DYNAMIC ASSOCIATES, INC.
7373 North Scottsdale Road, Suite B-169
Scottsdale, Arizona 85253
NOTICE AND PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 10, 1997
To the Shareholders of Dynamic Associates, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders (the
"Annual Meeting") of Dynamic Associates, Inc., a Nevada corporation (the
"Company"), will be held at 7373 North Scottsdale Road, Suite B-169, Scottsdale,
Arizona, 85253 on the 10th day of October, 1997, at 10:00 a.m. (Pacific Time)
for the following purpose:
1. To elect six directors to the Board of Directors to serve for a
one year term;
2. To amend the Articles of Incorporation to provide for
indemnification of the officers, directors and agents of the
Company to the fullest extent under Nevada law;
3. To approve the 1997 Stock Option Plan;
4. To appoint Smith & Company as the independent auditors for the
Company;
5. To approve the Bylaws of the Company as proposed; and
6. To transact any and all other business that may properly come
before the Meeting or any Adjournment(s) thereof.
The Board of Directors has fixed the close of business on September 9,
1997 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at such meeting or any
adjournment(s) thereof. Only shareholders of the Company's Common Stock of
record at the close of business on the Record Date are entitled to notice of
and to vote at the Annual Meeting. Shares can be voted at the Annual Meeting
only if the holder is present or represented by proxy. The stock transfer books
will not be closed. A copy of the Company's 1996 Annual Report to Shareholders,
in the form of the 10-KSB filed with the Securities and Exchange Commission,
which includes audited financial statements, is enclosed. A list of
shareholders entitled to vote at the Annual Meeting will be available for
examination at the offices of the Company for ten (10) days prior to the Annual
Meeting.
You are cordially invited to attend the Annual Meeting; whether or not you
expect to attend the meeting in person, however, you are urged to mark, sign,
date, and mail the enclosed form of proxy promptly so that your shares of stock
may be represented and voted in accordance with your wishes and in order that
the presence of a quorum may be assured at the meeting. Your proxy will be
returned to you if you should be present at the Annual Meeting and should
request its return in the manner provided for revocation of proxies on the
initial page of the enclosed proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
_________________________________________________
Logan Anderson, Secretary and Director
Scottsdale, Arizona, September 9, 1997
YOUR VOTE IS IMPORTANT
<PAGE>
DYNAMIC ASSOCIATES, INC.
7373 North Scottsdale Road, Suite B-169
Scottsdale, Arizona 85253
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 10, 1997
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the Board of Directors on behalf of
Dynamic Associates, Inc., a Nevada corporation (the "Company"), to be voted at
the 1997 Annual Meeting of Shareholders of the Company (the "Annual Meeting")
to be held on October 10, 1997 at the time and place and for the purposes set
forth in the accompanying Notice of Annual Shareholders (the "Notice") and at
any adjournment(s) thereof. When proxies in the accompanying form are properly
executed and received, the shares represented thereby will be voted at the
Annual Meeting in accordance with the directions noted thereon; if no direction
is indicated, such shares will be voted for the election of directors and in
favor of the other proposals set forth in the Notice.
The executive offices of the Company are located at, and the mailing
address of the Company is 7373 North Scottsdale Road, Suite B-169, Scottsdale,
Arizona, 85253.
Management does not intend to present any business at the Annual Meeting
for a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the shareholders
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them in accordance with their judgment on such matters.
This proxy statement (the "Proxy Statement") and accompanying proxy are
being mailed on or about September 25, 1997. The Company's Annual Report on
Form 10-KSB (the "1996 Form 10-KSB"), which serves as the Annual Report to
Shareholders, covering the Company's fiscal year ended December 31, 1996, is
enclosed herewith, and certain parts thereof are incorporated herein by
reference. See "Incorporation by Reference."
Any shareholder of the Company giving a proxy has the unconditional right
to revoke his proxy at any time prior to the voting thereof either in person at
the Annual Meeting, by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to the Company addressed to Jan Wallace,
President and Chairman of the Board, Dynamic Associates, Inc., 7373 North
Scottsdale Road, Suite B-169, Scottsdale, Arizona, 85253; no such revocation
shall be effective, however, until such notice of revocation has been received
by the Company at or prior to the Annual Meeting.
In addition to the solicitation of proxies by use of the mail, officers
and regular employees of the Company may solicit the return of proxies, either
by mail, telephone, telegraph or through personal contact. Such officers and
employees will not be additionally compensated but will be reimbursed for
out-of-pocket expenses. Brokerage houses and other custodians, nominees, and
fiduciaries will, in connection with shares of the Company's common stock,
$0.001 par value per share (the "Common Stock"), registered in their names, be
requested to forward solicitation material to the beneficial owners of such
shares of Common Stock.
The cost of preparing, printing, assembling, and mailing the Annual
Report, the Notice, this Proxy Statement, and the enclosed form of proxy, as
well as the cost of forwarding solicitation materials to the beneficial owners
of shares of Common Stock and other costs of solicitation, are to be borne by
the Company.
<PAGE>
QUORUM AND VOTING
The record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting was the close of business on September 9,
1997 (the "Record Date"). On the Record Date, there were 13,399,787 shares of
Common Stock issued and outstanding.
Each shareholder of Common Stock is entitled to one vote on all matters to
be acted upon at the Annual Meeting and neither the Company's Articles of
Incorporation (the "Nevada Articles of Incorporation") nor its Bylaws (the
"Nevada Bylaws") allow for cumulative voting rights. The presence, in person
or by proxy, of the holders of twenty-five percent (25%) of the issued and
outstanding Common Stock entitled to vote at the meeting is necessary to
constitute a quorum to transact business. If a quorum is not present or
represented at the Annual Meeting, the shareholders entitled to vote thereat,
present in person or by proxy, may adjourn the Annual Meeting from time to time
without notice or other announcement until a quorum is present or represented.
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the shares of Common Stock voting at the meeting is required for
the election of each of the nominees for director, amend the Articles of
Incorporation, approve the 1997 Stock Option Plan, appoint auditors for the
Company and approve the Bylaws.
Abstentions and broker non-votes will be counted for purposes of
determining a quorum, but will not be counted as voting for purposes of
determining whether a proposal has received the necessary number of votes for
approval of the proposal.
<PAGE>
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement. This summary is not intended to be complete
and is qualified in all respects by reference to the detailed information
appearing elsewhere in this proxy statement and the exhibits hereto.
The Meeting
Date, Time and Place of the Annual Meeting
The Annual Meeting of Dynamic Associates, Inc. is scheduled to be held on
October 10, 1997, at 10:00 a.m. in the Company's corporate offices at 7373 North
Scottsdale Road, Suite B-169, Scottsdale, Arizona, 85253. See "Solicitation
and Revocability of Proxies."
Record Date
Only holders of record of shares of Common Stock at the close of business
on September 9, 1997 are entitled to receive notice of and to vote at the
Annual Meeting.
Vote Required
Assuming the presence of a quorum at the Annual Meeting , the affirmative
vote of the holders of a majority of the shares of Common Stock represented and
voting at the Annual Meeting is required for (i) the election of each nominee
for director of the Company, (ii) for the approval to amend the Articles of
Incorporation, (iii) for approval of the 1997 Stock Option Plan, (iv) for the
appointment of Smith & Company as the independent auditors for the Company, and
(v) to approve the proposed Bylaws of the Company.
Accountants
Smith & Company, 10 West 100 South, Suite Number 700, Salt Lake City, Utah,
84101, have been selected by the Company to act as the principal accountant for
1997. Smith & Company have been the accountants for the Company for six years
and no change of accountants has occurred since that time and none is
contemplated. It is not expected that the representatives of Smith & Company
will attend the annual shareholders' meeting and will not be available to answer
questions from the shareholders.
Recommendations
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT THE
COMPANY'S SHAREHOLDERS VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR
("PROPOSAL
1"), FOR THE AMENDMENT OF THE ARTICLES OF INCORPORATION ("PROPOSAL
2"), FOR THE
APPROVAL OF THE 1997 STOCK OPTION PLAN ("PROPOSAL 3"), FOR THE
APPOINTMENT OF
SMITH & COMPANY AS THE INDEPENDENT AUDITORS FOR THE COMPANY
("PROPOSAL 4")AND
FOR THE APPROVAL OF THE BYLAWS OF THE COMPANY ("PROPOSAL 5").
<PAGE>
THE COMPANY
1. Background
Dynamic Associates, Inc. was formed as a Nevada corporation July 20, 1989
to provide vehicles for future business development. The company was founded
with three principal shareholders: Capital General Corporation, David R. Yeaman
and Krista Castleton. During the period from on or about January 1986 and
continuing through 1991, Yeaman, and individuals associated with Yeaman,
incorporated as many as 92 subsidiary corporations of Capital General in Utah
and Nevada, along with Dynamic Associates, Inc. Beginning in April 1986 and
continuing through at least September 1991, Yeaman caused Capital General to
distribute without registration in violation of Section 5(a) and (c) of the
Securities Act, 100 shares each of at least 69 issuers controlled by Yeaman and
Capital General to between approximately 275 to 900 persons throughout the
United States, ostensibly as gifts. In all instances, the gifted stock
certificates failed to reflect any restrictive legends.
Dynamic Associates Evolution
Harry Moll, Jan Wallace and David Hunter acquired controlling interest in
Dynamic Associates, Inc. August 30, 1995 with the intent of acquiring a viable
business. Jan Wallace is the current President and a Director, with Logan B.
Anderson as the Secretary/Treasurer and a Director, Herb Capozzi, Billy Means,
Jr., and Florian Homm are Directors and Grace Sim is Vice President of Finance.
Microthermia Technology, Inc.
Management determined that it had expertise in the medical field and during
discussions with Microthermia Technology, Inc. (MTI) a licensing agreement was
executed providing for the funding of a newly established company to provide for
the treatment of certain vascular conditions. MTI was established to create and
develop microwave energy based therapy, as an alternative to surgical treatments
or other therapies for certain urinary and vascular conditions. MTI has
obtained a patent on the microwave systems utilized for treatment of the
conditions. On September 15, 1995 Microthermia Acquisition Corporation (MAC)
was formed to provide for joint development of the technology of MTI. The joint
venture agreement was approved by the shareholders and directors of MTI, and
required the approval of the Secretary of State of California, which was not
given.
Because of the delays and eventual refusal by the Secretary of State to
approve the agreement, the Company formed a wholly owned subsidiary, Microwave
Management Company (MMC) and entered into a licensing agreement with MTI to
allow the Company the exclusive use of the technology of MTI for the treatment
of telangiectasia. The licensing agreement has been prepaid for two years and
has provisions for automatic annual renewal for eight additional years at no
cost. Under the Licensing Agreement a 2% royalty fee will be required to be
paid by the Company for net sales of the products and services related to the
technology if utilized. MAC is currently researching and developing Microwave
technologies other than those acquired from MTI, for the treatment of certain
human vascular problems.
P&H Laboratories
Management also entered into a Share Purchase Agreement with P&H to
provide for the engineering and manufacturing capability to more expeditiously
bring the products of the Company to market. On April 23, 1996 the Company
acquired 50% of P&H for $1,000,000.00, and has an exclusive two year option to
acquire the remaining 50% for $1,000,000.00. The offer to acquire this
additional 50% will expire April 23, 1998. P&H Laboratories is a modern
microwave component designer and manufacturer. Devices produced at P&H are
currently being used on most NASA and military satellites, as well as
communications satellites throughout the world.
P&H Laboratories (P&H) is a privately held corporation, incorporated in the
state of California. The executive offices of the company are at 4496 Runway
Street, Simi Valley, California and include manufacturing and engineering space
of approximately 18,000 square feet. The Board of Directors manages the affairs
of the corporation and consists of seven members. Two members are active in the
normal daily operations at P&H and the remaining five directors are outside
directors and experienced business persons. This team controls the long term
strategic planning of the corporation and directs the officers of the
corporation, who handle the day to day affairs and manage the business. On
September 11, 1997, the Company purchased the remaining 50% of P&H for 214,287
shares of its restricted common stock at lower than its exclusive two year
option, pending the finalization of Harold Saltzman's employment agreement.
<PAGE>
Genesis Health Management Corporation
The Company entered into an Acquisition Agreement on August 1, 1996 to
acquire 100% of Genesis Health Management Corporation, ("Genesis"), of Bossier
City Louisiana, for $15,000,000.00, and 3,000,000 common shares of stock of the
Company. The agreement was extended by mutual consent of the parties and a
final agreement was executed by the parties on December 2, 1996. The final
agreement provided that the Company pay $12,000,000.00, issue a Promissory Note
for $3,000,000.00 and issue 3,000,000 shares of common stock of the Company.
The Promissory Note for the $3,000,000.00 bears interest at 10% per annum and
is due on or before September 2, 1997. The note is secured by a Pledge of the
Company of 51% of the authorized stock of Genesis. The Promissory Note,
(including interest) was paid in full on March 3, 1997. Genesis is in the
business of managing and operating geriatric and psychiatric units in various
hospitals, (both in-patient and out-patient). At December 31, 1996, Genesis
had 19 operating units. As of June 30th, 1997, Genesis has 31 operating units.
2. Security Ownership of Management and Principal Shareholders
The following table sets forth information regarding the beneficial
ownership of Common Stock as of December 31, 1996 by each person or group who
owned, to the Company's knowledge, more than five percent of the Common Stock,
each of the Company's directors, the Company's Chief Executive Officer, and all
of the Company's directors and executive officers as a group.
The following table sets forth, as of December 31, 1996, information
regarding the beneficial ownership of shares by each person known by the
Company to own five percent or more of the outstanding shares, by each of the
directors and by the officers and by each director and officer as a group.
<TABLE>
<CAPTION>
Name Amount of Percent
of beneficial owner beneficial ownership of class
<S> <C> <C>
Vickie T. Lucky 2,370,000 19.5%
Brant Investments, Ltd. 1,631,480 13.4%
Harry Moll 1,770,000* 14.2%
Jan Wallace 550,000** 4.5%
(President & Director)
Herb Capozzi (Director) 100,000 0.8%
Logan Anderson 940,000*** 7.5%
(Secretary/Treasurer/Director)
Florian Homm (Director) 200,000 1.6%
Billy Means, Jr. (Director) 30,000 0.2%
All Officers and Directors 1,820,000 13.6%
as a Group (5 persons)
</TABLE>
* Includes 300,000 shares owned by SSM, Ltd., which is controlled by
Mr. Moll.
** Includes 150,000 options held by Ms. Wallace.
*** Includes 100 options held by Mr. Capozzi
**** Includes 100,000 shares owned by Amteck Management, Inc., which is
controlled by Mr. Anderson, and 405,000 options held by Mr. Anderson.
3. Voting Intentions of Certain Beneficial Owners and Management.
To be ratified by the Shareholders, Proposal No. 1, Proposal No. 2,
Proposal No. 3, Proposal No. 4 and Proposal No. 5 each require the affirmative
vote of a majority of the Company's outstanding voting securities present at the
meeting once a quorum is determined. The Company's directors and officers have
advised the Company that they will vote the 1,820,000 shares owned or controlled
by them FOR each of the Proposals in this Proxy Statement. These shares
represent 13.6% of the outstanding common stock of the Company.
<PAGE>
4. Additional Information.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of this material can also be obtained at
prescribed rates from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W. Washington, D.C. 20549. The
Company's Common Stock is traded through OTC Bulletin Board under the symbol
DYAS.
The following documents filed by the Company with the Securities and
Exchange Commission pursuant to the Exchange Act are incorporated herein by
reference and made a part hereof:
a. The Company's Annual Report on Form 10-K for the year ended December
31, 1994;
b. The Company's Annual Report on Form 10-K for the year ended December
31, 1995;
c. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996;
d. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1996;
e. The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1996;
f. The Company's Annual Report on Form 10-KSB for the year ended December
31, 1996;
g. The Company's Amended Annual Report on Form 10-KSB/A for the year
ended December 31, 1996;
h. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997;
i. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1997.
All reports and documents filed by the Company pursuant to Section 13, 14
or 15(d) of the Exchange Act, after the date of this Proxy Statement, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
respective date of filing such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement to the extent that a statement contained herein or in any
other subsequently filed document, which also is or is deemed to be incorporated
by reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of this Proxy Statement.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO
EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROXY
STATEMENT HAS BEEN
DELIVERED, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF ANY
OR ALL OF
THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE
INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS.
WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE COMPANY
AT 7373
NORTH SCOTTSDALE ROAD, SUITE B-169, SCOTTSDALE, ARIZONA, 85253.
5. Director Compensation
Compensation awarded to Directors of the Company is listed below in
response to question 7, "Remuneration and Executive Compensation."
6. Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires the Company's directors, officers and persons who
own more than 10 percent of a registered class of the Company's equity
securities, to file
<PAGE>
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("the Commission"). Directors, officers and greater than 10 percent
beneficial owners are required by applicable regulations to furnish the Company
with copies of all forms they file with the Commission pursuant to Section
16(a). The Company is not aware of any beneficial owner of more than 10
percent of its registered Common Stock for purposes of Section 16(a).
Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that during fiscal 1996 all filing requirements
applicable to its directors and executive officers were satisfied.
7. Remuneration and Executive Compensation
The following table sets forth for fiscal 1996 compensation awarded or
paid to Ms. Jan Wallace, the Company's President and Mr. Logan Anderson, the
Company's Secretary, Treasurer and Director (collectively, the "named Executive
Officers"). Other than as indicated in the table below, no executive officer
of the Company received any annual compensation in the year ended December 31,
1996.
Summary Compensation Table
Annual Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Other Restricted
Annual Stock Options/ LTIP All Othr
Name Title Year Salary Bonus Comp Awarded SARs (#) payouts($) Comp
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Pres,
Wallace CEO, 1996 $120,000 $ 0 0 0 150,000 0 0
Director
Logan Secy/
Anderson Treas, 1996 $120,000 $ 0 0 0 405,000 0 0
Director
Florian
Homm Dir 1996 $ 0 $ 0 0 0 200,000 0 0
Herb
Capozzi Dir 1996 $ 0 $ 0 0 0 100,000 0 0
Billy
Means Dir 1996 $120,000 $ 0 0 0 0 0 0
</TABLE>
*Options
The following options were granted to directors and officers of the
Company. The options were granted when the Company did not publicly trade and
no monetary value had been attributed to the granting of the options. The stock
options are at a price of $1.00 per share.
<TABLE>
<CAPTION>
Date Date Number Expiration Date
Granted Issued
<S> <C> <C> <C> <C>
Jan Wallace 4/9/96 4/9/96 150,000 4/9/99
Logan Anderson 4/9/96 4/9/96 150,000 4/9/99
Logan Anderson 4/9/96 10/4/96 255,000 10/4/99
Florian Homm 4/9/96 4/9/96 100,000 4/9/99
Florian Homm 4/9/96 9/16/96 100,000 9/16/99
Herb Capozzi 4/9/96 4/9/96 100,000 4/9/99
</TABLE>
<PAGE>
8. Information and Background of Officers and Directors
The following table shows the positions held by the Company's officers and
directors. The directors were appointed and will serve until the next annual
meeting of the Company's stockholders, and until their successors have been
elected and have qualified. The officers were appointed to their positions,
and continue in such positions at the discretion of the directors.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Jan Wallace 41 President, Director
Logan Anderson 42 Secretary-Treasurer, Director
Florian Homm 37 Director
Herb Capozzi 71 Director
Billy Means, Jr. 42 Director
</TABLE>
Jan Wallace (age 41) is a Director, President and Chief Operating Officer of
the Company. Ms. Wallace has been employed by the Company since April 1995,
when she was elected to the Board of Directors and accepted the position of
Chief Operating Officer. Ms. Wallace was previously Vice President of Active
Systems, Inc. a Canadian Company specializing in SGML Software an ISO standard
in Ottawa, Ontario. Prior to that she was President and Owner of Mailhouse
Plus, Ltd., an office equipment distribution company which was sold to Ascom
Corporation. She has also been in management with Pitney Bowes-Canada and Bell
Canada where she received its highest award in Sales and Marketing. Ms. Wallace
was educated at Queens University in Kingston, Ontario and Carleton University,
Ottawa, Ontario in Political Science with a minor in Economics. Ms. Wallace is
also an officer and director of Claire Technologies, Inc.
Logan Anderson (age 42) is a Secretary-Treasurer of the Company. Mr. Anderson
has been Secretary-Treasurer of the Company since April 1995. Since 1993 Mr.
Anderson has been principal and president of Amteck Financial Services Corp.,
a financial consulting company in Vancouver, B.C. From 1982 to 1992 Mr.
Anderson was Controller of Cohart Management group, which was responsible for
management of private and public corporations. Mr. Anderson received his
Bachelors of Commerce degree in Accounting and Economics from Otago University,
New Zealand in 1977. Mr. Anderson is an Associated Chartered Accountant (New
Zealand).
William H. Means, Jr. (age 42) is Executive Vice President. Mr. Means received
his B.S. in Business Administration from Louisiana Tech University in 1976 and
his M.B.A. in Personnel Management from Louisiana Tech in 1978. From 1978 to
1980, Mr. Means worked as an Assistant Credit Manager, Salary Administrator and
Commercial Loan Review Analyst at Commercial National Bank in Shreveport,
Louisiana. From 1980 through 1984 he was the Vice President of Commercial Loan
Administration at Bossier Bank and Trust in Bossier City, Louisiana. From 1984
through 1986 he was a Senior Vice President at National Bank of Bossier and
from 1986 through 1988 he was a Senior Vice President at Bank of Mid-South in
Bossier City, Louisiana. From 1988 through 1989 he was a co-owner and Account
Executive at United Advertising Network and from 1989 through 1991 he was an
Office and Site supervisor at McNeely Construction Company. Mr. Means owned and
operated Space Center Painting and Construction Company, Space Center Mini
Storage and Terrace Acres Apartments from 1991 through 1994, when he joined
Genesis as an Executive Vice President.
Florian Homm (age 37) has been in the investment management and banking
businesses for over fifteen years, much of it in senior management positions
with firms such as Merrill Lynch, Fidelity Management and Research, Bank Julius
Bar and Tweedy, Browne in London, New York, Boston and Frankfurt. Mr. Homm is
Managing Partner of Value Management and Research GmbH in Germany, a firm
specializing in investment management and corporate financial services. VMR
includes amongst its fund management clients highly regarded institutional
investors as well as European blue chip companies and fast growing corporations
in North America and Europe. Mr. Homm is an honors graduate in Economics from
Harvard College. He received his Master of Business Administration degree from
Harvard Business School. Mr. Homm is a Board Member of the European Association
of Securities Dealers (EASD), on the board of a number of public companies, has
received several investment awards and has published extensively on a wide range
of financial topics.
Herb Capozzi (age 71) is a Director of the Company. Mr. Capozzi is currently a
Director and the Co-founder of PLC Systems, Inc., a cardiac revascularization
company developing medical systems and technology which trades on the American
Stock Exchange. He was President and Director of International Potter
Distillers, and Director and Co-founder of the Keg Restaurant chain in Canada.
Mr. Capozzi was a partner in bringing McDonald's restaurants to Canada. From
1981 to 1986, Mr. Capozzi was one of three original Directors of EXPO '86, the
1986 World's Fair in Vancouver, Canada. Mr. Capozzi was an elected member of
Legislative Assembly, Province of British Columbia, for two terms and Chairman
of the Insurance
<PAGE>
Committee and the Procedure Committee. He also had a football career with the
New York Giants (NFL), the Calgary Stampeders (CFL), and the Montreal Alouttes
(CFL), and with the B.C. Lions as General Manager for 10 years. Mr. Capozzi was
a principal owner of the soccer organization the Vancouver White Caps. Mr.
Capozzi received his Bachelor's Degree of Arts for Chemistry and a Bachelor's
Degree of Commerce from the University of British Columbia. He also received a
Bachelor's Degree of Education from the University of Italy.
<PAGE>
PROPOSAL NO. 1:
ELECTION OF BOARD MEMBERS
The Bylaws of the Company provide that the number of directors that shall
constitute the whole board shall be not less than three (3), or more than seven
(7). The number of directors presently comprising the Board of Directors is
five (5).
Nominees
Unless otherwise directed in the enclosed proxy, it is the intention of
the persons named in such proxy to nominate and to vote the shares represented
by such proxy for the election of the following named nominees for the office of
director of the Company, to hold office until next annual meeting of the
shareholders or until their respective successors shall have been duly elected
and shall have qualified. Each of the nominees is presently a director of the
Company.
1. Information Concerning Nominees
<TABLE>
<CAPTION>
Name Age Position Director/Officer Since
<S> <C> <C> <C>
Jan Wallace 41 President, CEO, Director September 2, 1995
Logan Anderson 41 Director, Secretary, December 29, 1995
Treasurer
Florian Homm 37 Director January 7, 1997
Herb Capozzi 71 Director February 1, 1996
Billy Means, Jr. 42 Director February 10, 1997
Elliot Smith 64 Director New Nominee
Jan Wallace, President and Director. Ms. Wallace is currently a Director,
President and Chief Executive Officer of Claire Technologies, Inc. Ms.
Wallace was previously Vice President of Active Systems, Inc. a Canadian
Company specializing in SGML Software (an ISO standard) in Ottawa, Ontario.
Prior to that she was President and Owner of Mailhouse Plus, Ltd., an office
equipment distribution company which was sold to Ascom Corporation. She has also
been in management with Pitney Bowes-Canada and Bell Canada where she received
its highest award in Sales and Marketing. Ms. Wallace attended Queens University
in Kingston, Ontario and Carleton University, Ottawa, Ontario in Political
Science with a minor in Economics.
Logan Anderson, Director, Secretary-Treasurer. Mr. Anderson has been Secretary-
Treasurer of the Company since April 1995. Mr. Anderson is a graduate of Otago
University, New Zealand, with a Bachelor's Degree of Commerce in Accounting
and Economics (1977). He is an Associated Chartered Accountant (New Zealand)
and was employed by Coopers & Lybrand in New Zealand (1977-1980) and Canada
(1980-1982). From 1982 to 1992 Mr. Anderson was Comptroller of Cohart Management
group, a management service company which is responsible for the management of
private and public corporations Since 1993 Mr. Anderson has been principal and
president of Amteck Financial Services Corp., a financial consulting service
company. Mr. Anderson was formerly Officer and Director of Claire Technologies,
Inc. and has been an Officer and Director of numerous private and public
companies in the past 12 years, including PLC Systems, Inc. (AMEX) and
3D-Systems (NASDAQ).
William H. Means, Jr., Director. Mr. Means is currently President of Genesis
Health Management Corporation, a subsidiary of The Company. Mr. Means received
his B.S. in Business Administration from Louisiana Tech University in 1976 and
his M.B.A. in Personnel Management from Louisiana Tech in 1978. From 1978 to
1980, Mr. Means worked as an Assistant Credit Manager, Salary Administrator and
Commercial Loan Review Analyst at Commercial National Bank in Shreveport,
Louisiana. From 1980 through 1984 he was the Vice President of Commercial Loan
Administration at Bossier Bank and Trust in Bossier City, Louisiana. From 1984
through 1986 he was a Senior Vice President at National Bank of Bossier and from
1986 through 1988 he was a Senior Vice President at Bank of Mid-South in Bossier
City, Louisiana. From 1988 through 1989 he was a co-owner and Account Executive
at United Advertising Network and from 1989 through 1991 he was an Office and
Site supervisor at McNeely Construction Company. Mr. Means owned and operated
Space Center Painting and Construction Company, Space Center Mini Storage and
Terrace Acres Apartments from 1991 through 1994, when he joined Genesis as an
Executive Vice President.
<PAGE>
Florian Homm, Director. Mr. Homm is a Managing Partner of Value Management and
Research GmbH in Germany, a firm specializing in investment management and
corporate financial services. Mr. Homm has been in the investment management
and banking businesses for over fifteen years, much of it in senior management
positions with firms such as Merrill Lynch, Fidelity Management and Research,
Bank Julius Bar and Tweedy, Browne in London, New York, Boston and Frankfurt.
Mr. Homm graduated with Honours in Economics from Harvard College. He received
his Master of Business Administration degree from Harvard Business School. Mr.
Homm is a Board Member of the European Association of Securities Dealers
(EASD), on the board of a number of public companies, has received several
investment awards and has published extensively on a wide range of financial
topics.
Herb Capozzi, Director. Mr. Capozzi is currently a Director and the Co-founder
of PLC Systems, Inc., a cardiac revascularization company developing medical
systems and technology which trades on the American Stock Exchange. He was
President and Director of International Potter Distillers, and Director and
Co-founder of the Keg Restaurant chain in Canada. Mr. Capozzi was a partner in
bringing McDonald's restaurants to Canada. From 1981 to 1986, Mr. Capozzi was
one of three original Directors of EXPO '86, the 1986 World's Fair in Vancouver,
Canada. Mr. Capozzi was an elected member of Legislative Assembly, Province of
British Columbia, for two terms and Chairman of the Insurance committee and the
Procedure Committee. He also had a football career with the New York Giants
(NFL), the Calgary Stampeders (CFL), and the Montreal Alouttes (CFL), and with
the B.C. Lions as General Manager for 10 years. Mr. Capozzi was a principal
owner of the soccer organization the Vancouver White Caps. Mr. Capozzi
received his Bachelor's Degree of Arts for Chemistry and a Bachelor's Degree of
Commerce from the University of British Columbia. He also received a Bachelor's
Degree of Education from the University of Italy.
Elliot Smith (Age 64) began his career with Prudential Securities in 1954 as a
Registered Representative in the Syracuse, New York, office. By 1966, Mr. Smith
was appointed Resident Manager of the firm's largest office in New York City.
He was named Manager, Marketing & Sales Division at the Home Office in New York
City in 1969, and in 1970, was elected First Vice President and National Sales
Manager. In 1973, Mr. Smith was elected to the Board of Directors of Bache &
Company, Inc. In 1977, he was named Senior Officer of Commodity Division and
Metal Company and in 1980, was elected President of Bache Haley Stuart metal
Company, Inc. In 1983, after leaving Prudential, Mr. Smith served as Executive
Vice President at R. Lewis Securities, Inc., located in New York City, and from
1984 to 1995 was President of Whale Securities Company, L.P., also located in
New York City. Mr. Smith is also on the Boards of Pennington School and
Jillians Corporation. Mr. Smith is a former Member and Director of the Chicago
Board of Options Exchange; Governor of the American Stock Exchange (AMEX);
Governor and Chairman of the AMEX Commodities Exchange; Director and Member
of the Executive Committee of the Securities Industry Automation Corp.; and
Past President of the Association of Investment Brokers.
The Board of Directors does not contemplate that any of the above-named
nominees for director will refuse or be unable to accept election as a director
of the Company, or be unable to serve as a director of the Company. Should any
of them become unavailable for nomination or election or refuse to be nominated
or to accept election as a director of the Company, then the persons named in
the enclosed form of proxy intend to vote the shares represented in such proxy
for the election of such other person or persons as may be nominated or
designated by the Board of Directors. No nominee is related by blood, marriage,
or adoption to another nominee or to any executive officer of the Company or its
subsidiaries or affiliates.
Assuming the presence of a quorum, each of the nominees for director of the
Company requires for his election the approval of the holders of a plurality of
the shares of Common Stock represented and voting at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH
OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
<PAGE>
PROPOSAL NO. 2:
AMENDMENT OF ARTICLES OF INCORPORATION
The Articles of Incorporation of the Company do not currently provide for
indemnification of the officers, directors and agents of the Company. The Board
of Directors recommends that the Articles be amended so that the officers,
directors and agents of the Company are indemnified to the fullest extent
possible under Nevada law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF
THE ARTICLES OF
INCORPORATION TO INDEMNIFY THE OFFICERS, DIRECTORS AND AGENTS OF
THE COMPANY.
<PAGE>
PROPOSAL NO. 3:
1997 STOCK OPTION PLAN
Attached hereto is a copy of the proposed 1997 Stock Option Plan for the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
1997 STOCK
OPTION PLAN.
<PAGE>
PROPOSAL NO. 4:
APPOINTMENT OF INDEPENDENT AUDITORS
Smith & Company have acted as independent auditors for the Company for the
past 6 years. The Board of Directors recommends that Smith & Company continue
to act as independent auditors for the Company and that they be appointed the
independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF
SMITH &
COMPANY AS INDEPENDENT AUDITORS FOR THE COMPANY.
<PAGE>
PROPOSAL NO. 5:
BYLAWS
A copy of the proposed Bylaws of the Company are attached hereto. The
Board of Directors recommends that these Bylaws be adopted by the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE BYLAWS OF
THE COMPANY.
<PAGE>
</TABLE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
DYNAMIC ASSOCIATES, INC.
We, the undersigned President and Secretary of Dynamic Associates, Inc. do
hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the ____ day of _________, 199__, adopted a resolution to amend the
original articles as follows:
Article _____ is hereby amended to read as follows:
(a) That this corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right
of the corporation) by reason of the fact that he is or was a Director,
Officer, employee or agent of this corporation, or is or was serving
at the request of this corporation as a Director, Officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including attorneys' fees), judgements,
fines, and amounts paid in settlement actually and reasonably incurred by
a director in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of this corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe this
conduct was unlawful. The termination of any action, suit, or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of this
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful;
(b) That this corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of this corporation to
procure a judgement in its favor by reason of the fact that that person is
or was a Director, Officer, employee, or agent of this corporation, or is
or was serving at the request of this corporation as a Director, Officer,
employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of this corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his or her duty to this corporation
unless and
<PAGE>
only to the extent that the court in which such action or suit was
rought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper;
(c) To the extent that a Director, Officer, employee, or agent of
this corporation has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in paragraphs (a) and (b)
above, or in defense of any claim, issue, or matter therein, he or she
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith;
(d) Any indemnification under paragraphs (a) and (b) above (unless
ordered by a court) shall be made by this corporation only as authorized
in the specific case upon a determination that indemnification of the
Director, Officer, employee, or agent is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
paragraphs (a) and (b) above. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors
who where not parties to such action, suit, or proceeding, or (2) if such
a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders;
(e) Expenses incurred in defending a civil or criminal action, suit,
or proceeding may be paid by this corporation in advance of the final
disposition of such action, suit, or proceeding as authorized by the
board of directors in the manner provided above under receipt of an
undertaking by or on behalf of the director, officer, employee, or agent
to repay such amount unless it shall ultimately be determined that he or
she is entitled to be indemnified by this corporation as authorized by
this resolution;
(f) The indemnification shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise,
both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of
such a person.
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is ________________; that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
____________________________________
President
____________________________________
Secretary
State of __________ )
)ss.
County of ________ )
On ____________________, personally appeared before me, a Notary Public,
________________________, who acknowledged that they executed the above
instrument.
____________________________________
My Commission Expires: Notary Public
_____________________
BYLAWS
OF
DYNAMIC ASSOCIATES, INC.
ARTICLE I
OFFICE
The Board of Directors shall designate and the Corporation shall maintain
a principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation may also have offices in such other places
as the Board may from time to time designate.
The location of the principal office of the Corporation shall be: 216
South Fourth Street, Las Vegas, Nevada, 89101.
ARTICLE II
SHAREHOLDERS MEETING
Section 1. Annual Meetings. The annual meeting of the shareholders of the
Corporation shall be held at such place within or without the State of Nevada
as shall be set forth in compliance with these Bylaws. The meeting shall be
called on any day and time at the directors' discretion, such meeting to be
held every year. This meeting shall be for the election of Directors and for
the transaction of such other business as may properly come before it.
Section 2. Special Meetings. Special meetings of shareholders, other than
those regulated by statute, may be called at any time by the President, or a
majority of the Directors, and must be called by the President upon written
request of the holders of 50% of the outstanding shares entitled to vote at
such special meeting. Written notice of such meeting stating the place, the
date and hour of the meeting, the purpose or purposes for which it is called,
and the name of the person by whom or at whose direction the meeting is called
shall be given. The notice shall be given to each shareholder of record in the
same manner as notice of the annual meeting. No business other than that
specified in the notice of the meeting shall be transacted at any such special
meeting.
Section 3. Notice of Shareholder Meetings. The Secretary shall give
written notice stating the place, day, and hour of the meeting, and in the case
of a special meeting, the purpose or purposes for which the meeting is called,
which shall be delivered not less than ten nor more than fifty days before the
date of the meeting, either personally or by mail to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the books of the Corporation, with postage
thereon prepaid.
Section 4. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Nevada, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the State of Nevada,
as the place
<PAGE>
for the holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the principal office
of the Corporation.
Section 5. Record Date. The Board of Directors may fix a date not less
than ten nor more than fifty days prior to any meeting as the record date for
the purpose of determining shareholders entitled to notice of and to vote at
such meetings of the shareholders. The transfer books may be closed by the
Board of Directors for a stated period not to exceed fifty days for the purpose
of determining shareholders entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other purpose.
Section 6. Quorum. No less than 25% of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders.If less than 25% of the
outstanding shares are represented at a meeting, the meeting may be
adjourned from time to time without further notice. At a meeting resumed after
any such adjournment at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of shareholders in such number that less than a quorum remain.
Section 7. Voting. A holder of an outstanding share, entitled to vote at
a meeting, may vote at such meeting in person or by proxy. Except as may
otherwise be provided in the Articles of Incorporation, every shareholder shall
be entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the Articles of Incorporation otherwise
provided, all corporate action shall be determined by 50% of the votes cast at
a meeting of shareholders by the holders of share entitled to vote thereon.
Section 8. Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his
duly authorized attorney in fact. Such proxy shall be filed with the Secretary
of the Corporation before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
Section 9. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors. The Board of Directors may adopt
such rules and regulations for the conduct of their meetings and the management
of the Corporation as they deem proper.
<PAGE>
Section 2. Number, Tenure and Qualifications. The number of Directors of
the Corporation shall not be less than three, or more than seven. Each Director
shall hold office until the next annual meeting of shareholders and until his
successor shall have been elected and qualified. Directors need not be residents
of the State of Nevada or shareholders of the Corporation.
Section 3. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than by this Bylaw, immediately following
after and at the same place as the annual meeting of shareholders. The Board
of Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than this resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by order of the Chairman of the Board, the President, or by one-
third of the Directors. The Secretary shall give notice of the time, place and
purpose or purposes of each special meeting by mailing the same at least two
days before the meeting or by telephoning or telegraphing the same at least one
day before the meeting to each Director.
Section 5. Quorum. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business, but less than a
quorum may adjourn any meeting from time to time until a quorum shall be
present, whereupon the meeting may be held, as adjourned, without further
notice. At any meeting at which every Director shall be present, even though
without any notice, any business may be transacted.
Section 6. Manner of Acting. At all meetings of the Board of Directors,
each Director shall have one vote. The act of a majority present at a meeting
shall be the act of the Board of Directors, provided a quorum is present.
Section 7. Vacancies. A vacancy in the Board of Directors shall be deemed
to exist in case of death, resignation, or removal of any Director, or if the
authorized number of Directors be increased, or if the shareholders fail at any
meeting of shareholders at which any Director to elect the full authorized
number to be elected at that meeting.
Section 8. Removals. Directors may be removed at any time by a vote of the
shareholders holding 50% of the shares outstanding and entitled to vote. Such
vacancy shall be filled by the Directors then in office, though less than a
quorum, to hold office until the next annual meeting or until his successor is
duly elected and qualified, except that any directorship to be filled by reason
of removal by the shareholders may be filled by election by the shareholders at
the meeting at which the Director is removed. No reduction of the authorized
number of Directors shall have the effect of removing any Director prior to the
expiration of his term of office.
Section 9. Resignation. A Director may resign at any time by delivering
written notification thereof to the President or Secretary of the Corporation.
Resignation shall become effective upon its acceptance by the Board of
Directors; provided, however, that if the Board of Directors has not acted
thereon within ten days from the date of its delivery, the resignation shall
upon the tenth day be deemed accepted.
<PAGE>
Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
Section 11. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefore.
Section 12. Emergency Power. When, due to a national disaster or death, a
majority of the Directors are incapacitated or otherwise unable to attend the
meetings and function as Directors, the remaining members of the Board of
Directors shall have all the powers necessary to function as a complete Board,
and for the purpose of doing business and filling vacancies shall constitute a
quorum, until such time as all Directors can attend or vacancies can be filled
pursuant to these Bylaws.
Section 13. Chairman. The Board of Directors may elect from its own number
a Chairman of the Board, who shall preside at all meetings of the Board of
Directors, and shall perform such other duties as may be prescribed from time
to time by the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a President,
one or more Vice-Presidents, a Secretary, a Treasurer, a General Manager, and a
General Counsel, each of whom shall be elected by a majority of the Board of
Directors. Such other officers and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors. In its discretion, the
Board of Directors may leave unfilled for any such period as it may determine
any office except those of President and Secretary. Any two or more offices may
be held by the same person, except the offices of President and Secretary.
Officers may or may not be directors or shareholders of the Corporation.
Section 2. Election and Term of Office. The officers of the Corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held as
soon thereafter as convenient. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
<PAGE>
Section 3. Resignation. Any officer may resign at any time by delivering a
written resignation either to the President or to the Secretary. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section 4. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall require 50% vote of the Board of Directors, exclusive of the
officer in question if he is also a Director.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, or if a new office shall
be created, such vacancy may be filled by the Board of Directors for the
unexpired portion of the term.
Section 6. President. The President shall be the chief executive and
administrative officer of the company. He shall preside at all meetings of the
stockholders and, in the absence of the Chairman of the Board, at meetings of
the Board of Directors. He shall exercise such duties as customarily pertain to
the office of President and shall have general and active supervision over the
property, business, and affairs of the company and over its several officers.
He may appoint officers, agents, or employees other than those appointed by the
Board of Directors. He may sign, execute and deliver in the name of the company
powers of attorney, contracts, bonds and other obligations, and shall perform
such other duties as may be prescribed from time to time by the Board of
Directors or by the Bylaws.
Section 7. Vice-President. The Vice-President shall have such powers and
perform such duties as may be assigned to him by the Board of Directors or the
President. In the absence or disability of the President, the Vice-President
designated by the Board or the President shall perform the duties and exercise
the powers of the President. A Vice-President may sign and execute contracts
and other obligations pertaining to the regular course of his duties.
Section 8. Secretary. The Secretary shall, subject to the direction of a
designated Vice-President, keep the minutes of all meetings of the stockholders
and of the Board of Directors and, to the extent ordered by the Board of
Directors or the President, the minutes of meetings of all committees. He shall
cause notice to be given of meetings of stockholders, of the Board of Directors,
and of any committee appointed by the Board. He shall have custody of the
corporate seal and general charge of the records, documents and papers of the
company not pertaining to the performance of the duties vested in other
officers, which shall at all reasonable times be open to the examination of any
Director. He may sign or execute contracts with the President or Vice-President
hereunto authorized in the name of the company and affix the seal of the
company thereto. He shall perform such other duties as may be prescribed from
time to time by the Board of Directors or by the Bylaws. He shall be sworn to
the faithful discharge of his duties. Assistant Secretaries shall assist the
Secretary and shall keep and record such minutes of meetings as shall be
directed by the Board of Directors.
Section 9. Treasurer. The Treasurer shall, subject to the direction of a
designated Vice-President, have general custody of the collection and
disbursement of funds of the company.
<PAGE>
He shall endorse on behalf of the company for collection checks, notes and other
obligations, and shall deposit the same to the credit of the company in such
bank or banks or depositories as the Board of Directors may designate. He may
sign, with the President or such other persons as may be designated for the
purpose by the Board of Directors, all bills of exchange or promissory notes of
the company. He shall enter or cause to be entered regularly in the books of
the company full and accurate account of all monies received and paid by him
on account of the company; shall at all reasonable times exhibit his books and
accounts to any Director of the company upon application at the office of the
company during business hours; and, whenever required by the Board of Directors
or the President, shall render a statement of his accounts. He shall perform
such other duties as may be prescribed from time to time by the Board of
Directors or by the Bylaws. He shall give bond for the faithful performance of
his duties in such sum and with or without such surety as shall be approved by
the Board of Directors.
Section 10. General Counsel. The General Counsel shall advise and represent
the company generally in all legal matters and proceedings, and shall act as
counsel to the Board of Directors and the Executive Committee. The General
Counsel may sign and execute pleadings, powers of attorney pertaining to legal
matters, and any other contracts and documents in the regular course of his
duties.
Section 11. General Manager. The Board of Directors may employ and appoint
a General Manager who may, or may not, be one of the officers or Directors of
the corporation. He shall be the chief operating officer of the corporation and,
subject to the directions of the Board of Directors, shall have general charge
of the business operations of the corporation and general supervision over its
employees and agents. He shall have the exclusive management of the business of
the corporation and of all of its dealings, but at all times subject to the
control of the Board of Directors. Subject to the approval of the Board of
Directors or the Executive Committee, he shall employ all employees of the
corporation, or delegate such employment to subordinate officers, or such
division chiefs, and shall have authority to discharge any person so employed.
He shall make a report to the President and Directors quarterly, or more often
if required to do so, setting forth the result of the operations under his
charge, together with suggestions looking to the improvement and betterment of
the condition of the corporation, and to perform such other duties as the Board
of Directors shall require.
Section 12. Other Officers. Other officers shall perform such duties and
have such powers as may be assigned to them -by the Board of Directors.
Section 13. Salaries. The salaries or other compensation of the officers of
the corporation shall be fixed from time to time by the Board of Directors,
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents. No officer shall be prevented from receiving any such
salary or compensation by reason of the fact that he is also a Director of the
corporation.
Section 14. Surety Bonds. In case the Board of Directors shall so require,
any officer or agent of the corporation shall execute to the corporation a bond
in such sums and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his duties to the
corporation, including responsibility for negligence and for the accounting for
all property, monies or securities of the corporation which may come into his
hands.
<PAGE>
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors may appoint from
among its members an Executive Committee of not less than two nor more than
seven members, one of whom shall be the President, and shall designate one of
such members as Chairman. The Board may also designate one or more of its
members as alternates to serve as members of the Executive Committee in the
absence of a regular member or members. The Board of Directors reserves to
itself alone the power to declare dividends, issue stock, recommend to
stockholders any action requiring their approval, change the membership of any
committee at any time, fill vacancies therein, and discharge any committee
either with or without cause at any time. Subject to the foregoing limitations,
the Executive Committee shall possess and exercise all other powers of the Board
of Directors during the intervals between meetings.
Section 2. Other Committees. The Board of Directors may also appoint from
among its own members such other committees as the Board of Directors may
determine, which shall in each case consist of not less than two Directors, and
which shall have such powers and duties as shall from time to time be prescribed
by the Board. The President shall be a member ex officio of each committee
appointed by the Board of Directors. A majority of the members of any committee
may fix its rules of procedure.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loan or advances shall be contracted on behalf of the
corporation, no negotiable paper or other evidence of its obligation under any
loan or advance shall be issued in its name, and no property of the corporation
shall be mortgaged, pledged, hypothecated or transferred as security for the
payment of any loan, advance, indebtedness of liability of the corporation
unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
Section 3. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select, or as may be selected by any officer or agent authorized to do so by
the Board of Directors.
Section 4. Checks and Drafts. All notes, drafts, acceptances, checks,
endorsements and evidences of indebtedness of the corporation shall be signed
by such officer or officers or such agent or agents of the corporation and in
such manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the corporation in any of its duly
authorized depositories shall be made in such manner as the Board of Directors
from time to time may determine.
<PAGE>
Section 5. Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the President or a Vice-President and by the Treasurer or by the
Secretary, and sealed with the seal of the corporation. The seal may be
facsimile, engraved or printed. Where such bond or debenture is authenticated
with the manual signature of an authorized officer of the corporation or other
trustee designated by the indenture of trust or other agreement under which
such security is issued, the signature of any of the corporation's officers
named thereon may be facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, shall cease to
be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
ARTICLE VII
CAPITAL STOCK
Section 1. Certificate of Share. The shares of the corporation shall be
represented by certificates prepared by the Board of Directors and signed by
the President or the Vice-President and by the Secretary, and sealed with the
seal of the corporation or a facsimile. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the corporation itself or one of
its employees. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the corporation as the Board of Directors may
prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney hereunto authorized by power of
attorney duly executed and filed with the secretary of the corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
Section 3. Transfer Agent and Registrar. The Board of Directors shall have
power to appoint one or more transfer agents and registrars for the transfer and
registration of certificates of stock of any class, and may require that stock
certificates shall be countersigned and registered by one or more of such
transfer agents and registrars.
Section 4. Lost or Destroyed Certificates. The corporation may issue a new
certificate to replace any certificate theretofore issued by it alleged to have
been lost or destroyed. The Board of Directors may require the owner of such a
certificate or his legal representative to give the corporation a bond in such
sum and with such sureties as the Board of Directors may direct to indemnify
the corporation as transfer agents and registrars, if any, against claims that
may be made
<PAGE>
on account of the issuance of such new certificates. A new certificate may be
issued without requiring any bond.
Section 5. Consideration for Shares. The capital stock of the corporation
shall be issued for consideration, but not less than the par value thereof, as
shall be fixed sometime by the Board of Directors. In the absence of fraud, the
determination of the Board of Directors as to the value of any property or
services received in full or partial payment of shares shall be conclusive.
Section 6. Registered Shareholders. The company shall be entitled to treat
the holder of record of any share or shares of stock as the holder thereof, in
fact, and shall not be bound to recognize any equitable or other claim to or on
behalf of this company any and all of the rights and powers incident to the
ownership of such stock at any meeting, and shall have power and authority
to execute and deliver proxies and consents on behalf of this company in
connection with the exercise by this company of the rights and powers incident
to the ownership of such stock. The Board of Directors, from time to time, may
confer like powers upon any other person or persons.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. No officer or Director shall be personally
liable for any obligations of the corporation or for any duties or obligations
of the corporation or for any duties or obligations arising out of any acts or
conduct of said officer or Director performed for or on behalf of the
corporation. The corporation shall and does hereby indemnify and hold harmless
each person and his heirs and administrators who shall serve at any time
hereafter as a Director or officer of the corporation from and against any and
all claims, judgments and liabilities to which such persons shall become subject
by reason of his having heretofore or hereafter been a Director or officer of
the corporation, or by reason of any action alleged to have heretofore or
hereafter taken or omitted to have been taken by him as such Director or
officer, and shall reimburse each such person for all legal and other expenses
reasonably incurred by him in connection with any such claim or liability,
including power to defend such person from all suits or claims as provided for
under the provisions of the Nevada Business Corporation Act; provided, however,
that no such person shall be indemnified against, or be reimbursed for, any
expense incurred in connection with any claim or liability arising out of his
own negligence or willful misconduct. The rights accruing to any person under
the foregoing provisions of this section shall not exclude any other right to
which he may lawfully be entitled, nor shall anything herein contained restrict
the right of the corporation to indemnify or reimburse such person in any proper
case, even though not specifically herein provided for. The corporation, its
directors, officers, employees and agents shall be fully protected in taking
any action or making any payment, or in refusing so to do in reliance upon the
advice of counsel.
Section 2. Other Indemnification. The indemnification herein provided shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer or
employee, and shall inure to the benefit of the heirs, executors and
administrators of such person.
<PAGE>
Section 3. Insurance. The corporation may purchase and maintain insurance
on behalf of any person who is or was a Director, officer or employee of the
corporation, or is or was serving at the request of the corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
liability under the provisions of this section or of the general Corporation
Law of Nevada.
Section 4. Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the corporation by its
Board of Directors, in lieu of such indemnity, to settle any such claim, action,
suit or proceeding at the expense of the corporation by the payment of the
amount of such settlement and the costs and expenses incurred in connection
therewith.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or Director
of the corporation under the provisions of these Bylaws, or under the provisions
of the Articles of Incorporation, or under the provisions of the Nevada Business
Corporation Act, a waiver thereof in writing signed by the person or person
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice. Attendance at any
meeting shall constitute a waiver of notice of such meetings, except where
attendance is for the express purpose of objecting to the legality of that
meeting.
ARTICLE X
AMENDMENTS
These bylaws may be altered, amended repealed, or new bylaws adopted by
50% of the entire Board of Directors at any regular or special meeting. Any
bylaw adopted by the Board may be repealed or changed by action of the
shareholders.
ARTICLE XI
FISCAL YEAR
The fiscal year of the corporation shall be fixed and may be varied by
resolution of the Board of Directors.
ARTICLE XII
DIVIDENDS
The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the surplus of the corporation.
ARTICLE XIII
CORPORATE SEAL
<PAGE>
The seal of the corporation shall be in the form of a circle and shall bear
the name of the corporation and the year of incorporation per sample affixed
hereto.
Approved by:
________________________________
Secretary
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File No. 33-55254-03
DYNAMIC ASSOCIATES, INC.
------------------------
(Name of Small Business Issuer in its charter)
NEVADA 87-0473323
- ------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7373 NORTH SCOTTSDALE ROAD, SUITE B150
SCOTTSDALE, ARIZONA 85253
- -------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (602) 483-8700
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (S.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year $4,517,598.
As of March 13, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $24,578,953.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of December 31,1996
$.001 PAR VALUE CLASS A COMMON STOCK 12,158,900 SHARES
Transitional Small Business Disclosure Format: Yes[ ] No[ X ]
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
Dynamic Associates, Inc., a Nevada corporation (the "Company" or "Dynamic")
was incorporated on July 20, 1989 for the purpose of developing venture
businesses and was a development stage company through 1995. Through
acquisitions Dynamic has become a holding company for a variety of businesses.
The Company is now engaged in (i) the development and acquisition of microwave
technologies for medical purposes through Microwave Medical Corp. ("Micro"),
(ii) managing the operation of geriatric/psychiatric units for various hospitals
through Genesis Health Management Corporation ("Genesis") and (iii) the
manufacturing of highly technologically advanced components and subsystems for
the communications and aerospace industries through P&H Laboratories, Inc.
("P&H").
The Company's executive offices are presently located at 7373 North
Scottsdale Road, Suite B150, Scottsdale, Arizona 82553. Its telephone number
at this location is (602) 483-8700 and the telefax number is (602) 443-1235.
MICROWAVE MEDICAL CORP.
Micro, a wholly-owned subsidiary of the Company, was established to exploit
medical applications for microwaves. Micro has entered into a ten year licensing
agreement with Microthermia Technology, Inc. ("MTI"), pursuant to which the
Company has the exclusive use of MTI's microwave technology for the treatment of
telangiectasia or spider veins. The Company has prepaid the licensing fee for
the initial two year term of the licensing agreement which expires on January
16, 1998. The license agreement is renewable for eight additional years at no
additional cost to the Company. Under the terms of the licensing agreement, the
Company, in addition to the licensing fee, will pay a royalty fee equal to two
percent of the net sales of products and services utilizing MTI's microwave
technology.
Currently, surgery, sclerotherapy (injection) and laser or pulsed light
treatments are the primary therapies for telangiectasia and are provided through
dermatologists, plastic surgeons or vascular surgeons. To date the U.S. Federal
Drug Administration ("FDA") has not approved MTI's microwave technology for the
treatment of telangiectasia. Micro intends to complete animal tests, obtain an
investigative device exemption and start clinical trials, leading to a
submission of data to the FDA, and an application for approval of the microwave
technology treatment with the FDA in 1997. Micro is also currently developing
its own treatment technology for telangiectasia outside of the license agreement
with MTI.
In addition, Micro is currently researching and developing microwave
technologies for the treatment of certain human vascular problems. The Company
plans to commence development of a treatment for benign prostate hyperplasia,
the non-cancerous enlargement of the prostate gland ("BPH").
BPH is an enlargement of the prostate gland leading to various
difficulties. Surgical
<PAGE>
alternatives, mechanical devices and certain pharmaceutical treatments are the
competitive treatments. Micro plans to use microwaves, together with a
specialized delivery system to shrink the prostate gland. Micro will be
undertaking the necessary steps for the application of patents and FDA approval
as we lead into product readiness only. One other company in Massachusetts has
obtained FDA approval for use of its machine applying microwave technology to
the treatment of BPH. Micro does not have a patent on this technology.
P&H LABORATORIES
On April 23, 1996, the Company acquired 50% of the outstanding common stock
of P&H, a California corporation, for $1,000,000, together with an exclusive two
year option expiring on April 23, 1998 to acquire the remaining 50% of P&H for
an additional $1,000,000. P&H is a modern microwave component designer and
manufacturer. Devices produced at P&H are currently being used on most NASA
and military satellites, as well as communications satellites throughout the
world.
P&H also provides special engineering services to customers with specific
needs. P&H will be able to provide the Company with this capability to produce
and develop manufacturing processes for its medical systems. P&H has experience
with the engineering and manufacturing of microwave components, super components
and subsystems and also supports major programs and operating platforms. P&H
manufacturing operations include thin film processing, top assembly, production
testing and tuning and subsystems integration, wire bonding environmental test
and packaging.
P&H has been engaged since its inception in Mil-Standard and Hi-Reliability
Aerospace programs for various types of devices. The products of P&H are
highly technical and sold to various government and industrial users. The
products and the development expertise of P&H will enable Dynamic to reduce its
research and development costs for all new products and to provide state of the
art engineering for microwave systems.
The executive offices of P&H are located at 4496 Runway Street, Simi
Valley, California and include manufacturing and engineering space of
approximately 18,000 square feet. P&H has approximately 60 employees.
GENESIS HEALTH MANAGEMENT CORPORATION
In December 1996, the Company purchased 100% of the outstanding common
stock of Genesis for $25,373,000. Of the purchase price, $15,050,000 was paid
in cash or notes and accounts payable and $10,323,000 was paid by issuing
3,100,000 shares of the Common Stock of the Company at a value of $3.33 per
share. The notes issued in connection with the acquisition of Genesis were paid
in full on March 3, 1997. Genesis is in the business of managing and operating
psychiatric/geriatric units in various hospitals (both in-patient and out-
patient).
Genesis, a Louisiana corporation, provides elderly healthcare and gero-
psychology services to small healthcare facilities unable to provide these
service in house. Gero-psych, while a relatively new field, has historically
neglected access to treatment for a large number of elderly people in serious
need of this treatment. Gero-psych treatment, as administered today, is
primarily geared to low-functioning patients requiring only medication
management and patients without medical
<PAGE>
complications. Elder people, however, frequently have medical and psychiatric
problems, including severe depression, due to the natural aging process,
traumatic losses, strokes and various other causes. Psychiatric problems are
being treated on gero-psych units and medical problems are being treated on
acute care units, many times exceeding authorized lengths of stay, and have
become a burden for the hospital's financial resources.
In order to resolve these problems, Genesis has developed a program which
it has operated in various hospitals. Aggressive management has treated the
psychiatric diagnosis and at the same time treated the secondary medical
problems, allowing for higher medical acuity. This approach has proven
beneficial in many respects. In addition to treating the primary diagnosis,
the Genesis Senior Care Program assists the host hospital in lowering lengths
of stays on the acute care side of the hospital. Furthermore, the acute care
physician is able to resolve many medical problems, as opposed to just
stabilizing them. This method of treatment results in an overall reduction in
the frequency of a patient's returns to the hospital and increases the patient's
quality of life.
Genesis' Senior Care Program provides comprehensive care for elderly
patients experiencing acute psychiatric disorders, cognitive impairment and
age-related psychological difficulties while concurrently encouraging resolution
of medical problems contributing to or inhibiting the resolution of acute care
emotional or psychiatric problems. This program targets higher-functioning
patients with acute emotional problems, allowing the therapeutic milieu to be
effective, as opposed to focusing on lower-functioning patients (who only
require medication management). This method achieves maximum therapeutic
results after 10-18 days of treatment. Senior care units are allowed to treat
patients with higher medical acuity than regular geriatric-psychiatric programs,
thus producing higher ancillary costs while providing a higher standard of care
for the patients.
The Genesis treatment program conforms to the guidelines of the JCAHO
Accreditation Manual for Hospitals and Medicare Standards. The program is
reimbursed at cost by Medicare when established as a distinct part unit of a
hospital which qualifies for an exemption from the Medicare Prospective Payment
System ("PPS"). The PPS exemption provides for a cost plus reimbursement system
for the unit, which allows the hospital to receive full reimbursement of the
direct operating expenses, plus an allocation to the unit of a substantial
portion of the hospital's overall overhead and capital costs.
<PAGE>
Financial Information Relating to Industry
Segments and Class of Products or Services
<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Microwave Medical Corp. $ 0 $ 0 $ 0
P&H Laboratories 3,395,098 3,723,013 3,448,251
Genesis Health Management
Corporation* 1,122,500 3,382,188 65,000
Intersegment sales or transfers 0 0 0
Operating profit or (loss):
Microwave (604,856) (87,184) 0
P&H 171,969 507,591 92,799
Genesis* 440,487 241,470 (62,681)
Identifiable assets:
Microwave 79,322 0 0
P&H 1,415,795 1,570,335 1,641,754
Genesis 1,451,361 837,321 109,220
* Includes December 1996 only.
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTY
Dynamic Associates, Inc.
The Company is headquartered in leased office premises at 7373 North
Scottsdale Road, Suite B150, Scottsdale, Arizona 85253. The Company is provided
with approximately 1100 square feet of office space at a cost of $600 per month
on a month-to-month basis. See "Certain Relationships and Related
Transactions."
Microwave Medical Corp.
Micro utilizes the facilities of P&H for its research and development
program and currently has 600 square feet set aside for its sole use.
Genesis Health Management Corporation
Genesis is headquartered in leased office premises at 1613 Jimmie Davis
Highway, Suite No. 1, Bossier City, Louisiana 71112. The office is
approximately 3,000 square feet and is leased for a period of two years,
expiring September 30, 1998, at an annual rental of $ 33600.
ITEM 3. LEGAL PROCEEDINGS
<PAGE>
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 28, 1996, an annual shareholders meeting was held. The
following Directors were elected: Jan Wallace, Herb Capozzi, and Logan Anderson.
The three individuals were also Directors before the election. Each Director
received votes as follows:
Jan Wallace Herb Capozzi Logan Anderson
----------- ------------ --------------
Votes For: 2,470,000 2,470,000 2,470,000
None of the Directors received votes against or withheld, neither were
there any abstention votes or Broker non votes.
The following items were approved with 2,470,000 votes For, 0 against or
withheld, 0 abstentions and 0 broker non votes:
1. To increase the size of the Board of Directors from no less than
three or more than seven members.
2. To increase the number of authorized shares from 25,000,000 shares to
100,000,000 shares.
3. To change the requirement that the annual meeting be held on a
specific day each year.
4. To approve the acts and actions of the Board to the date of the
meeting and to ratify and adopt the acts of the Corporation.
5. To remove the designated Class "A" voting common stock, and to
classify all shares of the Company as "Common Shares".
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock has traded on the Electronic Bulletin Board (Nasdaq)
since April 11, 1996 under the symbol "DYAS". The Common Stock also trades on
the Frankfurt and Berlin Exchanges in Germany (trading symbol "DYA"). The
following table sets forth, for the periods indicated, the highest and lowest
bid quotations for the Common Stock, as reported by Nasdaq. The prices reported
reflect inter-dealer prices, without retial mark-up, mark-down or commission,
and may not reflect actual transactions.
<TABLE>
<CAPTION>
High Low
--------- ----------
<S> <C> <C>
1996 First Quarter $ 0.00 $ 0.00
Second Quarter 4.25 2.00
Third Quarter 3.75 2.00
Fourth Quarter 4.25 2.87
</TABLE>
On December 31, 1996, the last reported sale price of the Common Stock on
Nasdaq was
<PAGE>
$3.50.
As of December 31, 1996 there were approximately 419 record holders of the
Company's Common Stock. This number does not include an indeterminate number
of shareholders whose shares are held by brokers in "street name."
Since the commencement of trading on the Electronic Bulletin Board, the
average monthly volume of trading of the Company's Common Stock has been
approximately 430,000 shares. The volume of trading on the Electronic Bulletin
Board traditionally has been limited and there can be no assurance that the
Electronic Bulletin Board will provide an effective market for a shareholder
to sell his or her Common Stock of the Company.
The Company has not previously declared or paid any dividends on its
common stock and does not anticipate declaring any dividends in the foreseeable
future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This Management's Discussion and Analysis or Plan of Operation contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these forward-
looking statements. Factors that may cause such differences include, but are not
limited to, competition, technological advances and the availability of
managerial personnel.
Overview
General
The Company is engaged in (i) the development and acquisition of microwave
technologies for medical purposes through Micro, (ii) managing the operation of
geriatric/psychiatric units for various hospitals through Genesis and (iii) the
manufacturing of highly technologically advanced components and subsystems for
the communications and aerospace industries through P&H.
<PAGE>
In December 1996, the Company purchased 100% of the outstanding common
stock of Genesis for $25,373,000. Of the purchase price, $15,050,000 was paid
in cash or notes and accounts payable and $10,323,000 was paid by issuing
3,100,000 shares of the Common Stock of the Company at a value of $3.33 per
share. The notes issued in connection with the acquisition were paid in full on
March 3, 1997. Genesis is in the business of managing and operating psychiatric/
geriatric units in various hospitals (both in-patient and out-patient). At
December 31, 1996, Genesis had 19 operating units. The gross revenue from the
date of the acquisition to the year ended December 31, 1996 was $1,122,500. The
operating expenses accounted for 61% of revenues totaling $682,013. Genesis has
contracts with hospitals in the states of Louisiana, Arkansas, Mississippi and
Tennessee. The contracts range from three to five years. In January 1997,
another contract was added to increase monthly billings to $1,151,000. Nine of
the contracts began in 1996, nine began in 1995 and one began in 1994.
The acquisition of Genesis was funded, in part, by the sale of convertible
notes of the Company. The Company issued 784 convertible notes in reliance on
Regulation S to non-U.S. persons. Each note is for $18,500 principal amount,
bears interest at 10% per annum and is convertible into Common Stock of the
Company at $3.50 per share. The notes mature September 16, 2006. The notes
may be redeemed by the Company at any time after September 15, 1997 with payment
to the holder of the principal amount, accrued interest and a premium (10%
reduced to 0% by the year 2005). The proceeds were used to acquire Genesis and
also provide the Company with additional working capital.
The licensing agreement between Micro and MTI is renewable by the Company
and will provide the Company access to medical treatments using the microwave
technology without incurring the cost of acquiring the underlying company. As
the treatments are approved by the FDA, it is expected that Micro will
contribute to the revenues to the Company.
Results of Operations
This discussion covers the years 1995 and 1996, the years in which the
Company had operations and was doing business. Prior to that time the Company
was a development stage company and was not engaged in any substantial business.
The pro forma information assumes that Genesis was part of the Company for
all of 1995 and 1996 and that P&H was part of the Company for all of 1995.
Net Sales and Management Fees. Actual: Sales and management fees increased
from $0 in 1995 to $4,517,598 with the acquisition of P&H and Genesis. Pro
Forma: Sales and management fees increased from $7,555,201 in 1995 to
$13,073,458 in 1996, mainly due to the new contracts obtained by Genesis.
Gross Profit. Actual: Gross profit increased from $0 in 1995 to $2,020,601
in 1996. The increase resulted from the gross profit provided by Genesis and
P&H. Pro Forma: Gross profit increased from $5,185,033 in 1995 to $10,576,461
in 1996, due to the profitability of Genesis and P&H.
<PAGE>
Cost of Sales. Actual: Cost of sales increased from $0 in 1995 to
$2,496,997 in 1996 and related to P&H. Pro Forma: Cost of sales increased from
$2,370,168 in 1995 to $2,496,997 in 1996. The 5% increase relates to higher
costs of P&H.
Selling and General and Administrative Expense. Actual: These expenses
increased from $562,273 in 1995 to $2,785,635 in 1996. The major reason for
the increase relates to Genesis and P&H and higher management fees incurred by
the Company. Pro Forma: These expenses increased from $4,950,820 in 1995 to
$8,884,355 in 1996, mainly due to Genesis and P&H.
Net Interest Income/Expense. Actual: The Company had net interest expense
of $171,500 for 1996 compared with net interest income of $2,786 in 1995. The
substantial increase in interest expense relates mainly to the interest expense
associated with the convertible notes. Pro Forma: Net interest expense for 1996
was $186,635 compared with net interest expense of $13,089 in 1995. The
increase relates mainly to interest expense related to the convertible notes.
Net Loss. Actual: Net loss increased from $619,467 in 1995 to $956,821 in
1996. The increase was due to the large amount of research and development
incurred by Micro ($605,599) and large amounts of general and administrative
expenses incurred by the Company. The main items of expense incurred by the
Company were management fees of approximately $428,000, legal fees of
approximately $233,000, amortization of goodwill of approximately $202,000 and
travel expense of approximately $225,000 relating to looking for potential
investors for the Company and purchasers of the convertible notes. Pro Forma:
Net income increased from a loss of $300,474 in 1995 to income of $1,487,484 in
1996. Approximately $685,000 of the increase results from expected tax benefits
in the future and the balance of the increase is due to the increased
profitability of Genesis and P&H.
Liquidity and Capital Resources. Actual: Working capital was $2,266,990
at December 31, 1996 compared to $688,363 at December 31, 1995. The increase
arises from the profitability of Genesis and P&H and the sale of the
convertible notes. Pro Forma: Working capital at December 31, 1996 was
$2,266,990 compared to $2,711,339 for 1995. The 1995 figures do not include the
Genesis pro forma transaction which distorts working capital by adding
$3,050,000 to current liabilities without reflecting cash from convertible notes
that would have resulted if the transaction had taken place in 1995 rather than
in 1996.
The Company's growth in the future is expected to be financed by working
capital provided by equity and debt offerings and excess cash generated by
Genesis. Genesis expects to be able to meet cash requirements from operations.
Micro will need assistance from the Company to fund operations. P&H expects to
meet cash requirements from operations. Several California banks have expressed
interest in providing lines of credit to P&H.
During the year the Company completed a Regulation S stock offering to Non-
US Residents of 1,822,400 shares of Common Stock at $1.75 per share, 12,500
shares of Common Stock at $2.00 per share and sold 184,000 shares to employees
and consultants at $1.00 per share pursuant to the Company's 1995 Incentive
Stock Option Plan.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<PAGE>
See Item 13.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table shows the positions held by the Company's officers and
directors. Directors serve until the next annual meeting of the Company's
stockholders, and until their successors have been elected and have qualified.
Name Age Position
- ---------------------- --------- -------------------
Jan Wallace 41 President, Director
Logan Anderson 42 Secretary-Treasurer, Director
Florian Homm 37 Director
Herb Capozzi 71 Director
Billy Means, Jr. 42 Director
Jan Wallace (age 41) is a Director, President and Chief Executive Officer of
the Company. Ms. Wallace has been employed by the Company since April 1995,
when she was elected to the Board of Directors and accepted the position of
Chief Executive Officer. Ms. Wallace was previously Vice President of Active
Systems, Inc., a Canadian Company specializing in SGML Software, an ISO
standard in Ottawa, Ontario. Prior to that she was President and owner of
Mailhouse Plus, Ltd., an office equipment distribution company which was sold
to Ascom Corporation. She has also been in management with Pitney Bowes-Canada
and Bell Canada where she received its highest award in Sales and Marketing.
Ms. Wallace was educated at Queens University in Kingston, Ontario and
Carleton University, Ottawa, Ontario in Political Science with a minor in
Economics. Ms. Wallace is also an officer and director of Claire Technologies,
Inc.
Logan Anderson (age 42) is Secretary-Treasurer of the Company. Mr. Anderson
has been Secretary-Treasurer of the Company since April 1995. Since 1993 Mr.
Anderson has been principal and president of Amteck Financial Services Corp.,
a financial consulting company in Vancouver, B.C. During 1992 and 1993 Mr.
Anderson was an officer and director of Centrepoint Equities Inc., in Vancouver,
B.C. From 1982 to 1992 Mr. Anderson was Controller of Cohart Management Group,
which was responsible for management of private and public corporations. Mr.
Anderson received his Bachelors of Commerce degree in Accounting and Economics
from Otago University, New Zealand in 1977. Mr. Anderson is an Associated
Chartered Accountant (New Zealand). Mr. Anderson is also an officer, and was a
director (from April, 1996 to March, 1997) of Claire Technologies, Inc.
<PAGE>
William H. Means, Jr. (age 42) is President of Genesis. Mr. Means received his
B.S. in Business Administration from Louisiana Tech University in 1976 and his
M.B.A. in Personnel Management from Louisiana Tech in 1978. From 1978 to 1980,
Mr. Means worked as an Assistant Credit Manager, Salary Administrator and
Commercial Loan Review Analyst at Commercial National Bank in Shreveport,
Louisiana. From 1980 through 1984 he was the Vice President of Commercial Loan
Administration at Bossier Bank and Trust in Bossier City, Louisiana . From
1984 through 1986 he was a Senior Vice President at National Bank of Bossier
and from 1986 through 1989 he was a co-owner and Account Executive at United
Advertising Network and from 1989 through 1991 he was an Office and Site
supervisor at McNeely Construction Company. Mr. Means owned and operated
Space Center Painting and Construction Company, Space Center Mini Storage and
Terrace Acres Apartments from 1991 through 1994, when he joined Genesis as an
Executive Vice President and later became President of Genesis.
Florian Homm (age 37) has been in the investment management and banking
businesses for over fifteen years, much of it in senior management positions
with firms such as Merrill Lynch, Fidelity Management and Research, Bank Julius
Baer and Tweedy, Browne in London, New York, Boston and Frankfurt. Mr. Homm is
Managing Partner of Value Management and Research GmbH in Germany, a firm
specializing in investment management and corporate financial services. VMR
includes amongst its fund management clients highly regarded institutional
investors as well as European blue chip companies and fast growing corporations
in North America and Europe. Mr. Homm is an honors graduate in Economics from
Harvard College. He received his Master of Business Administration degree from
Harvard Business School. Mr. Homm is a Board Member of the European Association
of Securities Dealers (EASD), on the board of a number of European public
companies, has received several investment awards and has published extensively
on a wide range of financial topics.
Herb Capozzi (age 71) is a Director of the Company. Mr. Capozzi is currently a
Director and the Co-founder of PLC Systems, Inc., a cardiac revascularization
company developing medical systems and technology which trades on the American
Stock Exchange. He was President and Director of International Potter
Distillers, and a Director and Co-founder of the Keg Restaurant chain in Canada.
Mr. Capozzi was a partner in bringing McDonald's restaurants to Canada. From
1981 to 1986, Mr. Capozzi was one of three original Directors of EXPO '86, the
1986 World's Fair in Vancouver, Canada. Mr. Capozzi was an elected member of
Legislative Assembly, Province of British Columbia, for two terms and Chairman
of the Insurance Committee and the Procedure Committee. He also had a football
career with the New York Giants (NFL), the Calgary Stampeders (CFL), and the
Montreal Alouttes (CFL), and the B.C. Lions as General Manager for 10 years.
Mr. Capozzi was a principal owner of the soccer organization, the Vancouver
White Caps. Mr. Capozzi received his Bachelor's Degree of Arts for Chemistry
and a Bachelor's Degree of Commerce from the University of British Columbia.
He also received a Bachelor's Degree of Education from the University of
Italy.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") of the Company (Ms. Jan Wallace, the President and Chief Executive
Officer of the Company) and the one other executive officer of the Company other
than the CEO whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term All Other
Compensation Compensation Compensation
Award ($)
------------ ------------ ------------
Year Salary($) Options
----- --------- -------
<S> <C> <C> <C> <C>
Jan Wallace 1996 120,000 150,000 ----
President and Chief 1995 25,000 ------- 400(1)
Executive Officer 1994 ------ ------- -----
Logan Anderson 1996 120,000 405,000 -----
Secretary, Treasurer 1995 4,000 ------- 400(2)
1994 ------- ------- ------
</TABLE>
- -------------------------
(1) For services rendered to the Company, Ms. Wallace received 400,000 shares
of Common Stock valued at $.001 per share.
(2) For services rendered to the Company, Mr. Anderson received 400,000 shares
of Common Stock valued at $.001 per share.
The following table sets forth certain information regarding stock option
grants made to each of the Executive Officers named in the Summary Compensation
Table during the fiscal year ended December 31, 1996.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
Individual Grants
<CAPTION>
Options Options Granted Exercise or Expiration
Name Granted (#)(2) to Employees Base Price Date
in Fiscal Year ($/sh)
<S> <C> <C> <C> <C>
Jan Wallace 150,000 7.50% $1.00 04/09/99
Logan Anderson 150,000 7.50% $1.00 04/09/99
255,000 12.75% $1.00 10/04/99
</TABLE>
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive or defined benefit
pension plans.
1995 INCENTIVE STOCK OPTION PLAN
The Company has established the 1995 Incentive Stock Option Plan (the
"Plan") for employees and directors of the Company. 2,000,000 shares of Common
Stock are reserved for issuance under the Plan. At December 31, 1996, options
to purchase all 2,000,000 shares had been granted. The Company also can grant
non-qualified stock options under the Plan.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has an employment agreement with Jan Wallace expiring on
December 31, 1998 providing for, among other things, Ms. Wallace to be paid
$120,000 for the year ending December 31, 1997 and $132,000 for the year ending
December 31, 1998. The employment agreement is subject to automatic one year
renewals at the end of the then current term unless either the Company or Ms.
Wallace provides notice that it or she does not wish to extend the term of the
agreement. For each year that the employment agreement is extended, Ms.
Wallace's salary will increase by 10% over the previous year.
The Company has a consulting agreement with Logan Anderson expiring on
December 31, 1998 providing for, among other things, Mr. Anderson to be paid
$120,000 per annum. The consulting agreement is subject to automatic one year
renewals at the end of the then current term unless either the Company or Mr.
Anderson provides notice that it or he does not wish to extend the term of the
agreement.
BOARD OF DIRECTOR COMPENSATION
Effective February 1997, each director of the Company will receive $10,000
per annum for services rendered to the Company and, in addition, will receive
$750 for each meeting attended ($250 for a telephonic meeting). Each Director
will also receive $500 per day when on Company business. Each director is
reimbursed for the reasonable expenses of attending meetings.
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
no officer, director or greater than 10% shareholder has filed any of the
required reports.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth, as of December 31, 1996, information
regarding the beneficial ownership of the Company's Common Stock by each
person known by the Company to own five percent or more of the outstanding
shares, by each of the directors and officers, and by the directors and officers
as a group. As of December 31, 1996, there were outstanding 12,158,900 shares of
the Common Stock of the Company.
<TABLE>
<CAPTION>
Name and Address of Amount of Percent of
Beneficial Owner Beneficial Ownership Class
- ------------------- -------------------- ----------
<S> <C> <C>
Vickie T. Lucky
1613 Jimmie Davis Highway, Suite 1 & 2
Bossier City, LA 71112 2,370,000 19.5%
Brant Investments, Ltd.
Global Securities Service
BH Level Royal Bank Plaza
200 Bay Street
Toronto, Canada M5J255 1,631,480 13.4%
Harry Moll
Box 836
Georgetown
Grand Cayman, BWI 1,770,000(1) 14.2%
Jan Wallace
6929 East Cheney
Paradise Valley, AZ 85253 550,000(2) 4.5%
Herb Capozzi
308-595 Howe Street
Vancouver, BC Canada 100,000(3) 0.8%
Logan Anderson
7373 North Scottsdale Road, #B-150
Scottsdale, AZ 85253 940,000(4) 7.5%
Florian Homm
Amselweg 7b
61462 Koningstein
Germany 200,000 1.6%
Billy Means, Jr.
1613 Jimmie Davis Highway, Suite 1 & 2
Bossier City, LA 71112 30,000 0.2%
All Officers and Directors as a
Group (5 persons) 1,820,000 15.0%
</TABLE>
(1) Includes 300,000 shares owned by SSM, Ltd., which is controlled by Mr.
Moll and 270,000 options held by Mr. Moll.
(2) Includes 150,000 options held by Ms. Wallace.
(3) Includes 100,000 options held by Mr. Capozzi.
(4) Includes 100,000 shares owned by Amteck Management, Inc., which is
controlled by Mr. Anderson and 405,000 options held by Mr. Anderson.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Harry Moll was paid $120,000 by the Company for consulting services
rendered to the Company during 1996. The Company currently has a consulting
agreement with Mr. Moll effective as of January 1, 1997 and expiring on December
31, 1998 providing for, among other things, Mr. Moll to be paid $120,000 per
annum. The consulting agreement is subject to automatic one year renewals at the
end of the then current term unless either the Company or Mr. Moll provides
notice that it or he does not wish to extend the term of the agreement.
In order for the Company to fund its day to day operations, it was
necessary to obtain a loan of $220,000 from a Canadian company. This loan was
arranged through Mr. Moll and it was his collateral that was pledged to secure
the loan. Of this $220,000 amount $20,000 is a fee and the remaining $200,000
represented cash advanced to the Company. The loan was repaid during the year
ended December 31, 1996, and a total of 40,000 shares of Common Stock were
issued in connection with the repayment of the loan.
Florian Homm, Director, is Managing Partner of Value Management and
Research GmbH in Germany ("VMR"). VMR owns $92,500 of convertible debt issued
by the Company in 1996.
Amteck Management, Inc. ("Amteck"), controlled by Logan Anderson, received
$92,000 in 1996 for rent and administrative services. The Company is provided
with office space and other management services on a month-to-month basis by
Amteck. The Company paid $600 per month to Amteck for rent beginning in
March 1996. Other fees are paid to Amteck based on services received.
<TABLE>
<CAPTION>
Due From Amount Interest Rate Due Date
- ------------------------ -------- ------------- --------
<S> <C> <C> <C>
Officer of P&H $30,000 0% June, 1997
Officers of Micro 105,000 0% December 31, 1997
Claire Technologies, Inc.(1) 375,000 10% November 1, 1997
</TABLE>
(1) Also convertible to Claire Technologies, Inc. common stock at $.20 per
share. Claire will also issue 100,000 shares of its restricted common
stock. Beginning February 28, 1997 and every three months thereafter,
Claire will issue an additional 100,000 shares if the loan is still
outstanding. The loan is payable November 1, 1997 and if not paid by that
date Claire will pay an additional 500,000 common (restricted) shares.
Claire will have 30 days grace to remedy the payment, and the loan will
be payable on demand thereafter. Claire has some of the same officers and
directors as the Company.
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) The following financial statements, financial statement schedules and
supplementary data are included:
Page
Independent Auditor's Report F-1
Financial Statements:
Consolidated Balance Sheets - December 31, 1996 and 1995. F-2
Consolidated Statements of Operations - Years Ended
December 31, 1996, 1995, and 1994. F-4
Consolidated Statement of Changes in Stockholders'
Equity - Years Ended December 31, 1996 and 1995. F-5
Consolidated Statements of Cash Flows - Years Ended
December 31, 1996, 1995, and 1994. F-6
Notes to Financial Statements F-7
The following exhibits are included:
(3)(i) Articles of Incorporation are incorporated by reference.
(ii) By-Laws are incorporated by reference.
(4)(ii) Instruments defining the rights of holders of long-term debt 17
(iii) Copies of indentures qualified under the Trust
Indenture Act of 1939 19
(21) Subsidiaries of the registrant 23
(27) Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1996. A
Form 8-K/A was filed on November 14, 1996 and another Form 8-K/A was filed on
December 17, 1996 to provide further information not originally included in
the 8-K filing dated August 27, 1996 relating to the acquisition of Genesis.
The information filed included audited financial statements of Genesis for
1996, 1995, and 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DYNAMIC ASSOCIATES, INC.
Date: April 15, 1997 By: /s/ Jan Wallace
Jan Wallace, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: April 15, 1997 By: /s/ Jan Wallace
Jan Wallace, President and Director
Date: April 15, 1997 By: /s/ Logan Anderson
Logan Anderson, Secretary/Treasurer
and Director
Date: April 15, 1997 By: /s/ Herb Capozzi
Herb Capozzi, Director
Date: April 15, 1997 By: /s/ Billy Means
Billy Means, Director
Date: April 15, 1997 By: /s/ Florian Homm
Florian Homm, Director
<PAGE>
1997 INCENTIVE STOCK OPTION PLAN AND 1997
NONSTATUTORY STOCK OPTION PLAN
1. Names and Purposes of the Plans. This Plan document is intended to
implement and govern two separate Stock Option Plans of DYNAMIC ASSOCIATES,
INC., a Nevada corporation (the "Company"): the 1997 Incentive Stock Option
Plan ("Plan A") and the 1997 Nonstatutory Stock Option Plan ("Plan B")
(collectively the "Plans"). Plan A provides for the granting of options that
are intended to qualify as incentive stock options ("Incentive Stock Options")
within the meaning of Section 422(b) of the Internal Revenue Code, as amended.
Plan B provides for the granting of options that are not intended to so
qualify. Unless specified otherwise, all the provisions of this Plan document
relate equally to both Plan A and Plan B, which Plans are condensed into one
Plan document solely for purposes of administrative convenience and are not
intended to constitute tandem plans. The purposes of the Plans are (a) to
attract and retain the best available people for positions of substantial
responsibility, and (b) to provide additional incentive to the Employees of the
Company (and its future parents and subsidiaries, if any) and to promote the
success of the Company's business.
2. Definitions. For purposes of the Plans, the following terms will
have the respective meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company;
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended;
(c) "Common Stock" shall mean the Class A common stock of the Company;
(d) "Company" shall mean Dynamic Associates, Inc., a Nevada corporation;
(e) "Committee" shall mean the committee appointed by the Board in
accordance with Paragraph 3(a) of this Plan document, if one is appointed;
(f) "Employee" shall mean any person, including an officer or director,
who is an employee (within the meaning of Section 422 of the Code) of the
Company, any parent, any subsidiary or any successors to any of the foregoing;
(g) "Incentive Option" shall mean an incentive stock option as defined in
Section 422(b) of the Code;
(h) "Non-Statutory Option" shall mean an option which does not qualify as
an Incentive Option;
<PAGE>
(i) "Option" shall mean a stock option granted pursuant to the Plan,
whether an Incentive Option or a Non-Statutory Option;
(j) "Option Agreement" shall mean an agreement substantially in the form
attached hereto as Exhibit A or the form attached hereto as Exhibit B, or such
other form or forms as the Board (subject to the terms and conditions of the
Plans) may from time to time approve, evidencing an Option;
(k) "Option Grant Date" shall mean the date on which an Option is granted
by the Board;
(1) "Optioned Stock" shall mean the Common Stock subject to an Option
granted pursuant to a Plan;
(m) "Optionee" shall mean an Employee or other Eligible Person who
receives an Option;
(n) "Outstanding Incentive Option" shall mean any Incentive Stock Option
which has not yet been exercised in full or has not yet expired by lapse of
time;
(o) "Parent" shall mean a "parent corporation" as defined in Section
424(e) of the Code;
(p) "Plan A" shall mean the 1997 Incentive Stock Option Plan;
(q) "Plan B" shall mean the 1997 Non-Statutory Stock Option Plan;
(r) "Predecessor Corporation" shall mean a corporation which is a party to
a transaction described in Code Section 424(a) (or which would be so described
if a substitution or assumption under such section had been effected) with the
Company, a Parent, a Subsidiary or a predecessor corporation of any such
corporations.
(s) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 13 of this Plan document;
(t) "Stock Purchase Agreement" shall mean an agreement substantially in
the form attached hereto as Exhibit C or such other form or forms as the Board
(subject to the terms and conditions of this Plan) may from time to time
approve, which is to be executed as a condition of purchasing Optioned Stock
upon exercise of an Option as provided in a Plan; and,
(u) "Subsidiary" shall mean a subsidiary corporation as defined in
Section 424(f) of the Code.
3. Administration of Plan.
(a) Procedure. The Plans shall be administered by the Board.
<PAGE>
The Board may appoint a Committee consisting of not less than two (2)
members of the Board to administer one or both of the Plans on behalf of the
Board, subject to such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by
the Board. From time to time, the Board may increase the size of the Committee
and appoint additional members thereof, remove members of the Committee, and
thereafter, directly administer the Plans. Any references herein to the Board
shall refer to the Committee, if one is appointed, to the extent of the
Committee's authority.
(b) Limitations on Members of Board. Members of the Board who are
either eligible for options or have been granted Options may vote on any
matters affecting the administration of the Plans or the grant of any Options
pursuant to the Plans; except that no such member shall act in connection with
an Option to himself or herself, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to Options of such member.
(c) Powers of the Board. Subject to the provisions of the Plan the
Board shall have the authority, in its discretion, to make all determinations
necessary or advisable for the administration of the Plans, including without
limitation:
(i) to determine, upon review of relevant information, the then
fair market value per share of the Common Stock;
(ii) to determine the exercise price of the Options to be granted,
subject to the provisions of Paragraph 8 of this Plan document;
(iii) to determine the Employees to whom, and the time or
times at which, Options shall be granted, and the number of shares of Optioned
Stock to be represented by each Option;
(iv) to determine whether Options granted hereunder shall be
granted under Plan A as Incentive Options or Plan B as Non-statutory Options;
(v) to prescribe, amend and rescind rules and regulations
relating to the Plans;
(vi) to determine the terms and provisions of each Option granted
under the Plans (which need not be identical) and to modify or amend each
Option (with or without consent of the Optionee, if necessary);
(vii) to accelerate the exercise date of any Option;
(viii) to construe and interpret the Plans, the Option Agreements,
Stock Purchase Agreements and any other agreements provided for hereunder; and
<PAGE>
(ix) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted by
the Board or to take such other actions as may be necessary or advisable with
respect to the Company's rights pursuant to the Option, Stock Purchase Agreement
or other agreement approved hereunder.
(d) Effect of the Board's or Committee's Decision. All decisions,
determinations and interpretations of the Board or the Committee shall be
final and binding on all Optionees and any other proper holders of any Options
granted under the Plan.
4. Stock Subject to the Plan. Subject to the provisions of Section 13 of this
Plan document, the maximum aggregate number of shares which may be optioned
under these Plans is TWO MILLION (2,000,000) shares of authorized Common Stock.
This constitutes an absolute cumulative limitation on the total number of shares
that may be optioned under Plan A and Plan B and, therefore, at any particular
date the maximum aggregate number of shares which may be optioned under Plan A
is equal to TWO MILLION (2,000,000) minus the number of shares previously
optioned under Plan A and Plan B; and the maximum aggregate number of shares
which may be optioned under Plan B is equal to TWO MILLION (2,000,000) minus
the number of shares which have been previously optioned under Plan A or Plan B.
All shares to be optioned under either Plan A or Plan B may be either authorized
but unissued shares or shares held in the treasury. Shares of Common Stock that
(a) are repurchased by the Company after issuance hereunder pursuant to the
exercise of an Option or (b) are not purchased by the Optionee prior to the
expiration of the applicable Option Period (as described hereinbelow) shall
again become available to be covered by Options to be issued hereunder and
shall not, as of the effective date of such repurchase or expiration, be
counted as having been previously optioned for purposes of the above described
maximum number of shares which may be optioned hereunder.
5. Eligibility. Options under Plan A may be granted to any Employee who is
designated by the Board in its discretion. Non Employees, including directors
of the Company or any Parent or Subsidiary, who are not regular employees of
the Company, are not eligible to receive Options under Plan A. Options under
Plan B may be granted to any Employee, any Non-Employee director of Company or
any Parent or Subsidiary, and any consultant or independent contractors who
provide valuable services to the Company (or its Parent or Subsidiary), all as
designated by the Board in its discretion. An Optionee who has been granted an
Option may, if otherwise eligible, be granted an additional Option or Options.
Options may be granted to one or more persons without being granted to other
eligible persons, as the Board may deem fit.
6. Term of the Plan. Plan A shall become effective immediately upon the
earlier to occur of its adoption by the Board or its approval by vote of a
majority of the outstanding shares of the Company entitled to vote on the
adoption of such Plan. Plan B shall become effective immediately upon its
adoption by the Board. Each Plan shall continue in effect until December 31,
2007 unless sooner terminated under Sections 15 or 18 of this Plan document.
No Option may be granted under a Plan after its expiration.
<PAGE>
7. Option Period. Each Option granted pursuant to either Plan shall be
evidenced by an Option Agreement. Each Option shall expire and all rights
thereunder shall end at the expiration of such period (which shall in no event
be more than ten (10) years) after the Option Grant Date as shall be fixed by
the Board, subject in all cases to earlier expiration as provided in Section
11 of this Plan document. Notwithstanding the foregoing, the term of each
Incentive Option granted to an Employee who, at the time the Incentive Option
is granted, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary (determined as required by the Code as applied to Incentive Options)
shall not be more than five (5) years from the Option Grant Date.
8. Option Price and Consideration.
(a) Price. The per share Option price for the Shares to be issued
pursuant to an Option granted under either Plan shall be such price as is
determined by the Board in its sole discretion. Notwithstanding the foregoing,
with respect to Incentive Options granted under Plan A: (i) such price shall in
no event be less than one hundred percent (100%) of the fair market value per
Share of the Company's Common Stock on the Option Grant Date, as determined by
the Board; and (ii) in the case of an Incentive Option granted to an Employee
who, at the time the Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent, Subsidiary or Predecessor Corporation (determined as
required by the Code as applied to Incentive Options), the per share Option
price shall be at least one hundred ten percent (110%) of the fair market
value as of the Option Grant Date, as determined by the Board. The fair
market value shall be determined by the Board in its sole discretion, exercised
in good faith; provided, however, that where there is a public market for the
Common Stock, the fair market value per share shall be the mean of the reported
bid and asked price for the Common Stock on the date of the grant, or, in the
event the Common Stock is listed on a stock exchange, the fair market value per
share shall be the closing price on the exchange as of the date of grant of the
Option.
(b) Form of Consideration. The form of consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Board and may consist of cash, promissory
notes, or the surrender of shares of Common Stock having a fair market value on
the date of surrender equal to the purchase price of the Shares as to which said
Option shall be exercised, a combination thereof, or such other consideration
and method of payment for the issuance of Shares as is permitted under
applicable law.
(c) Promissory Notes. If the consideration for the exercise of an
Option is a promissory note, such note shall be a full recourse promissory
note executed by the Optionee. If the option is an Incentive Option under Plan
A, such note shall bear interest at a per annum rate which is not less than the
greater of (i) the applicable "test rate" described in Treasury Regulations
Section 1.4831(d) in effect on the date of exercise or (ii) a fair market
interest rate, as determined by the Board in its good faith discretion. If a
promissory note is given as consideration, the Company may retain the
<PAGE>
Shares purchased upon exercise of the Option in escrow as security for payment
of the promissory note.
(d) Surrendered Common Stock. If the consideration for the exercise
of an Option is the surrender of previously acquired and owned shares of common
stock of the Company, the Optionee will be required to make representations and
warranties satisfactory to the Company regarding the Optionee's title to the
shares used to effect the purchase, including without limitation,
representations and warranties that the Optionee has good and marketable title
to such shares free and clear of any and all liens, encumbrances, charges,
equities, claims, security interests, options or restrictions and has full
power to deliver such shares without obtaining the consent or approval of any
person or governmental authority other than those which have already given
consent or approval in a form satisfactory to the Company. The value of the
shares used to effect the purchase shall be the fair market value of those
shares as determined by the Board in its sole discretion, exercised in good
faith.
9. Limit on Value of Optioned Stock Issued Under Plan A. The aggregate
fair market value (determined as of the Option Grant Date of each Option) of
the Shares with respect to which Incentive Options are exercisable for the first
time by the Optionee during any calendar year under Plan A and all other
incentive stock option plans of the Company, any Parent or Subsidiary, or any
Predecessor Corporation of any such corporation shall not exceed One Hundred
Thousand Dollars ($100,000.00), as determined pursuant to Section 422(d) of the
Code.
10. Exercise of Option.
(a) General Terms. Any Option granted hereunder shall be exercisable
at such times and under such conditions as may be determined by the Board which
conditions may include performance criteria with respect to the Company and/or
the Optionee or provisions for vesting over a period of time conditioned upon
continued employment and shall include the contemporaneous execution of a Stock
Purchase Agreement in a form approved by the Board and as shall be permissible
under the terms of the Plan. In all events, in order to exercise an Option
hereunder the Optionee shall execute a Stock Purchase Agreement in a form
approved by the Board and shall deliver the required (or permitted) exercise
consideration to the Company. As a condition to the exercise of an Option, the
Board may require the Optionee pursuant to the Option Agreement to agree to
restrictions on the sale or other transfer of ownership of the Common Stock
acquired by an Optionee or to sell such Shares to the Company upon termination
of employment.
(b) Partial Exercise. An Option may be exercised in accordance with
the provisions of either Plan as to all or any portion of the Shares then
exercisable under an Option, from time to time during the term of the Option.
An Option may not be exercised for a fraction of a Share.
(c) Time of Exercise. An Option shall be deemed to be exercised when
the Company has received at its principal business office: (i) written notice of
such exercise in accordance with the terms of the Option Agreement and given by
the person entitled to exercise the Option; (ii) full
<PAGE>
payment for the Shares with respect to which the Option is exercised; (iii) the
executed Stock Purchase Agreement if required; and (iv) any other
representations or agreements required by the terms of this Plan or the Option
Agreement. Full payment may consist of such consideration as is authorized by
the Board as provided hereunder.
(d) No Rights as Shareholder Until Exercise. Until this Option is
properly exercised hereunder and the Company receives full payment for the
Shares with respect to which the Option is exercised, no right to receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Option is properly exercised and
payment in full is received, except as provided in Section 13 of this Plan
document.
(e) Issuance of Share Certificates. As soon as practicable after any
proper exercise of an Option in accordance with the provisions of this Plan
document and payment in full for the exercised Shares, the Company shall,
without transfer or issue tax to the Optionee, deliver to the Optionee at the
principal business office of the Company, or such other place as shall be
mutually acceptable, a certificate or certificates representing the Shares of
Common Stock as to which the Option has been exercised. The time of issuance
and delivery of the certificates) representing the Shares of Common Stock may
be postponed by the Company for such period as may be required for it, with
reasonable diligence, to comply with any applicable listing requirements of any
national or regional securities exchange and any law or regulation applicable
to the issuance and delivery of such Shares.
(f) Reduction of Shares Upon Exercise. Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.
11. Termination of Employment.
(a) General. If an Optionee ceases to be an Employee then, except as
provided in Paragraph 11(a) or 11(b) hereof, any Option of the Optionee, whether
vested or non-vested, and if issued under Plan A, shall terminate as of the date
of termination of employment. Notwithstanding the foregoing, within the earlier
of (i) thirty (30) days (or such other period of time not exceeding three (3)
months as set forth in the Option Agreement) following the date of termination
of employment and (ii) the time the Option expires by its terms, the Optionee
may exercise the Option to the extent it was vested and exercisable on the date
of termination of employment, provided the Optionee was not discharged for cause
(in which event the Option shall not be exercisable after the date of
termination).
(b) Death or Disability. If Optionee dies or becomes disabled
(within the meaning of Code Section 422 and the rules and regulations
thereunder) then, within the earlier of thirty (30) days (or such other period
of time not exceeding six (6) months as set forth in the Option Agreement)
following the date of such death or disability and the time the Option expires
by its terms, the Optionee
<PAGE>
or such person or persons to whom the Optionee's rights under the Option shall
pass by the Optionee's will or by the laws of descent and distribution, may
exercise the Option to the extent it was vested and exercisable on the date of
death or disability.
(c) Definition of Termination. For purposes of each Plan, an Employee
shall be deemed terminated as an employee when such Employee's employment is
deemed to no longer continue within the meaning of Code Section 422 and the
rules and regulations thereunder.
12. Non-transferability of Options. The Options and any rights and
privileges granted under any Option Agreement are not transferable by the
Optionee, either voluntarily or by operation of law, otherwise than by will and
the laws of descent and distribution and shall be exercisable during Optionee's
lifetime only by Optionee.
13. Adjustments Upon Changes in Capitalization.
(a) Reorganizations, Recapitalization, Etc. If the outstanding shares
of Common Stock of the Company are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of the Company
through reorganization, recapitalization, reclassification, stock dividend (but
only on Common Stock), stock split, reverse stock split or other similar
transaction, or, if any other increase or decrease occurs in the number of
Shares of Common Stock of the Company without the receipt of consideration by
the Company, then an appropriate and proportional adjustment shall be made in
(i)the number and kind of shares of stock covered by each outstanding Option,
(ii) the number and kind of shares of stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted (or
which have been returned to the Plan upon cancellation of an Option), and (iii)
the exercise price per share of stock covered by each such outstanding Option.
The granting of stock options or bonuses to Employees of the Company and the
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without the receipt of consideration." Notwithstanding the
foregoing, no adjustment need be made under this paragraph if, upon the advice
of counsel, the Board determines that such adjustment may result in federal
taxable income to the holders of Options or Common Stock or other classes of
the Company's securities.
(b) Dissolution, Liquidation, Etc. Upon the dissolution or
liquidation of the Company, or upon a reorganization, merger or consolidation
of the Company with one or more corporations as a result of which the Company
is not the surviving corporation, or upon a sale (or exchange through merger)
of substantially all the property or more than fifty percent (50%) of the then
outstanding stock of the Company to another corporation, the Plan shall
terminate, and any Option theretofore granted hereunder shall terminate.
Notwithstanding the foregoing, the Board may provide in writing in connection
with, or in contemplation of, such transaction for any, all or none of the
following alternatives (separately or in combination): (i) for all or a portion
of the Options theretofore granted to become immediately exercisable; (ii) for
the assumption by the successor corporation of the Options theretofore granted
or the substitution by such corporation for such Options of new options
covering the stock of the successor corporation, or a Parent or Subsidiary
<PAGE>
thereof, with appropriate adjustments as to the number and kind of shares and
prices; or (iii) for the continuance of the Plan by such successor corporation
in which event the Plan and the Options theretofore granted shall continue in
the manner and under the terms so provided.
(c) No Fractional Shares. No fractional shares of the Common Stock
shall be issuable on account of any action under this Paragraph 13, and the
aggregate number of shares into which Shares then covered by an Option, when
changed as the result of such action, shall be reduced to the largest number of
whole Shares resulting from such action. Notwithstanding the foregoing, the
Board, in its sole discretion, may determine to issue scrip certificates, in
respect to any fractional shares, which scrip certificates, in such event,
shall be in a form and have such terms and conditions as the Board in its
discretion shall prescribe.
(d) Binding Effect of Board Determinations. All adjustments under
this Paragraph 13 shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive.
(e) No Other Adjustments. Except as expressly provided herein, no
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares of Common
Stock subject to the Plan or any Options.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time and from
time to time suspend or terminate either Plan. The Board may also amend or
revise either Plan from time to time in such respects as the Board may deem
advisable, except that, without approval of the holders of the majority of the
outstanding shares of the Company's Common Stock, no such revision or amendment
shall amend Plan A so as to:
(i) Increase the number of Shares subject to Plan A other than in
connection with an adjustment under Section 13 of this Plan document;
(ii) Permit the granting of Incentive Options to anyone other than as
provided in Paragraph 5;
(iii) Remove the administration of Plan A from the Board;
(iv) Extend the term of Plan A beyond that provided in Paragraph 6
hereof;
(v) Extend the term of any Incentive Option beyond the maximum term
set forth in Paragraph 7;
<PAGE>
(vi) Permit the granting of Incentive Options which would not qualify
as Incentive Stock Options; or
(vii) Decrease the per share option price required with respect to
Incentive Options under Paragraph 8(a) hereof.
(b) Effect of Termination. Except as otherwise provided in Section
13, without the written consent of the Optionee, any such termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if the Plan had not been terminated.
15. Conditions Upon Issuance of Shares. Options granted under either Plan
are conditioned upon the Company obtaining any required permit, or exemption
from the qualification or registration provisions of any applicable state
securities law and other appropriate governmental agencies, authorizing the
Company to issue such Options and Optioned Stock upon terms and conditions
acceptable to the Company. Shares shall not be issued with respect to an
Option granted under either Plan unless the exercise of such Option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Board may require the person
exercising such Option to execute an agreement approved by the Board, and may
require the person exercising such Option to make any representation and
warranty to the Company as may, in the judgment of counsel to the Company, be
required under applicable laws or regulations.
16. Reservation of Shares. During the term of the Plans, the Company will
at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plans. During the term of the
Plans, the Company will use its best efforts to seek to obtain from appropriate
regulatory agencies any requisite authorization in order to issue and sell such
number of Shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Plan. The inability of the Company to obtain from any such
regulatory agency the requisite authorization(s) deemed by the Company's counsel
to be necessary to the lawful issuance and sale of any Shares hereunder, or the
inability of the Company to confirm to its satisfaction that any issuance and
sale of any Shares hereunder will meet applicable legal requirements, shall
relieve the Company of any liability in respect to the non-issuance or sale of
such Shares as to which such requisite authority shall not have been obtained.
17. Taxes, Fees, Expenses and Withholding of Taxes.
(a) Issue and Transfer Taxes. The Company shall pay all original
issue and transfer taxes (but not income taxes, if any) with respect to the
grant of Options and the issue and transfer of Shares pursuant to the exercise
of such Options, and all other fees and expenses necessarily incurred
<PAGE>
by the Company in connection therewith, and will use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the Company,
shall be applicable thereto.
(b) Withholding. The grant of Options hereunder and the issuance of
Shares of Common Stock pursuant to the exercise of such Options are conditioned
upon the Company's reservation of the right to withhold, in accordance with any
applicable law, from any compensation payable to the Optionee any taxes required
to be withheld by federal, state or local law as a result of the grant or
exercise of such Option or the sale of the Shares issued upon exercise of the
Option.
18. Shareholder Approval of Plan A. Continuance of Plan A and the
effectiveness of any Option granted under such Plan shall be subject to approval
by the holders of the outstanding voting stock of the Company in accordance with
applicable law within twelve (12) months before or after the date Plan A is
adopted by the Board. Any Options granted under Plan A prior to obtaining
such shareholder approval shall be granted upon the conditions that the Options
so granted: (i) shall not be exercisable prior to such approval and (ii) shall
become null and void ab initio if such shareholder approval is not obtained.
19. Liability of Company. The Company, its Parent or any Subsidiary which
is in existence or hereafter comes into existence, will not be liable to an
Optionee granted an Incentive Option or other person if it is determined for
any reason by the Internal Revenue Service or any court having jurisdiction that
any Incentive Options granted hereunder are not Incentive Stock Options.
20. Notices. Any notice to be given to the Company pursuant to the
provisions of the Plans shall be addressed to the Company in care of its
Secretary at its principal office, and any notice to be given to an Optionee
shall be delivered personally or addressed to such Optionee at the address given
beneath such Optionee's signature on such Optionee's Stock Option Agreement, or
at such other address as such Employee (or any transferee) upon the transfer of
the Optioned Stock may hereafter designate in writing to the Company. Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified, and deposited, postage
and registry or certification fee prepaid, in a post office or branch post
office regularly maintained by the United States Postal Service. It shall be
the obligation of each Optionee and each transferee holding Shares purchased
upon exercise of an Option to provide the Secretary of the Company, by letter
mailed as provided hereinabove, with written notice of such person's direct
mailing address.
21. No Enlargement of Employee Rights. This Plan is purely voluntary on
the part of the Company, and the continuance of the Plan shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment of any Employee. Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the employ of the Company, its Parent, Subsidiary or a successor
corporation, or to interfere with the right of the Company or any such
corporations to discharge or retire any Employee thereof at any time. No
Employee shall have any right to or interest in Options authorized hereunder
prior to the grant of such Option to such employee, and upon such grant he or
she shall have only such rights
<PAGE>
and interests as are expressly provided herein, subject, however, to all
applicable provisions of the Company's Certificate of Incorporation, as the
same may be amended from time to time.
22. Legends on Certificates.
(a) Federal Law. Unless an appropriate registration statement is
filed pursuant to the Federal Securities Act of 1933, as amended, with respect
to the Options and Shares issuable under the Plans, each certificate
representing such Options and Shares shall be endorsed on its face with a
legend substantially as follows:
"THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED
UPON EXERCISE OF THIS OPTION HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(b) State Legend. If required by applicable state authorities each
certificate representing the Options and Shares issuable under the Plans shall
be endorsed on its face with any legends required by such authorization.
(c) Additional Legends. Each certificate representing the Options
and Shares issuable under the Plans shall also contain legends as are set forth
in any Stock Purchase Agreement or other agreement the execution of which is a
condition to the exercise of an Option under this Plan. In addition, each
Option Agreement shall be endorsed with a legend substantially as follows:
"THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
OPTION MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
TERMS OF A STOCK PURCHASE AGREEMENT, A COPY OF WHICH IS
ON FILE WITH THE SECRETARY OF THE COMPANY, TO BE ENTERED
INTO BETWEEN THE HOLDER OF THIS OPTION AND THE COMPANY
AS A CONDITION TO EXERCISE OF THIS OPTION."
23. Availability of Plan. A copy of the Plans shall be delivered to the
Secretary of the Company and shall be shown by him to any eligible person
making reasonable inquiry concerning it.
24. Invalid Provisions. In the event that any provision of the Plans is found
to be invalid or otherwise unenforcable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all
<PAGE>
such other provisions shall be given full force and effect to the same extent
as though the invalid or unenforceable provision was not contained herein.
25. Applicable Law. These Plans shall be governed and construed in accordance
with the laws of the State of Nevada applicable to contracts executed, and to
be fully performed, in Nevada.
IN WITNESS WHEREOF, pursuant to the due authorization and adoption of
these Plans by the Board on ______, 1997, the Company has caused these Plans to
be duly executed by its duly authorized officers, effective as of _____, 1997.
DYNAMIC ASSOCIATES, INC.,
A Nevada corporation.
_____________________________________________
By: _________________________________________
Title: _______________________________________
<PAGE>
EXHIBIT "A"
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE
OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR
DISTRIBUTION THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY
BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK
PURCHASE AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY, TO BE ENTERED INTO BETWEEN OPTIONEE AND THE COMPANY
AS A CONDITION TO EXERCISE OF THIS OPTION.
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made as of the ___________ day of _________________, 19__,
by and between Dynamic Associates, Inc. a Nevada corporation (hereinafter called
"Company") and _________________________ (hereinafter called "Optionee").
RECITALS
A. The Board of Directors of the Company has adopted the Company's
1997 Incentive Stock Option Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees (including officers and
employee directors), who contribute to the financial success of the Company or
its parent or subsidiary corporations.
B. Optionee is a key member of the Company or its parent or subsidiary
corporations, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Company's grant of a
stock option to the Optionee.
C. The granted option is intended to be an incentive stock option
("Incentive Option") within the meaning of Section 422 of the Internal Revenue
Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions
set forth in this Agreement, there is hereby granted to Optionee, as of the
date of this Agreement (the "Grant
<PAGE>
Date"), a stock option to purchase up to ______ shares of the Company's Common
Stock (the "Optioned Shares") from time to time during the option term at the
option price of $_______ per share.
2. Plan. The options granted hereunder are in all instances subject
to the terms and conditions of the Plan. In the event of any conflict between
this Agreement and the Plan, the provisions of the Plan shall control. Optionee
acknowledges receipt of a copy of the Plan and hereby accepts this option
subject to all of the terms and conditions of the Plan. Optionee agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.
3. Option Term. This option shall have a maximum term of _______
(______) years measured from the Grant Date and shall accordingly expire at the
close of business on ________, 19__ (the "Expiration Date"), unless sooner
terminated in accordance with Paragraph 7, 9(a) or 20.
4. Option Nontransferable; Exception. This option shall be neither
transferable nor assignable by Optionee, either voluntarily or involuntarily,
other than by will or by the laws of descent and distribution and may be
exercised, during Optionee's lifetime, only by Optionee.
5. Condition Precedent to Exercise. This option may not be
exercised in whole or in part at any time prior to the time the Company has
satisfied the following condition precedent:
[this could be registration, obtaining a goal or period of time].
In the event the forgoing condition precedent has not been satisfied prior to
the Expiration Date or prior to this option's earlier termination in accordance
with Paragraph 7, 9(a) or 20, then this option shall terminate and cease to be
outstanding.
6. Dates of Exercise. This option may not be exercised in whole or
in part at any time prior to the time it is approved by the Company's
shareholders in accordance with Paragraph 20. Provided such shareholder
approval is obtained and the condition precedent to exercise set forth in
Paragraph 5 has been satisfied, this option shall become exercisable for
100% of the Optioned Shares one (1) year from the Grant Date, provided that in
no event may options for more than One Hundred Thousand Dollars ($100,000) of
Optioned Shares, calculated at the exercise price, become exercisable for the
first time in any calendar year. Once exercisable, options shall remain so
exercisable until the expiration or sooner termination of the option term under
Paragraph 7 or Paragraph 9(a) of this Agreement. In no event, however, shall
this option be exercisable for any fractional shares.
7. Accelerated Termination of Option Term. The option term specified
in Paragraph 3 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
<PAGE>
(i) Except as otherwise provided in subparagraphs (ii), (iii) or (iv)
below, should Optionee cease to be an Employee of the Company at any time during
the option term, then the period for exercising this option shall be reduced to
a one (1) month period commencing with the date of such cessation of Employee
status, but in no event shall this option be exercisable at any time after the
Expiration Date. Upon the expiration of such one (1) month period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding.
(ii) Should Optionee die while this option is outstanding, then the
executors or administrators of Optionee's estate or Optionee's heirs or legatees
(as the case may be) shall have the right to exercise this option for the number
of shares (if any) for which the option is exercisable on the date of the
optionee's death. Such right shall lapse and this option shall cease to be
exercisable upon the earlier of (i) six (6) months from the date of the
optionee's death or (ii) the Expiration Date.
(iii) Should Optionee become permanently disabled and cease by reason
thereof to be an Employee of the Company at any time during the option term,
then Optionee shall have a period of six (6) months (commencing with the date
of such cessation of Employee status) during which to exercise this option;
provided, however, that in no event shall this option be exercisable at any
time after the Expiration Date. Optionee shall be deemed to be permanently
disabled if Optionee is, by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration
of not less than twelve (12) months, unable to perform his/her usual duties for
the Company or its Parent or Subsidiary corporations. Upon the expiration of
the limited period of exercisability or (if earlier) upon the Expiration Date,
this option shall terminate and cease to be outstanding.
(iv) Should Optionee's status as an Employee be terminated for cause
(including, but not limited to, any act of dishonesty, willful misconduct,
failure to perform material duties, fraud or embezzlement or any unauthorized
disclosure or use of confidential information or trade secrets) or should
Optionee make or attempt to make any unauthorized use or disclosure of the
confidential information or trade secrets of the Company or any parent or
subsidiary corporations, then in any such event this option shall terminate and
cease to be exercisable immediately upon such termination of Employee status or
such unauthorized disclosure or use of confidential or secret information or
attempt thereat.
(v) For purposes of this Paragraph 7 and for all other purposes under
this Agreement, Optionee shall be deemed to be an Employee of the Company and
to continue in the Company's employ for so long as Optionee remains an Employee
of the Company or one or more of its parent or subsidiary corporations as such
terms are defined in the Plan.
8. Adjustment in Option Shares
(a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares, or
other change affecting the
<PAGE>
outstanding Common Stock as a class without receipt of consideration (as set
forth in the Plan), then appropriate adjustments will be made to (i) the total
number of Optioned Shares subject to this option and (h) the option price
payable per share in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number and class of
securities to which Optionee immediately prior to such merger of other business
combination would have been entitled to receive in the consummation of such
merger or other business combination.
9. Special Termination of Option.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business combination
in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred, or exchanged through merger, to different holders
in a single transaction or a series of related transactions; then this
option shall terminate upon the consummation of such Corporate Transaction
and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof. The Company shall Corporate
Transaction. The Company can give no assurance that the options shall
be assumed and shall provide Optionee with at least thirty (30) days prior
written notice of the specified date for the med by the successor
corporation or its parent company and it may occur that some options
outstanding under the Plan will be assumed while these options are
terminated.
(b) In the event of a Corporate Transaction, the Company may, at
its option, accelerate the vesting schedule contained in Section 6 hereof, but
shall have no obligation to do so. The Company shall have the right to
accelerate other options outstanding under the Plan or any other plan, even if
it does not accelerate the options of Optionee hereunder.
(c) This Agreement shall not in any way affect the right of the
Company to make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
<PAGE>
10. Privilege of Stock Ownership. The holder of this option shall
not have any of the rights of a shareholder with respect to the Optioned Shares
until such individual shall have exercised the option and paid the option price
in accordance with this Agreement.
11. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part
of the Optioned Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Execute and deliver to the Secretary of the Company a stock
purchase agreement in substantially the form of Exhibit ___ to this
Agreement the "Purchase Agreement");
(ii) Pay the aggregate option price for the purchased shares in
cash, unless another form of consideration is permitted as described in
Exhibit B, if any, attached hereto or by the Board at the time of
exercise.
(b) This option shall be deemed to have been exercised with respect
to the number of Optioned Shares specified in the Purchase Agreement at such
time as the executed Purchase Agreement for such shares shall have been
delivered to the Company and all other conditions of this Section have been
fulfilled. Payment of the option price shall immediately become due and shall
accompany the Purchase Agreement. As soon thereafter as practical, the Company
shall mail or deliver to Optionee or to the other person or persons exercising
this option a certificate or certificates representing the shares so purchased
and paid for.
12. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned Shares
upon such exercise shall be subject to compliance by the Company and Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
13. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 4 or 9(a), the provisions of this Agreement shall insure to the
benefit of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
<PAGE>
14. Liability of Company.
(a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the Plan.
(b) The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option without
the imposition of requirements unacceptable to the Company in its reasonable
discretion shall relieve the Company of any liability with respect to the non-
issuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
(c) Neither the Company nor any Parent, Subsidiary or successor
corporation will have any liability to Optionee or any other person if it is
determined for any reason that any options granted hereunder are not Incentive
Stock Options.
15. No Employment Contract. Except to the extent the terms of any written
employment contract between the Company and Optionee may expressly provide
otherwise, the Company (or any parent or subsidiary corporation of the Company
employing Optionee) shall be under no obligation to continue the employment of
Optionee for any period of specific duration and may terminate Optionee's
status as an Employee at any time, with or without cause.
16. Notices. Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Company in
care of its Secretary at its corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this Agreement. All
notices shall be deemed to have been given or delivered upon personal delivery
or upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
17. Loans or Guarantees. The Company may, in its absolute discretion and
without any obligation to do so, assist Optionee in the exercise of this option
by (i) authorizing the extension of a loan to Optionee from the Company, (ii)
permitting Optionee to pay the option price for the purchased Common Stock in
installments over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan, installment
method of payment or guarantee (including the interest rate, the Collateral
requirements and terms of repayment) shall be established by the Company in its
sole discretion.
18. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the Plan. All decisions of
<PAGE>
the Company with respect to any question or issue arising under the Plan or this
Agreement shall be conclusive and binding on all persons having an interest in
this option.
19. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Nevada.
20. Shareholder Approval. The grant of this option is subject to approval of
the Plan by the Company's shareholders within twelve (12) months after the
adoption of the Plan by the Board of Directors, and this option may not be
exercised in whole or in part until such shareholder approval is obtained. In
the event that such shareholder approval is not obtained, then this option
shall thereupon terminate and Optionee shall have no further rights to acquire
any Optioned Shares hereunder.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate on its behalf by its duly authorized officer and Optionee
has also executed this Agreement in duplicate, all as of the day and year
indicated above.
DYNAMIC ASSOCIATES, INC.,
A Nevada corporation.
_____________________________________________
By: _________________________________________
Title: _______________________________________
________________________________
OPTIONEE
Address:_________________________
_________________________
_________________________
<PAGE>
EXHIBIT "B"
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE
OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR
DISTRIBUTION THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED. THE SHARES WHICH MAY BE
PURCHASED UPON EXERCISE OF THIS OPTION MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, TO BE ENTERED
INTO BETWEEN OPTIONEE AND THE COMPANY AS A CONDITION TO EXERCISE OF
THIS OPTION.
NON-STATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the __________ day of __________________, 19___,
by and between DYNAMIC ASSOCIATES, INC., a Nevada corporation (hereinafter
called "Company"), and ____________________ (hereinafter called "Optionee").
RECITALS
A. The Board of Directors of the Company has adopted the Company's
1997 Non-Statutory Stock Option Plan (the "Plan") for the purpose of attracting
and retaining the services of selected key employees (including officers and
employee directors) and others (collectively, "Eligible Persons"), who
contribute to the financial success of the Company or its parent or subsidiary
corporations.
B. Optionee is an Eligible Person and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company's grant of a stock option to Optionee.
C. The granted option is not intended to be an incentive stock option
("Incentive Option") within the meaning of Section 422 of the Internal Revenue
Code, but is rather a non-statutory option.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set forth in
this Agreement, there is hereby granted to Optionee, as of the date of this
Agreement (the "Grant Date"), a stock
<PAGE>
option to purchase up to ____________
shares of the Company's Common Stock (the "Optioned Shares") from time to time
during the option term at the option price of $___________ per share.
2. Plan. The options granted hereunder are in all instances subject to
the terms and conditions of the Plan. In the event of any conflict between
this Agreement and the Plan, the provisions of the Plan shall control. Optionee
acknowledges receipt of a copy of the Plan and hereby accepts this option
subject to all of the terms and conditions of the Plan. Optionee agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.
3. Option Term. This option shall have a maximum term of years measured
from the Grant Date and shall accordingly expire at the close of business on
__________________, 19___ (the "Expiration Date"), unless sooner terminated in
accordance with Paragraph 6 or 8(a).
4. Option Nontransferable; Exception. This option shall be neither
transferable nor assignable by Optionee, either voluntarily or involuntarily,
other than by will or by the laws of descent and distribution and may be
exercised, during Optionee's lifetime, only by Optionee.
5. Dates of Exercise. This option shall be exercisable as follows:
options for ______% of the Optioned Shares shall become exercisable one (1)
year from the Grant Date and an additional _______% of the Optioned Shares
shall become exercisable on each successive anniversary of the Grant Date.
Once exercisable, options shall remain so exercisable until the expiration or
sooner termination of the option term under Paragraph 6 or Paragraph 8(a) of
this Agreement. In no event, however, shall this option be exercisable for any
fractional shares.
6. Accelerated Termination of Option Term. The option term specified in
Paragraph 3 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraphs (ii), (iii) or (iv)
below, should Optionee cease to be an Employee of the Company at any time during
the option term, then the period for exercising this option shall be reduced to
a one (1) month period commencing with the date of such cessation of Employee
status, but in no event shall this option be exercisable at any time after the
Expiration Date. Upon the expiration of such one (1) month period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding.
(ii) Should Optionee die while this option is outstanding, then the
executors or administrators of Optionee's estate or Optionee's heirs or legatees
(as the case may be) shall have the right to exercise this option for the number
of shares (if any) for which the option is exercisable on the date of the
optionee's death. Such right shall lapse and this option shall cease to be
exercisable upon the earlier of (i)six (6) months from the date of the
optionee's death or (ii) the Expiration Date.
<PAGE>
(iii) Should Optionee become permanently disabled and cease by
reason thereof to be an Employee of the Company at any time during the option
term, then Optionee shall have a period of six (6) months (commencing with the
date of such cessation of Employee status) during which to exercise this option;
provided, however, that in no event shall this option be exercisable at any
time after the Expiration Date. Optionee shall be deemed to be permanently
disabled if Optionee is, by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration
of not less than twelve (12) months, unable to perform his/her usual duties for
the Company or its Parent or Subsidiary corporations. Upon the expiration of
the limited period of exercisability or (if earlier) upon the Expiration Date,
this option shall terminate and cease to be outstanding.
(iv) Should Optionee's status as an Employee be terminated for cause
(including, but not limited to, any act of dishonesty, willful misconduct,
failure to perform material duties, fraud or embezzlement or any unauthorized
disclosure or use of confidential information or trade secrets) or should
Optionee make or attempt to make any unauthorized use or disclosure of the
confidential information or trade secrets of the Company or any parent or
subsidiary corporations, then in any such event this option shall terminate and
cease to be exercisable immediately upon such termination of Employee status or
such unauthorized disclosure or use of confidential or secret information or
attempt thereat.
(v) For purposes of this Paragraph 6 and for all other purposes under
this Agreement, if Optionee is an Employee, Optionee shall be deemed to be an
Employee of the Company and to continue in the Company's employ for so long as
Optionee remains an Employee of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan. For purposes of
this Paragraph 6 and for all other purposes under this Agreement, if Optionee
is not an Employee, but is eligible because Optionee is a director, consultant
or contractor of Company or a parent or subsidiary corporation, Optionee shall
be deemed to be an Eligible Person for so long as Optionee remains a director,
consultant or contractor of the Company or one or more of its parent or
subsidiary corporations as such terms are defined in the Plan.
7. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares,
or other change affecting the outstanding Common Stock as a class without
receipt of consideration (as set forth in the Plan), then appropriate
adjustments will be made to (i) the total number of Optioned Shares subject to
this option and (ii) the option price payable per share in order to reflect
such change and thereby preclude a dilution or enlargement of benefits
hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding under the Plan
immediately after such merger or other business combination shall be
appropriately adjusted to apply and pertain to the number
<PAGE>
and class of securities to which Optionee immediately prior to such merger or
other business combination would have been entitled to receive in the
consummation of such merger or other business combination.
8. Special Termination of Option.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business combination
in which fifty percent (50%) or more of the Company's outstanding voting stock
is transferred, or exchanged through merger, to different holders in a single
transaction or a series of related transactions; then this option shall
terminate upon the consummation of such Corporate Transaction and cease to be
exercisable, unless it is expressly assumed by the successor corporation or
parent thereof. The Company shall provide Optionee with at least thirty (30)
days prior written notice of the specified date for the Corporate Transaction.
The Company can give no assurance that the options shall be assumed by the
successor corporation or its parent company and it may occur that some options
outstanding under the Plan will be assumed while these options are terminated.
(b) In the event of a Corporate Transaction, the Company may, at its
option, accelerate the vesting schedule contained in Section 5 hereof, but shall
have no obligation to do so. The Company shall have the right to accelerate
other options outstanding under the Plan or any other plan, even if it does
not accelerate the options of Optionee hereunder.
(c) This Agreement shall not in any way affect the right of the
Company to make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
9. Privilege of Stock Ownership. The holder of this option shall not have
any of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option and paid the option price in
accordance with this Agreement.
10. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part
of the Optioned Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after
<PAGE>
Optionee's death, Optionee's executor, administrator, heir or legatee, as the
case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the Company a stock
purchase agreement in substantially the form of Exhibit to this Agreement (the
"Purchase Agreement");
(ii) Pay the aggregate option price for the purchased shares in cash,
unless another form of consideration is permitted as described in Exhibit B, if
any, attached hereto or by the Board at the time of exercise.
(b) This option shall be deemed to have been exercised with respect to
the number of Optioned Shares specified in the Purchase Agreement at such time
as the executed Purchase Agreement for such shares shall have been delivered to
the Company and all other conditions of this Section have been fulfilled.
Payment of the option price shall immediately become due and shall accompany
the Purchase Agreement. As soon thereafter as practical, the Company shall
mail or deliver to Optionee or to the other person or persons exercising this
option a certificate or certificates representing the shares so purchased and
paid for.
11. Compliance With Laws and Regulations.
(a) The exercise of this option and the issuance of Optioned Shares
upon such exercise shall be subject to compliance by the Company and Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
12. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 4 or 8(a), the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
13. Liability of Company.
(a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the Plan.
<PAGE>
(b) The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option without
the imposition of requirements unacceptable to the Company in its reasonable
discretion shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
14. No Employment Contract. Except to the extent the terms of any written
employment contract between the Company and Optionee may expressly provide
otherwise, the Company (or any parent or subsidiary corporation of the Company
employing Optionee) shall be under no obligation to continue the employment of
Optionee for any period of specific duration and may terminate Optionee's status
as an Employee at any time, with or without cause.
15. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of its Secretary at its corporate offices. Any notice required
to be given or delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated below Optionee's signature line on this
Agreement. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid and
properly addressed to the party to be notified.
16. Withholding. Optionee acknowledges that, upon any exercise of this option,
the Company shall have the right to require Optionee to pay to the Company an
amount equal to the amount the Company is required to withhold as a result of
such exercise for federal and state income tax purposes.
17. Loans or Guarantees. The Company may, in its absolute discretion and
without any obligation to do so, assist Optionee in the exercise of this option
by (i) authorizing the extension of a loan to Optionee from the Company, (ii)
permitting Optionee to pay the option price for the purchased Common Stock in
installments over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan, installment
method of payment or guarantee (including the interest rate, the Collateral
requirements and terms of repayment) shall be established by the Company in its
sole discretion.
18. Construction. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and subject to
the express terms and provisions of the Plan. All decisions of the Company with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
19. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Nevada.
<PAGE>
20. REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTIONED
SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO
CERTAIN RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE SUCH
SHARES IN ACCORDANCE WITH THE TERMS AND CONDITIONS SPECIFIED IN THE
PURCHASE AGREEMENT.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate on its behalf by its duly authorized officer and Optionee
has also executed this Agreement in duplicate, all as of the day and year
indicated above.
DYNAMIC ASSOCIATES, INC.,
A Nevada corporation.
_____________________________________________
By: _________________________________________
Title: _______________________________________
________________________________
OPTIONEE
Address:_________________________
_________________________
_________________________
<PAGE>
EXHIBIT "C"
STOCK PURCHASE AGREEMENT
This Agreement is made as of this ________ day of ___________19___, by
and among DYNAMIC ASSOCIATES, INC., a Nevada corporation ("Corporation"), and
the holder of a stock option under the Corporation's 1997 Stock Option Plan
("Optionee").
1. EXERCISE OF OPTION
1.1 Exercise. Optionee hereby purchases shares of Class A Common
Stock of the Corporation ("Purchased Shares") pursuant to that certain option
("Option") granted Optionee on _______________, 19___ ("Grant Date") under the
Corporation's 1997 Stock Option Plan ("Plan") to purchase up to _____ shares of
the Corporation's Class A Common Stock ("Total Purchasable Shares") at an option
price of $_______ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Secretary of the Corporation, Optionee shall pay the Option Price for the
Purchased Shares in accordance with the provisions of the agreement between the
Corporation and Optionee evidencing the Option ("Option Agreement") and shall
deliver whatever additional documents may be required by the Option Agreement
as a condition for exercise.
2. INVESTMENT REPRESENTATIONS
2.1 Investment Intent. Optionee hereby warrants and represents that
Optionee is acquiring the Purchased Shares for Optionee's own account and not
with a view to their resale or distribution and that Optionee is prepared to
hold the Purchased Shares for an indefinite period and has no present intention
to sell, distribute or grant any participating interests in the Purchase Shares.
Optionee hereby acknowledges the fact that the Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
that the Corporation is issuing the Purchased Shares to Optionee in reliance on
the representations made by Optionee herein.
2.2 Restricted Securities. Optionee hereby confirms that Optionee has
been informed that the Purchased Shares may not be resold or transferred unless
the Purchased Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly, Optionee
hereby acknowledges that Optionee is prepared to hold the Purchased Shares for
an indefinite period and that Optionee is aware that Rule 144 of the Securities
and Exchange Commission issued under the 1933 Act is not presently available to
exempt the sale of the Purchased Shares from the registration requirements of
the 1933 Act. Should Rule 144 subsequently become available, Optionee is aware
that any sale of the Purchased Shares effected pursuant to the Rule may,
depending upon the status of Optionee as an
<PAGE>
"affiliate" or "non-affiliate" under the Rule, be made only in limited amounts
in accordance with the provisions of the Rule, and that in no event may any
Purchased Shares be sold pursuant to the Rule until Optionee has held the
Purchased Shares for the requisite holding period following payment in cash of
the Option Price for the Purchased Shares.
2.3 Optionee Knowledge. Optionee represents and warrants that he or
she has a preexisting business or personal relationship with the officers and
directors of the Corporation, that he or she is aware of the business affairs
and financial condition of the Corporation and that he or she has such
knowledge and experience in business and financial matters with respect to
companies in business similar to the Corporation to enable him or her to
evaluate the risks of the prospective investment and to make an informed
investment decision with respect thereto. Optionee further represents and
warrants that the Corporation has made available to Optionee the opportunity to
ask questions and receive answers from the Corporation concerning the terms and
conditions of the issuance of the Purchased Shares and that he or she could be
reasonably assumed to have the capacity to protect his or her own interests in
connection with such investment.
2.4 Speculative Investment. Optionee represents and warrants that he
or she realizes that his or her purchase of the Purchased Shares will be a
speculative investment and that he or she is able, without impairing his or
her financial condition, to hold the Purchased Shares for an indefinite period
of time and to suffer a complete loss of his or her investment. Optionee
represents and warrants that he or she is aware and fully understands the
implications of the restrictions upon transfer imposed by the Plan and therefore
on the Purchased Shares.
2.5 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, ASSIGNED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION THEREUNDER OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
3. MISCELLANEOUS PROVISIONS
3.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation
may in its judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on either the
Optionee or the Purchased Shares pursuant to the express provisions of this
Agreement.
<PAGE>
3.2 Agreement Is Entire Contract. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and
shall in all respects be construed in conformity with the express terms and
provisions of the Plan.
3.3 Governing Law. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
3.4 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
3.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transfer by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
DYNAMIC ASSOCIATES, INC.,
A Nevada corporation.
_____________________________________________
By: _________________________________________
Title: _______________________________________
________________________________
OPTIONEE
Address:_________________________
_________________________
_________________________
<PAGE>
EXHIBIT D
Other Forms of Acceptable Consideration
[If no forms are listed hereon, cash shall be the only
acceptable form of consideration for the exercise of the
options.]
_________________
