Prepared by MerrillDirect





AMENDED AND RESTATED EMPLOYMENT
AGREEMENT

(Ronald Zazworsky)


             THIS
EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of May 28, 2001 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 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
a Division President of Health and Government Services and Officer of the
Company.  As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and expected of a
Division President of the Company. 
Employee hereby accepts this employment upon the terms and conditions
herein contained and, subject to paragraph 1(b), agrees to devote his working
time, attention and efforts to promote and further the business of the Company.


             (b)        Employee shall not, during the term of
his employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage except to the 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 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.





 


             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
$275,000 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 of Directors (the “Board”) will review Employee’s performance and
make increases to such base salary if, in its discretion, any such increase is
warranted.  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 75% of Employee's annual base salary
payable in cash and/or equity of the Company (at the Company’s discretion) in
accordance with the Incentive Bonus Plan. 
The award of any bonus shall be based on the Company’s overall
performance and the total performance of the business 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. 
For 2001, Employee has already been awarded Warrant No. 63 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 car allowance
(determined on a pre-tax basis) (increased from $500 per month effective March
2001).  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 $6,000 per year for expenditures on
health, insurance, financial planning or tax planning benefits (or similar
benefits at the discretion of the Company) or club dues selected by Employee.



             3.          [INTENTIONALLY
LEFT BLANK]


             4.          Term; Termination; Rights on
Termination.  The term of this
Agreement shall begin on the date hereof and continue through December 31,
2002.  On each December 31, the
agreement shall automatically renew for a two (2) year period (such that upon
such renewal, the new remaining term shall be two years), 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 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 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 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 (or those existing
within one (1) year prior to that time) customers, suppliers, businesses, or
accounts of the Company (including the subsidiaries thereof) in connection with
any business substantially similar to the Business;



             (ii)         call upon, hire, attempt to hire, contact or solicit with
respect to hiring (for Employee or on behalf of another) any person who is, at
that time, or who has been within one (1) year prior to that time, an employee
of the Company (including the subsidiaries thereof) in a managerial or sales
capacity, provided that Employee shall be permitted to call upon and hire any
member of his immediate family;



             (iii)        Lend credit, money or
reputation for the purpose of establishing or operating a 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”);



             (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.



             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
	 	2200 Ross
  Avenue
	 	Suite
  2200
	 	Dallas,
  Texas 75201
	 	Attn:  Charles C. Reeder, 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.


             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 3 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 (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 3 times Employee’s annual salary in effect 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, 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 the
holders of at least 75% 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)         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”) 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
(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) 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 (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.


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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:
	 	


	 	Title:
	 	 
	 	 
	 	EMPLOYEE:
	 	 
	 	 
	 	


	 	RONALD ZAZWORSKY