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EXHIBIT 10.35
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") between F.Y.I.,
Incorporated ("FYI"), a Delaware corporation, and Xxxxx Xxxxxxxxxx ("Employee")
is hereby entered into and effective as of the 1st day of January 1998. This
Agreement hereby supersedes any other employment agreements or understandings,
written or oral, between FYI and Employee.
RECITALS
The following statements are true and correct:
As of the date of this Agreement, FYI, primarily through companies it
intends to acquire as subsidiaries, will be engaged primarily in the business of
providing document/information management services. References herein to "FYI"
are intended to include FYI and these operating subsidiaries, as may be
applicable in the circumstances.
Employee will be employed hereunder by FYI in a confidential
relationship wherein Employee, in the course of his employment with FYI, will
become familiar with and aware of information as to FYI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by FYI, and future plans with respect thereto, all of which will be
established and maintained at great expense to FYI; this information is a trade
secret and constitutes the valuable good will of FYI.
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:
AGREEMENTS
1. Employment and Duties.
(a) FYI hereby employs Employee as Executive Vice
President-Corporate Development and Treasurer. As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and expected of an
Executive Vice President-Corporate Development and Treasurer and will report
directly to the Board of Directors of FYI (the "Board"). Additional or different
duties, titles or positions, however, may be assigned to Employee or may be
taken from Employee from time to time by the Board, provided that any such
changes are consistent and compatible with Employee's experience, background and
managerial skills. Employee hereby accepts this employment upon the terms and
conditions herein contained and agrees to devote his time, attention and efforts
to promote and further the business of FYI.
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(b) Employee shall faithfully adhere to, execute and fulfill
all reasonable policies established by FYI.
(c) 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 (i) does not
interfere with Employee's duties and responsibilities hereunder and (ii) does
not violate paragraph 3 hereof. The foregoing limitations shall not be construed
as prohibiting Employee from serving on the boards of directors of other
companies or making personal investments in such form or manner as will require
his services, other than to a minimal extent, in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
2. Compensation. For all services rendered by Employee, FYI shall
compensate Employee as follows:
(a) Base Salary. Beginning on January 1, 1998, the base salary
payable to Employee shall be Two Hundred Thousand Dollars ($200,000) per year,
payable on a semimonthly basis in equal installments as nearly as practicable on
the first (1st) and fifteenth (15th) day of each month. On at least an annual
basis, the Board will review Employee's performance and may make increases to
such base salary if, in its sole discretion, any such increase is warranted.
(b) Incentive Bonus Plan. It is FYI'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 have the opportunity under this plan to be eligible for
bonus not to exceed a value equal to 50% of base salary.
(c) Stock Options. FYI's Stock Option Plan sets forth detailed
terms and conditions which will govern stock option grants to Employee and other
employees of FYI.
(d) Executive Perquisites, Benefits and Other Compensation.
Employee shall be entitled to receive additional benefits and compensation from
FYI in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee
and his dependent family members under health,
hospitalization, disability, dental, life and other insurance
plans that FYI 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. 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
FYI's expense reporting policy.
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(iii) Four (4) weeks of paid vacation per year or
such greater amount as may be afforded officers and key
employees under FYI's policies in effect from time to time.
(iv) An automobile allowance in the amount of Five
Hundred Dollars ($500) per month.
(v) Other executive perquisites as may be available
to or deemed appropriate for Employee by the Board and
participation in all other employee benefits as available from
time to time.
3. Non-Competition Agreement.
(a) Employee will not, during the period of his employment by
or with FYI, and for a period of two (2) years immediately following the
termination of his employment under this Agreement, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, persons, Company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, in any business selling
any products or services in direct competition with FYI,
within 100 miles of FYI or where any of its subsidiaries
conducts business, including any territory serviced by FYI or
any of its subsidiaries (the "Territory");
(ii) call upon any person who is, at that time,
within the Territory, an employee of FYI (including its
subsidiaries) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the
employ of FYI (including its subsidiaries);
(iii) call upon any person or entity which is, at
that time, or which has been, within one (1) year prior to
that time, a customer of FYI (including its subsidiaries)
within the Territory for the purpose of soliciting or selling
products or services in direct competition with FYI within the
Territory; or
(iv) call upon any prospective acquisition candidate,
on his own behalf or on behalf of any competitor of FYI, which
candidate was either called upon by FYI or for which FYI made
an acquisition analysis, for the purpose of acquiring such
entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than one percent
(1%) of the capital stock of
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a competing business, whose stock is traded on a national securities exchange or
in the over-the-counter market.
(b) Because of the difficulty of measuring economic losses to
FYI as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to FYI for which it would
have no other adequate remedy, Employee agrees that the foregoing covenant may
be enforced by FYI in the event of breach by him by injunctions and restraining
orders, which injunctions and restraining orders may be obtained from any court
with appropriate jurisdiction.
(c) It is agreed by the parties that the foregoing covenants
in this paragraph 3 impose a reasonable restraint on Employee in light of the
activities and business of FYI on the date of the execution of this Agreement
and the current plans of FYI; but it is also the intent of FYI and Employee that
such covenants be construed and enforced in accordance with the changing
activities and business of FYI throughout the term of this covenant, whether
before or after the date of termination of the employment of Employee. For
example, if, during the term of this Agreement, FYI enters a new and different
business in addition to that enumerated under the Recitals above, then Employee
will be precluded from soliciting the customers or employees of such new
business and from directly competing with such new business within 100 miles of
its operating location(s) through the term of this covenant.
(d) The covenants in this paragraph 3 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee against FYI,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by FYI of such covenants. It is specifically agreed
that the period of two (2) years stated at the beginning of this paragraph 3,
during which the agreements and covenants of Employee made in this paragraph 3
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this paragraph 3
even if there is pending in a court of competent jurisdiction an action
(including any appeal from any final judgment) brought by any person, whether or
not a party to this Agreement, in which such person contests the validity of
such agreements and covenants or their enforceability or seeks to avoid their
performance or enforcement.
4. Term; Termination; Rights on Termination. The term of this
Agreement shall begin on the date hereof and continue for one (1) year, and,
unless terminated sooner as herein provided, shall continue thereafter on a
year-to-year basis on the same terms and conditions
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contained herein. This Agreement and Employee's employment may be terminated in
any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate
the Agreement with no severance compensation due to Employee's estate.
(b) Disability. 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 four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), FYI 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 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 FYI with
a written statement from a qualified doctor to such effect and provided,
further, that, at FYI'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 FYI 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 FYI, 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 or for one
(1) year, whichever amount is greater.
(c) Good Cause. FYI may terminate the Agreement ten (10) days
after written notice to Employee for good cause, which shall include: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's breach of paragraph 3(a) above; (3) Employee's gross negligence in
the performance or intentional nonperformance (continuing for ten (10) days
after receipt of written notice of need to cure) of any of Employee's material
duties and responsibilities hereunder except for nonperformance due to
disability, as set forth in paragraph 4(b) above; (4) Employee's willful
dishonesty, fraud or misconduct with respect to the business or affairs of FYI
which materially and adversely affects the operations or reputation of FYI; (5)
Employee's conviction of a felony crime; or (6) 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, FYI or Employee may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the other party. Should Employee be terminated by FYI without cause,
Employee shall receive from FYI, in a lump-sum payment due on the effective date
of termination in the amount of one half of the Base Salary at the rate then in
effect. If Employee resigns or otherwise terminates his employment without cause
pursuant to this paragraph 4(d), Employee shall receive no severance
compensation. Employee shall be deemed
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to have been terminated without cause by FYI if Employee shall be assigned any
duties materially inconsistent with, or Employee's responsibilities shall be
significantly limited, or Employee shall be significantly demoted, in any case
so as not to be serving in a senior executive officer capacity to FYI (and its
subsidiaries and affiliates), and the continuance thereof for a period of five
(5) business days after written notice from Employee that he is unwilling to
accept such changes in duties or responsibilities.
(e) Change in Control of FYI. Refer to paragraph 11 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements 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 11. All other rights and obligations of FYI and Employee under this
Agreement shall cease as of the effective date of termination, except that FYI's
obligations under paragraph 8 herein and Employee's obligations under paragraphs
3, 5, 6, 7 and 9 herein shall survive such termination in accordance with their
terms.
If termination of Employee's employment arises out of FYI's failure to
pay Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other breach of this Agreement by FYI, as
determined by a court of competent jurisdiction or pursuant to the provisions of
paragraph 15 below, FYI 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. Further, none of the provisions of paragraph 3
shall apply in the event this Agreement is terminated as a result of a breach by
FYI.
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 FYI or its
representatives, vendors or customers which pertain to the business of FYI shall
be and remain the property of FYI and be subject at all times to its discretion
and control. Likewise, all correspondence, reports, records, charts, advertising
materials and other similar data pertaining to the business, activities or
future plans of FYI which are collected by Employee shall be delivered promptly
to FYI without request by it upon termination of Employee's employment.
6. Inventions. Employee shall disclose promptly to FYI 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 FYI and which Employee conceives as a result of his employment by
FYI. Employee hereby assigns and agrees to assign all his interests therein to
FYI or its nominee. Whenever requested to do so by FYI, Employee shall execute
any and all applications,
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assignments or other instruments that FYI shall deem necessary to apply for and
obtain Letters Patent of the United States or any foreign country or to
otherwise protect FYI's interest therein.
7. Trade Secrets. Employee agrees that he will not, during or
after the term of this Agreement with FYI, disclose the material trade secrets
of FYI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
8. 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 FYI against
Employee), by reason of the fact that he is or was performing services under
this Agreement or any prior agreement with F.Y.I., or was or is an employee of
F.Y.I. then FYI 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 FYI are made a party to the same third-party action,
complaint, suit or proceeding, FYI agrees to engage competent legal
representation, and Employee agrees to use the same representation, subject to
Employees reasonable approval or Employee will be liable and responsible for all
attorneys' fees of any separate legal representation and counsel engaged by him.
Further, while Employee is expected at all times to use his best efforts to
faithfully discharge his duties under this Agreement, Employee cannot be held
liable to FYI for errors or omissions made in good faith where Employee has not
exhibited gross, willful and wanton negligence and misconduct or performed
criminal and fraudulent acts which materially damage the business of FYI.
9. No Prior Agreements. Employee hereby represents and warrants
to FYI that the execution of this Agreement by Employee and his employment by
FYI 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 FYI 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
FYI 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.
10. Assignment: Binding Effect. Employee understands that he has
been selected for employment by FYI 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 two
(2) sentences and the express provisions of paragraph 11 below, 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.
11. Change in Control. The following provisions shall become
applicable in the event of a Change in Control.
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(a) Unless he elects to terminate this Agreement pursuant to
(c) below, Employee understands and acknowledges that FYI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of FYI hereunder.
(b) In the event of a pending Change in Control wherein FYI
and Employee have 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 FYI's
business and/or assets that such successor is not willing as of the closing to
assume and agree to perform FYI's obligations under this Agreement in the same
manner and to the same extent that FYI is hereby required to perform, then such
Change in Control shall be deemed to be a termination of this Agreement by FYI
without cause and the applicable portions of paragraph 4(d) will apply; however,
under such circumstances, the amount of the lump-sum severance payment due to
Employee shall be triple the Base Salary then in effect and the non-competition
provisions of paragraph 3 shall not apply whatsoever.
(c) In any Change in Control situation, Employee may, at his
sole discretion, elect to terminate this Agreement by providing written notice
to FYI at least five (5) business days prior to the anticipated closing of the
transaction giving rise to the Change in Control. In such case, the applicable
provisions of paragraph 4(d) will apply as though FYI had terminated the
Agreement without cause; however, under such circumstances, the amount of the
lump-sum severance payment due to Employee shall be one hundred and fifty
percent (150%) of the Base Salary then in effect and the non-competition
provisions of paragraph 3 shall all apply for a period of one (1) year from the
effective date of termination.
(d) For purposes of applying paragraph 4 under the
circumstances described in (b) and (c) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change in Control
and all compensation, reimbursements and lump-sum payments due Employee must be
paid in full by FYI at or prior to such closing. Further, all of Employee's
stock options shall immediately vest and Employee will be given ninety (90) days
and an opportunity to elect whether to exercise all or any of his vested options
to purchase FYI common stock, including any options with accelerated vesting
under the provisions of any Stock Option Plan adopted by FYI, such that he may
convert the options to shares of FYI common stock at or prior to the closing of
the transaction giving rise to the Change in Control, if he so desires.
(e) A "Change in Control," shall be deemed to have occurred
if:
(i) any person, other than FYI or an employee benefit
plan of FYI, 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
FYI and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting
securities representing fifty percent (50%) or more of the
total voting power of all of the then-outstanding voting
securities of FYI;
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(ii) the individuals (A) who, as of the effective
date of the Company's registration statement with respect to
its IPO, constitute the Board (the "Original Directors") or
(B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board 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 and whose
election, or nomination for election, to the Board 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)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of FYI shall approve a merger,
consolidation, recapitalization, or reorganization of FYI, 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 FYI 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 FYI shall approve a plan of
complete liquidation of FYI or an agreement for the sale or
disposition by FYI of all or a substantial portion of FYI's
assets (i.e., 50% or more of the total assets of FYI).
(f) Employee must be notified in writing by FYI at any time
that FYI or any member of its Board anticipates that a Change in Control may
take place.
(g) Employee shall be reimbursed by FYI or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by FYI or its successor within ten (10) days after Employee delivers a
written request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Employee.
12. Complete Agreement. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with FYI 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 FYI 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
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agreements. This written Agreement may not be later modified except by a further
writing signed by a duly authorized officer of FYI and Employee, and no term of
this Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
13. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To FYI: F.Y.I. Incorporated
0000 XxXxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Vice President and General Counsel
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxx Rain Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
To Employee: Xxxxx Xxxxxxxxxx
0000 XxXxxxxx Xxxxxx, Xxx. 000
Xxxxxx, Xxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.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 the other party of such change in
accordance with this paragraph 13.
14. 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.
15. 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
affect. 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
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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 FYI 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 FYI.
16. Governing Law. This agreement shall in all respects be
construed according to the laws of the State of Texas.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
F.Y.I. INCORPORATED
By: /s/ Xx Xxxxxx
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Xx Xxxxxx
President and Chief Executive Officer
EMPLOYEE:
/s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
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