Prepared by MerrillDirect





AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

(Joe A. Rose)


             THIS
EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of May 18, 2001 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 outsourcing solutions 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 (i) does not interfere with Employee's duties and
responsibilities hereunder and (ii) does not violate paragraph 9
hereof. The foregoing limitations shall not be construed as prohibiting Employee
from (A) serving on the board of directors of other companies or
(B) making personal investments in such form or manner as will neither
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 9 hereof.





 


             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
$365,000 per year (effective January 1, 2001), 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 2001 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 80% of Employee's annual base salary payable
in cash and/or equity (at the Company’s discretion) in accordance with this
Incentive Bonus Plan.  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.  For
2001, Employee has already been awarded Warrant No. 59 as payment for any
2001 bonus opportunity.


             (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 $1,000 per month
(effective March 2001) 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)       The Company shall provide Employee with
other executive perquisites as may be available to or deemed appropriate for
Employee by the Board and participation in all other Company-wide employee benefits
as available from time to time.



             (v)        The
Company shall reimburse Employee up to $8,000 per year for expenditures on
health, insurance, financial planning or tax planning benefits (or similar
benefits, or such other benefits at the discretion of the Company) or club
dues, all as selected by Employee.



             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 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 (the “Term”)
of this Agreement shall begin on the date hereof and continue through
December 31, 2003.  On each
December 31, the agreement shall automatically renew for a three-year
period (such that upon such renewal, the new remaining term shall be three
years), 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 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 (which notice was actually received
by 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 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), 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 equivalent to the
remaining Term of this Agreement.


             (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.





 


             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





 


             (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 used (prior to the termination of this Agreement) by the Company
or its affiliates.


             As used in paragraph 9(a),
references to the business, customers, Territory, etc. of the Company refer to
the status of the Company prior to any Change in Control (i.e., such breadth of business, customers,
Territory, etc. shall not automatically be expanded to include those of a
successor to the Company resulting from a Change in Control).  In the course of Employee’s employment with
the Company, Employee will become exposed to certain of the Company’s
confidential information and business relationships, which the above covenants
are designed to protect.  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 and
the Company agrees not to assign all or any portion of its obligations under
this Agreement (other than to a successor as a result of a Change in Control). 
Subject to the preceding, this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns.


             13.        Complete Agreement.  This Agreement is not a promise of future
employment.  Employee has no oral
representations, understandings or agreements with the Company or any of its
officers, directors or representatives covering the same subject matter as this
Agreement.  This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Employee and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. 
This Agreement may not be later modified except by a further writing
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by writing signed by the party waiving the
benefit of such term.


             14.        Notice.  Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:


             




	To the Company:	F.Y.I.
  Incorporated
	 	3232 McKinney
  Avenue
	 	Suite 1000
	 	Dallas, Texas
  75204
	 	Attn:  President
	 	 
	with a copy to:	F.Y.I.
  Incorporated
	 	3232 McKinney
  Avenue
	 	Suite 1000
	 	Dallas, Texas
  75204
	 	Attn:  General Counsel
	 	 
	with a copy to:	Locke Liddell & Sapp LLP
	 	2200
  Ross Avenue
	 	Suite 2200
	 	Dallas, Texas 75201
	 	Attn:  Charles
  C. Reeder, Esq.
	 	 
	To Employee:	Joe A. Rose
	 	3924 Southwestern
  Boulevard
	 	Dallas, Texas 75225
			







 





 


Notice shall be deemed given and effective three (3)
days after the deposit in the United States mail of a writing addressed as
above and sent first class mail, certified, return receipt requested, or when
actually received.  Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.


             15.        Severability; Headings.  If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative.  The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.


             16.        Arbitration.  Any unresolved dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three (3) arbitrators in Dallas,
Texas, in accordance with the rules of the American Arbitration Association then
in effect.  The arbitrators shall not
have the authority to add to, detract from, or modify any provision hereof nor
to award punitive damages to any injured party.  The arbitrators shall have the authority to order back-pay,
severance compensation, vesting of options (or cash compensation in lieu of
vesting of options), reimbursement of costs, including those incurred to
enforce this Agreement, and interest thereon in the event the arbitrators
determine that Employee was terminated without disability or good cause, as
defined in paragraphs 4(b) and 4(c), respectively, or that the Company has
otherwise materially breached this Agreement. 
A decision by a majority of the arbitration panel shall be final and
binding.  Judgment may be entered on the
arbitrators' award in any court having jurisdiction.  The direct expense of any arbitration proceeding shall be borne
by the Company.


             17.        Governing Law.  This Agreement shall in all respects be
construed according to the laws of the State of Texas.


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


             19.        Attorneys' Fees.  In the event of any litigation or
arbitration arising under or in connection with this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees as determined by the
court or arbitration panel, as the case may be.  Each party to this Agreement represents and warrants that it has
been represented by counsel in the negotiation and execution of this Agreement,
including without limitation the provisions set forth in this
paragraph 19.


             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 five (5) 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 (or
within fifteen (15) business days prior to) 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 five (5) times Employee’s
annual salary in effect 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.





 


             (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 30% 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 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 of the Company,
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 holders of at least 75% of the 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)         Continuation
of Benefits.  (i) Following the
termination of the Executive’s employment in connection with a Change in
Control (as contemplated by paragraph 20(b) or 20(c) of this Agreement) (a
“Change in Control Termination”) and until the earlier of (A) three (3)
years following such Change in Control Termination or (B) the date on which the
Executive becomes employed by a new employer (other than to the successor to
the Company following such Change in Control), the Company shall, at its
expense, provide the Executive with medical, dental, life insurance, disability
and accidental death and dismemberment benefits (“Insurance Benefits”) at the
highest level provided to the Executive immediately prior to the Change in
Control; provided, however, if the Executive becomes employed by a new employer
that maintains Insurance Benefits that either (x) do not cover the Executive
with respect to a pre-existing condition that was covered under the Company’s
Insurance Benefits, or (y) do not cover the Executive for a designated waiting
period, or (z) do not provide for a certain benefit, the Executive’s coverage
under the Company’s Insurance Benefits shall continue (with respect to such
area of non-coverage described in (x), (y) or (z), as applicable), without
limitation, until the earlier of the end of the applicable period of
non-coverage under the new employer’s Insurance Benefits or the third
anniversary of the Change in Control.






 



             (ii) Following a Change in Control
Termination the special benefit allowance of $8,000 contemplated by
paragraph 2(b)(v) of this Agreement will continue for 3 years thereafter.



             (iii) The Company shall reimburse
all reasonable expenses incurred by the Executive for reasonable office and
secretarial expenses and for reasonable professional outplacement services by
qualified consultants selected by the Executive for up to 3 years after a
Change in Control Termination.



             (iv) The Executive shall not be
required to seek other employment following a Change in Control Termination and
any compensation earned from other employment shall not reduce the amounts
otherwise payable under this Agreement.



                           (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 to receive from the Company an additional
payment (the “Gross-up Payment”) (i.e., in addition to such other severance
benefits, Change in Control benefits or any other payments under this Agreement)
in an amount such that the net amount of Total Payments and Gross-up Payment
retained by the Employee, after the calculation and deduction of all Excise Tax
on the Total Payments and all federal, state and local income tax, employment
tax and Excise Tax on the Gross-up Payment, shall be equal to 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 paragraph 20, 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
(together with all other employees with comparable appointment rights in their
respective employment agreements such that all such employees may collectively
select a single accounting firm) 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 (on an after tax basis) 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
greater than the amount previously taken into account and paid under this
Agreement (such additional Excise Tax being the “Additional Excise Tax”), 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 the Later Payment, Employee will retain from the Later Payment an amount
equal to the Additional Excise Tax, which Employee shall use to pay the
Additional Excise Tax.


             (h)        In
the event of a Change in Control, the Company shall require that the ultimate
parent entity (or if no parent entity, the acquiring entity itself) of any
entity that acquires control (through ownership of securities or assets,
consistent with the definitional triggers of a Change in Control set forth
above) of the Company in connection with such Change in Control assume or
guaranty the Company’s obligations under paragraphs 20(f) and 20(g) of this
Agreement.





 


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


 




	 	F.Y.I.
  INCORPORATED
	 	 
	 	 
	 	By:
	 	


	 	Title:
	 	 
	 	 
	 	 
	 	EMPLOYEE:
	 	 
	 	 
	 	


	 	JOE A. ROSE