EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective ______________, 1999, is
between DYNAMIC ASSOCIATES, INC., a Nevada corporation
("Employer"), and XXXXX X. XXX ("Employee").
W I T N E S S E T H:
WHEREAS, Employer and Employee want to enter into an agreement
providing for the continued employment of Employee as an executive
of Employer;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, Employer and Employee agree as follows:
1. Employment of Employee.
(a) Subject to the terms and conditions hereof, Employer
hereby employs Employee as President of Employer, to
perform the services set forth in Section l(b) below for
a term of approximately three (3) years, commencing with
the date hereof and ending on June 30, 2002. Employee
hereby accepts such employment an agrees to serve
Employers as President for such period.
(b) Employee will perform the general duties of managing the
day-to-day operations of Employer, including leading the
development and implementation of its operating systems,
coordinating and leading its new business development
activities, leading its business planning and budgeting
activities, and other duties and responsibilities
reasonably and customarily required of a president of a
business enterprise. Employee shall report to and be
under the supervision of the board of directors of
Employer.
2. Salary. Employer shall pay to Employee as compensation
for the services to be performed hereunder a salary at a rate of
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) per
annum, payable in installments in accordance with the prevailing
payroll practices of Employer.
3. Bonus Payments and Stock Option Grant.
(a) For the period that Employee is employed by Employer
hereunder, Employer shall pay or cause to be paid to
Employee as incentive compensation a potential cash bonus
payable within seventy-five (75) days after each fiscal
year ending June 30. Such potential cash bonus shall be
determined in accordance with the following description
and shall not exceed a total amount of One Hundred
Thousand and No/100 Dollars ($100,000.00) per year.
(b) If Employer's consolidated earnings before interest
expense, taxes, depreciation and amortization ("EBITDA"),
based on independent audit results, equals or exceeds the
threshold EBITDA amount for each year, as stipulated
below, then a bonus of $100,000.00 shall be paid. If less
than the EBITDA threshold but a minimum of 80% of the
EBITDA threshold amount is earned, then the $100,000.00
potential bonus shall be multiplied by the actual
percentage of threshold EBITDA achieved. Also, the
potential bonus amounts for Employee shall not be
considered when calculating Employer's annual EBITDA.
(c) The EBITDA threshold amounts for each fiscal year of
Employer for purposes of this Agreement shall be as
follows:
Year 1 (ending June 30, 2000) $4,000,000
Year 2 (ending June 30, 2001) $4,600,000
Year 3 (ending June 30, 2002) $5,290,000
4. Employee Benefits. Employee shall be entitled during the
period that he is employed hereunder to participate in all regular
employee benefit plans maintained by Employer, including without
limitation, any group life insurance, group medical insurance and
long term disability insurance programs.
5. Stock Option. Employer will grant Employee as of the
date hereof an option to purchase 1,000,000 shares of Dynamic
Common Stock pursuant to Employer's 1997 Non-Statutory Stock Option
Plan. The per-share exercise price of the option shall equal the
average, per-share closing bid and asked price of Dynamic Common
Stock for the eleven (11)-day period beginning five (5) days prior
to the grant date and ending five (5) days after the grant date.
The option will vest with respect to one-third (1/3) of the shares
upon execution of this Agreement, with respect to one-third (1/3)
of the shares upon the first (1st) anniversary of the execution of
this Agreement, and with respect to the remaining one-third (1/3)
of the shares upon the second (2nd) anniversary of the execution of
this Agreement.
6. Confidentiality. Employee acknowledges that all
information possessed by him relating to those activities of
Employer which are of a secret or confidential nature is the
property of Employer, and Employee shall not, during the period
that he is employed by Employer and for one year thereafter, use
any such information for the benefit of others than Employer, or
any corporation directly or indirectly controlled by it, or
disclose any such information to others except in the course of the
business of Employer, or any corporation directly or indirectly
controlled by it. Such restricted information includes all of
Employer's documented operating systems, software and written
material.
7. Noncompete and Hiring Restrictions.
(a) Upon termination of this Agreement for any reason,
provided that, if required by the terms of this
Agreement, the Employer has made the payment to Employee
as specified in Section 11 below, then for one year after
termination of this Agreement,
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Employee shall not compete with Employer within twenty (20)
miles of any of Employer's operating units by directly or
indirectly managing, consulting with, being an owner or any
form of partner with any entity that provided mental health
services or pain management services similar to those
services with which Employer is affiliated or associated
and will not solicit the business of or contact for the
purposes of soliciting the business of any of the
Employer's operating units, customers or clients.
Employer's operating units shall include those in
operation, in development or already solicited by
Employer without a negative response at the date of
Employee's termination.
(b) Upon termination of this Agreement for any reason,
provided that, if required by the terms of this
Agreement, the Employer has made the payment to Employee
as specified in Section 11 below, then for one year after
termination of this Agreement for any reason, Employee
shall not directly or indirectly solicit the employment
of, or contractual services of, or employ or contract
with in any matter any individual who has been employed
or contracted in anyway by or with Employer at any time
during the term of this Agreement with Employer.
8. Reimbursement of Expenses. During the period that
Employee is employed hereunder, Employer shall provide for payment
of or reimbursement of Employee for all travel and other out-of-
pocket expenses reasonably incurred by Employee in the performance
of his duties hereunder. Employee will provide a written record of
his expenses.
9. Obligation to Perform Duties. The obligations of
Employer hereunder, including its obligation as to the payment of
the compensation provided for herein, shall be contingent upon the
performance by Employee of his obligations hereunder.
10. Termination of Employment.
Employee's employment hereunder:
(a) Shall terminate forthwith upon the death of Employee.
(b) May be terminated immediately by Employer for cause which
shall include any of the following reasons:
(1) if Employee shall engage in any material misconduct
or neglect of duties or otherwise fails to act in a
way which materially and adversely affects the
business or affairs of Employer; or
(2) if Employee shall (i) be convicted of a felony or
(ii) commit an act of dishonestly, fraud or
embezzlement against Employer.
(c) May be terminated by Employer at any time if Employee
shall become ill or be injured or otherwise incapacitated
and such illness, injury, or incapacity shall be of
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such nature as to prevent him from performing the duties to be
performed by him hereunder and shall continue for a
period of six (6) consecutive months.
(d) May be terminated by Employer without cause without
written notice, subject to the payments being made to
Employee on the effective termination date as described
in Section 11 below and the option described in Section
5 shall remain exercisable for its full five (5) year
term.
(e) May be terminated by Employee upon thirty (30) days'
advance written notice.
11. Payments After Termination. In the event Employee's
employment hereunder terminates pursuant to Section 10(a), 10(c) or
10(e), Employee (or his heirs, executors, or administrators in the
event of termination by reason of death of Employee) shall be
entitled to receive (a) the salary payable to Employee under
Section 2 prorated to the close of the month in which such
termination occurs, plus (b) any unreimbursed expenses, plus (c) a
cash payment equal to the cash bonus paid to Employee for
performance during the most recently completed fiscal year of
Employer multiplied by a fraction, the numeration of which is the
number of months in the current fiscal year during which Employee
was employed hereunder (including the month in which termination of
employment occurs) and the denominator of which is twelve (12). In
the event Employee's employment hereunder terminates pursuant to
Section 10(b), Employee (or his heirs, executors, or administrators
in the event of termination by reason of death of Employee) shall
be entitled to receive (a) the salary payable to Employee under
Section 2 prorated to the close of the month in which such
termination occurs, plus (b) any unreimbursed expenses. In the
event Employee's employment hereunder is terminated pursuant to
Section 10(d), Employer shall pay Employee $150,000.00 plus the
total potential cash bonus amount of $100,000.00 as provided for in
Section 3 so long as Employee has complied with the restrictions
set forth in Sections 6 and 7. In addition, the option mentioned
in Section 5 shall remain exercisable for its full five (5) year
term.
12. Severability. If any one or more of the covenants or
agreements provided in this Agreement should be determined by a
court or competent jurisdiction to be contrary to law, such
covenant or agreement shall be deemed and construed to be severable
from the remaining covenants and agreement herein contained and
shall in no way affect the validity of the remaining provisions of
this Agreement.
13. Notices. Any notice or communication provided for herein
and contemplated hereby shall be sufficiently given if given in
writing and delivered by certified mail, return receipt requested,
and addressed to Employer at Suite B-169, 7373 N. Scottsdale,
Xxxxxxxxxx, Xxxxxxx 00000, and to Employee at 0000 Xxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, or in either case to a new address
specified by notice given as provided in this Section 13.
14. Binding Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Tennessee, without giving effect to its conflicts of laws
provisions.
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IN WITNESS WHEREOF, Employer and Employee have executed this
Employment Agreement as of the date first above written.
DYNAMIC ASSOCIATES, INC.
By: Date: March 25, 1999
Title:______________________________
____________________________________ Date: March 25, 1999
XXXXX X. XXX
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