**AMENDEDAND RESTATED EMPLOYMENT AGREEMENT(Joe A. Rose)**

             THISEMPLOYMENT AGREEMENT (the "Agreement") is made and entered intoeffective 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 otheremployment agreements or understandings, written or oral, between the Companyand Employee.

**R E C I T A L S**

             Thefollowing statements are true and correct:

             As ofthe date of this Agreement, the Company is engaged primarily in the documentand information management outsourcing solutions business (the “Business”).

             Employeeis employed hereunder by the Company in a confidential relationship whereinEmployee, in the course of his employment with the Company, has and willcontinue to become familiar with and aware of information as to the Company'scustomers, specific manner of doing business, including the processes,techniques and trade secrets utilized by the Company, and future plans withrespect thereto, all of which has been and will be established and maintainedat great expense to the Company; this information is a trade secret andconstitutes the valuable goodwill of the Company.

             Therefore,in consideration of the mutual promises, terms, covenants and conditions setforth herein and the performance of each, it is hereby agreed as follows:

**A G R E E M E N T S**

1.          Employmentand Duties.

             (a)         The Company hereby employs Employee asan Executive Vice President and Chief Operating Officer.  As such, Employee shall haveresponsibilities, duties and authority reasonably accorded to and expected ofan Executive Vice President and Chief Operating Officer.  Employee hereby accepts this employment uponthe terms and conditions herein contained and, subject to paragraph 1(b),agrees to devote his working time, attention and efforts to promote and furtherthe business of the Company.

             (b)        Employee shall not, during the term ofhis employment hereunder, be engaged in any other business activity pursued forgain, profit or other pecuniary advantage except to the extent that suchactivity (i) does not interfere with Employee's duties andresponsibilities hereunder and (ii) does not violate paragraph 9hereof. The foregoing limitations shall not be construed as prohibiting Employeefrom (A) serving on the board of directors of other companies or(B) making personal investments in such form or manner as will neitherrequire his services, other than to a minimal extent, in the operation oraffairs of the companies or enterprises in which such investments are made norviolate the terms of paragraph 9 hereof.

 

             2.          Compensation.  For all services rendered by Employee, theCompany 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 basisin accordance with the Company's standard payroll procedures but not less thanmonthly (pro-rated for any year in which Employee is employed for less than thefull year). On at least an annual basis the Board (as defined below) willreview Employee’s performance and make increases to such base salary if, in itsdiscretionary, any such increase is warranted. Such recommended increase would, in all likelihood, require approval bythe Board of Directors (the “Board”) or a duly constituted committeethereof.  For 2001 and subsequent years,it is the Company's intent to develop a written Incentive Bonus Plan settingforth the criteria under which Employee and other officers and key employeeswill be eligible to receive year-end bonus awards. Employee shall be eligiblefor a bonus opportunity of up to 80% of Employee's annual base salary payablein cash and/or equity (at the Company’s discretion) in accordance with thisIncentive Bonus Plan.  The award of anybonus shall be based on the Company’s overall performance and shall be payablein various increments based on the performance. The incremental payments andthe Company's targeted performance shall be determined by the Board or thecompensation committee thereof.  For2001, Employee has already been awarded Warrant No. 59 as payment for any2001 bonus opportunity.

             (b)        Other Compensation.  Employee shall be entitled to receiveadditional benefits and compensation from the Company in such form and to suchextent as specified below:

             (i)          Payment of all premiums for coveragefor Employee and Employee's dependent family members under health,hospitalization, disability, dental and other insurance plans that the Companymay have in effect from time to time.

             (ii)         Reimbursement for all business traveland other out-of-pocket expenses reasonably incurred by Employee in theperformance 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 beappropriately documented in reasonable detail by Employee upon submission ofany request for reimbursement, and in a format and manner consistent with theCompany's expense reporting policy.

             (iii)        Four (4) weeks paid vacation for eachyear during the period of employment or such greater amount as may be affordedofficers and key employees generally under the Company's policies in effectfrom time to time (pro-rated for any year in which Employee is employed forless than the full year).

 

             (iv)       The Company shall provide Employee withother executive perquisites as may be available to or deemed appropriate forEmployee by the Board and participation in all other Company-wide employee benefitsas available from time to time.

             (v)        TheCompany shall reimburse Employee up to $8,000 per year for expenditures onhealth, insurance, financial planning or tax planning benefits (or similarbenefits, or such other benefits at the discretion of the Company) or clubdues, all as selected by Employee.

             3.          Placeof Performance.

             (a)         Employee understands that he may berequested by the Board of Directors of the Company (the “Board”) to relocatefrom his then current residence to another geographic location in order to moreefficiently carry out his duties and responsibilities under this Agreement oras 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 familyand 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 otherpurposes; temporary lodging and living costs prior to moving into a newpermanent residence; duplicate home carrying costs; and closing costs on thesale of Employee’s present residence and on the purchase of a comparableresidence in the new location.  Thegeneral intent of the foregoing is to assist Employee with the cost of therelocation, with an understanding that Employee will use his best efforts toincur only those costs which are reasonable and necessary to effect a smooth,efficient and orderly relocation with minimal disruption to the businessaffairs of the Company and the personal life of Employee and his family.

             (b)        Notwithstandingthe above, if Employee is requested by the Board to relocate and Employeerefuses, such refusal shall not constitute “good cause” for termination of thisAgreement under the terms of paragraph 4(c).

             4.          Term; Termination; Rights onTermination.  The term (the “Term”)of this Agreement shall begin on the date hereof and continue throughDecember 31, 2003.  On eachDecember 31, the agreement shall automatically renew for a three-yearperiod (such that upon such renewal, the new remaining term shall be threeyears), unless written notice is given that it will not be renewed.  This Agreement and Employee's employment maybe terminated in any one of the following ways:

             (a)         Death.  The death of Employee shall immediately terminate the Agreementwith no severance compensation due to Employee's estate.

             (b)        Disability.  The Company will make efforts to reasonablyaccommodate Employee as required by applicable state or federal disabilitylaws.  However, the parties irrebutablypresume that, given Employee's position, it would be an undue hardship to theCompany if Employee is absent for more than three (3) consecutive months.  Therefore, if as a result of incapacity dueto physical or mental illness or injury, Employee shall have been absent fromhis full-time duties hereunder for three (3) consecutive months, then thirty(30) days after receiving written notice (which notice may occur before orafter the end of such three (3) month period, but which shall not be effectiveearlier than the last day of such three (3) month period), the Company mayterminate Employee's employment hereunder provided Employee is unable to resumehis full-time duties at the conclusion of such notice period.  Also, Employee may terminate his employmenthereunder if his health should become impaired to an extent that makes thecontinued performance of his duties hereunder hazardous to his physical ormental health or his life, provided that Employee shall have furnished theCompany with a written statement from a qualified doctor to such effect andprovided, further, that at the Company's request made within thirty (30) daysof the date of such written statement, Employee shall submit to an examinationby a doctor selected by the Company who is reasonably acceptable to Employee orEmployee's doctor and such doctor shall have concurred in the conclusion ofEmployee's doctor.  In the event this Agreementis terminated as a result of Employee's disability, Employee shall receive fromthe Company, in a lump-sum payment due within ten (10) days of the effectivedate of termination, the base salary at the rate then in effect for whatevertime 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 receivedby Employee) for good cause, which shall be: (i) Employee's breach of thisAgreement; (ii) Employee's negligence in the performance or nonperformance(continuing for five (5) days after receipt of the written notice) of any ofEmployee's material duties and responsibilities hereunder; (iii) Employee'sdishonesty, fraud or misconduct with respect to the business or affairs of theCompany that adversely affects the operations or reputation of the Company;(iv) Employee's conviction of a felony crime; or (v) chronic alcohol abuse orillegal drug abuse by Employee.  In theevent of a termination for good cause, as enumerated above, Employee shall haveno right to any severance compensation.

             (d)        Without Cause.  At any time after the commencement ofemployment, the Company may, without cause, terminate this Agreement andEmployee's employment, effective ten (10) days after written notice is providedto Employee.  Employee may only beterminated without cause by the Company during the Term hereof if suchtermination is approved by the Board of Directors of the Company.  Should Employee be terminated by the Companywithout cause, Employee shall receive from the Company, in a lump-sum paymentdue on the effective date of termination equivalent to the remaining Term ofthis Agreement.

             (e)         Change in Control.  Refer to paragraph 20 below.

             (f)         Termination by Employee for GoodReason.  Employee may terminate hisemployment hereunder for "Good Reason."  As used herein, "Good Reason" shall mean thecontinuance of any of the following after fifteen (15) days' prior writtennotice by Employee to the Company, specifying the basis for such Employee'shaving Good Reason to terminate this Agreement:

             (i)          Employee's removal from, or failure tobe 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 thisAgreement by the Company that is not cured within the fifteen (15) day timeperiod set forth in paragraph 4(f), including the failure to pay Employeeon a timely basis the amounts to which he is entitled under this Agreement.

In the event of any dispute with respect to thetermination by the Employee for Good Reason, such dispute shall be resolvedpursuant 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 entitledas a result of such breach, including interest thereon and all reasonable legalfees and expenses and other costs incurred by Employee to enforce his rightshereunder.  Should Employee terminatehis employment for Good Reason, Employee shall receive from the Company, in alump-sum payment due on the effective date of termination equivalent to theremaining Term of this Agreement.

             (g)        Termination by Employee Without Cause.   If Employee resigns or otherwise terminateshis employment without Good Reason pursuant to paragraph 4(f), Employee shallreceive no severance compensation.

Upon termination of this Agreement for any reasonprovided in clauses (a) through (g) above, Employee shall be entitled toreceive all compensation earned and all benefits and reimbursements vested ordue through the effective date of termination. Additional compensation subsequent to termination, if any, will be dueand payable to Employee only to the extent and in the manner expressly providedabove or in paragraph 16.  All otherrights and obligations of the Company and Employee under this Agreement shallcease as of the effective date of termination, except that the Company'sobligations under paragraph 10 herein and Employee's obligations underparagraphs 5, 6, 7, 8, 9 and 11 herein shall survive such termination inaccordance with their terms.

             5.          Return of Company Property.  All records, designs, patents, businessplans, financial statements, manuals, memoranda, lists and other propertydelivered to or compiled by Employee by or on behalf of the Company or theirrepresentatives, vendors or customers which pertain to the business of theCompany shall be and remain the property of the Company, as the case may be, andbe subject at all times to their discretion and control.  Likewise, all correspondence, reports,records, charts, advertising materials and other similar data pertaining to thebusiness, activities or future plans of the Company that is collected by Employeeshall be delivered promptly to the Company without request by it upontermination of Employee's employment.

             6.          Inventions.  Employee shall disclose promptly to theCompany any and all significant conceptions and ideas for inventions,improvements and valuable discoveries, whether patentable or not, which areconceived or made by Employee, solely or jointly with another, during theperiod of employment or within one (1) year thereafter, and which are directlyrelated to the business or activities of the Company and that Employeeconceives as a result of his employment by the Company.  Employee hereby assigns and agrees to assignall 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 otherinstruments that the Company shall deem necessary to apply for and obtainletters patent of the United States or any foreign country or to otherwiseprotect the Company's interest therein.

 

             7.          Trade Secrets.  Employee agrees that he will not, during orafter the term of this Agreement with the Company, disclose the specific termsof the Company's relationships or agreements with their respective significantvendors or customers or any other significant and material trade secret of theCompany, 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 aperiod of three (3) years thereafter, whichever is longer, without the priorwritten consent of the Company, Employee shall not, directly or indirectly,through any form of ownership, in any individual or representative oraffiliated capacity whatsoever, except as may be required by law, reveal,divulge, disclose or communicate to any person, firm, association, corporationor other entity in any manner whatsoever information of any kind, nature ordescription concerning: (i) the names of any prior or present suppliers orcustomers with respect to the Business, (ii) the prices for products orservices with respect to the Business, (iii) the names of personnel withrespect to the Business, (iv) the manner of operation with respect to theBusiness, (v) the plans, trade secrets, or other data of any kind, nature ordescription, whether tangible or intangible, with respect to the Business, or(vi) any other financial, statistical or other information regarding thebusiness acquired by the Company that the Company designates or treats asconfidential or proprietary.  Theagreements set forth herein shall not apply to any information that at the timeof 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 inviolation of this Agreement).  Withoutregard to whether any or all of the foregoing matters would be deemed confidential,material or important, the parties hereto stipulate that as between them, thesame are important, material and confidential and gravely affect the effectiveand successful conduct of the Business and its goodwill.

             9.          Noncompetition.  (a) Employee agrees that during the term ofthis Agreement and, upon termination of Employee’s employment by the Companyfor a period of three (3) years thereafter, he shall not:

             (i)          Call upon, solicit, divert, take awayor attempt to call upon, solicit, divert or take away any existing customers,suppliers, businesses, or accounts of the Business in connection with anybusiness substantially similar to the Business in the territory defined as 100miles in and around the Company’s and its affiliates operations (the“Territory”);

             (ii)         Hire, attempt to hire, contact orsolicit with respect to hiring for himself or on behalf of any other person anypresent employee of the Company in the Business;

             (iii)        Lend credit, money or reputation for thepurpose of establishing or operating a business substantially similar to theBusiness in the Territory;

             (iv)       Do any act that Employee knew orreasonably should have known might directly injure the Company in any materialrespect or that might divert customers, suppliers or employees from theBusiness; and

 

             (v)        Without limiting the generality of theforegoing provisions, conduct a business substantially similar to the Businessunder the name “F.Y.I. Incorporated” or any other trade names, trademarks orservice marks used (prior to the termination of this Agreement) by the Companyor its affiliates.

             As used in paragraph 9(a),references to the business, customers, Territory, etc. of the Company refer tothe 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 asuccessor to the Company resulting from a Change in Control).  In the course of Employee’s employment withthe Company, Employee will become exposed to certain of the Company’sconfidential information and business relationships, which the above covenantsare designed to protect.  The covenants in subsections (i) through (v) areintended to restrict Employee from competing in any manner with the Company orthe Business in the activities that have heretofore been carried on by theCompany or its affiliates.  Theobligations set forth in subsections (i) through (v) above shall apply toactions by Employee, through any form of ownership, and whether as principal, officer,director, agent, employee, employer, consultant, stockholder or holder of anyequity security (beneficially or as trustee of any trust), lender, partner,joint venturer or in any other individual or representative or affiliatedcapacity whatsoever.  However, none ofthe foregoing shall prevent  Employeefrom being the holder of up to 5.0% in the aggregate of any class of securitiesof any corporation engaged in the activities described in subsection (i)through (v) above, provided that such securities are listed on a nationalsecurities exchange or reported on the Nasdaq National Market.

             10.        Indemnification.  In the event Employee is made a party to anythreatened, pending or completed action, suit or proceeding, whether civil,criminal, administrative or investigative (other than an action by the Companyagainst Employee), by reason of the fact that he is or was performing servicesunder this Agreement, then the Company shall indemnify Employee against allexpenses (including attorneys' fees), judgments, fines and amounts paid insettlement, as actually and reasonably incurred by Employee in connectiontherewith.  In the event that bothEmployee and the Company are made a party to the same third-party action,complaint, suit or proceeding, the Company agrees to engage competent legalrepresentation, and Employee agrees to use the same representation, providedthat if counsel selected by the Company shall have a conflict of interest thatprevents such counsel from representing Employee, Employee may engage separatecounsel and the Company shall pay all attorneys' fees of such separatecounsel.  Further, while Employee isexpected at all times to use his best efforts to faithfully discharge hisduties under this Agreement, Employee shall not be held liable to the Companyfor errors or omissions made in good faith where Employee has not exhibitednegligence or performed criminal and fraudulent acts which damage the businessof the Company.

             11.        No Prior Agreements.  Employee hereby represents and warrants tothe Company that the execution of this Agreement by Employee and his employmentby the Company and the performance of his duties hereunder will not violate orbe a breach of any agreement with a former employer, client or any other personor entity.  Further, Employee agrees toindemnify the Company for any claim, including, but not limited to, attorneys'fees and expenses of investigation, by any such third party that such thirdparty may now have or may hereafter come to have against the Company based uponor arising out of any non-competition agreement, invention or secrecy agreementbetween Employee and such third party which was in existence as of the date ofthis Agreement.

 

             12.        Assignment; Binding Effect.  Employee understands that he has beenselected for employment by the Company on the basis of his personalqualifications, experience and skills. Employee agrees, therefore, he cannot assign all or any portion of hisperformance under this Agreement andthe Company agrees not to assign all or any portion of its obligations underthis 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 tothe benefit of and be enforceable by the parties hereto and their respectiveheirs, legal representatives, successors and assigns.

             13.        Complete Agreement.  This Agreement is not a promise of futureemployment.  Employee has no oralrepresentations, understandings or agreements with the Company or any of itsofficers, directors or representatives covering the same subject matter as thisAgreement.  This written Agreement isthe final, complete and exclusive statement and expression of the agreementbetween the Company and Employee and of all the terms of this Agreement, and itcannot be varied, contradicted or supplemented by evidence of any prior orcontemporaneous oral or written agreements. This Agreement may not be later modified except by a further writingsigned by a duly authorized officer of the Company and Employee, and no term ofthis Agreement may be waived except by writing signed by the party waiving thebenefit of such term.

             14.        Notice.  Whenever any notice is required hereunder, it shall be given inwriting 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 asabove and sent first class mail, certified, return receipt requested, or whenactually received.  Either party maychange the address for notice by notifying the other party of such change inaccordance with this paragraph 14.

             15.        Severability; Headings.  If any portion of this Agreement is heldinvalid or inoperative, the other portions of this Agreement shall be deemedvalid and operative and, so far as is reasonable and possible, effect shall begiven to the intent manifested by the portion held invalid or inoperative.  The paragraph headings herein are forreference 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 controversyarising under or in connection with this Agreement shall be settled exclusivelyby arbitration, conducted before a panel of three (3) arbitrators in Dallas,Texas, in accordance with the rules of the American Arbitration Association thenin effect.  The arbitrators shall nothave the authority to add to, detract from, or modify any provision hereof norto 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 ofvesting of options), reimbursement of costs, including those incurred toenforce this Agreement, and interest thereon in the event the arbitratorsdetermine that Employee was terminated without disability or good cause, asdefined in paragraphs 4(b) and 4(c), respectively, or that the Company hasotherwise materially breached this Agreement. A decision by a majority of the arbitration panel shall be final andbinding.  Judgment may be entered on thearbitrators' award in any court having jurisdiction.  The direct expense of any arbitration proceeding shall be borneby the Company.

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

             18.        Counterparts.  This Agreement may be executedsimultaneously in two (2) or more counterparts, each of which shall be deemedan original and all of which together shall constitute but one and the sameinstrument.

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

             20.        Change in Control.

             (a)         Employee understands and acknowledgesthat the Company may be merged or consolidated with or into another entity.

             (b)        In the event of a pending Change inControl wherein the Employee has not received written notice at least fifteen(15) business days prior to the anticipated closing date of the transactiongiving rise to the Change in Control from the successor to all or a substantialportion of the Company’s business and/or assets that such successor is willingas of the closing to assume and agree to perform the Company’s obligationsunder this Agreement in the same manner and to the same extent that the Companyis hereby required to perform, such Change in Control shall be deemed to be atermination of this Agreement by the Company and the amount of the lump-sumseverance payment due to Employee shall be five (5) times the Employee’s annualsalary immediately prior to Change in Control and the non-competitionprovisions of paragraph 9 shall not apply whatsoever.  Payment shall be made either at closing ofthe transaction if notice is served at least five (5) days before closing orwithin ten (10) days of Employee’s written notice.

             (c)         In any Change in Control situation inwhich Employee has received written notice from the successor to the Companythat such pending successor is willing to assume the Company’s obligationshereunder or Employee receives notice after (orwithin fifteen (15) business days prior to) theChange in Control that Employee is being terminated, Employee may nonetheless,at his sole discretion, elect to terminate this Agreement by providing writtennotice to the Company at any time prior to closing of the transaction and up totwo (2) years after the closing of the transaction giving rise to the Change inControl.  In such case, the amount of thelump-sum severance payment due to Employee shall be five (5) times Employee’sannual salary in effect immediately prior to Change in Control and thenon-competition provisions of paragraph 9 shall all apply.  Payment shall be made either at closing ifnotice is served at least five (5) days before closing or within ten (10) daysof written notice by Employee.

             (d)        Forpurposes of applying paragraph 4 under the circumstances described in (b) and(c) above, the effective date of termination will be the later of the closingdate of the transaction giving rise to the Change in Control or Employee’snotice as described above, and all compensation, reimbursements and lump-sumpayments due Employee must be paid in full by the Company at such time.  Further, Employee will be given sufficienttime in order to comply with then Securities and Exchange Commission’sregulations to elect whether to exercise and sell all or any of his vestedoptions to purchase Common Stock of the Company, including any options withaccelerated vesting under the provisions of the Company's 1995 Stock OptionPlan, as amended or any warrants, such that he may convert the options orwarrants to shares of Common Stock of the Company at or prior to the closing ofthe transaction giving rise to the Change in Control, if he so desires.

 

             (e)         A "Change in Control" shallbe deemed to have occurred if:

             (i)          any person, other than the Company oran employee benefit plan of the Company, acquires directly or indirectly theBeneficial Ownership (as defined in Section 13(d) of the Securities ExchangeAct of 1934, as amended) of any voting security of the Company and immediatelyafter such acquisition such Person is, directly or indirectly, the BeneficialOwner of voting securities representing 30% or more of the total voting powerof all of the then-outstanding voting securities of the Company;

             (ii)         the individuals (A) who, as of theclosing date of the Company's initial public offering, constitute the Board ofDirectors of the Company (the "Original Directors") or (B) whothereafter are elected to the Board of Directors of the Company and whoseelection, or nomination for election, to the Board of Directors of the Companywas approved by a vote of at least two-thirds (2/3) of the Original Directorsthen still in office (such directors becoming "Additional OriginalDirectors" immediately following their election) or (C) who are elected tothe Board of Directors of the Company and whose election, or nomination forelection, to the Board of Directors of the Company was approved by a vote of atleast two-thirds (2/3) of the Original Directors and Additional OriginalDirectors then still in office (such directors also becoming "AdditionalOriginal Directors" immediately following their election), cease for anyreason to constitute a majority of the members of the Board of Directors of theCompany;

             (iii)        the stockholders of the Company shallapprove a merger, consolidation, recapitalization, or reorganization of theCompany, a reverse stock split of outstanding voting securities of the Company,or consummation of any such transaction if stockholder approval is not soughtor 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 survivingentity outstanding immediately after such transaction being Beneficially Ownedby holders of at least 75% of the outstanding voting securities of the Companyimmediately prior to the transaction, with the voting power of each suchcontinuing holder relative to other such continuing holders not substantiallyaltered in the transaction; or

             (iv)       the stockholders of the Company shallapprove a plan of complete liquidation of the Company or an agreement for thesale or disposition by the Company of all or a substantial portion of the Company'sassets (i.e., 50% or more of the total assets of the Company).

             (f)         Continuationof Benefits.  (i) Following thetermination of the Executive’s employment in connection with a Change inControl (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 theExecutive becomes employed by a new employer (other than to the successor tothe Company following such Change in Control), the Company shall, at itsexpense, provide the Executive with medical, dental, life insurance, disabilityand accidental death and dismemberment benefits (“Insurance Benefits”) at thehighest level provided to the Executive immediately prior to the Change inControl; provided, however, if the Executive becomes employed by a new employerthat maintains Insurance Benefits that either (x) do not cover the Executivewith respect to a pre-existing condition that was covered under the Company’sInsurance Benefits, or (y) do not cover the Executive for a designated waitingperiod, or (z) do not provide for a certain benefit, the Executive’s coverageunder the Company’s Insurance Benefits shall continue (with respect to sucharea of non-coverage described in (x), (y) or (z), as applicable), withoutlimitation, until the earlier of the end of the applicable period ofnon-coverage under the new employer’s Insurance Benefits or the thirdanniversary of the Change in Control.

 

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

             (iii) The Company shall reimburseall reasonable expenses incurred by the Executive for reasonable office andsecretarial expenses and for reasonable professional outplacement services byqualified consultants selected by the Executive for up to 3 years after aChange in Control Termination.

             (iv) The Executive shall not berequired to seek other employment following a Change in Control Termination andany compensation earned from other employment shall not reduce the amountsotherwise payable under this Agreement.

                           (g)       Ifany portion of the severance benefits, Change in Control benefits or any otherpayment under this Agreement, or under any other agreement with, or plan of theCompany, including but not limited to stock options, warrants and otherlong-term incentives (in the aggregate “Total Payments”) would be subject tothe excise tax imposed by Section 4999 of the Code, as amended (or anysimilar tax that may hereafter be imposed) or any interest or penalties withrespect to such excise tax (such excise tax, together with any such interestand penalties, are hereinafter collectively referred to as the “Excise Tax”),then Employee shall be entitled to receive from the Company an additionalpayment (the “Gross-up Payment”) (i.e., in addition to such other severancebenefits, 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 Paymentretained by the Employee, after the calculation and deduction of all Excise Taxon the Total Payments and all federal, state and local income tax, employmenttax and Excise Tax on the Gross-up Payment, shall be equal to the TotalPayments.

             Forpurposes of this paragraph Employee’s applicable Federal, state and local taxesshall be computed at the maximum marginal rates, taking into account the effectof any loss of personal exemptions resulting from receipt of the Gross-UpPayment.

             Alldeterminations required to be made under this paragraph 20, includingwhether a Gross-Up Payment is required under this paragraph, and theassumptions to be used in determining the Gross-Up Payment, shall be made bythe Company’s current independent accounting firm, or such other firm as theCompany may designate in writing prior to a Change in Control (the “AccountingFirm”), which shall provide detailed supporting calculations both to the Companyand Employee within twenty business days of the receipt of notice from Employeethat there will likely be a Change in Control, or such earlier time as isrequested by the Company.  In the eventthat the Accounting Firm is serving as accountant or auditor for the partyeffecting the Change in Control or is otherwise unavailable, Employee may(together with all other employees with comparable appointment rights in theirrespective employment agreements such that all such employees may collectivelyselect a single accounting firm) appoint another nationally recognizedaccounting firm to make the determinations required hereunder (which accountingfirm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firmwith respect to such determinations described above shall be borne solely bythe Company.

 

             Employee agrees (unless requestedotherwise by the Company) to use reasonable efforts to contest in good faithany subsequent determination by the Internal Revenue Service that Employee owesan amount of Excise Tax greater than the amount determined pursuant to thisparagraph; provided, that Employee shall be entitled to reimbursement bythe Company (on an after tax basis) of all fees and expenses reasonably incurredby Employee in contesting such determination. In the event the Internal Revenue Service or any court of competentjurisdiction determines that Employee owes an amount of Excise Tax that isgreater than the amount previously taken into account and paid under thisAgreement (such additional Excise Tax being the “Additional Excise Tax”), theCompany shall promptly pay to Employee the amount of such shortfall.  In the case of any payment that the Companyis required to make to Employee pursuant to the preceding sentence (a “LaterPayment”), the Company shall also pay to Employee an additional amount suchthat after payment by Employee of all of Employee’s applicable Federal, stateand local taxes, including any interest and penalties assessed by any taxing authority,on the Later Payment, Employee will retain from the Later Payment an amountequal to the Additional Excise Tax, which Employee shall use to pay theAdditional Excise Tax.

             (h)        Inthe event of a Change in Control, the Company shall require that the ultimateparent entity (or if no parent entity, the acquiring entity itself) of anyentity that acquires control (through ownership of securities or assets,consistent with the definitional triggers of a Change in Control set forthabove) of the Company in connection with such Change in Control assume orguaranty the Company’s obligations under paragraphs 20(f) and 20(g) of thisAgreement.

 

             INWITNESS WHEREOF, the parties hereto have executed this Agreement as of the dayand year first above written.

 

|   | F.Y.I.  INCORPORATED |
|--------|----------------------|
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|   | By:                  |
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|   | Title:               |
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|   | EMPLOYEE:            |
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|   |                 |
|   |                      |
|   | JOE A. ROSE          |
|   |                 |
|   |                 |
|        |                      |  |