**EMPLOYMENTAGREEMENT(Kerry D. Walbridge)**

             This Employment Agreement (the"Agreement") by and between F.Y.I. Incorporated, a Delawarecorporation (the "Company"), and Kerry D. Walbridge("Employee") is hereby entered into effective as of May 18, 2001 (the“Effective Date”).  This Agreementhereby supersedes any other employment agreements or understandings, written ororal, between the Company and Employee.

RE C I T A L S

             The following statements are trueand correct:

             As of the date of this Agreement,the Company is engaged primarily in the business of providing document andinformation management outsourcing solutions.

             Employee is employed hereunder bythe Company in a confidential relationship wherein Employee, in the course ofhis employment with the Company, has and will continue to become familiar withand aware of information as to the Company's customers, specific manner ofdoing business, including the processes, techniques and trade secrets utilizedby the Company, and future plans with respect thereto, all of which has beenand will be established and maintained at great expense to the Company; thisinformation is a trade secret and constitutes the valuable goodwill of theCompany.

             Therefore, in consideration of themutual promises, terms, covenants and conditions set forth herein and theperformance of each, it is hereby agreed as follows:

AG R E E M E N T S

             1.          Employment and Duties.

             (a)         The Company hereby employs Employee asDivision President of Conversion and Distribution Services.  As such, Employee shall haveresponsibilities, duties and authority reasonably accorded to and expected of aDivision President and will report directly to the Company’s Chief OperatingOfficer or such other officer designated by the Company.  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 and responsibilitieshereunder and (ii) does not violate paragraph 3 hereof.  The foregoing limitations shall not beconstrued as prohibiting Employee from (A) serving on the boards ofdirectors of other companies or (B) making personal investments in suchform or manner as will neither require his services, other than to a minimalextent, in the operation or affairs of the companies or enterprises in whichsuch investments are made nor violate the terms of paragraph 3 hereof.

 

             2.          Compensation.  For all services rendered by Employee, theCompany shall compensate Employee as follows:

             (a)         *BaseSalary*.  The base salarypayable to Employee shall be $250,000 per year (effective March 19, 2001),payable on a regular basis in accordance with the Company's standard payrollprocedures but not less than bi-weekly.

             (b)        *IncentiveBonus Plan*.  Beginning forthe year 2001, Employee shall be eligible for a bonus opportunity of up to 50%of his annual base salary in accordance with the Company’s Incentive Bonus Planas modified from time to time, payable in cash and/or equity of the Company (atthe Company’s discretion).  The bonuspayment and the Company's targeted performance shall be determined and approvedby the Board or the compensation committee thereof.  For the year in which this Employment Agreement is executed, thebonus opportunity shall be prorated for the length of time Employee is actuallyemployed by the Company.  For 2001,Employee has already been awarded Warrant No. 79 as payment for any 2001bonus opportunity.

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

             (i)          Paymentof all premiums for coverage for Employee and his dependent family members underhealth, hospitalization, disability, dental, life and other insurance plansthat the Company may have in effect from time to time, and not less favorablethan the benefits provided to other Company executives.

             (ii)         Reimbursement for all business travel and otherout-of-pocket expenses reasonably incurred by Employee in the performance ofhis services pursuant to this Agreement. All reimbursable expenses shall be appropriately documented inreasonable detail by Employee upon submission of any request for reimbursement,and in a format and manner consistent with the Company's expense reportingpolicy.

             (iii)        Four (4) weeks paid vacation for each year during the periodof employment or such greater amount as may be afforded officers and keyemployees generally under the Company's policies in effect from time to time(prorated for any year in which Employee is employed for less than the fullyear).

             (iv)       An automobile allowance in the amount of $1,000 per month.

             (v)        Participationin the Company’s 401(k) Plan and Non-Qualified Plan.

 

             3.          Non-Competition Agreement.

             (a)         Subject to Section 3(a) and Section 12,Employee will not, during the period of his employment by or with the Company,and for a period of two (2) years immediately following the termination of hisemployment under this Agreement, for any reason whatsoever, directly orindirectly, for himself or on behalf of or in conjunction with any otherperson, company, partnership, corporation, business or entity of whatevernature:

             (i)          engage,as an officer, director, shareholder, owner, partner, joint venturer, or in amanagerial capacity, whether as an employee, independent contractor, consultantor advisor, or as a sales representative, in any business selling any productsor services in direct competition with the Company, within 100 miles of (i) theprincipal executive offices of the Company or (ii) any place to which theCompany provides products or services or in which the Company (including thesubsidiaries thereof) is in the process of initiating business operationsduring the term of this covenant (the "Territory");

             (ii)         call upon, hire, attempt to hire, contact or solicit withrespect to hiring (for Employee or on behalf of another)  any person who is, at that time, or who hasbeen 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 ofhis immediate family;

             (iii)        call upon, solicit, divert or take away or attempt to callupon, solicit, divert or take away any person or entity which is, at that time,or which has been, within one (1) year prior to that time, a customer of theCompany (including the subsidiaries thereof) for the purpose of soliciting orselling products or services in direct competition with the Company;

             (iv)       call upon any prospective acquisition candidate, on Employee'sown behalf or on behalf of any competitor, with which candidate the Company(including the subsidiaries thereof) entered into substantive discussions orfor which candidate the Company made an acquisition analysis, for the purposeof acquiring such entity; or

             (v)        disclosecustomers, whether current or proposed, of the Company (or the subsidiariesthereof) to any person, firm, partnership, corporation or business for anyreason or purpose whatsoever.

             Notwithstanding the above, theforegoing covenant shall not be deemed to prohibit Employee from acquiring asan investment not more than three percent (3%) of the capital stock of acompeting business, whose stock is traded on a national securities exchange orover-the-counter.

             (b)        Because of the difficulty of measuringeconomic losses to the Company as a result of a breach of the foregoingcovenant, and because of the immediate and irreparable damage that could becaused to the Company for which it would have no other adequate remedy,Employee agrees that the foregoing covenant may be enforced by the Company inthe event of breach by him by injunctions and restraining orders without thenecessity of posting any bond therefor.

 

             (c)         In the course of Employee’s employmentwith the Company, Employee will become exposed to certain of the Company’sconfidential information and business relationships, which the above covenantsare designed to protect.  It is agreedby the parties that the foregoing covenants in this paragraph 3 impose areasonable restraint on Employee in light of the activities and business of theCompany (including the Company's subsidiaries) on the date of the execution ofthis Agreement and the current plans of the Company (including the Company'ssubsidiaries); but it is also the intent of the Company and Employee that suchcovenants be construed and enforced in accordance with the changing activities,business and locations of the Company (including the Company's subsidiaries)throughout the term of this covenant, whether before or after the date oftermination of the employment of Employee, subject to the following paragraph.  For example, if, during the Term of thisAgreement, the Company (including the Company's subsidiaries) engages in newand different activities, enters a new business or established new locationsfor its current activities or business in addition to or other than the activitiesor business enumerated under the Recitals above or the locations currentlyestablished therefor, then Employee will be precluded from soliciting thecustomers or employees of such new activities or business or from such newlocation and from directly competing with such new business within 100 miles ofits then-established operating location(s) through the term of this covenant.

             It is further agreed by the partieshereto that, in the event that Employee shall cease to be employed hereunder,and shall enter into a business or pursue other activities not in competitionwith the Company (including the Company's subsidiaries), or similar activitiesor business in locations the operation of which, under such circumstances, doesnot violate clause (i) of this paragraph 3, and in any event such new business,activities or location are not in violation of this paragraph 3 or ofEmployee's obligations under this paragraph 3, if any, Employee shall not bechargeable with a violation of this paragraph 3 if the Company (including theCompany's subsidiaries) shall thereafter enter the same, similar or acompetitive (i) business, (ii) course of activities or (iii) location, asapplicable.

             (d)        The covenants in this paragraph 3 areseverable and separate, and the unenforceability of any specific covenant shallnot affect the provisions of any other covenant.  Moreover, in the event any court of competent jurisdiction shalldetermine that the scope, time or territorial restrictions set forth areunreasonable, then it is the intention of the parties that such restrictions beenforced to the fullest extent that the court deems reasonable, and theAgreement shall thereby be reformed to such extent.

             (e)         All of the covenants in this paragraph3 shall be construed as an agreement independent of any other provision in thisAgreement, and the existence of any claim or cause of action of Employeeagainst the Company, whether predicated on this Agreement or otherwise, shallnot constitute a defense to the enforcement by the Company of suchcovenants.  It is specifically agreedthat the period of two (2) years following Employee’s employment set forth atthe beginning of this paragraph 3, during which the agreements and covenants ofEmployee made in this paragraph 3 shall be effective, shall be computed byexcluding from such computation any time during which Employee is in violationof any provision of this paragraph 3.

 

             4.          Place of Performance.

             (a)         Employee’s place of employment is theCompany’s headquarters in Dallas, Texas. Employee understands that he may be requested by the Board to relocatefrom his present 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 the event that Employee is requested torelocate from Dallas and agrees to do so, the Company will pay all reasonablerelocation costs to move Employee, his immediate family and their personalproperty and effects.  Such costs mayinclude, by way of example, but are not limited to, pre-move visits to searchfor a new residence, investigate schools or for other purposes; temporarylodging and living costs prior to moving into a new permanent residence;duplicate home carrying costs; all closing costs on the sale of Employee'spresent residence and on the purchase of a comparable residence in the newlocation; and added income taxes that Employee may incur, as a result of anypayment hereunder, to the extent any relocation costs are not deductible fortax purposes.  The general intent of theforegoing is that Employee shall not personally bear any out-of-pocket cost asa result of the relocation, with an understanding that Employee will use hisbest efforts to incur only those costs which are reasonable and necessary toeffect a smooth, efficient and orderly relocation with minimal disruption tothe business affairs of the Company and the personal life of Employee and hisfamily.

             (b)        Notwithstanding the above, if Employeeis requested by the Board to relocate and Employee refuses, such refusal shallnot constitute "good cause" for termination of this Agreement underthe terms of paragraph 5(c).

             5.          Term; Termination; Rights onTermination.  The term of thisAgreement shall begin on the date hereof and continue through one yearfollowing the Effective Date (the "Term").  This Agreement and Employee's employment may be terminatedearlier in any one of the following ways:

             (a)         *Death*.  The death of Employee shall immediately terminatethe Agreement with no severance compensation due to Employee's estate.

             (b)        *Disability*.  If, as a result of incapacity due tophysical or mental illness or injury, Employee shall have been absent from hisfull-time duties hereunder for four (4) consecutive months, then thirty (30)days after receiving written notice (which notice may occur before or after theend of such four (4) month period, but which shall not be effective earlierthan the last day of such four (4) month period), the Company may terminateEmployee's employment hereunder provided Employee is unable to resume hisfull-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 thisAgreement is terminated as a result of Employee's disability, Employee shallreceive from the Company, in a lump-sum payment due within ten (10) days of theeffective date of termination, the base salary, at the rate then in effect forwhatever time period is remaining under the Term of this Agreement.

 

             (c)         *Good Cause*.  The Company may terminate the Agreement ten(10) days after written notice to Employee for good cause, which shall be: (1)Employee's material and irreparable breach of this Agreement; (2) Employee'sgross negligence in the performance or intentional nonperformance (continuingfor ten (10) days after receipt of the written notice) of any of Employee'smaterial duties and responsibilities hereunder or Employee’s material failureto meet mutually agreed-upon targets as set forth in Employee’s performanceplan; (3) Employee's dishonesty, fraud or misconduct with respect to thebusiness or affairs of the Company which materially and adversely affects theoperations or reputation of the Company; (4) Employee's conviction of a felonycrime; or (5) chronic alcohol abuse or illegal drug abuse by Employee.  In the event of a termination for goodcause, as enumerated above, Employee shall have no right to any severancecompensation.

             (d)        *WithoutCause*.  At any time after thecommencement of employment, the Company may, without cause, terminate thisAgreement and Employee's employment, effective thirty (30) days after writtennotice is provided to the Employee. Should Employee be terminated by the Company without cause, Employeeshall receive from the Company, on or before the effective date of termination,a standard Company executive separation agreement providing for a gross lump-sumseverance payment equivalent to the base salary at the rate then in effect forthe greater of (i) whatever time period is remaining under the Term ofthis Agreement or (ii) six (6) months (“Severance Pay”).  Further, any termination without cause by theCompany shall operate to shorten the period set forth in paragraph 3(a) andduring which the terms of paragraph 3 apply to one (1) year from the date oftermination of employment.

             (e)         *Terminationby Employee for Good Reason*. Employee may terminate his employment hereunder for "GoodReason."  As used herein,"Good Reason" shall mean the continuance of any of the followingafter ten (10) days' prior written notice by Employee to the Company, specifyingthe basis for such Employee's having Good Reason to terminate this Agreement:

             (i)          theassignment to Employee of any duties materially and adversely inconsistent withEmployee’s position as specified in paragraph 1 hereof.

             (ii)         any material breach of this Agreement by the Company that isnot cured within the ten (10) day time period set forth in paragraph 5(f)above, including the failure to pay Employee on a timely basis the amounts towhich he is entitled under this Agreement.

 

In the event of any termination by theEmployee for Good Reason, as determined by a court of competent jurisdiction orpursuant to the provisions of paragraph 16 below, the Company shall pay allamounts and damages (which damages shall not include payment of salary for thethen unexpired Term in light of the Severance Pay set forth below), to whichEmployee may be entitled as a result of such breach, including interest thereonand all reasonable legal fees and expenses and other costs incurred by Employeeto enforce his rights hereunder.  In addition,Employee shall be entitled to receive Severance Pay from the Company, in alump-sum payment due on the effective date of termination, equal to the basesalary then in effect for the greater of (i) whatever time period isremaining under the Term of this Agreement or (ii) six (6) months.  Further, none of the provisions of paragraph3 shall apply in the event this Agreement is terminated by Employee for GoodReason.

| (f)    | *Termination  by Employee Without Good Reason*.  If Employee resigns or otherwise  terminates his employment without Good Reason pursuant to paragraph 5(f),  Employee shall receive no severance compensation. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                 |
| (g)    | *Change  of Control*.  Refer to paragraph 12, below.                                                                                                                                                            |

Upon termination of this Agreement forany reason provided in clauses (a) through (g) above, Employee shall be entitledto receive all compensation earned and all benefits vested and reimbursementsdue 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's obligationsunder paragraph 9 herein and Employee's obligations under paragraphs 3, 6, 7,8, 9 and 10 herein shall survive such termination in accordance with theirterms.

             6.          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 (includingthe Company’s subsidiaries) or its representatives, vendors or customers whichpertain to the business of the Company (including the Company’s subsidiaries)shall be and remain the property of the Company and be subject at all times toits discretion and control.  Likewise,all correspondence, reports, records, charts, advertising materials and othersimilar data pertaining to the business, activities or future plans of theCompany (including the Company’s subsidiaries) that is collected by Employeeshall be delivered promptly to the Company without request by it upontermination of Employee's employment.

             7.          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 (including the Company’ssubsidiaries) and which Employee conceives as a result of his employment by theCompany.  Employee hereby assigns andagrees 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 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.

 

             8.          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 (including the Company’s subsidiaries) relationships oragreements with its significant vendors or customers or any other significantand material trade secret of the Company (including the Company’ssubsidiaries), whether in existence or proposed, to any person, firm,partnership, corporation or business for any reason or purpose whatsoever,except as is disclosed in the ordinary course of business.

             9.          Indemnification.  In the event Employee is made a party to 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 both Employeeand 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 cannot be held liable to the Company forerrors or omissions made in good faith where Employee has not exhibited gross,willful and wanton negligence and misconduct or performed criminal andfraudulent acts which materially damage the business of the Company.

             10.        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.

             11.        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 and the Company agrees not to assign all orany portion of its obligations under this Agreement (other than to a successoras a result of a Change in Control). Subject to the preceding two (2) sentences and the express provisions ofparagraph 12 below, this Agreement shall be binding upon, inure to the benefitof and be enforceable by the parties hereto and their respective heirs, legalrepresentatives, successors and assigns.

 

             12.        Change in Control.

             (a)         Unless he elects to terminate thisAgreement pursuant to (c) below, Employee understands and acknowledges that theCompany may be merged or consolidated with or into another entity and that suchentity shall automatically succeed to the rights and obligations of the Companyhereunder.

             (b)        Provided that Employee would have beenan employee of the Company for at least one year at the time of such Change inControl, then in the event of a pending Change in Control wherein the Employeehas not received written notice at least fifteen (15) business days prior tothe anticipated closing date of the transaction giving rise to the Change inControl from the successor to all or a substantial portion of the Company'sbusiness and/or assets that such successor is willing as of the closing toassume and agree to perform the Company's obligations under this Agreement inthe same manner and to the same extent that the Company is hereby required toperform, such Change in Control shall be deemed to be a termination of thisAgreement by the Company and the amount of the lump-sum severance payment dueto Employee shall be 1 times Employee’s annual salary immediately prior to theChange in Control and the non-competition provisions of paragraph 3 shallnot apply whatsoever.  Payment shall bemade 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)         Providedthat Employee would have been an employee of the Company for at least one yearat the time of such Change in Control, then in any Change in Control situationin which 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 the Change in Control that Employeeis being terminated, Employee may nonetheless, at his sole discretion, elect toterminate this Agreement by providing written notice to the Company at any timeprior to closing of the transaction and up to two (2) years after the closingof the transaction giving rise to the Change in Control.  In such case, the amount of the lump-sumseverance payment due to Employee shall be 1 times Employee’s annual salary ineffect immediately prior to the Change in Control and the non-competitionprovisions of paragraph 3 shall all apply.  Payment shall be made either at closing if notice is served atleast five (5) days before closing or within ten (10) days of written notice byEmployee.

             (d)        Forpurposes of applying paragraph 5 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’s regulationsto elect whether to exercise and sell all or any of his vested options topurchase Common Stock of the Company, including any options with acceleratedvesting under the provisions of the Company's 1995 Stock Option Plan, asamended (and as modified by the related option agreement/certificate inaccordance with such Plan) or any warrants, such that he may convert suchoptions or warrants to shares of Common Stock of the Company at or prior to theclosing of the transaction giving rise to the Change in Control, if he sodesires.  Employee acknowledges that hisoption agreement/certificate provides that not all (50%) of such options veston a Change in Control if at such time Employee has been employed by the Companyless than one year.

 

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

             (i)          anyperson, other than the Company or an employee benefit plan of the Company,acquires directly or indirectly the Beneficial Ownership (as defined inSection 13(d) of the Securities Exchange Act of 1934, as amended) of anyvoting security of the Company and immediately after such acquisition suchPerson is, directly or indirectly, the Beneficial Owner of voting securitiesrepresenting 30% or more of the total voting power of all of the then-outstandingvoting securities of the Company;

             (ii)         the individuals (A) who, as of the closing date of theCompany's initial public offering, constitute the Board of Directors of theCompany (the "Original Directors") or (B) who thereafter are electedto the 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 then still in office (suchdirectors becoming "Additional Original Directors" immediatelyfollowing their election) or (C) who are elected to the Board of Directors ofthe Company and whose election, or nomination for election, to the Board ofDirectors of the Company was approved by a vote of at least two-thirds (2/3) ofthe 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 amajority of the members of the Board of Directors of the Company;

             (iii) the stockholders of theCompany shall approve a merger, consolidation, recapitalization, orreorganization of the Company, a reverse stock split of outstanding votingsecurities of the Company, or consummation of any such transaction ifstockholder approval is not sought or obtained, other than any such transactionwhich would result in at least 75% of the total voting power represented by thevoting securities of the surviving entity outstanding immediately after suchtransaction being Beneficially Owned by holders of at least 75% of theoutstanding voting securities of the Company immediately prior to thetransaction, with the voting power of each such continuing holder relative toother such continuing holders not substantially altered in the transaction; or

             (iv)       the stockholders of the Company shall approve a plan ofcomplete liquidation of the Company or an agreement for the sale or dispositionby the Company of all or a substantial portion of the Company's assets (i.e.,50% or more of the total assets of the Company).

             (f)         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”) in an amount such that the net amount of TotalPayments and Gross-up Payment retained by the Employee, after the calculationand deduction of all Excise Tax on the Total Payments and all federal, stateand local income tax, employment tax and Excise Tax on the Gross-up Payment,shall be equal to the Total Payments.

             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 12, 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 theCompany and Employee within twenty business days of the receipt of notice fromEmployee that there will likely be a Change in Control, or such earlier time asis requested by the Company.  In theevent that the Accounting Firm is serving as accountant or auditor for theparty effecting the Change in Control or is otherwise unavailable, Employee(together with all other employees with comparable appointment rights in theirrespective employment agreements such that all such employees may collectively selecta single accounting firm) may appoint another nationally recognized accountingfirm to make the determinations required hereunder (which accounting firm shallthen 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 taxingauthority, on the Later Payment, Employee will retain from the Later Payment anamount equal to the Additional Excise Tax, which Employee shall use to pay theAdditional Excise Tax.

 

             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 and may only be amended by awritten agreement executed by each of the parties hereto.

             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:  Chief Operating Office  |
|             |                                |
| 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:    | Kerry  D. Walbridge                 |
|             | 5335 Willow  Wood Lane         |
|             | Dallas,  Texas  75252     |

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

             15.        Severability; Headings.  If any portion of this Agreement is heldinvalid or inoperative in any circumstance, (i) such portion shall remain validand operative in all other circumstances; (ii) the other portions of thisAgreement shall be deemed valid and operative; and (iii) so far as isreasonable and possible, effect shall be given to the intent manifested by theportion held invalid or inoperative. The paragraph headings herein are for reference purposes only and arenot intended in any way to describe, interpret, define or limit the extent orintent 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 Associationthen in effect.  The arbitrators shallnot have the authority to add to, detract from, or modify any provision hereofnor 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 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 5(b) and 5(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 costs of any arbitration proceeding shall be borne by theparty or parties not prevailing in such proceeding determined by thearbitrators.

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

**[Balance of sheet intentionallyleft blank]**

 

|   | EMPLOYEE:                                    |
|--------|----------------------------------------------|
|   |                                         |
|   |   /s/   Kerry D. Walbridge         |
|   |                                              |
|   | Kerry  D. Walbridge                          |
|   |                                         |
|   |                                         |
|   |                                         |
|   | F.Y.I.  INCORPORATED                         |
|   |                                         |
|   |                                         |
|   |                                         |
|   | By:   /s/   Ed H. Bowman, Jr. |
|   |                                              |
|   | Title:                                       | President  and Chief  Executive Officer |
|        |                                              |  |  |