EXHIBIT 10.68
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(XXX X. XXXX)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of January 2000 by and between Xxx X. Xxxx ("Employee") and
F.Y.I. Incorporated, a Delaware corporation (the "Company"). This Agreement
hereby supersedes any other employment agreements or understandings, written or
oral, between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in the
document and information management services business (the "Business").
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of his employment with the Company,
has and will continue to become familiar with and aware of information as to the
Company's customers, specific manner of doing business, including the processes,
techniques and trade secrets utilized by the Company, and future plans with
respect thereto, all of which has been and will be established and maintained at
great expense to the Company; this information is a trade secret and constitutes
the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as an Executive Vice President
and Chief Operating Officer. As such, Employee shall have responsibilities,
duties and authority reasonably accorded to and expected of an Executive Vice
President and Chief Operating Officer. Employee hereby accepts this employment
upon the terms and conditions herein contained and, subject to paragraph 1(b),
agrees to devote his working time, attention and efforts to promote and further
the business of the Company.
(b) Employee shall not, during the term of his employment hereunder,
be engaged in any other business activity pursued for gain, profit or other
pecuniary advantage except to the extent that such activity does not interfere
with Employee's duties and responsibilities hereunder. The foregoing
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limitations shall not be construed as prohibiting Employee from making
personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which
such investments are made.
2. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(a) BASE SALARY; ANNUAL BONUS. The base salary payable to Employee
shall be $330,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than monthly (pro-rated
for any year in which Employee is employed for less than the full year). On
at least an annual basis the Board (as defined below) will review Employee's
performance and make increases to such base salary if, in its discretionary,
any such increase is warranted. Such recommended increase would, in all
likelihood, require approval by the Board of Directors (the "Board") or a
duly constituted committee thereof. For 2000 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan setting forth the
criteria under which Employee and other officers and key employees will be
eligible to receive year-end bonus awards. Employee shall be eligible for a
bonus opportunity of up to 50% of Employee's annual base salary payable in
cash and or equity at the Company's discretion beginning January 1, 2000 in
accordance with this Incentive Bonus Plan. For 2000 Employee has already
been awarded Warrant No. 17 as partial payment for any 2000 Bonus
opportunity. In addition, a $30,000 cash bonus will be paid if F.Y.I. makes
the 2000 EPS target of $1.93. The award of any bonus shall be based on the
Company's overall performance and shall be payable in various increments
based on the performance. The incremental payments and the Company's targeted
performance shall be determined by the Board or the compensation committee
thereof.
(b) OTHER COMPENSATION. Employee shall be entitled to receive
additional benefits and compensation from the Company in such form and to such
extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental and other insurance plans that the Company may have in
effect from time to time.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the performance
of his services pursuant to this Agreement and a $500 per month car
allowance (determined on a pre-tax basis). All reimbursable expenses
shall be appropriately documented in reasonable detail by Employee upon
submission of any request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy.
(iii) Four (4) weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded officers
and key employees generally under the Company's policies in effect from
time to time (pro-rated for any year in which Employee is employed for
less than the full year).
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(iv) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide employee benefits
as available from time to time.
3. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board of
Directors of the Company (the "Board") to relocate from his then current
residence to another geographic location in order to more efficiently carry
out his duties and responsibilities under this Agreement or as 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 up to
$30,000 to move Employee, his immediate family and 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
other purposes; temporary lodging and living costs prior to moving into a new
permanent residence; duplicate home carrying costs; and closing costs on the
sale of Employee's present residence and on the purchase of a comparable
residence in the new location. The general intent of the foregoing is to
assist Employee with the cost of the relocation, with an understanding that
Employee will use his best efforts to incur only those costs which are
reasonable and necessary to effect a smooth, efficient and orderly relocation
with minimal disruption to the business affairs of the Company and the
personal life of Employee and his family.
(b) Notwithstanding the above, if Employee is requested by the Board
to relocate and Employee refuses, such refusal shall not constitute "good cause"
for termination of this Agreement under the terms of paragraph 4(c).
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this
Agreement shall begin on the date hereof and continue for three years (the
"Term"). On the annual anniversary, the agreement shall automatically renew for
a three-year period, unless written notice is given that it will not be renewed.
This Agreement and Employee's employment may be terminated in any one of the
following ways:
(a) DEATH. The death of Employee shall immediately terminate the
Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. The Company will make efforts to reasonably
accommodate Employee as required by applicable state or federal disability
laws. However, the parties irrebutably presume that, given Employee's
position, it would be an undue hardship to the Company if Employee is absent
for more than three (3) consecutive months. Therefore, if as a result of
incapacity due to physical or mental illness or injury, Employee shall have
been absent from his full-time duties hereunder for three (3) consecutive
months, then thirty (30) days after receiving written notice (which notice
may occur before or after the end of such three (3) month period, but which
shall not be effective earlier than the last day of such three (3) month
period), the Company may terminate Employee's employment hereunder provided
Employee is unable to resume his full-time duties at the conclusion of such
notice period. Also, Employee may terminate his employment hereunder if
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his health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental
health or his life, provided that Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect and provided,
further, that at the Company's request made within thirty (30) days of the
date of such written statement, Employee shall submit to an examination by a
doctor selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion of
Employee's doctor. In the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company, in a lump-sum
payment due within ten (10) days of the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement.
(c) GOOD CAUSE. The Company may terminate the Agreement five (5) days
after written notice to Employee for good cause, which shall be: (i) Employee's
breach of this Agreement; (ii) Employee's negligence in the performance or
nonperformance (continuing for five (5) days after receipt of the written
notice) of any of Employee's material duties and responsibilities hereunder;
(iii) Employee's dishonesty, fraud or misconduct with respect to the business or
affairs of the Company that adversely affects the operations or reputation of
the Company; (iv) Employee's conviction of a felony crime; or (v) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a termination
for good cause, as enumerated above, Employee shall have no right to any
severance compensation.
(d) WITHOUT CAUSE. At any time after the commencement of employment,
the Company may, without cause, terminate this Agreement and Employee's
employment, effective ten (10) days after written notice is provided to
Employee. Employee may only be terminated without cause by the Company during
the Term hereof if such termination is approved by the Board of Directors of the
Company. Should Employee be terminated by the Company without cause, Employee
shall receive from the Company, in a lump-sum payment due on the effective date
of termination equivalent to the remaining term or two years salary at the rate
then in effect, whichever is greater.
(e) CHANGE IN CONTROL. Refer to paragraph 20 below.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may terminate
his employment hereunder for "Good Reason." As used herein, "Good Reason" shall
mean the continuance of any of the following after fifteen (15) days' prior
written notice by Employee to the Company, specifying the basis for such
Employee's having Good Reason to terminate this Agreement:
(i) Employee's removal from, or failure to be reappointed or
reelected to, Employee's position under this Agreement, except as
contemplated by paragraphs 4(a), (b), (c) and (e); or
(ii) Any other material breach of this Agreement by the Company
that is not cured within the fifteen (15) day time period set forth in
paragraph 4(f), including the failure to pay Employee on a timely basis
the amounts to which he is entitled under this Agreement.
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In the event of any dispute with respect to the termination by the Employee for
Good Reason, such dispute shall be resolved pursuant to the provisions of
paragraph 16 below. In the event that it is determined that Good Reason did
exist, the Company shall pay all amounts and damages to which Employee may be
entitled as a result of such breach, including interest thereon and all
reasonable legal fees and expenses and other costs incurred by Employee to
enforce his rights hereunder. Should Employee terminate his employment for Good
Reason, Employee shall receive from the Company, in a lump-sum payment due on
the effective date of termination equivalent to the remaining term or two years
salary at the rate then in effect, whichever is greater.
(g) TERMINATION BY EMPLOYEE WITHOUT CAUSE. If Employee resigns or
otherwise terminates his employment without Good Reason pursuant to paragraph
4(f), Employee shall receive no severance compensation.
Upon termination of this Agreement for any reason provided in clauses (a)
through (g) above, Employee shall be entitled to receive all compensation earned
and all benefits and reimbursements vested or due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in the manner expressly
provided above or in paragraph 16. All other rights and obligations of the
Company and Employee under this Agreement shall cease as of the effective date
of termination, except that the Company's obligations under paragraph 10 herein
and Employee's obligations under paragraphs 5, 6, 7, 8, 9 and 11 herein shall
survive such termination in accordance with their terms.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Employee by or on behalf of the Company or
their representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company, as the case may be, and
be subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company that is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
6. INVENTIONS. Employee shall disclose promptly to the Company any
and all significant conceptions and ideas for inventions, improvements and
valuable discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are directly related to the business
or activities of the Company and that Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
letters patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
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7. TRADE SECRETS. Employee agrees that he will not, during or after
the term of this Agreement with the Company, disclose the specific terms of the
Company's relationships or agreements with their respective significant vendors
or customers or any other significant and material trade secret of the Company,
whether in existence or proposed, to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever.
8. DISCLOSURE OF INFORMATION. Employee agrees that for a period of
three (3) years after the date hereof or during the term of this Agreement and
for a period of three (3) years thereafter, whichever is longer, without the
prior written consent of the Company, Employee shall not, directly or
indirectly, through any form of ownership, in any individual or representative
or affiliated capacity whatsoever, except as may be required by law, reveal,
divulge, disclose or communicate to any person, firm, association, corporation
or other entity in any manner whatsoever information of any kind, nature or
description concerning: (i) the names of any prior or present suppliers or
customers with respect to the Business, (ii) the prices for products or services
with respect to the Business, (iii) the names of personnel with respect to the
Business, (iv) the manner of operation with respect to the Business, (v) the
plans, trade secrets, or other data of any kind, nature or description, whether
tangible or intangible, with respect to the Business, or (vi) any other
financial, statistical or other information regarding the business acquired by
the Company that the Company designates or treats as confidential or
proprietary. The agreements set forth herein shall not apply to any information
that at the time of disclosure or thereafter is generally available to and known
by the public (other than as a result of a disclosure directly or indirectly by
Employee in violation of this Agreement). Without regard to whether any or all
of the foregoing matters would be deemed confidential, material or important,
the parties hereto stipulate that as between them, the same are important,
material and confidential and gravely affect the effective and successful
conduct of the Business and its goodwill.
9. NONCOMPETITION. (a) Employee agrees that during the term of this
Agreement and, upon termination of Employee's employment by the Company for a
period of three (3) years thereafter, he shall not:
(i) Call upon, solicit, divert, take away or attempt to call
upon, solicit, divert or take away any existing customers, suppliers,
businesses, or accounts of the Business in connection with any business
substantially similar to the Business in the territory defined as 100 miles in
and around the Company's and its affiliates operations (the "Territory");
(ii) Hire, attempt to hire, contact or solicit with respect to
hiring for himself or on behalf of any other person any present employee of the
Company in the Business;
(iii) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business in
the Territory;
(iv) Do any act that Employee knew or reasonably should have
known might directly injure the Company in any material respect or that might
divert customers, suppliers or employees from the Business; and
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(v) Without limiting the generality of the foregoing
provisions, conduct a business substantially similar to the Business under the
name "F.Y.I. Incorporated" or any other trade names, trademarks or service marks
heretofore used by the Company or its affiliates.
The covenants in subsections (i) through (v) are intended to restrict
Employee from competing in any manner with the Company or the Business in the
activities that have heretofore been carried on by the Company or its
affiliates. The obligations set forth in subsections (i) through (v) above
shall apply to actions by Employee, through any form of ownership, and whether
as principal, officer, director, agent, employee, employer, consultant,
stockholder or holder of any equity security (beneficially or as trustee of any
trust), lender, partner, joint venturer or in any other individual or
representative or affiliated capacity whatsoever. However, none of the
foregoing shall prevent Employee from being the holder of up to 5.0% in the
aggregate of any class of securities of any corporation engaged in the
activities described in subsection (i) through (v) above, provided that such
securities are listed on a national securities exchange or reported on the
Nasdaq National Market.
10. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement, then the Company shall indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all times
to use his best efforts to faithfully discharge his duties under this Agreement,
Employee shall not be held liable to the Company for errors or omissions made in
good faith where Employee has not exhibited negligence or performed criminal and
fraudulent acts which damage the business of the Company.
11. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and his employment
by the Company and the performance of his duties hereunder will not violate or
be a breach of any agreement with a former employer, client or any other person
or entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any non-competition
agreement, invention or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
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12. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding, this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
13. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Employee and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This Agreement may not be later modified except by
a further writing signed by a duly authorized officer of the Company and
Employee, and no term of this Agreement may be waived except by writing signed
by the party waiving the benefit of such term.
14. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
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To the Company: F.Y.I. Incorporated
0000 XxXxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
To Employee: Xxx X. Xxxx
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the United States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
16. ARBITRATION. Any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Dallas, Texas,
in accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from,
or modify any provision hereof nor to award punitive damages to any injured
party. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in
paragraphs 4(b) and 4(c), respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any arbitration
proceeding shall be borne by the Company.
17. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
18. COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
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19. ATTORNEYS' FEES. In the event of any litigation or arbitration
arising under or in connection with this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees as determined by the court or
arbitration panel, as the case may be. Each party to this Agreement represents
and warrants that it has been represented by counsel in the negotiation and
execution of this Agreement, including without limitation the provisions set
forth in this paragraph 19.
20. CHANGE IN CONTROL.
(a) Employee understands and acknowledges that the Company may be
merged or consolidated with or into another entity.
(b) In the event of a pending Change in Control wherein the Employee
has not received written notice at least fifteen (15) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of the Company's business
and/or assets that such successor is willing as of the closing to assume and
agree to perform the Company's obligations under this Agreement in the same
manner and to the same extent that the Company is hereby required to perform,
such Change in Control shall be deemed to be a termination of this Agreement by
the Company and the amount of the lump-sum severance payment due to Employee
shall be four (4) times the Employee's annual salary immediately prior to Change
in Control and the non-competition provisions of paragraph 9 shall not apply
whatsoever. Payment shall be made either at closing of the transaction if
notice is served at least five (5) days before closing or within ten (10) days
of Employee's written notice.
(c) In any Change in Control situation in which Employee has received
written notice from the successor to the Company that such pending successor is
willing to assume the Company's obligations hereunder or Employee receives
notice after the Change in Control that Employee is being terminated, Employee
may nonetheless, at his sole discretion, elect to terminate this Agreement by
providing written notice to the Company at any time prior to closing of the
transaction and up to two (2) years after the closing of the transaction giving
rise to the Change in Control. In such case, the amount of the lump-sum
severance payment due to Employee shall be four times Employee's annual salary
immediately prior to Change in Control and the non-competition provisions of
paragraph 9 shall all apply. Payment shall be made either at closing if notice
is served at least five (5) days before closing or within ten (10) days of
written notice by Employee.
(d) For purposes of applying paragraph 4 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
later of the closing date of the transaction giving rise to the Change in
Control or Employee's notice as described above, and all compensation,
reimbursements and lump-sum payments due Employee must be paid in full by the
Company at such time. Further, Employee will be given sufficient time in order
to comply with then Securities and Exchange Commission's regulations to elect
whether to exercise and sell all or any of his vested options to purchase Common
Stock of the Company, including any options with accelerated vesting under the
provisions of the Company's 1995 Stock Option Plan, as amended or any warrants,
such that he may convert the options or warrants to shares of Common Stock of
the Company at or prior to the closing of the transaction giving rise to the
Change in Control, if he so desires.
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(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
(ii) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the "Original
Directors") or (B) who thereafter are elected to the Board of Directors
of the Company and whose election, or nomination for election, to the
Board of Directors of the Company was approved by a vote of at least
two-thirds (2/3) of the Original Directors then still in office (such
directors becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board of Directors of the
Company and whose election, or nomination for election, to the Board of
Directors of the Company was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election), cease for any reason to
constitute a majority of the members of the Board of Directors of the
Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) If any portion of the severance benefits, Change in Control
benefits or any other payment under this Agreement, or under any other agreement
with, or plan of the Company, including but not limited to stock options,
warrants and other long-term incentives (in the aggregate
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"Total Payments") would be subject to the excise tax imposed by Section 4999
of the Code, as amended (or any similar tax that may hereafter be imposed) or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Employee shall be entitled under this
paragraph to an additional amount (the "Gross-Up Payment") such that after
payment by Employee of all of Employee's applicable Federal, state and local
taxes, including any Excise Tax, imposed upon such additional amount,
Employee will retain an amount equal to the Excise Tax imposed on the Total
Payments.
For purposes of this paragraph Employee's applicable Federal, state and
local taxes shall be computed at the maximum marginal rates, taking into account
the effect of any loss of personal exemptions resulting from receipt of the
Gross-Up Payment.
All determinations required to be made under this Agreement, including
whether a Gross-Up Payment is required under this paragraph, and the assumptions
to be used in determining the Gross-Up Payment, shall be made by the Company's
current independent accounting firm, or such other firm as the Company may
designate in writing prior to a Change in Control (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and Employee
within twenty business days of the receipt of notice from Employee that there
will likely be a Change in Control, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the party effecting the Change in Control or is otherwise
unavailable, Employee may appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm with respect to such determinations described above shall be
borne solely by the Company.
Employee agrees (unless requested otherwise by the Company) to use
reasonable efforts to contest in good faith any subsequent determination by the
Internal Revenue Service that Employee owes an amount of Excise Tax greater than
the amount determined pursuant to this paragraph; PROVIDED, that Employee shall
be entitled to reimbursement by the Company of all fees and expenses reasonably
incurred by Employee in contesting such determination. In the event the
Internal Revenue Service or any court of competent jurisdiction determines that
Employee owes an amount of Excise Tax that is either greater than the amount
previously taken into account and paid under this Agreement, the Company shall
promptly pay to Employee the amount of such shortfall. In the case of any
payment that the Company is required to make to Employee pursuant to the
preceding sentence (a "Later Payment"), the Company shall also pay to Employee
an additional amount such that after payment by Employee of all of Employee's
applicable Federal, state and local taxes, including any interest and penalties
assessed by any taxing authority, on such additional amount, Employee will
retain an amount equal to the total of Employee's applicable Federal, state and
local taxes, including any interest and penalties assessed by any taxing
authority, arising due to the Later Payment.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
F.Y.I. INCORPORATED
By: /s/Xx X. Xxxxxx, Xx.
----------------------
Title:
EMPLOYEE:
/s/Xxx X. Xxxx
-----------------------
XXX X. XXXX
13