Exhibit 10.1


 


CONSULTING AGREEMENT FOURTH AMENDED ADDENDUM


 


This
Consulting Agreement Fourth Amended Addendum is entered into effective as of January 1,
2006 (except as otherwise provided herein), and is a supplement to, and
modification of, that certain Consulting Agreement (the “Original Agreement”)
by and between F.Y.I. Incorporated (n/k/a SOURCECORP,
Incorporated) (the “Company”) and David Lowenstein (“Consultant”), dated as of January 1,
2000.


 


1.             Change of Control. 
Effective January 1, 2006, sub-paragraphs 9(c) and (e) of
the Original Agreement are amended in their entirety to provide as follows:


 


9.  Change in Control.


 


(c)           Upon
a Change in Control, the Company or its successor shall (A) provide prompt
written notice to Consultant of the occurrence of the Change in Control, and (B) deliver
to an independent corporate trustee in an escrow account, upon terms reasonably
satisfactory to Consultant, an amount equal to the Consultant’s lump sum
termination payment and the Gross-up Payment to which he is entitled in
accordance with Section 9(g).  The
escrow agreement shall provide that, to the extent that Consultant for any
reason must report and pay federal, state, or local income tax or
self-employment or excise tax on the lump sum termination payment or the
Gross-up Payment, the escrow agent shall distribute to the Consultant the
amount necessary to pay all federal, state and local income tax,
self-employment tax and any excise tax as it becomes due. The Company shall
bear the costs of establishing and maintaining the escrow account.  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 obligation 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.


 


(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)          stockholder approval of 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)          stockholder approval of a 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))
or consummation of any such transaction if stockholder approval is not sought
or obtained.


 


2.             Gross-Up Payment. 
Effective January 1, 2006, paragraph 9(g) of the Original
Agreement is amended in its entirety to provide as follows:


 


(g)           If
any portion of the severance benefits, Change in Control benefits, termination
payment, 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, restricted stock awards 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 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,
termination payment 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
Consultant, after the calculation and deduction of all Excise Tax on the Total
Payments and all federal, state and


 


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local income
tax, self-employment tax and Excise Tax on the Gross-up Payment, shall be equal
to 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 or itemized deductions resulting from receipt
of the Gross-Up Payment.


 


All determinations required to be made under
this paragraph 9(g), including whether a Gross-Up Payment is required, 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 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
(together with all employees with comparable appointment rights in their
respective employment agreements such that Consultant and 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.


 


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 Section; provided, that Consultant shall be
entitled to reimbursement by the Company (on an after tax basis) 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 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 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 the
Later Payment, Consultant will retain from the Later Payment an amount equal to
the Additional Excise Tax, which Consultant shall use to pay the Additional
Excise Tax.


 


3.             Section 409A Provisions.  Effective January 1, 2006, the following provisions are added
as Paragraph 17 of the Agreement:


 


17.   Section 409A.


 


(a)         Notwithstanding
any provision of the Agreement to the contrary, if Consultant is a “specified
employee” as defined under Section 409A
(“Section 409A”) of the Internal Revenue Code of 1986, as amended or any
regulations or Treasury guidance


 


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promulgated thereunder,
Consultant shall not be entitled to any payments or benefits upon a separation
from service until the earlier of (i) the date which is six months after
his separation from service as such term is defined under Section 409A for
any reason other than death or (ii) the date of his death.  The provisions of this paragraph 17 shall
only apply if required to comply with Section 409A.


 


(b)         If any provision of
this Agreement (or of any award of compensation, including equity compensation
or benefits) would cause Consultant to incur any additional tax or interest
under Section 409A, the Company shall, after promptly consulting with and
receiving the approval of Consultant (which shall not be unreasonably
withheld), reform such provision; provided that the Company agrees (both
in the application of this sub-paragraph (b) and the above sub-paragraph
(a)) to maintain, to the maximum extent practicable, the original intent and
economic benefit to Consultant of the applicable provision without violating
the provisions of Section 409A.


 


(c)           This paragraph 17
shall survive any termination of this Agreement.


 


4.             Governing
Laws.  This Fourth Amended
Addendum shall in all respect be construed according to the laws of the State
of Texas.


 


5.             Counterparts.  This
Fourth Amended Addendum 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 instruments.


 


6.             Effect of Fourth Amended Addendum.  Except as specifically amended by this Fourth
Amended Addendum, all provisions of the Original Agreement (as amended by the
Consulting Agreement Amended Addendum entered into effective October 1,
2004, the Second Amended Addendum entered into effective December 18,
2004, and the Third Amended Addendum entered into effective January 1,
2005) remain in full force and effect in accordance with their express terms.


 


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


 


	
  SOURCECORP,
  Incorporated

  (f/k/a/ F.Y.I. Incorporated)

  	
   

  	
  CONSULTANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas
  C. Walker

  	
   

  	
  /s/ David
  Lowenstein

  	
   

  
	
   

  	
  Thomas C. Walker

  Chairman and Chief Development Officer

  	
   

  	
  David Lowenstein

  



 


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