EXHIBIT 5
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into on _____________, 1999,
by and among DYNAMIC ASSOCIATES, INC., a Nevada corporation
("Dynamic"), ACS2, Inc., a Delaware corporation ("ACS2"), ADVANCED
CLINICAL SYSTEMS, INC., a Delaware corporation ("Advanced"), the
parties named on Exhibit 1 attached hereto (collectively the
"Original ACS2 Stockholders") and Harwell Howard Hyne Gabbert &
Manner, P.C. ("Escrow Agent").
W I T N E S S E T H:
A. Dynamic, ACS2, Advanced and Dynamic Acquisition
Corporation, have entered into an Agreement and Plan of Merger
dated March 30, 1999, (the "Merger Agreement"), pursuant to which
ACS2 is being merged into the (the "Merger") and the Original ACS2
Stockholders are being issued shares of common stock of Dynamic
(the "Dynamic Common Stock").
B. The parties hereto have agreed, pursuant to the Merger
Agreement, to the establishment of an escrow account to hold a
portion of the shares of Dynamic Common Stock issued pursuant to
the Merger, in an amount and for the purposes specified herein.
NOW, THEREFORE, in consideration of the premises set forth in
the Merger Agreement, the mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1. Deposit. Concurrently with the execution and delivery of
this Agreement, Dynamic has deposited with Escrow Agent four
million eighty six thousand seventy three (4,086,073) shares of
Dynamic Common Stock, with duly executed stock powers
(collectively, the "Escrow Stock"), which constitutes a portion of
the Merger Consideration (as such term is defined in the Merger
Agreement) to be issued under the Merger Agreement. Escrow Agent
hereby acknowledges receipt of the Escrow Stock. The number of
shares of Escrow Stock earmarked for each Original ACS2 Stockholder
is set forth on Exhibit 1 attached hereto. Escrow Agent will hold
the Escrow Stock in accordance with the terms and provisions of
this Agreement.
2. Disbursement of Escrow Stock.
(a) Dynamic, with respect to the operations of Genesis
Health Care Management Corporation ("Genesis") and Geriatric Care
Centers of America, Inc. ("GCCA") (Genesis and GCCA are referred
collectively herein as the "Dynamic Group"), and ACS2, with respect
to the operations of Advanced, Pain Care, Inc., Pain Care of
Florida, Inc., Pain Care of Kentucky, Inc., Pain Care of Georgia,
Inc., Pain Care of Tennessee, Inc. and Pain Care of Texas, Inc.
(collectively the "ACS2 Group"), have projected consolidated
earnings before interest, taxes, depreciation and amortization
("EBITDA") of $2,400,000 for each of the Dynamic Group and ACS2
Group, respectively, for the twelve (12) month period ending
December 31, 1999 (the "Projections").
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(b) On or before April 1, 2000, Dynamic shall prepare
and deliver to the Original ACS2 Stockholders and the Escrow Agent
a written statement of the consolidated EBITDA for the Dynamic
Group for the twelve (12) month period ending December 31, 1999
(the "Dynamic Group EBITDA") and a comparable written statement of
the consolidated EBITDA for the ACS2 Group for the twelve (12)
month period ending December 31, 1999 (the "ACS2 Group EBITDA").
The Dynamic Group EBITDA and ACS2 Group EBITDA shall be based on
audited financial statements, prepared in a manner consistent with
past practice for the applicable group's operations and in
accordance with generally accepted accounting principles. Dynamic
will make the work papers related to such written statements
available to any Original ACS2 Stockholder promptly upon written
request.
(c) If any Original ACS2 Stockholder disputes the
calculation of either Dynamic Group EBITDA or ACS2 Group EBITDA,
such stockholder will provide written notice to Dynamic and the
Escrow Agent setting forth in detail the nature and basis for the
dispute. The dispute shall be settled pursuant to paragraph 3 of
this Agreement. If no such notice of dispute is received within
forty-five (45) days of delivery of the written statements
referenced in Section 2(b), the Escrow Agent will disburse the
Escrow Stock on or about June 1, 2000 as follows:
(i) If both the Dynamic Group EBITDA and the ACS2
Group EBITDA exceed seventy percent (70%) of their respective
Projections, or neither the Dynamic Group EBITDA nor the ACS2 Group
EBITDA exceeds seventy percent (70%) of their respective
Projections, Escrow Agent will promptly release all of the Escrow
Stock to the Original ACS2 Stockholders in accordance with the
amounts set forth in Exhibit 1.
(ii) If the ACS2 Group EBITDA exceeds seventy
percent (70%) of its Projections and the Dynamic Group EBITDA fails
to exceed seventy percent (70%) of its Projections, the Escrow
Agent will release all of the Escrow Stock to the Original ACS2
Stockholders. In addition, Dynamic will issue pro rata to the
Original ACS2 Stockholders an additional 4,180,000 shares of
Dynamic Common Stock.
(iii) If the Dynamic Group EBITDA exceeds
seventy percent (70%) of its Projections and the ACS2 Group EBITDA
fails to exceed seventy percent (70%) of its Projections, the
Escrow Agent will release the Escrow Stock to Dynamic and such
shares shall be returned to treasury.
3. Settlement of Disputes.
(a) If one or more Original ACS2 Stockholders provide
written notice in accordance with Section 2(c) of this Agreement of
a dispute, the question of whether the claim is valid shall be
conclusively determined by a single arbitrator which Dynamic and
the disputing stockholder(s) shall jointly and in good faith
attempt to select. If such parties are unable to agree on a single
arbitrator, then such determination shall be made by three
arbitrators, one arbitrator being selected by Dynamic, one
arbitrator being selected by the disputing stockholder(s) and the
third being selected by the two arbitrators so selected. If the
first two (2) arbitrators are unable to agree on the selection of
the third arbitrator, the third arbitrator shall be designated by
the American
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Arbitration Association. The rules of such Association shall
govern the conduct of any such arbitration proceeding, except as
may otherwise be specifically provided in this Agreement. If either
party, thirty (30) days after written notification of any demand for
arbitration hereunder, shall not have so selected its arbitrator and
given written notice thereof to the other party, such arbitrator
shall be selected by the American Arbitration Association at the
request of any party to this Agreement.
(b) The meetings of the arbitrators shall be held in
Nashville, Tennessee, or at such other place or places as may be
agreed upon by the arbitrators. All determinations made by the
arbitrator(s) shall be by majority vote and shall be final,
conclusive, and binding on the parties hereto and the parties agree
to the entry of judgment in any court of competent jurisdiction
based on the award of the arbitrator(s). Notice of any such
determination shall forthwith be given to the disputing party(ies)
and Escrow Agent. Escrow Agent shall, upon receipt of such notice,
release the Escrow Stock to the appropriate party(ies). Dynamic,
on the one hand, and the disputing stockholder(s), on the other
hand, shall each pay one-half of the fees and expenses of such
arbitration, unless the arbitrator(s) shall expressly determine to
the contrary.
(c) Any award of the arbitrator(s) will be limited to a
direction as to the release of the Escrow Stock and the issuance by
Dynamic of the additional shares of Dynamic Common Stock pursuant
to Section 2(c)(ii), along with any order as to costs which the
arbitrator(s) deem appropriate.
4. Other Payments. Notwithstanding anything in this Escrow
Agreement to the contrary, Escrow Agent shall make payments of any
or all Escrow Stock in accordance with the terms of any written
instructions which it may receive which have been executed by each
of the Dynamic and all of the Original ACS2 Stockholders.
5. Rights as Stockholders. So long as Escrow Stock remains
in escrow the Original ACS2 Stockholders may vote those shares of
Dynamic Common Stock held in escrow pursuant to the allocation set
forth in Exhibit 1, but shall have no other rights as stockholders
of Dynamic with respect to such shares.
6. Resignation or Substitution of Escrow Agent. Escrow
Agent may resign and be discharged of its duties hereunder at any
time by giving notice of such resignation to the LLC, Dynamic and
all of the Original ACS2 Stockholders, which notice will specify a
date not less than thirty (30) days after the giving of such notice
when the resignation will take effect. Promptly after such notice,
a successor escrow agent will be appointed by Dynamic. The
successor escrow agent will become Escrow Agent upon the
resignation date specified in the notice. Escrow Agent will
continue to serve until its successor accepts the escrow and
receives the Escrow Stock or until Escrow Agent interpleads the
same into the registry of the District Court of Davidson County,
Tennessee.
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7. Liability of Escrow Agent.
(a) Upon disbursement of all Escrow Stock held in escrow
in accordance with the terms of this Agreement, Escrow Agent will
be released and discharged without further obligation under this
Agreement. Escrow Agent has no duties other than to hold and
release the Escrow Stock as contemplated hereunder. This Agreement
sets forth exclusively the duties of Escrow Agent in its capacity
as such and no implied duties or obligations will be read into this
Agreement against it. Escrow Agent will have no liability
hereunder except for acts of gross negligence, willful misconduct
or fraud. Escrow Agent shall not be responsible or liable in any
manner whatsoever with respect to any liability or obligation of
Dynamic, ACS2, Advanced, Advanced-Dynamic, LLC or any Original ACS2
Stockholder.
(b) Escrow Agent will be under no obligation to
institute or defend any action, suit or legal proceeding in
connection with this Agreement or to take any other action likely
to involve it in expense unless first indemnified to its
satisfaction. In the event that a dispute arises, Escrow Agent may
bring an interpleader action in the District Court of Davidson
County, Tennessee naming the LLC, Dynamic and the Original ACS2
Stockholder(s) as parties.
(c) Escrow Agent shall be protected in acting in
reliance upon any instrument or signature or telephonic
communication believed to be genuine and may assume that any person
purporting to give any notice, advice or instruction in connection
with the provisions hereof has been duly authorized to do so.
Escrow Agent shall be protected in acting upon advice of counsel in
reference to any matter connected herewith.
(d) Escrow Agent shall not be liable for any error of
judgement, or for any act done or steps taken or omitted by it in
good faith or for any mistake of fact or law, or for anything which
it may do or refrain from doing in connection herewith, except its
own gross negligence, willful misconduct or fraud.
8. Representation. Dynamic, ACS2, Advanced and each of the
Original ACS2 Stockholders hereby acknowledge and agree that Escrow
Agent has also acted as legal counsel to ACS2 and Advanced in
connection with the negotiations of this Agreement, the Merger
Agreement and other agreements and matters related thereto.
Dynamic, for itself and on behalf of its affiliates, and each of
the Original ACS2 Stockholders hereby agree that Escrow Agent may
represent ACS2 and/or Advanced as its legal counsel in connection
with any dispute arising between or among the parties, including
disputes that may involve the rights or obligations of ACS2 and/or
Advanced under this Agreement, the Merger Agreement or any related
agreement or matters.
9. Indemnification of Escrow Agent.
(a) The Escrow Agent shall have no duties or
responsibilities whatsoever with respect to the Escrow Stock except
as are specifically set forth herein. The Escrow Agent shall
neither be responsible for or under, nor chargeable with knowledge
of the terms and conditions of, any other agreement, instrument or
document in connection herewith. The Escrow Agent may conclusively
rely upon, and shall be fully protected from all liability, loss,
cost, damage or expense
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in acting or omitting to act pursuant to any written notice,
instrument, request, consent, certificate, document, letter,
telegram, opinion, order, resolution or other writing hereunder
without being required to determine the authenticity of such
document, the correctness of any fact stated therein, the propriety
of the service thereof or the capacity, identity or authority of
any party purporting to sign or deliver such document. The Escrow
Agent shall have no responsibility for the contents of any such
writing contemplated herein and may rely without any liability upon
the contents thereof.
(b) The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and reasonably believed by it
to be authorized hereby or with the rights or powers conferred upon
it hereunder, nor for action taken or omitted by it in good faith,
and in accordance with advice of counsel (which counsel may be of
the Escrow Agent's own choosing), and shall not be liable for any
mistake of fact or error of judgment or for any acts or omissions
of any kind except for its own willful misconduct, gross negligence
or fraud.
(c) All other parties hereto agree to jointly and
severally indemnify the Escrow Agent and its employees, directors,
agents and advisors and hold each harmless against any and all
liabilities incurred by it hereunder as a consequence of such
party's action, and all other parties hereto agree jointly and
severally to indemnify the Escrow Agent and hold it harmless
against any claims, costs, payments, and expenses (including the
fees and expenses of counsel) and all liabilities incurred by it in
connection with the performance of its duties hereunder and them
hereunder, except in either case for claims, costs, payments and
expenses (including the fees and expenses of counsel) and
liabilities incurred by the Escrow Agent resulting from its own
willful misconduct, gross negligence or fraud.
10. Notices. All notices and other communications required
or permitted to be given under this Agreement shall be in writing
and shall be deemed to be duly given: (a) if delivered personally
or sent by facsimile, on the date received; (b) if delivered by
overnight courier on the day after mailing so long as the sending
party retains a receipt thereof; and (c) if mailed, then three (3)
days after mailing with the United States mail service, postage
pre-paid. Any such notices or communications shall be sent to the
parties at the addresses listed below or at such other addresses as
a party may specify by notice to the other parties to this
Agreement, which notice will be accomplished in accordance with the
terms of this paragraph 10.
11. Miscellaneous. All capitalized terms not otherwise
defined in this Agreement will have the respective meanings set
forth in the Merger Agreement. This Agreement will inure to the
benefit of, and will be binding upon, the parties hereto and may
not be assigned by any party without the prior written consent of
all other parties, and any prohibited assignment shall be null and
void. The headings used in this Agreement have been inserted for
convenience only and will not control or affect the meaning of any
provision of this Agreement. The provisions of this Agreement have
been subject to negotiation, and will not be construed against its
drafter. This Agreement, together with the Merger Agreement and
the exhibits hereto, constitutes the entire agreement among the
parties with respect to the subject matter hereof. No change in,
addition to or waiver or amendment of the terms or conditions of
this Agreement will be binding upon any of the parties unless
approved in writing by such parties. This Agreement may be
executed in any number of counterparts, each of which will be
deemed an original and all of which together will be deemed one and
the same instrument. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of
Tennessee, without giving effect to its conflicts of laws
provisions.
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IN WITNESS WHEREOF, the parties have executed this Escrow
Agreement as of the date set forth above.
ACS2:
ACS2, Inc.
By:
Title:
49 Music Square West, Suite 502
Nashville, Tennessee 37203-3272
DYNAMIC:
DYNAMIC ASSOCIATES, INC.
By:
Title:
7373 N. Scottsdale,
Suite B-169
Scottsdale, AZ 85253
ADVANCED:
ADVANCED CLINICAL SYSTEMS, INC.
By:
Title:
49 Music Square West, Suite 502
Nashville, Tennessee 37203-3272
ORIGINAL ACS2 STOCKHOLDERS:
Healthmark Partners, LLC
By:
Title:
Kevin D. Lee
James T. Harper
Lisa A. Manning
David Alfery
T.C. Thomas, III, M.D.
Thomas P. Tooney, M.D.
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ESCROW AGENT:
HARWELL HOWARD HYNE GABBERT &
MANNER, P.C.
By:
Title:
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37238
Kimberly Tipton
Scott N. Mohler
Reginal J. Rutherford
Walter M. Jones
Carol Ann Kelley
Maureen T. (Stearns) Browning
Elizabeth Dan
Betty Brumley
F. Karl VanDevender
H. Brooks Morgan
M. Bruce Sanderson
NationsCredit
By:
Title:
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EXHIBIT 1
Number of Shares
Original ACS2 Stockholders of Escrow Stock
Andrew W. Miller
James T. Harper
Kevin D. Lee
David Alfery
T.C. Thomas, III, M.D.
Thomas P. Tooney, M.D.
Lisa A. Manning
Kimberly Tipton
Scott N. Mohler, Ph.D
Reginal J. Rutherford, M.D.
Walter M. Jones
Carol Ann Kelley, R.N.
M. Bruce Sanderson, M.D.
H. Brooks Morgan, M.D.
Maureen T. (Stearns) Browning, R.N.
F. Karl VanDevender, M.D.
Elizabeth Dan
Betty Brumley
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