**EXHIBIT 10.6**

 

**FIRST AMENDMENT TO**

**AMENDED AND RESTATED EMPLOYMENT AGREEMENT**

**(Ronald Zazworsky)**

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the“Amendment”) by and between *SOURCECORP,*Incorporated, a Delaware corporation and *SOURCECORP*Management, L.P., a Texas limited partnership andindirect wholly owned subsidiary of *SOURCECORP,*Incorporated (collectively, the “Company”), and Ronald Zazworsky(“Employee”) is made and entered intoeffective as of April 10, 2002.

 

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

 

The following statements are true and correct:

 

This Amendment amends that certain Amended and Restated EmploymentAgreement by and between Employee and F.Y.I. Incorporated (n/k/a *SOURCECORP,*Incorporated), dated May 18,2001 (the “Agreement”).

 

The parties desire to amend the Agreement to amend the Change in Controlprovisions contained therein.

 

Therefore, in consideration of the mutual promises, terms, covenants andconditions set forth herein and the performance of each, it is hereby agreed asfollows:

 

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

 

1.     **Amendment to Agreement**.  The parties agree to amend Section 20 of theAgreement to read in its entirety as follows:

 

20.           Change in Control.

 

(a)           Unlesshe elects to terminate this Agreement pursuant to (c) below, Employeeunderstands and acknowledges that the Company may be merged or consolidatedwith or into another entity and that such entity shall automatically succeed tothe rights and obligations of the Company hereunder.

 

(b)           Inthe event of a pending Change in Control wherein the Employee has not receivedwritten notice at least fifteen (15) business days prior to the anticipatedclosing date of the transaction giving rise to the Change in Control from thesuccessor to all or a substantial portion of the Company’s business and/orassets that such successor is willing as of the closing to assume and agree toperform the Company’s obligations under this Agreement in the same manner andto the same extent that the Company is hereby required to perform, such Changein Control shall be deemed to be a termination of this Agreement by the Companyand the amount of the lump-sum severance payment due to Employee shall be 1.72times the sum of Employee’s annual salary plus maximum annual bonus opportunityin effect immediately prior to the Change

 

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in Control and the non-competition provisions of paragraph 9 shall notapply whatsoever.  Payment shall be madeeither at closing of the transaction if notice is served at least five (5) daysbefore closing or within ten (10) days of Employee’s written notice.

 

(c)           Inany Change in Control situation in which Employee has received written noticefrom the successor to the Company that such pending successor is willing toassume the Company’s obligations hereunder or Employee receives notice after (orwithin fifteen (15) business days prior to) 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 1.72 times the sum of Employee’sannual salary plus maximum annual bonus opportunity in effect immediately priorto the Change in Control and the non-competition provisions of paragraph 9shall all apply.  Payment shall be madeeither at closing if notice is served at least five (5) days before closing orwithin ten (10) days of 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 stock option orsimilar plan, as amended or any warrants, such that he may convert the optionsor warrants to shares of Common Stock of the Company at or prior to the closingof the transaction giving rise to the Change in Control, if he so desires.

 

(e)           A “Change in Control” shall be deemed to haveoccurred if:

 

(i)            any person, other than the Companyor an employee benefit plan of the Company, acquires directly or indirectly theBeneficial Ownership (as defined in Section 13(d) of the Securities Exchange Actof 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) who thereafter areelected to the Board of Directors of the Company and whose election, ornomination for election, to the Board of Directors of the Company was approvedby a vote of at least two-thirds (2/3) of the Original Directors then still inoffice (such directors 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

 

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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” immediatelyfollowing their election), cease for any reason to constitute a majority of themembers of the Board of Directors of the Company;

 

(iii)          the consummation of a merger,consolidation, recapitalization or reorganization of the Company, a reversestock split of outstanding voting securities of the Company, or consummation ofany such transaction if stockholder approval is not sought or obtained, otherthan any such transaction which would result in at least 75% of the totalvoting power represented by the voting securities of the surviving entityoutstanding immediately after such transaction being Beneficially Owned by theholders of at least 75% of 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 consummation of a plan of completeliquidation of the Company or an agreement for the sale or disposition by theCompany of all or a substantial portion of the Company’s assets (i.e., 50% ormore of the total assets of the Company (including the Company’ssubsidiaries)).

 

 (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.

 

For purposes of this paragraph Employee’s applicableFederal, state and local taxes shall be computed at the maximum marginal rates,taking into account the effect of any loss of personal exemptions resultingfrom receipt of the Gross-Up Payment.

 

All determinationsrequired to be made under this paragraph 20, including whether a Gross-UpPayment is required under this paragraph, and the assumptions to be used indetermining the Gross-Up Payment, shall be made by the Company’s currentindependent accounting firm, or such other firm as the Company may designate inwriting prior to a Change in Control (the “Accounting Firm”), which shallprovide detailed supporting calculations both to the Company and Employeewithin twenty business days of the receipt of notice from Employee that therewill likely be a Change in Control, or such earlier time as is requested by theCompany.  In the event that theAccounting Firm is serving as accountant or auditor for the party

 

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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 collectivelyselect a single accounting firm) may 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 requested otherwise by the Company)to use reasonable efforts to contest in good faith any subsequent determinationby the Internal Revenue Service that Employee owes an amount of Excise Taxgreater than the amount determined pursuant to this paragraph; provided,that Employee shall be entitled to reimbursement by the Company (on an aftertax basis) of all fees and expenses reasonably incurred by Employee incontesting such determination.  In theevent the Internal Revenue Service or any court of competent jurisdictiondetermines that Employee owes an amount of Excise Tax that is greater than theamount previously taken into account and paid under this Agreement (suchadditional Excise Tax being the “Additional Excise Tax”), the Company shallpromptly 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.

 

2.     **Governing Law**.  This Amendment shall in all respects beconstrued according to the laws of the State of Texas.

 

3.     **Counterparts**.  This Amendment may be executed simultaneously in two (2) or morecounterparts, each of which shall be deemed an original and all of whichtogether shall constitute but one and the same instrument.

 

4.     **Effect of Amendment**.  Except as specifically amended by thisAmendment, all provisions of the Agreement remain in full force and effect inaccordance with their express terms. Employee acknowledges receipt of that certain letter dated March 29,2002, notifying Employee of the termination of the automatic renewal provisionof the Agreement.

 

**[Balance ofpage intentionally left blank]**

 

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

 

 
|   | *SOURCECORP,* INCORPORATED |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | /s/ Joe Rose |
|   | Title:                          | Chief Operating Officer and Executive Vice President |
|   |                            |
|   |                            |
|   | *SOURCECORP*Management,  L.P.   |
|   |                            |
|   |                            |
|   | By: SRCP**Management,  Inc.,    |
|   | General Partner                 |
|   |                            |
|   |                            |
|   |                            | By: | /s/ Joe Rose |
|   |                            | Title: | Chief Operating Officer |
|   |                            |
|   |                            |
|   | EMPLOYEE:                       |
|   |                            |
|   |                            |
|   | /s/ Ronald Zazworsky            |
|   | RONALD ZAZWORSKY                |
|        |                                 |  |  |  |  |

 

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