the Term of this Agreement
and for a period of three (3) years thereafter, whichever is longer, without
the prior written consent of the Company, Employee shall not, directly or
indirectly, through any form of ownership, in any individual or
representative or affiliated capacity whatsoever, except as may be required
by law, reveal, divulge, disclose or communicate to any person, firm,
association, corporation or other entity in any manner whatsoever information
of any kind, nature or description concerning: (i) the names of any prior or
present suppliers, customers or acquisition candidates with respect to the
Business, (ii) the prices for products or services with respect to the
Business, (iii) the names of personnel with respect to the Business, (iv) the
manner of operation with respect to the Business, (v) the plans, trade
secrets, or other data of any kind, nature or description, whether tangible
or intangible, with respect to the Business, or (vi) any other financial,
statistical or other information regarding the business acquired by the
Company that the Company designates or treats as confidential or proprietary.
The agreements set forth herein shall not apply to any information that at
the time of disclosure or thereafter is generally available to and known by
the public (other than as a result of a disclosure directly or indirectly by
Employee in violation of this Agreement). Without regard to whether any or
all of the foregoing matters would be deemed confidential, material or
important, the parties hereto stipulate that as between them, the same are
important, material and confidential and gravely affect the effective and
successful conduct of the Business and its goodwill.
9. NONCOMPETITION. (a) Employee agrees that during the Term of this
Agreement and, upon termination of Employee's employment by the Company for a
period of (i) two (2) years thereafter in the case of termination pursuant to
sections 4(b), 4(c) and 4(f) of this Agreement and (ii) one (1) year in the
case of termination pursuant to sections 4(d) and 4(e) of this Agreement or
if this Agreement is not renewed, he shall not:
(i) Call upon, solicit, divert, take away or attempt to
call upon, solicit, divert or take away any existing customers,
suppliers, businesses, or accounts or acquisition candidates who have
been contacted by the Company or who are on acquisition target lists of
the Company of the Business in connection with any business
substantially similar to the Business in the territory defined as 100
miles in and around the Company's and its affiliates' operations (the
"Territory");
(ii) Hire, attempt to hire, contact or solicit with
respect to hiring for himself or on behalf of any other person any
present employee of the Company in the Business;
(iii) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the
Business in the Territory;
(iv) Do any act that Employee knew or reasonably should
have known might directly injure the Company in any material respect or
that might divert customers, suppliers or employees or acquisition
candidates who have been contacted by the Company or who are on
acquisition target lists of the Company from the Business; and
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<PAGE>
(v) Without limiting the generality of the foregoing
provisions, conduct a business substantially similar to the Business
under the name "F.Y.I. Incorporated" or any other trade names,
trademarks or service marks heretofore used by the Company or its
affiliates.
The covenants in subsections (i) through (v) are intended to restrict
Employee from competing in any manner with the Company or the Business in the
activities that have heretofore been carried on by the Company or its
affiliates. The obligations set forth in subsections (i) through (v) above
shall apply to actions by Employee, through any form of ownership, and whether
as principal, officer, director, agent, employee, employer, consultant,
stockholder or holder of any equity security (beneficially or as trustee of
any trust), lender, partner, joint venturer or in any other individual or
representative or affiliated capacity whatsoever. However, none of the
foregoing shall prevent Employee from being the holder of up to 5.0% in the
aggregate of any class of securities of any corporation engaged in the
activities described in subsection (i) through (v) above, provided that such
securities are listed on a national securities exchange or reported on the
Nasdaq National Market.
10. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement, then the Company shall indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all
times to use his best efforts to faithfully discharge his duties under this
Agreement, Employee shall not be held liable to the Company for errors or
omissions made in good faith where Employee has not exhibited negligence or
performed criminal and fraudulent acts which damage the business of the
Company.
11. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and his
employment by the Company and the performance of his duties hereunder will not
violate or be a breach of any agreement with a former employer, client or any
other person or entity. Further, Employee agrees to indemnify the Company for
any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
may hereafter come to have against the Company based upon or arising out of
any non-competition agreement, invention or secrecy agreement between Employee
and such third party which was in existence as of the date of this Agreement.
12. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding, this Agreement shall be binding upon, inure to the benefit
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<PAGE>
of and be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the
final, complete and exclusive statement and expression of the agreement
between the Company and Employee and of all the terms of this Agreement, and
it cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This Agreement may not be later
modified except by a further writing signed by a duly authorized officer of
the Company and Employee, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attn: Margot T. Lebenberg, Esq.
To Employee: David Byerley
885 Shenton Road
West Chester, PA 19380
Notice shall be deemed given and effective three (3) days after the deposit in
the United States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to
any injured party. The arbitrators shall have the authority to order back-pay,
severance compensation, vesting of options (or cash compensation in lieu of
vesting of options), reimbursement of costs, including those incurred to
enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee
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<PAGE>
was terminated without disability or good cause, as defined in paragraphs 4(b)
and 4(c), respectively, or that the Company has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be
final and binding. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. The costs of any arbitration proceeding shall be
borne by the party or parties not prevailing in such proceeding as determined
by the arbitrators.
17. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
18. COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same instrument.
19. ATTORNEYS' FEES. In the event of any litigation or arbitration
arising under or in connection with this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees as determined by the court or
arbitration panel, as the case may be. Each party to this Agreement represents
and warrants that it has been represented by counsel in the negotiation and
execution of this Agreement, including without limitation the provisions set
forth in this paragraph 19.
20. CHANGE IN CONTROL.
(a) Employee understands and acknowledges that the Company may
be merged or consolidated with or into another entity.
(b) In the event of a pending Change in Control wherein the
Employee has not received written notice at least fifteen (15) business days
prior to the anticipated closing date of the transaction giving rise to the
Change in Control from the successor to all or a substantial portion of the
Company's business and/or assets that such successor is willing as of the
closing to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company is hereby
required to perform, such Change in Control shall be deemed to be a
termination of this Agreement by the Company and the amount of the lump-sum
severance payment due to Employee shall be two (2) times Employee's annual
salary immediately prior to Change in Control and the non-competition
provisions of paragraph 9 shall not apply whatsoever. Payment shall be made
either at closing of the transaction if notice served at least five (5) days
before closing or within ten (10) days of Employee's written notice.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such pending
successor is willing to assume the Company's obligations hereunder or Employee
receives notice after the Change in Control that Employee is being terminated,
Employee may nonetheless, at his sole discretion, elect to terminate this
Agreement by providing written notice to the Company at any time prior to
closing of the transaction and up to one (1) year after the closing of the
transaction giving rise to the Change in Control. In such case, the amount of
the lump-sum severance payment due to Employee shall be two (2) times
Employee's annual salary immediately prior to the Change in
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<PAGE>
Control and the non-competition provisions of paragraph 9 shall all apply.
Payment shall be made either at closing if notice is served at least five (5)
days before closing or within ten (10) days of written notice by Employee.
(d) For purposes of applying paragraph 4 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in order
to comply with the Securities and Exchange Commission's regulations to elect
whether to exercise and sell all or any of his vested options to purchase
Common Stock of the Company, including any options with accelerated vesting
under the provisions of the Company's 1995 Stock Option Plan, as amended or
any warrants, such that he may convert the options or warrants to shares of
Common Stock of the Company at or prior to the closing of the transaction
giving rise to the Change in Control, if he so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) of any voting security of the Company
and immediately after such acquisition such person is, directly or
indirectly, the Beneficial Owner of voting securities representing 50%
or more of the total voting power of all of the then-outstanding voting
securities of the Company;
(ii) the individuals (A) who, as of the effective date of
the Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board of
Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a
vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also
becoming "Additional Original Directors" immediately following their
election), cease for any reason to constitute a majority of the members
of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization or reorganization of the
Company, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result
in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
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<PAGE>
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
(iv) the stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company
(including the Company's subsidiaries)).
(f) Employee must be notified in writing by the Company at any
time that the Company or any member of its Board anticipates that a Change in
Control may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company, including but not limited to stock
options, warrants and other long-term incentives (in the aggregate "Total
Payments") would be subject to the excise tax imposed by Section 4999 of the
Code, as amended (or any similar tax that may hereafter be imposed) or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under this
paragraph to an additional amount (the "Gross-Up Payment") such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any Excise Tax, imposed upon such additional amount, Employee
will retain an amount equal to the Excise Tax imposed on the Total Payments.
For purposes of this paragraph Employee's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt
of the Gross-Up Payment.
All determinations required to be made under this Agreement,
including whether a Gross-Up Payment is required under this paragraph, and the
assumptions to be used in determining the Gross-Up Payment, shall be made by
the Company's current independent accounting firm, or such other firm as the
Company may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Company and Employee within twenty business days of the receipt of notice from
Employee that there will likely be a Change in Control, or such earlier time
as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the party effecting the Change in Control
or is otherwise unavailable, Employee may appoint another nationally
recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm with respect to such
determinations described above shall be borne solely by the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by
the Internal Revenue Service that Employee owes an amount of Excise Tax
greater than the amount determined pursuant to this paragraph; PROVIDED, that
Employee shall be entitled to reimbursement by the Company of all fees and
expenses reasonably incurred by Employee in contesting such determination. In
the
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event the Internal Revenue Service or any court of competent jurisdiction
determines that Employee owes an amount of Excise Tax that is either greater
than the amount previously taken into account and paid under this Agreement,
the Company shall promptly pay to Employee the amount of such shortfall. In
the case of any payment that the Company is required to make to Employee
pursuant to the preceding sentence (a "Later Payment"), the Company shall also
pay to Employee an additional amount such that after payment by Employee of
all of Employee's applicable Federal, state and local taxes, including any
interest and penalties assessed by any taxing authority, on such additional
amount, Employee will retain an amount equal to the total of Employee's
applicable Federal, state and local taxes, including any interest and
penalties assessed by any taxing authority, arising due to the Later Payment.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
------------------------------------------
Ed H. Bowman, Jr.
EMPLOYEE:
/s/ David Byerley
---------------------------------------------
DAVID BYERLEY
Page 13
<PAGE>
EXHIBIT 10.71
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, MARCH 16, 2010.
****************************************
Number 30
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to MARGOT
T. LEBENBERG or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company,
at $26.375 per share (the "Exercise Price"), ten thousand (10,000) shares of
the Company's Common Stock, par value $0.01 per share (the "Common Stock"),
subject to the provisions and upon the terms and conditions herein set forth.
The Exercise Price and the number of Warrant Shares are subject to
adjustment from time to time as provided in subsection 1.10.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT. (a) Subject to subsection
1.3, this Warrant may be exercised to purchase (i) 33 1/3% of the underlying
shares from and after 9:00 A.M. New York City time on March 16, 2001 (the
"First Exercise Date"); (ii) 33 1/3% of the underlying shares on March 16,
2002 (the "Second Exercise Date"); and the remaining (iii) 33 1/3% of the
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<PAGE>
underlying shares on March 16, 2003 (the "Third Exercise Date") to and
including 5:00 P.M. New York City time on March 16, 2010 (the "Expiration
Date"). Each of the First Exercise Date, the Second Exercise Date and the
Third Exercise Date are hereinafter referred to from time to time, as
applicable, as the "Exercise Date" and collectively from time to time as the
"Exercise Dates")."
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part, by:
(i) Surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed
by the Warrantholder of record and specifying the number of
Warrant Shares to be purchased, to the Company at the office of
the Company located at 3232 McKinney Avenue, Suite 900, Dallas,
Texas 75204 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than a
Saturday, Sunday or a day on which the New York Stock Exchange is
authorized to close or on which the Company is otherwise closed
for business (a "Nonbusiness Day") on or after 9:00 A.M. New York
City time on the Exercise Date but not later than 5:00 P.M. on the
Expiration Date (or 5:00 P.M. on the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day),
(ii) Delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form (such payment may be made by the
Warrantholder directly or by a designated broker pursuant to the
broker-assisted cashless exercise program instituted by the
Company, subject to subsection 1.5 herein) and
(iii) Such documentation as to the identity and authority
of the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in
denominations of at least one thousand (1,000) shares each or such other
denomination as may be specified by the Warrantholder and agreed upon by
the Company, and shall be issued in the name of the Warrantholder or, if
permitted by subsection 1.5 and in accordance with the provisions
thereof, such other
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<PAGE>
name as shall be designated in the Exercise Form. If this Warrant
shall have been exercised only in part, the Company shall, at the time
of delivery of the certificates for the Warrant Shares, deliver to the
Warrantholder (or designated broker, as the case may be) a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which
new Warrant shall in all other respects be identical with this
Warrant. No adjustments or payments shall be made on or in respect of
Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior
to the date as of which the Warrantholder shall be deemed to be the
record holder of such Warrant Shares.
(c) In the event of Margot T. Lebenberg's death prior to the
Expiration Date, this Warrant may be exercised to the extent then
exercisable by Ms. Lebenberg's legal representative through the
Expiration Date.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior
to 5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if
the Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant
issued pursuant to subsection 1.1, shall cease to be exercisable and shall
become void and all rights of the Warrantholder hereunder shall cease.
Subject to subsection 1.3, this Warrant shall not be exercisable, and no
Warrant Shares shall be issued hereunder, prior to 9:00 A.M. New York City
time on the First Exercise Date.
1.3 EXERCISE UPON CHANGE OF CONTROL. In the event of a Change in
Control (as defined below), this Warrant shall immediately vest in its
entirety with respect to the Warrantholder's right to purchase all of the
shares underlying the Warrant and may be exercised in whole or in part from
time to time through and including the Expiration Date. A "Change in
Control" shall be deemed to have occurred if:
(i) Any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended) of any voting
security of the Company and immediately after such acquisition
such person is, directly or indirectly, the Beneficial Owner of
voting securities representing 50% or more of the total voting
power of all of the then-outstanding voting securities of the
Company;
(ii) The individuals (A) who, as of the closing date of
the Company's initial public offering, constitute the Board of
Directors of the Company (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
3
<PAGE>
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 Company shall approve a
merger, consolidation, recapitalization or reorganization of the
Company, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which
would result in at least 75% of the total voting power represented
by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at
least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction;
or
(iv) The stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion
of the Company's assets (I.E., 50% or more of the total assets of
the Company).
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 TRANSFER RESTRICTION AND LEGEND.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of,
in whole or in part, except in compliance with applicable United States
federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes hereof.
1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon surrender at
the principal office of the Company on
4
<PAGE>
any Business Day, without charge to any Warrantholder, except as provided
below. The Warrantholder will be charged for reasonable out-of-pocket costs
incurred by the Company in connection with the division of this Warrant into
Warrants representing fewer than one thousand (1,000) Warrant Shares. Upon
any such division, and, if permitted by subsection 1.5(b) and in accordance
with the provisions thereof, the Warrants may be transferred of record to a
name other than that of the Warrantholder of record; PROVIDED, HOWEVER, that
the Warrantholder shall be required to pay any and all transfer taxes with
respect thereto.
1.7 RESERVATION AND LISTING OF SHARES, ETC. All Warrant Shares
which are issued upon the exercise of the rights represented by this Warrant
shall, upon issuance and payment of the Exercise Price, be validly issued,
fully paid and nonassessable and free from all taxes, liens, security
interests, charges and other encumbrances with respect to the issue thereof
other than taxes in respect of any transfer occurring contemporaneously with
such issue. During the period within which this Warrant may be exercised,
the Company shall at all times have authorized and reserved, and keep
available free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant, and shall at its
expense use its best efforts to procure such listing thereof (subject to
official notice of issuance) as then may be required on all stock exchanges
on which the Common Stock is then listed or on the Nasdaq National Market.
The Company shall, from time to time, take all such action as may be required
to assure that the par value per share of the Warrant Shares is at all times
equal to or less than the then effective Exercise Price.
1.8 EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. If permitted by
subsections 1.5 or 1.6 and in accordance with the provisions thereof, upon
surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name
of the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of such bond or indemnification as
the Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and
deliver a new Warrant of like tenor. The term "Warrant" as used herein
includes any Warrants issued in substitution or exchange of this Warrant.
1.9 OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in subsections 1.1 and 1.5 or in Section
3.
1.10 CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant
Shares may be purchased hereunder, and the number of Warrant Shares to be
purchased upon exercise hereof, are subject to change or adjustment as
follows:
The number of Warrant Shares purchasable upon the exercise of this
Warrant and the
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<PAGE>
Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
this Warrant shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled
to receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall:
(i) Issue rights, options or warrants to all holders of
its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share
of Common Stock, or
(ii) Distribute to all holders of its shares of Common
Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or
earned surplus and dividends or distributions referred to in
paragraph (a) of this subsection 1.10) or rights, options or
warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock,
appropriate adjustments shall be made to the number of Warrant
Shares purchasable upon the exercise of the Warrant and/or the
Exercise Price in order to preserve the relative rights and
interests of the Warrantholders, such adjustments to be made by
the good faith determination of the Board of Directors of the
Company.
2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
3. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
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4. NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of
any cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION,
ETC. In case of any consolidation of the Company with or merger of the
Company into another corporation or in case of any sale, transfer or lease to
another corporation of all or substantially all of the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrantholders an agreement that the
Warrantholders shall have the right thereafter upon payment of the Exercise
Price in effect immediately prior to such action to purchase upon exercise of
this Warrant the kind and amount of shares and other securities and property
which such holder would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action; PROVIDED, HOWEVER,
that no adjustment in respect of cash dividends, interest or other income on
or from such shares or other securities and property shall be made during the
term of this Warrant or upon the exercise of this Warrant. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 5. The
provisions of this Section 5 shall apply similarly to successive
consolidations, mergers, sales, transfers or leases.
6. REGISTRATION RIGHTS. Not later than March 31, 2001, the
Company shall file a registration statement covering the Warrant Shares on a
Form S-8, which registration statement shall be effective upon the filing
thereof. The Company shall use its best efforts to keep such Form S-8
current and effective until the earlier of the Expiration Date or the date
this Warrant has been exercised in full.
The Company shall have sole control in connection with the
preparation, filing, amending and supplementing of any registration
statement, including the right to withdraw the same or delay the
effectiveness thereof when, in the sole judgment of the Board of Directors of
the Company, the pendency of such registration statement or the effectiveness
thereof would impose an undue burden upon the ability of the Company to
proceed with any other material financing for its own account or any material
corporate transaction, including, but not limited to, a reorganization,
recapitalization, merger, consolidation or material acquisition of the
securities or assets of another firm or corporation; and the Company shall be
required to file a new registration statement or to proceed with such actions
as reasonably may be required to cause the registration statement to become
effective within a reasonable time after the consummation of the event or
transaction which required such withdrawal or delay.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire
agreement between the Company and the Warrantholder with respect to this
Warrant and the Warrant Shares.
7.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder and
holders of Warrant Shares and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant,
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expressed or implied, is intended to or shall confer on any person other than
the Company, the Warrantholders and holders of Warrant Shares, or their
respective heirs, legal representatives, successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant or
the Warrant Shares.
7.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and
Warrantholders that hold Warrants entitling them to purchase at least 50% of
the Warrant Shares. The Company, any Warrantholder or holders of Warrant
Shares may, by an instrument in writing, waive compliance by the other party
with any term or provision of this Warrant on the part of such other party
hereto to be performed or complied with. The waiver by any such party of a
breach of any term or provision of this Warrant shall not be construed as a
waiver of any subsequent breach.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or
interpretation of this Warrant.
7.5 FURTHER ASSURANCES. Each of the Company, the Warrantholders
and holders of Warrant Shares shall do and perform all such further acts and
things and execute and deliver all such other certificates, instruments
and/or documents (including without limitation, such proxies and/or powers of
attorney as may be necessary or appropriate) as any party hereto may, at any
time and from time to time, reasonably request in connection with the
performance of any of the provisions of this Warrant.
7.6 NOTICES. All demands, requests, notices and other
communications required or permitted to be given under this Warrant shall be
in writing and shall be deemed to have been duly given if delivered
personally or sent by United States certified or registered first class mail,
postage prepaid, to the parties hereto at the following addresses or at such
other address as any party hereto shall hereafter specify by notice to the
other party hereto:
(a) If to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) If to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person then appearing on the books of
the Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the
mailing thereof.
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7.7 SEPARABILITY. Any term or provision of this Warrant that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this
Warrant or affecting the validity or enforceability of any of the terms or
provisions of this Warrant in any other jurisdiction.
7.8 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such
fraction multiplied by the current market price (as determined as of the date
of exercise, and with reference to the applicable trading market, in
accordance with paragraph (d) of subsection 5.1) of a share of such stock as
of the date of such exercise.
7.9 RIGHTS OF THE HOLDER. The Warrantholder shall not, solely by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or in equity.
7.10 GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and performed in Delaware.
7.11 EFFECT OF STOCK SPLITS, ETC. Whenever any rights under this
Agreement are available only when at least a specified minimum number of
Warrant Shares is involved, such number shall be appropriately adjusted to
reflect any stock split, stock dividend, combination of securities into a
smaller number of securities or reclassification of stock.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
--------------------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: March 16, 2000
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EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is_____________________________________.
Date _________________ Signature_________________________
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EXHIBIT 10.72
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, MARCH 16, 2010.
****************************************
Number 31
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to RONALD
ZAZWORSKY or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company,
at $26.375 per share (the "Exercise Price"), twenty thousand (20,000) shares
of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), subject to the provisions and upon the terms and conditions herein
set forth. The Exercise Price and the number of Warrant Shares are subject
to adjustment from time to time as provided in subsection 1.10.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT. (a) Subject to subsection
1.3, this Warrant may be exercised to purchase (i) 33 1/3% of the underlying
shares from and after 9:00 A.M. New York City time on March 16, 2001 (the
"First Exercise Date"); (ii) 33 1/3% of the underlying shares on March 16,
2002 (the "Second Exercise Date"); and the remaining (iii) 33 1/3% of the
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underlying shares on March 16, 2003 (the "Third Exercise Date") to and
including 5:00 P.M. New York City time on March 16, 2010 (the "Expiration
Date"). Each of the First Exercise Date, the Second Exercise Date and the
Third Exercise Date are hereinafter referred to from time to time, as
applicable, as the "Exercise Date" and collectively from time to time as the
"Exercise Dates")."
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part, by:
(i) Surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed
by the Warrantholder of record and specifying the number of
Warrant Shares to be purchased, to the Company at the office of
the Company located at 3232 McKinney Avenue, Suite 900, Dallas,
Texas 75204 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than a
Saturday, Sunday or a day on which the New York Stock Exchange is
authorized to close or on which the Company is otherwise closed
for business (a "Nonbusiness Day") on or after 9:00 A.M. New York
City time on the Exercise Date but not later than 5:00 P.M. on the
Expiration Date (or 5:00 P.M. on the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day),
(ii) Delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form (such payment may be made by the
Warrantholder directly or by a designated broker pursuant to the
broker-assisted cashless exercise program instituted by the
Company, subject to subsection 1.5 herein) and
(iii) Such documentation as to the identity and authority
of the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in
denominations of at least one thousand (1,000) shares each or such other
denomination as may be specified by the Warrantholder and agreed upon by
the Company, and shall be issued in the name of the Warrantholder or, if
permitted by subsection 1.5 and in accordance with the provisions
thereof, such other
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name as shall be designated in the Exercise Form. If this Warrant
shall have been exercised only in part, the Company shall, at the time
of delivery of the certificates for the Warrant Shares, deliver to the
Warrantholder (or designated broker, as the case may be) a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which
new Warrant shall in all other respects be identical with this
Warrant. No adjustments or payments shall be made on or in respect of
Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior
to the date as of which the Warrantholder shall be deemed to be the
record holder of such Warrant Shares.
(c) In the event of Ronald Zazworsky's death prior to the
Expiration Date, this Warrant may be exercised to the extent then
exercisable by Mr. Zazworsky's legal representative through the
Expiration Date.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior
to 5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if
the Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant
issued pursuant to subsection 1.1, shall cease to be exercisable and shall
become void and all rights of the Warrantholder hereunder shall cease.
Subject to subsection 1.3, this Warrant shall not be exercisable, and no
Warrant Shares shall be issued hereunder, prior to 9:00 A.M. New York City
time on the First Exercise Date.
1.3 EXERCISE UPON CHANGE OF CONTROL. In the event of a Change in
Control (as defined below), this Warrant shall immediately vest in its
entirety with respect to the Warrantholder's right to purchase all of the
shares underlying the Warrant and may be exercised in whole or in part from
time to time through and including the Expiration Date. A "Change in
Control" shall be deemed to have occurred if:
(i) Any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended) of any voting
security of the Company and immediately after such acquisition
such person is, directly or indirectly, the Beneficial Owner of
voting securities representing 50% or more of the total voting
power of all of the then-outstanding voting securities of the
Company;
(ii) The individuals (A) who, as of the closing date of
the Company's initial public offering, constitute the Board of
Directors of the Company (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
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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 Company shall approve a
merger, consolidation, recapitalization or reorganization of the
Company, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which
would result in at least 75% of the total voting power represented
by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at
least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction;
or
(iv) The stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion
of the Company's assets (I.E., 50% or more of the total assets of
the Company).
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 TRANSFER RESTRICTION AND LEGEND.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of,
in whole or in part, except in compliance with applicable United States
federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes hereof.
1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon surrender at
the principal office of the Company on
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any Business Day, without charge to any Warrantholder, except as provided
below. The Warrantholder will be charged for reasonable out-of-pocket costs
incurred by the Company in connection with the division of this Warrant into
Warrants representing fewer than one thousand (1,000) Warrant Shares. Upon
any such division, and, if permitted by subsection 1.5(b) and in accordance
with the provisions thereof, the Warrants may be transferred of record to a
name other than that of the Warrantholder of record; PROVIDED, HOWEVER, that
the Warrantholder shall be required to pay any and all transfer taxes with
respect thereto.
1.7 RESERVATION AND LISTING OF SHARES, ETC. All Warrant Shares
which are issued upon the exercise of the rights represented by this Warrant
shall, upon issuance and payment of the Exercise Price, be validly issued,
fully paid and nonassessable and free from all taxes, liens, security
interests, charges and other encumbrances with respect to the issue thereof
other than taxes in respect of any transfer occurring contemporaneously with
such issue. During the period within which this Warrant may be exercised,
the Company shall at all times have authorized and reserved, and keep
available free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant, and shall at its
expense use its best efforts to procure such listing thereof (subject to
official notice of issuance) as then may be required on all stock exchanges
on which the Common Stock is then listed or on the Nasdaq National Market.
The Company shall, from time to time, take all such action as may be required
to assure that the par value per share of the Warrant Shares is at all times
equal to or less than the then effective Exercise Price.
1.8 EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. If permitted by
subsections 1.5 or 1.6 and in accordance with the provisions thereof, upon
surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name
of the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of such bond or indemnification as
the Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and
deliver a new Warrant of like tenor. The term "Warrant" as used herein
includes any Warrants issued in substitution or exchange of this Warrant.
1.9 OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in subsections 1.1 and 1.5 or in Section
3.
1.10 CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant
Shares may be purchased hereunder, and the number of Warrant Shares to be
purchased upon exercise hereof, are subject to change or adjustment as
follows:
The number of Warrant Shares purchasable upon the exercise of this
Warrant and the
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Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
this Warrant shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled
to receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall:
(i) Issue rights, options or warrants to all holders of
its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share
of Common Stock, or
(ii) Distribute to all holders of its shares of Common
Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or
earned surplus and dividends or distributions referred to in
paragraph (a) of this subsection 1.10) or rights, options or
warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock,
appropriate adjustments shall be made to the number of Warrant
Shares purchasable upon the exercise of the Warrant and/or the
Exercise Price in order to preserve the relative rights and
interests of the Warrantholders, such adjustments to be made by
the good faith determination of the Board of Directors of the
Company.
2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed
appropriate by the Board of Directors of the Company.
3. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided,
the Company shall promptly mail first class, postage prepaid, to all
Warrantholders, notice of such adjustment.
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4. NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of
any cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION,
ETC. In case of any consolidation of the Company with or merger of the
Company into another corporation or in case of any sale, transfer or lease to
another corporation of all or substantially all of the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrantholders an agreement that the
Warrantholders shall have the right thereafter upon payment of the Exercise
Price in effect immediately prior to such action to purchase upon exercise of
this Warrant the kind and amount of shares and other securities and property
which such holder would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action; PROVIDED, HOWEVER,
that no adjustment in respect of cash dividends, interest or other income on
or from such shares or other securities and property shall be made during the
term of this Warrant or upon the exercise of this Warrant. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 5. The
provisions of this Section 5 shall apply similarly to successive
consolidations, mergers, sales, transfers or leases.
6. REGISTRATION RIGHTS. Not later than March 31, 2001, the
Company shall file a registration statement covering the Warrant Shares on a
Form S-8, which registration statement shall be effective upon the filing
thereof. The Company shall use its best efforts to keep such Form S-8
current and effective until the earlier of the Expiration Date or the date
this Warrant has been exercised in full.
The Company shall have sole control in connection with the
preparation, filing, amending and supplementing of any registration
statement, including the right to withdraw the same or delay the
effectiveness thereof when, in the sole judgment of the Board of Directors of
the Company, the pendency of such registration statement or the effectiveness
thereof would impose an undue burden upon the ability of the Company to
proceed with any other material financing for its own account or any material
corporate transaction, including, but not limited to, a reorganization,
recapitalization, merger, consolidation or material acquisition of the
securities or assets of another firm or corporation; and the Company shall be
required to file a new registration statement or to proceed with such actions
as reasonably may be required to cause the registration statement to become
effective within a reasonable time after the consummation of the event or
transaction which required such withdrawal or delay.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire
agreement between the Company and the Warrantholder with respect to this
Warrant and the Warrant Shares.
7.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder and
holders of Warrant Shares and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant,
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expressed or implied, is intended to or shall confer on any person other than
the Company, the Warrantholders and holders of Warrant Shares, or their
respective heirs, legal representatives, successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant or
the Warrant Shares.
7.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and
Warrantholders that hold Warrants entitling them to purchase at least 50% of
the Warrant Shares. The Company, any Warrantholder or holders of Warrant
Shares may, by an instrument in writing, waive compliance by the other party
with any term or provision of this Warrant on the part of such other party
hereto to be performed or complied with. The waiver by any such party of a
breach of any term or provision of this Warrant shall not be construed as a
waiver of any subsequent breach.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or
interpretation of this Warrant.
7.5 FURTHER ASSURANCES. Each of the Company, the Warrantholders
and holders of Warrant Shares shall do and perform all such further acts and
things and execute and deliver all such other certificates, instruments
and/or documents (including without limitation, such proxies and/or powers of
attorney as may be necessary or appropriate) as any party hereto may, at any
time and from time to time, reasonably request in connection with the
performance of any of the provisions of this Warrant.
7.6 NOTICES. All demands, requests, notices and other
communications required or permitted to be given under this Warrant shall be
in writing and shall be deemed to have been duly given if delivered
personally or sent by United States certified or registered first class mail,
postage prepaid, to the parties hereto at the following addresses or at such
other address as any party hereto shall hereafter specify by notice to the
other party hereto:
(a) If to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) If to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person then appearing on the books of
the Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the
mailing thereof.
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<PAGE>
7.7 SEPARABILITY. Any term or provision of this Warrant that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this
Warrant or affecting the validity or enforceability of any of the terms or
provisions of this Warrant in any other jurisdiction.
7.8 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such
fraction multiplied by the current market price (as determined as of the date
of exercise, and with reference to the applicable trading market, in
accordance with paragraph (d) of subsection 5.1) of a share of such stock as
of the date of such exercise.
7.9 RIGHTS OF THE HOLDER. The Warrantholder shall not, solely by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or in equity.
7.10 GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and performed in Delaware.
7.11 EFFECT OF STOCK SPLITS, ETC. Whenever any rights under this
Agreement are available only when at least a specified minimum number of
Warrant Shares is involved, such number shall be appropriately adjusted to
reflect any stock split, stock dividend, combination of securities into a
smaller number of securities or reclassification of stock.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
----------------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: March 16, 2000
10
<PAGE>
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is_____________________________________.
Date _________________ Signature_________________________
11
<PAGE>
EXHIBIT 10.73
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, MARCH 16, 2010.
****************************************
Number 32
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to
TIMOTHY J. BARKER or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company,
at $26.375 per share (the "Exercise Price"), twenty thousand (20,000) shares
of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), subject to the provisions and upon the terms and conditions herein
set forth. The Exercise Price and the number of Warrant Shares are subject
to adjustment from time to time as provided in subsection 1.10.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT.
(a) This Warrant may be exercised to purchase (i) 33 1/3% of the underlying
shares from and after 9:00 A.M. New York City time on March 16, 2001 (the
"First Exercise Date"); (ii) 33 1/3%
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of the underlying shares on March 16, 2002 (the "Second Exercise Date"); and
the remaining (iii) 33 1/3% of the underlying shares on March 16, 2003 (the
"Third Exercise Date") to and including 5:00 P.M. New York City time on March
16, 2010 (the "Expiration Date"). Each of the First Exercise Date, the
Second Exercise Date and the Third Exercise Date are hereinafter referred to
from time to time, as applicable, as the "Exercise Date" and collectively
from time to time as the "Exercise Dates")."
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part, by:
(i) Surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed
by the Warrantholder of record and specifying the number of
Warrant Shares to be purchased, to the Company at the office of
the Company located at 3232 McKinney Avenue, Suite 900, Dallas,
Texas 75204 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than a
Saturday, Sunday or a day on which the New York Stock Exchange is
authorized to close or on which the Company is otherwise closed
for business (a "Nonbusiness Day") on or after 9:00 A.M. New York
City time on the Exercise Date but not later than 5:00 P.M. on the
Expiration Date (or 5:00 P.M. on the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day),
(ii) Delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form (such payment may be made by the
Warrantholder directly or by a designated broker pursuant to the
broker-assisted cashless exercise program instituted by the
Company, subject to subsection 1.5 herein) and
(iii) Such documentation as to the identity and authority
of the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in
denominations of at least one thousand (1,000) shares each or such other
denomination as may be specified by the Warrantholder and agreed upon by
the Company, and shall be issued in the name of the Warrantholder or, if
2
<PAGE>
permitted by subsection 1.5 and in accordance with the provisions
thereof, such other name as shall be designated in the Exercise Form. If
this Warrant shall have been exercised only in part, the Company shall,
at the time of delivery of the certificates for the Warrant Shares,
deliver to the Warrantholder (or designated broker, as the case may be) a
new Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be identical with
this Warrant. No adjustments or payments shall be made on or in respect
of Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to
the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior
to 5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if
the Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant
issued pursuant to subsection 1.1, shall cease to be exercisable and shall
become void and all rights of the Warrantholder hereunder shall cease.
Subject to subsection 1.3, this Warrant shall not be exercisable, and no
Warrant Shares shall be issued hereunder, prior to 9:00 A.M. New York City
time on the First Exercise Date.
1.3 EXERCISE UPON CHANGE OF CONTROL. In the event of a Change in
Control (as defined below), this Warrant shall immediately vest in its
entirety with respect to the Warrantholder's right to purchase all of the
shares underlying the Warrant and may be exercised in whole or in part from
time to time through and including the Expiration Date. A "Change in
Control" shall be deemed to have occurred if:
(i) Any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended) of any voting
security of the Company and immediately after such acquisition
such person is, directly or indirectly, the Beneficial Owner of
voting securities representing 50% or more of the total voting
power of all of the then-outstanding voting securities of the
Company;
(ii) The individuals (A) who, as of the closing date of
the Company's initial public offering, constitute the Board of
Directors of the Company (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
3
<PAGE>
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 Company shall approve a
merger, consolidation, recapitalization or reorganization of the
Company, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which
would result in at least 75% of the total voting power represented
by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at
least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction;
or
(iv) The stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion
of the Company's assets (I.E., 50% or more of the total assets of
the Company).
In the event of Timothy J. Barker's death prior to the Expiration Date, this
Warrant may be exercised to the extent then exercisable by Mr. Barker's legal
representative through the Expiration Date.
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 TRANSFER RESTRICTION AND LEGEND.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of,
in whole or in part, except in compliance with applicable United States
federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes
4
<PAGE>
hereof.
1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon surrender
at the principal office of the Company on any Business Day, without charge to
any Warrantholder, except as provided below. The Warrantholder will be
charged for reasonable out-of-pocket costs incurred by the Company in
connection with the division of this Warrant into Warrants representing fewer
than one thousand (1,000) Warrant Shares. Upon any such division, and, if
permitted by subsection 1.5(b) and in accordance with the provisions thereof,
the Warrants may be transferred of record to a name other than that of the
Warrantholder of record; PROVIDED, HOWEVER, that the Warrantholder shall be
required to pay any and all transfer taxes with respect thereto.
1.7 RESERVATION AND LISTING OF SHARES, ETC. All Warrant Shares
which are issued upon the exercise of the rights represented by this Warrant
shall, upon issuance and payment of the Exercise Price, be validly issued,
fully paid and nonassessable and free from all taxes, liens, security
interests, charges and other encumbrances with respect to the issue thereof
other than taxes in respect of any transfer occurring contemporaneously with
such issue. During the period within which this Warrant may be exercised,
the Company shall at all times have authorized and reserved, and keep
available free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant, and shall at its
expense use its best efforts to procure such listing thereof (subject to
official notice of issuance) as then may be required on all stock exchanges
on which the Common Stock is then listed or on the Nasdaq National Market.
The Company shall, from time to time, take all such action as may be required
to assure that the par value per share of the Warrant Shares is at all times
equal to or less than the then effective Exercise Price.
1.8 EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. If permitted by
subsections 1.5 or 1.6 and in accordance with the provisions thereof, upon
surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name
of the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of such bond or indemnification as
the Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and
deliver a new Warrant of like tenor. The term "Warrant" as used herein
includes any Warrants issued in substitution or exchange of this Warrant.
1.9 OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in subsections 1.1 and 1.5 or in Section
3.
1.10 CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant
Shares may be
5
<PAGE>
purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
this Warrant shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled
to receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall:
(i) Issue rights, options or warrants to all holders of
its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share
of Common Stock, or
(ii) Distribute to all holders of its shares of Common
Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or
earned surplus and dividends or distributions referred to in
paragraph (a) of this subsection 1.10) or rights, options or
warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock,
appropriate adjustments shall be made to the number of Warrant
Shares purchasable upon the exercise of the Warrant and/or the
Exercise Price in order to preserve the relative rights and
interests of the Warrantholders, such adjustments to be made by
the good faith determination of the Board of Directors of the
Company.
2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed
appropriate by the Board of Directors of the Company.
6
<PAGE>
3. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided,
the Company shall promptly mail first class, postage prepaid, to all
Warrantholders, notice of such adjustment.
4. NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of
any cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION,
ETC. In case of any consolidation of the Company with or merger of the
Company into another corporation or in case of any sale, transfer or lease to
another corporation of all or substantially all of the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrantholders an agreement that the
Warrantholders shall have the right thereafter upon payment of the Exercise
Price in effect immediately prior to such action to purchase upon exercise of
this Warrant the kind and amount of shares and other securities and property
which such holder would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action; PROVIDED, HOWEVER,
that no adjustment in respect of cash dividends, interest or other income on
or from such shares or other securities and property shall be made during the
term of this Warrant or upon the exercise of this Warrant. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 5. The
provisions of this Section 5 shall apply similarly to successive
consolidations, mergers, sales, transfers or leases.
6. REGISTRATION RIGHTS. Not later than March 31, 2001, the
Company shall file a registration statement covering the Warrant Shares on a
Form S-8, which registration statement shall be effective upon the filing
thereof. The Company shall use its best efforts to keep such Form S-8
current and effective until the earlier of the Expiration Date or the date
this Warrant has been exercised in full.
The Company shall have sole control in connection with the
preparation, filing, amending and supplementing of any registration
statement, including the right to withdraw the same or delay the
effectiveness thereof when, in the sole judgment of the Board of Directors of
the Company, the pendency of such registration statement or the effectiveness
thereof would impose an undue burden upon the ability of the Company to
proceed with any other material financing for its own account or any material
corporate transaction, including, but not limited to, a reorganization,
recapitalization, merger, consolidation or material acquisition of the
securities or assets of another firm or corporation; and the Company shall be
required to file a new registration statement or to proceed with such actions
as reasonably may be required to cause the registration statement to become
effective within a reasonable time after the consummation of the event or
transaction which required such withdrawal or delay.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire
agreement between the Company and the Warrantholder with respect to this
Warrant and the Warrant Shares.
7
<PAGE>
7.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder and
holders of Warrant Shares and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant, expressed or implied, is
intended to or shall confer on any person other than the Company, the
Warrantholders and holders of Warrant Shares, or their respective heirs,
legal representatives, successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Warrant or the Warrant
Shares.
7.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and
Warrantholders that hold Warrants entitling them to purchase at least 50% of
the Warrant Shares. The Company, any Warrantholder or holders of Warrant
Shares may, by an instrument in writing, waive compliance by the other party
with any term or provision of this Warrant on the part of such other party
hereto to be performed or complied with. The waiver by any such party of a
breach of any term or provision of this Warrant shall not be construed as a
waiver of any subsequent breach.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or
interpretation of this Warrant.
7.5 FURTHER ASSURANCES. Each of the Company, the Warrantholders
and holders of Warrant Shares shall do and perform all such further acts and
things and execute and deliver all such other certificates, instruments
and/or documents (including without limitation, such proxies and/or powers of
attorney as may be necessary or appropriate) as any party hereto may, at any
time and from time to time, reasonably request in connection with the
performance of any of the provisions of this Warrant.
7.6 NOTICES. All demands, requests, notices and other
communications required or permitted to be given under this Warrant shall be
in writing and shall be deemed to have been duly given if delivered
personally or sent by United States certified or registered first class mail,
postage prepaid, to the parties hereto at the following addresses or at such
other address as any party hereto shall hereafter specify by notice to the
other party hereto:
(a) If to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) If to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person then appearing on the books of
the Company.
8
<PAGE>
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the
mailing thereof.
7.7 SEPARABILITY. Any term or provision of this Warrant that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this
Warrant or affecting the validity or enforceability of any of the terms or
provisions of this Warrant in any other jurisdiction.
7.8 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such
fraction multiplied by the current market price (as determined as of the date
of exercise, and with reference to the applicable trading market, in
accordance with paragraph (d) of subsection 5.1) of a share of such stock as
of the date of such exercise.
7.9 RIGHTS OF THE HOLDER. The Warrantholder shall not, solely by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or in equity.
7.10 GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and performed in Delaware.
7.11 EFFECT OF STOCK SPLITS, ETC. Whenever any rights under this
Agreement are available only when at least a specified minimum number of
Warrant Shares is involved, such number shall be appropriately adjusted to
reflect any stock split, stock dividend, combination of securities into a
smaller number of securities or reclassification of stock.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
--------------------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: March 16, 2000
10
<PAGE>
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is_____________________________________.
Date ___________________ Signature______________________
11
<PAGE>
EXHIBIT 10.74
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, MARCH 16, 2010.
****************************************
Number 33
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to JOE A. ROSE or
permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $26.375 per share (the
"Exercise Price"), one hundred thousand (100,000) shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), subject to the provisions
and upon the terms and conditions herein set forth. The Exercise Price and the
number of Warrant Shares are subject to adjustment from time to time as provided
in subsection 1.10.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT.
(a) This Warrant may be exercised to purchase (i) 33 1/3% of the underlying
shares from and after 9:00 A.M. New York City time on March 16, 2001 (the "First
Exercise Date"); (ii) 33 1/3%
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of the underlying shares on March 16, 2002 (the "Second Exercise Date"); and
the remaining (iii) 33 1/3% of the underlying shares on March 16, 2003 (the
"Third Exercise Date") to and including 5:00 P.M. New York City time on March
16, 2010 (the "Expiration Date"). Each of the First Exercise Date, the
Second Exercise Date and the Third Exercise Date are hereinafter referred to
from time to time, as applicable, as the "Exercise Date" and collectively
from time to time as the "Exercise Dates")."
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part, by:
(i) Surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed
by the Warrantholder of record and specifying the number of
Warrant Shares to be purchased, to the Company at the office of
the Company located at 3232 McKinney Avenue, Suite 900, Dallas,
Texas 75204 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than a
Saturday, Sunday or a day on which the New York Stock Exchange is
authorized to close or on which the Company is otherwise closed
for business (a "Nonbusiness Day") on or after 9:00 A.M. New York
City time on the Exercise Date but not later than 5:00 P.M. on the
Expiration Date (or 5:00 P.M. on the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day),
(ii) Delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form (such payment may be made by the
Warrantholder directly or by a designated broker pursuant to the
broker-assisted cashless exercise program instituted by the
Company, subject to subsection 1.5 herein) and
(iii) Such documentation as to the identity and authority
of the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in
denominations of at least one thousand (1,000) shares each or such other
denomination as may be specified by the Warrantholder and agreed upon by
the Company, and shall be issued in the name of the Warrantholder or, if
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permitted by subsection 1.5 and in accordance with the provisions
thereof, such other name as shall be designated in the Exercise Form. If
this Warrant shall have been exercised only in part, the Company shall,
at the time of delivery of the certificates for the Warrant Shares,
deliver to the Warrantholder (or designated broker, as the case may be) a
new Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be identical with
this Warrant. No adjustments or payments shall be made on or in respect
of Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to
the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to subsection 1.1, shall cease to be exercisable and shall become void
and all rights of the Warrantholder hereunder shall cease. Subject to
subsection 1.3, this Warrant shall not be exercisable, and no Warrant Shares
shall be issued hereunder, prior to 9:00 A.M. New York City time on the First
Exercise Date.
1.3 EXERCISE UPON CHANGE OF CONTROL. In the event of a Change in
Control (as defined below), this Warrant shall immediately vest in its
entirety with respect to the Warrantholder's right to purchase all of the
shares underlying the Warrant and may be exercised in whole or in part from
time to time through and including the Expiration Date. A "Change in
Control" shall be deemed to have occurred if:
(i) Any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended) of any voting
security of the Company and immediately after such acquisition
such person is, directly or indirectly, the Beneficial Owner of
voting securities representing 50% or more of the total voting
power of all of the then-outstanding voting securities of the
Company;
(ii) The individuals (A) who, as of the closing date of
the Company's initial public offering, constitute the Board of
Directors of the Company (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
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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 Company shall approve a
merger, consolidation, recapitalization or reorganization of the
Company, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which
would result in at least 75% of the total voting power represented
by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at
least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction;
or
(iv) The stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion
of the Company's assets (I.E., 50% or more of the total assets of
the Company).
In the event of Joe A. Rose's death prior to the Expiration Date, this Warrant
may be exercised to the extent then exercisable by Mr. Rose's legal
representative through the Expiration Date.
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 TRANSFER RESTRICTION AND LEGEND.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of,
in whole or in part, except in compliance with applicable United States
federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes hereof.
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1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon surrender at
the principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5(b) and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
PROVIDED, HOWEVER, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
1.7 RESERVATION AND LISTING OF SHARES, ETC. All Warrant Shares which
are issued upon the exercise of the rights represented by this Warrant shall,
upon issuance and payment of the Exercise Price, be validly issued, fully paid
and nonassessable and free from all taxes, liens, security interests, charges
and other encumbrances with respect to the issue thereof other than taxes in
respect of any transfer occurring contemporaneously with such issue. During the
period within which this Warrant may be exercised, the Company shall at all
times have authorized and reserved, and keep available free from preemptive
rights, a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant, and shall at its expense use its best efforts to
procure such listing thereof (subject to official notice of issuance) as then
may be required on all stock exchanges on which the Common Stock is then listed
or on the Nasdaq National Market. The Company shall, from time to time, take
all such action as may be required to assure that the par value per share of the
Warrant Shares is at all times equal to or less than the then effective Exercise
Price.
1.8 EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. If permitted by
subsections 1.5 or 1.6 and in accordance with the provisions thereof, upon
surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and, in the
case of loss, theft or destruction, of such bond or indemnification as the
Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor. The term "Warrant" as used herein includes any
Warrants issued in substitution or exchange of this Warrant.
1.9 OWNERSHIP OF WARRANT. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
1.10 CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant Shares
may be purchased hereunder, and the number of Warrant Shares to be purchased
upon exercise hereof, are subject to change or adjustment as follows:
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The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
this Warrant shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled
to receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall:
(i) Issue rights, options or warrants to all holders of
its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share
of Common Stock, or
(ii) Distribute to all holders of its shares of Common
Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or
earned surplus and dividends or distributions referred to in
paragraph (a) of this subsection 1.10) or rights, options or
warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock,
appropriate adjustments shall be made to the number of Warrant
Shares purchasable upon the exercise of the Warrant and/or the
Exercise Price in order to preserve the relative rights and
interests of the Warrantholders, such adjustments to be made by
the good faith determination of the Board of Directors of the
Company.
2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
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3. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
4. NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
In case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; PROVIDED, HOWEVER, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 5. The provisions of this Section 5
shall apply similarly to successive consolidations, mergers, sales, transfers or
leases.
6. REGISTRATION RIGHTS. Not later than March 31, 2001, the Company
shall file a registration statement covering the Warrant Shares on a Form S-8,
which registration statement shall be effective upon the filing thereof. The
Company shall use its best efforts to keep such Form S-8 current and effective
until the earlier of the Expiration Date or the date this Warrant has been
exercised in full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
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7.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder and holders
of Warrant Shares and their respective heirs, legal representatives, successors
and assigns. Nothing in this Warrant, expressed or implied, is intended to or
shall confer on any person other than the Company, the Warrantholders and
holders of Warrant Shares, or their respective heirs, legal representatives,
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Warrant or the Warrant Shares.
7.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and
Warrantholders that hold Warrants entitling them to purchase at least 50% of the
Warrant Shares. The Company, any Warrantholder or holders of Warrant Shares
may, by an instrument in writing, waive compliance by the other party with any
term or provision of this Warrant on the part of such other party hereto to be
performed or complied with. The waiver by any such party of a breach of any
term or provision of this Warrant shall not be construed as a waiver of any
subsequent breach.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
7.5 FURTHER ASSURANCES. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 NOTICES. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) If to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) If to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person then appearing on the books of
the Company.
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Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 SEPARABILITY. Any term or provision of this Warrant that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 RIGHTS OF THE HOLDER. The Warrantholder shall not, solely by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or in equity.
7.10 GOVERNING LAW. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 EFFECT OF STOCK SPLITS, ETC. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
_____________________
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: March 16, 2000
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EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is
_____________________________________.
Date _________________ Signature________________________
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EXHIBIT 10.75
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, MARCH 16, 2010.
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Number 41
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
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This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to DAVID BYERLEY or
permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $26.375 per share (the
"Exercise Price"), eleven thousand seven hundred eighty-five (11,785) shares of
the Company's Common Stock, par value $0.01 per share (the "Common Stock"),
subject to the provisions and upon the terms and conditions herein set forth.
The Exercise Price and the number of Warrant Shares are subject to adjustment
from time to time as provided in subsection 1.10.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT.
(a) This Warrant may be exercised to purchase all of the
underlying shares set forth above from and after (i) the Company's
determination that during calendar year
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2000 Employee shall have effected the acquisition on behalf of the
Company of not less than $6.0 million run rate of Acquired EBT (as
defined below) or (ii) if the condition set forth in clause (i) of this
subsection 1.1(a) is not satisfied, March 16, 2009 if at such time Mr.
Byerley is an employee of the Company (each of the events set forth in
clauses (i) and (ii) hereof, an "Exercise Date" and collectively from
time to time, the "Exercise Dates"). For purposes of this Warrant,
"Acquired EBT" shall mean the earnings before taxes of the acquired
entities or assets based upon generally accepted accounting principles
consistently applied and including all operating business expenses and
interest on capital expenditures in excess of associated goodwill and
excluding the pro forma amortization of goodwill associated with the
purchase proceeds (based on a thirty (30) year amortization schedule).
The Company shall complete its calculation of Acquired EBT for calendar
year 2000 on or before May 15, 2001. In the event that Acquired EBT for
calendar year 2000 is determined to be $6.0 million or greater this
Warrant shall be fully exercisable to and including 5:00 p.m. New York
City time on March 16, 2010; in the event that Acquired EBIT for calendar
year 2000 is determined to be less than $6.0 million, this Warrant shall
only be exercisable in accordance with subsection 1.1(a)(ii) above.
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part, by:
(i) Surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed
by the Warrantholder of record and specifying the number of
Warrant Shares to be purchased, to the Company at the office of
the Company located at 3232 McKinney Avenue, Suite 900, Dallas,
Texas 75204 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than a
Saturday, Sunday or a day on which the New York Stock Exchange is
authorized to close or on which the Company is otherwise closed
for business (a "Nonbusiness Day") on or after 9:00 A.M. New York
City time on the Exercise Date but not later than 5:00 P.M. on the
Expiration Date (or 5:00 P.M. on the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day),
(ii) Delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form (such payment may be made by the
Warrantholder directly or by a designated broker pursuant to the
broker-assisted cashless exercise program instituted by the
Company, subject to subsection 1.5 herein) and
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(iii) Such documentation as to the identity and authority
of the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in
denominations of at least one thousand (1,000) shares each or such other
denomination as may be specified by the Warrantholder and agreed upon by
the Company, and shall be issued in the name of the Warrantholder or, if
permitted by subsection 1.5 and in accordance with the provisions
thereof, such other name as shall be designated in the Exercise Form. If
this Warrant shall have been exercised only in part, the Company shall,
at the time of delivery of the certificates for the Warrant Shares,
deliver to the Warrantholder (or designated broker, as the case may be) a
new Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be identical with
this Warrant. No adjustments or payments shall be made on or in respect
of Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to
the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to subsection 1.1, shall cease to be exercisable and shall become void
and all rights of the Warrantholder hereunder shall cease. Subject to
subsection 1.3, this Warrant shall not be exercisable, and no Warrant Shares
shall be issued hereunder, prior to 9:00 A.M. New York City time on the First
Exercise Date.
1.3 EXERCISE UPON TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE OF
CONTROL. Upon termination of David Byerley's employment with the Company
without cause as described in David Byerley's Employment Agreement with the
Company at any time during the term of this Warrant following a Change in
Control (as defined below), this Warrant shall immediately vest in its entirety
with respect to the Warrantholder's right to purchase all of the shares
underlying the Warrant and may be exercised in whole or in part from time to
time through and including the Expiration Date. A "Change in Control" shall be
deemed to have occurred if:
(i) Any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately after
such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of
the total voting power of all of the then-outstanding voting
securities of the Company;
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(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 Company shall approve a
merger, consolidation, recapitalization, or reorganization of the
Company, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which
would result in at least 75% of the total voting power represented
by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at
least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction;
or
(iv) The stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion
of the Company's assets (I.E., 50% or more of the total assets of
the Company).
In the event of David Byerley's death prior to the Expiration Date, this Warrant
may be exercised to the extent then exercisable by Mr. Byerley's legal
representative through the Expiration Date.
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 TRANSFER RESTRICTION AND LEGEND.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of,
in whole or in part, except in compliance with
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applicable United States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes hereof.
1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon surrender at
the principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5(b) and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
PROVIDED, HOWEVER, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
1.7 RESERVATION AND LISTING OF SHARES, ETC. All Warrant Shares which
are issued upon the exercise of the rights represented by this Warrant shall,
upon issuance and payment of the Exercise Price, be validly issued, fully paid
and nonassessable and free from all taxes, liens, security interests, charges
and other encumbrances with respect to the issue thereof other than taxes in
respect of any transfer occurring contemporaneously with such issue. During the
period within which this Warrant may be exercised, the Company shall at all
times have authorized and reserved, and keep available free from preemptive
rights, a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant, and shall at its expense use its best efforts to
procure such listing thereof (subject to official notice of issuance) as then
may be required on all stock exchanges on which the Common Stock is then listed
or on the Nasdaq National Market. The Company shall, from time to time, take
all such action as may be required to assure that the par value per share of the
Warrant Shares is at all times equal to or less than the then effective Exercise
Price.
1.8 EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. If permitted by
subsections 1.5 or 1.6 and in accordance with the provisions thereof, upon
surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and, in the
case of loss, theft or destruction, of such bond or indemnification as the
Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and
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deliver a new Warrant of like tenor. The term "Warrant" as used herein
includes any Warrants issued in substitution or exchange of this Warrant.
1.9 OWNERSHIP OF WARRANT. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
1.10 CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant Shares
may be purchased hereunder, and the number of Warrant Shares to be purchased
upon exercise hereof, are subject to change or adjustment as follows:
The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
this Warrant shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled
to receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall:
(i) Issue rights, options or warrants to all holders of
its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share
of Common Stock, or
(ii) Distribute to all holders of its shares of Common
Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or
earned surplus and dividends or distributions referred to in
paragraph (a) of this subsection 1.10) or rights, options or
warrants, or convertible or exchangeable securities containing the
right to subscribe for or
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purchase shares of Common Stock, appropriate adjustments shall be
made to the number of Warrant Shares purchasable upon the
exercise of the Warrant and/or the Exercise Price in order to
preserve the relative rights and interests of the Warrantholders,
such adjustments to be made by the good faith determination of the
Board of Directors of the Company.
2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
3. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
4. NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
In case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; PROVIDED, HOWEVER, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 5. The provisions of this Section 5
shall apply similarly to successive consolidations, mergers, sales, transfers or
leases.
6. REGISTRATION RIGHTS. Not later than March 31, 2001, the Company
shall file a registration statement covering the Warrant Shares on a Form S-8,
which registration statement shall be effective upon the filing thereof. The
Company shall use its best efforts to keep such Form S-8 current and effective
until the earlier of the Expiration Date or the date this Warrant has been
exercised in full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a
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reorganization, recapitalization, merger, consolidation or material
acquisition of the securities or assets of another firm or corporation; and
the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder and holders
of Warrant Shares and their respective heirs, legal representatives, successors
and assigns. Nothing in this Warrant, expressed or implied, is intended to or
shall confer on any person other than the Company, the Warrantholders and
holders of Warrant Shares, or their respective heirs, legal representatives,
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Warrant or the Warrant Shares.
7.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and
Warrantholders that hold Warrants entitling them to purchase at least 50% of the
Warrant Shares. The Company, any Warrantholder or holders of Warrant Shares
may, by an instrument in writing, waive compliance by the other party with any
term or provision of this Warrant on the part of such other party hereto to be
performed or complied with. The waiver by any such party of a breach of any
term or provision of this Warrant shall not be construed as a waiver of any
subsequent breach.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
7.5 FURTHER ASSURANCES. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 NOTICES. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
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(a) If to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) If to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person then appearing on the books of
the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 SEPARABILITY. Any term or provision of this Warrant that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 RIGHTS OF THE HOLDER. The Warrantholder shall not, solely by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or in equity.
7.10 GOVERNING LAW. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 EFFECT OF STOCK SPLITS, ETC. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
---------------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: March 16, 2000
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EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is
_____________________________________.
Date _________________ Signature_________________________
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EXHIBIT 10.76
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, MARCH 16, 2010.
****************************************
Number 42
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to JONATHAN SHAW or
permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $26.375 per share (the
"Exercise Price"), twelve thousand three hundred seventy-five (12,375) shares of
the Company's Common Stock, par value $0.01 per share (the "Common Stock"),
subject to the provisions and upon the terms and conditions herein set forth.
The Exercise Price and the number of Warrant Shares are subject to adjustment
from time to time as provided in subsection 1.10.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT.
(a) This Warrant may be exercised to purchase all of the
underlying shares set forth above from and after (i) the Company's
determination that during calendar year
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2000 the Initial SBU EBT (as defined below) of the Company's FYI Image
strategic business unit is equal to or greater than $26,057,000 plus any
Acquired SBU EBT (as defined below) or (ii) if the condition set forth in
clause (i) of this subsection 1.1(a) is not satisfied, March 16, 2009 if
at such time Mr. Shaw is an employee of the Company (each of the events
set forth in clauses (i) and (ii) hereof, an "Exercise Date" and
collectively from time to time, the "Exercise Dates"). For purposes of
this Warrant, "Initial SBU EBT" shall mean the earnings before taxes of
the entities within the FYI Image strategic business unit at the date of
this Warrant and "Acquired SBU EBT" shall mean the earnings before taxes
of entities or assets within such business unit acquired after the date
of this Warrant and during calendar year 2000 and thereafter managed by
Mr. Shaw on a pro rata basis for the balance of such year, in each event
based upon generally accepted accounting principles consistently applied
and including all operating business expenses and interest on capital
expenditures in excess of associated goodwill and excluding any pro forma
amortization of goodwill associated with the purchase proceeds based on a
thirty (30) year amortization schedule (Initial SBU EBT and Acquired SBU
EBT, together "SBU EBT"). The Company shall complete its calculation of
SBU EBT for calendar year 2000 on or before May 15, 2001. In the event
that Initial SBU EBT for calendar year 2000 is determined to be
$26,057,000 or greater plus any Acquired SBU EBT, this Warrant shall be
fully exercisable to and including 5:00 p.m. New York City time on March
16, 2010; in the event that Initial SBU EBT for calendar year 2000 is
determined to be less than $26,057,000, this Warrant shall only be
exercisable in accordance with subsection 1.1(a)(ii) above.
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part, by:
(i) Surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed
by the Warrantholder of record and specifying the number of
Warrant Shares to be purchased, to the Company at the office of
the Company located at 3232 McKinney Avenue, Suite 900, Dallas,
Texas 75204 (or such other office or agency of the Company as it
may designate by notice to the Warrantholder at the address of
such Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than a
Saturday, Sunday or a day on which the New York Stock Exchange is
authorized to close or on which the Company is otherwise closed
for business (a "Nonbusiness Day") on or after 9:00 A.M. New York
City time on the Exercise Date but not later than 5:00 P.M. on the
Expiration Date (or 5:00 P.M. on the next succeeding Business Day,
if the Expiration Date is a Nonbusiness Day),
(ii) Delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form (such payment may
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be made by the Warrantholder directly or by a designated broker
pursuant to the broker-assisted cashless exercise program
instituted by the Company, subject to subsection 1.5 herein) and
(iii) Such documentation as to the identity and authority
of the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in
denominations of at least one thousand (1,000) shares each or such other
denomination as may be specified by the Warrantholder and agreed upon by
the Company, and shall be issued in the name of the Warrantholder or, if
permitted by subsection 1.5 and in accordance with the provisions
thereof, such other name as shall be designated in the Exercise Form. If
this Warrant shall have been exercised only in part, the Company shall,
at the time of delivery of the certificates for the Warrant Shares,
deliver to the Warrantholder (or designated broker, as the case may be) a
new Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be identical with
this Warrant. No adjustments or payments shall be made on or in respect
of Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to
the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to subsection 1.1, shall cease to be exercisable and shall become void
and all rights of the Warrantholder hereunder shall cease. Subject to
subsection 1.3, this Warrant shall not be exercisable, and no Warrant Shares
shall be issued hereunder, prior to 9:00 A.M. New York City time on the First
Exercise Date.
1.3 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON FOLLOWING CHANGE OF
CONTROL. Upon termination of Jonathan Shaw's employment with the Company
"without cause" or for "good reason" as described in Jonathan Shaw's Employment
Agreement with the Company at any time during the term of this Warrant following
a Change in Control (as defined below), this Warrant shall immediately vest in
its entirety with respect to the Warrantholder's right to purchase all of the
shares underlying the Warrant and may be exercised in whole or in part from time
to time through and including the Expiration Date. A "Change in Control" shall
be deemed to have occurred if:
(i) Any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly the
Beneficial Ownership (as
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defined in Section 13(d) of the Securities and Exchange Act of
1934, as amended (the" Exchange Act")) of any voting security of
the Company and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities
representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company;
(ii) The individuals (A) who, as of the 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 Company shall approve a
merger, consolidation, recapitalization, or reorganization of the
Company, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which
would result in at least 75% of the total voting power represented
by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at
least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction;
or
(iv) The stockholders of the Company shall approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or a substantial portion
of the Company's assets (I.E., 50% or more of the total assets of
the Company).
In the event of Jonathan Shaw's death prior to the Expiration Date, this Warrant
may be exercised to the extent then exercisable by Mr. Shaw's legal
representative through the Expiration Date.
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
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1.5 TRANSFER RESTRICTION AND LEGEND.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed of,
in whole or in part, except in compliance with applicable United States
federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes hereof.
1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon surrender at
the principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5(b) and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
PROVIDED, HOWEVER, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
1.7 RESERVATION AND LISTING OF SHARES, ETC. All Warrant Shares which
are issued upon the exercise of the rights represented by this Warrant shall,
upon issuance and payment of the Exercise Price, be validly issued, fully paid
and nonassessable and free from all taxes, liens, security interests, charges
and other encumbrances with respect to the issue thereof other than taxes in
respect of any transfer occurring contemporaneously with such issue. During the
period within which this Warrant may be exercised, the Company shall at all
times have authorized and reserved, and keep available free from preemptive
rights, a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant, and shall at its expense use its best efforts to
procure such listing thereof (subject to official notice of issuance) as then
may be required on all stock exchanges on which the Common Stock is then listed
or on the Nasdaq National Market. The Company shall, from time to time, take
all such action as may be required to assure that the par value per share of the
Warrant Shares is at all times equal to or less than the then effective Exercise
Price.
1.8 EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. If permitted by
subsections 1.5 or 1.6 and in accordance with the provisions thereof, upon
surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the
5
<PAGE>
Company shall, without charge, execute and deliver a new Warrant of like
tenor in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of
such mutilation, upon surrender and cancellation of this Warrant, the Company
will execute and deliver a new Warrant of like tenor. The term "Warrant" as
used herein includes any Warrants issued in substitution or exchange of this
Warrant.
1.9 OWNERSHIP OF WARRANT. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
1.10 CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant Shares
may be purchased hereunder, and the number of Warrant Shares to be purchased
upon exercise hereof, are subject to change or adjustment as follows:
The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
this Warrant shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled
to receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall:
(i) Issue rights, options or warrants to all holders of
its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share
of Common Stock, or
6
<PAGE>
(ii) Distribute to all holders of its shares of Common
Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or
earned surplus and dividends or distributions referred to in
paragraph (a) of this subsection 1.10) or rights, options or
warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock,
appropriate adjustments shall be made to the number of Warrant
Shares purchasable upon the exercise of the Warrant and/or the
Exercise Price in order to preserve the relative rights and
interests of the Warrantholders, such adjustments to be made by
the good faith determination of the Board of Directors of the
Company.
2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
3. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
4. NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
In case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; PROVIDED, HOWEVER, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 5. The provisions of this Section 5
shall apply similarly to successive consolidations, mergers, sales, transfers or
leases.
6. REGISTRATION RIGHTS. Not later than March 31, 2001, the Company
shall file a registration statement covering the Warrant Shares on a Form S-8,
which registration statement shall be effective upon the filing thereof. The
Company shall use its best efforts to keep such Form S-8 current and effective
until the earlier of the Expiration Date or the date this Warrant has been
exercised in full.
7
<PAGE>
The Company shall have sole control in connection with the
preparation, filing, amending and supplementing of any registration
statement, including the right to withdraw the same or delay the
effectiveness thereof when, in the sole judgment of the Board of Directors of
the Company, the pendency of such registration statement or the effectiveness
thereof would impose an undue burden upon the ability of the Company to
proceed with any other material financing for its own account or any material
corporate transaction, including, but not limited to, a reorganization,
recapitalization, merger, consolidation or material acquisition of the
securities or assets of another firm or corporation; and the Company shall be
required to file a new registration statement or to proceed with such actions
as reasonably may be required to cause the registration statement to become
effective within a reasonable time after the consummation of the event or
transaction which required such withdrawal or delay.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder and holders
of Warrant Shares and their respective heirs, legal representatives, successors
and assigns. Nothing in this Warrant, expressed or implied, is intended to or
shall confer on any person other than the Company, the Warrantholders and
holders of Warrant Shares, or their respective heirs, legal representatives,
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Warrant or the Warrant Shares.
7.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and
Warrantholders that hold Warrants entitling them to purchase at least 50% of the
Warrant Shares. The Company, any Warrantholder or holders of Warrant Shares
may, by an instrument in writing, waive compliance by the other party with any
term or provision of this Warrant on the part of such other party hereto to be
performed or complied with. The waiver by any such party of a breach of any
term or provision of this Warrant shall not be construed as a waiver of any
subsequent breach.
7.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
7.5 FURTHER ASSURANCES. Each of the Company, the Warrantholders
and holders of Warrant Shares shall do and perform all such further acts and
things and execute and deliver all such other certificates, instruments
and/or documents (including without limitation, such proxies and/or powers of
attorney as may be necessary or appropriate) as any party hereto may, at any
time and from time to time, reasonably request in connection with the
performance of any of the provisions of this Warrant.
8
<PAGE>
7.6 NOTICES. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) If to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) If to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person then appearing on the books of
the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 SEPARABILITY. Any term or provision of this Warrant that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 RIGHTS OF THE HOLDER. The Warrantholder shall not, solely by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or in equity.
7.10 GOVERNING LAW. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 EFFECT OF STOCK SPLITS, ETC. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/Ed H. Bowman, Jr.
---------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: March 16, 2000
10
<PAGE>
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is
_____________________________________.
Date _________________ Signature_________________________
11
<PAGE>
EXHIBIT 21
SUBSIDIARIES
Acadian Consultants Corp.
Advanced Digital Graphics, Inc.
American Economics Group Acquisition Corp.
APS Services Acquisition Corp.
Associate Record Technician Services Acquisition Corp.
B&B (Baltimore-Washington) Acquisition Corp.
California Medical Record Service Acquisition Corp.
CH Acquisition Corp.
Copyright Acquisition Corp.
Copy Right Acquisition Corp.
Creative Mailings, Inc.
Data Entry & Informational Services Acquisition Corp.
DeBari Associates Acquisition Corp.
Deliverex Acquisition Corp.
DISC Acquisition Corp.
Doctex Acquisition Corp.
DPAS Acquisition Corp.
Eagle Legal Services Acquisition Corp.
Economic Research Services, Inc.
F.Y.I. Corporate Acquisition Corp.
F.Y.I. Direct Inc.
F.Y.I. Discovery Services Incorporated
F.Y.I. HealthSERVE Incorporated
F.Y.I. Image Inc.
F.Y.I. Input Inc.
F.Y.I. Integration Solutions Inc.
F.Y.I. Investments, Inc.
F.Y.I. Legal Incorporated
F.Y.I. LegalSERVE Incorporated
F.Y.I. Print Inc.
F.Y.I. Records Inc.
F.Y.I. Storage Inc.
Global Direct Acquisition Corp.
Healthserve V.C. Corp.
Imagent Acquisition Corp.
IMC, L.P.
IMC Management, Inc.
Information Management Services Acquisition Corp.
Input Management, Inc.
Input of Texas, L.P.
Investor Communications Services
Leonard Archives Acquisition Corp.
Lifo Systems, L.P.
Lifo Management, Inc.
Mailing and Marketing Acquisition Corp.
Managed Care Professionals Acquisition Corp.
MAVRICC Management Systems, Inc.
Medicopy Acquisition Corp.
Microfilm Distribution Services, Inc.
Microfilming Services, Inc.
Micro Publication Systems, Inc.
Minnesota Medical Record Service Acquisition Corp.
MMS Escrow and Transfer Agency, Inc.
MSI Imaging Solutions Acquisition Corp.
NBDE Acquisition Corp.
Northern Minnesota Medical Record Service Acquisition Corp.
Permanent Records L.P.
Permanent Records Management, Inc.
PMI Imaging Systems Acquisition Corp.
Premier Acquisition Corp.
QCS Inet Acquisition Corp.
Quality Copy Acquisition Corp.
Quality Data Conversions Acquisition Corp.
RAC (California) Acquisition Corp.
Recordex Acquisition Corp.
Researchers Acquisition Corp.
Rust Consulting Acquisition Corp.
The Rust Consulting Group, Inc.
T.C.H. Group, Inc.
TCH Mailhouse, Inc.
ZIA Information Analysis Group, Inc.
Zip Shred Canada Acquisition Corp.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-K, into the Company's previously filed
Registration Statement File Nos. 333-05493, 333-26785, 333-87279, 333-69811,
333-69813, and 333-92981.
ARTHUR ANDERSEN, LLP
Dallas, Texas,
March 21, 2000
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<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 9,396
<SECURITIES> 0
<RECEIVABLES> 91,698
<ALLOWANCES> (8,835)
<INVENTORY> 5,695
<CURRENT-ASSETS> 106,619
<PP&E> 80,847
<DEPRECIATION> (34,335)
<TOTAL-ASSETS> 369,355
<CURRENT-LIABILITIES> 86,506
<BONDS> 86,376
0
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<COMMON> 146
<OTHER-SE> 174,863
<TOTAL-LIABILITY-AND-EQUITY> 369,355
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<TOTAL-COSTS> 297,272
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<LOSS-PROVISION> 6,326
<INTEREST-EXPENSE> 4,246
<INCOME-PRETAX> 40,001
<INCOME-TAX> 16,000
<INCOME-CONTINUING> 24,001
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,001
<EPS-BASIC> 1.70
<EPS-DILUTED> 1.60
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 14,592
<SECURITIES> 0
<RECEIVABLES> 56,388
<ALLOWANCES> (4,705)
<INVENTORY> 2,408
<CURRENT-ASSETS> 72,241
<PP&E> 55,485
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<TOTAL-ASSETS> 206,970
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<COMMON> 140
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<TOTAL-REVENUES> 247,462
<CGS> 6,719
<TOTAL-COSTS> 210,114
<OTHER-EXPENSES> (478)
<LOSS-PROVISION> 3,262
<INTEREST-EXPENSE> 1,468
<INCOME-PRETAX> 30,018
<INCOME-TAX> 10,987
<INCOME-CONTINUING> 19,031
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,031
<EPS-BASIC> 1.42
<EPS-DILUTED> 1.39
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<ARTICLE> 5
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 10,982
<SECURITIES> 0
<RECEIVABLES> 38,833
<ALLOWANCES> (3,356)
<INVENTORY> 1,675
<CURRENT-ASSETS> 50,644
<PP&E> 41,521
<DEPRECIATION> (19,354)
<TOTAL-ASSETS> 139,106
<CURRENT-LIABILITIES> 24,002
<BONDS> 6,796
0
0
<COMMON> 125
<OTHER-SE> 107,439
<TOTAL-LIABILITY-AND-EQUITY> 139,106
<SALES> 7,845
<TOTAL-REVENUES> 177,272
<CGS> 5,948
<TOTAL-COSTS> 151,161
<OTHER-EXPENSES> (743)
<LOSS-PROVISION> 1,647
<INTEREST-EXPENSE> 1,919
<INCOME-PRETAX> 19,370
<INCOME-TAX> 6,507
<INCOME-CONTINUING> 12,863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,863
<EPS-BASIC> 1.07
<EPS-DILUTED> 1.05
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