AGREEMENT AND PLAN OF MERGER
between
DYNAMIC ASSOCIATES, INC.
"Dynamic"
and
TELE-LAWYER, INC.
"Tele-Lawyer"
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered
into on November 28, 2000, by and between DYNAMIC ASSOCIATES, INC.,
a Nevada corporation ("Dynamic"), and TELE-LAWYER, INC., a Nevada
corporation ("Tele-Lawyer").
R E C I T A L S:
----------------
WHEREAS, the parties believe that a business combination
between Dynamic and the Tele-Lawyer is in the best interest of the
parties to this Agreement and their respective stockholders; and
WHEREAS, the respective Boards of Directors and shareholders
of the parties have approved, or will meet to consider and approve,
the merger of Tele-Lawyer with and into Dynamic, upon the terms and
conditions set forth in this Agreement and Plan of Merger in
accordance with Chapter 92A "Mergers and Exchanges of Interest" of
the Nevada Revised Statutes; and
WHEREAS, each party hereto wishes to adopt this Agreement and
Plan of Merger, together with the forms of Certificates of Merger
attached hereto as Exhibit A (the "Certificates of Merger") as a
"plan of reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code, and to cause the Merger to qualify as a
reorganization under the provision of Section 368(a)(1)(A) of the
Code, whereby each share of capital stock of Tele-Lawyer (the
"Tele-Lawyer Common Stock") will be canceled and whereby Dynamic
will be the surviving entity of a merger with Tele-Lawyer.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained in this Agreement 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:
ARTICLE I. THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section
1.3 hereof) and subject to and upon the terms and conditions of
this Agreement, Tele-Lawyer will be merged with and into Dynamic
(the "Merger"). Following the Merger, Dynamic will continue as the
surviving entity under the name "Dynamic Acquisition Corporation"
and the separate corporate existence of Tele-Lawyer will cease.
(Dynamic and Tele-Lawyer are sometimes referred to collectively
herein as the "Constituent Companies").
1.2 Effects of the Merger. At the Effective Time, Tele-
Lawyer will be a wholly owned subsidiary of Dynamic. At the
Effective Time, Dynamic will, without any other action, possess all
the rights, privileges, powers and franchises, of a public as well
as of a private nature, and be subject to all the restrictions,
disabilities and duties of Tele-Lawyer. All property, rights,
privileges, powers and franchises, and all and every other interest
will be thereafter as effectually the property of Dynamic as they
were of Tele-Lawyer, and the
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title to any real estate vested by deed or otherwise in Tele-Lawyer
will not revert or be in any way impaired by reason of the Merger.
All rights of creditors and all liens upon any property of Tele-Lawyer
will be preserved unimpaired, and all debts, liabilities and duties of
Tele-Lawyer will thenceforth attach to Dynamic.
1.3 Closing; Effective Time and Transaction Effective Date.
The closing of the Merger (the "Closing") will take place on a date
to be specified by the parties, but in no event more than fifteen
(15) business days following approval of the Merger by the
shareholders of Dynamic (the "Closing Date"), subject to
satisfaction or waiver of the conditions set forth in this
Agreement, at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
The Merger will become effective at the time of the filing of the
Certificate of Merger with the offices of the Secretary of State of
the State of Nevada in accordance with the provisions of applicable
law, which Certificates of Merger will be so filed as soon as
practicable after the Closing. The date and time when the Merger
will become effective shall be at such time as the Certificates of
Merger are duly filed with the Nevada Secretary of State or such
later date as mutually agreeable by the parties and specified in
the Certificates of Merger (the "Effective Time").
1.4 Certificate of Incorporation. The Articles of
Organization and Bylaws of Dynamic in effect immediately prior to
the Effective Time will remain the Articles of Organization and
Bylaws of Dynamic until amended in accordance with the provisions
of the applicable corporate law.
1.5 Directors and Officers. The officers and directors of
Dynamic immediately following the Effective Time will be the
officers and directors of Tele-Lawyer, until their successors have
been duly elected and qualified in accordance with the Articles of
Incorporation and Bylaws of Dynamic.
ARTICLE II. STATUS AND CONVERSION OF SECURITIES
2.1 Conversion of Securities. At the Effective Time, each
share of Tele-Lawyer Common Stock issued and outstanding
immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of the holders thereof,
automatically be canceled, retired and extinguished, and each
outstanding share of Tele-Lawyer Common Stock will be converted
into a share of Dynamic Common Stock ("Merger Consideration").
In addition, each holder of an option or warrant to purchase Tele-
Lawyer common stock under its incentive stock option plan or
otherwise shall be entitled to receive an option to purchase the
same number of shares of Dynamic stock under the same terms as
provided in their option or warrant agreement.
2.2 Delivery of Merger Consideration. Dynamic shall deliver
the Merger Consideration to each holder of Tele-Lawyer Common Stock
within five (5) business days of Closing or within five (5)
business days after surrender of certificates (the "Certificates")
representing all shares of Tele-Lawyer Common Stock owned by such
individual, whichever is later. By accepting delivery of the
Merger Consideration, each such holder
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will be deemed to have represented to Dynamic that such stockholder
has no present intention of selling or otherwise disposing of any of
its interest in the Dynamic Common Stock received as part of the
Merger Consideration, except as contemplated under that certain
Registration Rights Agreement referenced in Section 2.8.
(1) Certificates. The Certificates shall forthwith be
canceled upon surrender. Until surrendered as contemplated by this
Section 2.3, each such Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive
upon such surrender that pro rata portion of the Merger
Consideration applicable thereto. No interest will be paid or will
accrue on any portion of the Merger Consideration.
(2) No Further Ownership Rights in Tele-Lawyer Common
Stock. All shares of Dynamic Common Stock issued upon the surrender
for exchange of the Certificates in accordance with the terms of
this Article II shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to Tele-Lawyer Common
Stock theretofore represented by such Certificates, and there shall
be no further registration or transfer of the shares of Tele-Lawyer
Common Stock after the Effective Time.
(3) No Fractional Shares. No certificates or scrip
representing fractional shares of Dynamic Common Stock shall be
issued upon the surrender of certificates of Tele-Lawyer Common
Stock for exchange. Notwithstanding any other provision of this
Agreement, each holder of Tele-Lawyer Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of Dynamic Common Stock (after taking
into account all Certificates delivered by such holder) will
promptly receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Dynamic Common
Stock multiplied by the per share closing price of such Dynamic
Common Stock as reported on the Nasdaq Over-The-Counter Bulletin
Board on the date of the Effective Time.
(4) Lost Certificates. In the event any Certificates
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact, in form and substance reasonably
satisfactory to Dynamic, by the person claiming such certificate to
be lost, stolen or destroyed, Dynamic will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Dynamic
Common Stock and cash in lieu of fractional shares, deliverable in
respect thereof pursuant to this Agreement.
2.3 Cancellation of Treasury Shares. Any authorized but un-
issued shares of Tele-Lawyer Common Stock as of the Effective Time
shall automatically be canceled and retired and shall cease to
exist, and no Dynamic Common Stock, cash or other consideration
will be delivered in exchange therefor.
2.4 Securities Exemptions. Dynamic hereby represents,
warrants and covenants that all the shares of Dynamic Common Stock
comprising the Merger Consideration will be issued pursuant to an
exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). Each
share certificate representing the Dynamic Common Stock so issued
will be endorsed with a legend stating that the shares have been
issued pursuant to an exemption from registration provided by
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the Securities Act and may not be sold without an exemption from
registration or an effective registration statement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TELE-LAWYER
As an inducement to Dynamic to enter into this Agreement and to
consummate the Merger, Tele-Lawyer represents and warrants to
Dynamic, which representations will be true and correct at Closing,
as follows:
3.1 Organization, Qualification and Authority. Tele-Lawyer
is a corporation duly organized, validly existing and in good
standing in the State of Nevada, and is not required to be
qualified to do business as a foreign corporation in any other
jurisdiction. Tele-Lawyer does not own stock or equity interests
in and does not control, directly or indirectly, any corporation,
partnership, joint venture, association or business organization.
Since the date of its organization and incorporation, Tele-Lawyer
has consistently observed and operated within the corporate
formalities of the jurisdiction in which it is incorporated and/or
conducts its business, and has consistently observed and complied
with the general corporation law of such jurisdiction. Tele-Lawyer
has the full corporate power and authority to own, lease and
operate its properties and assets as presently owned, leased and
operated and to carry on its business as it is now being conducted.
Subject to obtaining certain third party consents, Tele-Lawyer has
the full right, power and authority to execute, deliver and carry
out the terms of this Agreement and all documents and agreements
necessary to give effect to the provisions of this Agreement.
Subject to obtaining certain third party consents, the execution,
delivery and consummation of this Agreement and all other
agreements and documents executed in connection herewith by Tele-
Lawyer have been duly authorized by all necessary corporate action
on the part of Tele-Lawyer and no other action on the part of Tele-
Lawyer or any other person or entity is necessary to authorize the
execution, delivery or consummation of this Agreement. This
Agreement and all other agreements and documents executed in
connection herewith by Tele-Lawyer, upon due execution and delivery
thereof, will constitute the valid and binding obligations of Tele-
Lawyer, enforceable in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally and by general principles of equity.
3.2 Capitalization and Stock Ownership
(1) Common Stock. The authorized capital stock of Tele-
Lawyer consists of twenty five million (25,000,000) shares, $0.001
par value, of common stock. Tele-Lawyer has issued the number of
shares, options and warrants as provided in Exhibit 3.1 attached
hereto. The Tele-Lawyer Stock is not subject to preemptive or
comparable rights. The Tele-Lawyer Stock has been issued in
accordance with all applicable federal and state securities laws.
(2) Related Agreements. There are no voting trusts,
voting agreements, shareholders' agreements or other comparable
commitments or understandings to which Tele-Lawyer is a party or by
which Tele-Lawyer is bound with respect to the voting of any Tele-
Lawyer Stock.
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3.3 Absence of Default. The execution, delivery and
consummation of this Agreement, and all other agreements and
documents executed in connection herewith, by Tele-Lawyer will not
constitute a violation of, be in conflict with, or, with or without
the giving of notice or the passage of time, or both, result in a
breach of, constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, indenture, obligation or
liability or result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any of the assets
of Tele-Lawyer under: (a) any term or provision of the Certificate
of Incorporation or Bylaws of Tele-Lawyer; (b) any material
contract, lease, purchase order, agreement, document or other
commitment, oral or written, to which Tele-Lawyer is a party or by
which Tele-Lawyer is bound.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF DYNAMIC
As an inducement Tele-Lawyer to enter into this Agreement and to
consummate the Merger, and as an inducement to the Original Tele-
Lawyer Stockholders to approve of and consummate the Merger,
Dynamic hereby represents and warrants to each such party, which
representations and warranties will be true and correct at Closing,
as follows. Any representation, warranty or covenant of or
relating to Dynamic is hereby deemed to also be a representation,
warranty or covenant of or relating to any and all of the Dynamic
Subsidiaries (as defined in Section 4.1).
4.1 Organization, Qualification and Authority. Dynamic is a
corporation duly organized, validly existing and in good standing
in the State of Nevada, and is not required to be qualified to do
business as a foreign corporation in any other jurisdiction.
Dynamic does not own stock or equity interest in and does not
control, directly or indirectly, any corporation, partnership,
joint venture, association or business organization other than the
entity set forth on Exhibit 4.1 attached hereto (the "Dynamic
Subsidiary"). Since the date of its organization and incorporation
or formation, Dynamic has consistently observed and operated within
the corporate formalities of the jurisdictions in which it is
organized and/or conducts its business, has consistently observed
and complied with the general corporation law of such jurisdictions
and has been duly qualified to do business as a foreign corporation
in all relevant jurisdictions. All outstanding shares of capital
stock of the Dynamic Subsidiaries consist solely of common stock
and have been validly issued in accordance with all applicable
federal and state securities laws and are owned by Dynamic free and
clear of all liens, charges, encumbrances, claims and options of
any nature. Dynamic has the full right, power and authority to
own, lease and operate its properties and assets as presently
owned, leased and operated and to carry on its business as it is
now being conducted. Subject to obtaining requisite approval of the
shareholders of Dynamic, Dynamic has the full right, power and
authority to execute, deliver and carry out the terms of this
Agreement and all documents and agreements necessary to give effect
to the provisions of this Agreement, to consummate the transactions
contemplated on the part of Dynamic hereby, and to take all actions
necessary to permit or approve the actions Dynamic is to take in
connection with this Agreement. Subject to obtaining requisite
approval of the shareholders of Dynamic, the execution, delivery
and consummation of this Agreement and all other agreements and
documents executed in connection herewith by Dynamic have been duly
authorized by all necessary corporate action on the part of
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Dynamic. No other action on the part of Dynamic, or any other
person or entity is necessary to authorize the execution, delivery
and consummation of this Agreement and all other agreements and
documents executed in connection herewith, other than such
shareholder approval. This Agreement and all other agreements and
documents executed in connection herewith by Dynamic, upon due
execution and delivery thereof, will constitute the valid and
binding obligations of Dynamic as the case may be, enforceable in
accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by general
principles of equity.
4.2 Capitalization and Stock Ownership.
(1) Common Stock. The authorized capital stock of
Dynamic (the "Dynamic Common Stock") consists of 100,000,000
shares, $0.001 par value, of common stock, of which 18,386,429
shares are currently issued and outstanding as of the date hereof.
The Dynamic Common Stock, along with the securities referenced in
clause (2) below, constitutes all current issued and outstanding
securities of Dynamic, and are duly authorized, validly issued,
fully paid and non-assessable. The convertible notes issued by
Dynamic in July 1999 constitute all past securities of Dynamic not
currently outstanding, were duly authorized and validly issued, and
no party has any rights or claims with respect thereto. The
Dynamic Common Stock is not subject to preemptive or comparable
rights. The Dynamic Common Stock and all other currently or
previously outstanding securities of Dynamic have been issued in
accordance with all applicable federal, state and foreign
securities laws.
(2) Other Securities. As of the date hereof, 8,575,000
shares of Dynamic Common Stock are reserved for issuance upon the
exercise of outstanding warrants (the "Dynamic Warrants"), 117,500
shares of Dynamic Common Stock are reserved for issuance upon
exercise of outstanding options (the "Dynamic Options"), all of
which have been granted under the 1997 Stock Option Plan, 8,325,000
shares of Dynamic Common Stock are reserved for issuance upon
conversion of certain replacement 7.5% convertible subordinated
notes (the "Dynamic Secured Notes"), and no other shares of Dynamic
Common Stock are or need to be reserved for any other purpose other
than as Merger Consideration. Dynamic has issued the Dynamic
Secured Notes in the aggregate principal amount of $8,325,000 which
Notes are convertible into that number of shares of Dynamic Common
Stock equal to the principal amount of such notes divided by $1.00.
The redemption of the original Notes and the issuance of the
Dynamic Secured Notes in replacement thereof was effected in full
compliance with law. True and correct fully executed copies of all
documents regarding the redemption and issuance of the convertible
Notes by Dynamic have been provided to Tele-Lawyer. Except for the
Dynamic Warrants, the Dynamic Options and the Dynamic Secured Notes
referenced in this clause (2) there are not any existing options,
warrants, calls, subscriptions, stock appreciation rights or other
rights or agreements or commitments obligating Dynamic to issue,
transfer or sell any capital stock or other security of it or any
Dynamic Subsidiary, or any other security convertible into or
evidencing the right to subscribe for any such security.
(3) Related Agreements. There are no voting trusts,
voting agreements, shareholders' or other comparable commitments or
understandings, oral or written, to
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which Dynamic or any holder of Dynamic securities is a party or by
which Dynamic or any such holder is bound with respect to the voting
of any Dynamic Common Stock or the capital stock or securities of any
Dynamic Subsidiary, either before or after Closing of the Merger.
(4) Dynamic Common Stock. On the Closing Date, Dynamic
will have a sufficient number of authorized but un-issued and/or
treasury shares of Dynamic Common Stock available for issuance to
the Original Tele-Lawyer Stockholders in accordance with the
provisions of this Agreement. The Dynamic Common Stock to be
issued as Merger Consideration pursuant to the Agreement will, when
so delivered, be duly and validly issued in accordance with all
applicable federal and state securities laws, will be exempt from
registration requirements of the 1933 Act and state "blue sky"
laws, will be fully paid and non-assessable, and will be free and
clear of preemptive or comparable rights.
4.3 Convertible Unsecured Debt; Refinancing. The Dynamic
Secured Notes and the convertible notes they replaced were offered,
sold and issued in compliance with law, including but not limited
to applicable federal, state and foreign securities laws. The
Trust Indenture Act of 1939, as amended, did not apply to the
offer, sale, issuance or ownership of either the Dynamic Secured
Notes or the convertible notes they replaced.
4.4 Absence of Default. The execution, delivery and
consummation of this Agreement, and all other agreements and
documents executed in connection herewith by Dynamic will not
constitute a violation of, be in conflict with, or, with or without
the giving of notice or the passage of time, or both, result in a
breach of, constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, indenture, obligation or
liability or result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any of the assets
of Dynamic under: (a) any term or provision of the Charter or
Bylaws of Dynamic; (b) any material contract, lease, purchase
order, agreement, document or other commitment, oral or written, to
which Dynamic is a party or by which Dynamic is bound (collectively
the "Dynamic Contracts"); (c) any judgment, decree, order, writ,
injunction or rule of any court or regulatory authority; or (d), to
the knowledge of Dynamic, any law, statute, rule or regulation to
which Dynamic is subject.
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ARTICLE V. COVENANTS OF PARTIES
5.1 Preservation of Business and Assets. From the date
hereof until the Closing, each party will use its best efforts and
will do or cause to be done all such acts and things as may be
necessary to preserve, protect and maintain intact the operation of
its respective business and assets as a going concern consistent
with prior practice and not other than in the ordinary course of
business, including preserving, protecting and maintaining the
goodwill of the suppliers, employees, clientele, patients and
others having business relations with such party. Each party will
use its best efforts to retain its employees in their current
positions up to Closing. Through Closing, other than consistent
with the terms of this Agreement, no party will acquire or sell or
agree to acquire or sell by merging or consolidating with, or by
purchasing or selling a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof. Except as expressly set
forth in this Agreement or any related Agreement, the execution,
delivery and consummation of this Agreement and the transactions
contemplated hereunder will not give rise to any obligation of any
party hereto, or any right of any holder of any security of any
party hereto to require such party, to purchase, offer to purchase,
redeem or otherwise prepay or repay any capital stock or other
security, or deposit any funds to affect the same. All parties
will use their best efforts to facilitate the consummation of the
Merger as contemplated hereunder, including obtaining requisite
approval of stockholders and third parties. Through Closing,
except as expressly set forth in this Agreement and except for the
exercise or termination of any outstanding Dynamic Warrants,
Dynamic Options, the conversion of Dynamic Secured Notes, or the
sale of Tele-Lawyer Common Stock, no party will issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any shares
of its capital stock of any class, any voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible
securities. Through Closing, except with the exception of a reverse
split of Dynamic Common Stock described herein, no party will
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, or repurchase, redeem or otherwise acquire any shares of its
capital stock. From the date hereof until the Closing, no party
will pay any dividend or distribution to its stockholders as such,
and no party will sell, discard or dispose of any of its assets,
except for the sale of the assets of the Dynamic Subsidiary.
5.2 Absence of Material Change. From the date hereof until
the Closing, no party will make any change in its business or in
the utilization of its assets and will not enter into any contract
or commitment or any other transaction with respect to its business
or its assets which is contrary to its representations, warranties
and obligations as set forth in this Agreement.
5.3 Material Transactions. Except as contemplated by this
Agreement, prior to the Effective Time, each party hereto,
including its respective subsidiaries, if any, will not, without
first obtaining the written consent of the other parties hereto:
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(1) dispose of or encumber any asset or enter into any
transaction or make any contract commitment relating to the
properties, assets and business of such entity, other than in the
ordinary course of business or as otherwise disclosed herein;
(2) enter into any employment contract which is not at
will or terminable upon notice of thirty (30) days or less, without
penalty;
(3) enter into any contract or agreement (i) which
cannot be performed within three months or less, or (ii) which
involves the expenditure of over $10,000.00, except in the ordinary
course of business;
(4) except as contemplated herein, issue or sell, or
agree to issue or sell, any shares of capital stock or other
securities of such entity;
(5) make any payment or distribution under any bonus,
pension, profit-sharing or retirement plan or incur any obligation
to make any such payment or contribution which is not in accordance
with such entities usual past practice, or make any payment or
contributions or incur any obligation pursuant to or in respect of
any other plan or contract or arrangement of providing for bonuses,
executive incentive compensation, pensions, deferred compensation,
retirement payments, profit-sharing or the like, establish or enter
into any such plan, contract or arrangement, or terminate any plan;
(6) extend credit to anyone except in the ordinary
course of business consistent with prior practice;
(7) guarantee the obligation of any person, firm or
corporation;
(8) amend its charter or bylaws, or applicable
organizational documents;
(9) set aside or pay any cash dividend or any other
distribution on or in respect of its capital stock or any
redemption, retirement or purchase with respect to its capital
stock or issue any additional shares of its capital stock; or
engage in any stock split, re-capitalization, reorganization or
comparable transaction;
(10) discharge or satisfy any lien, charge, encumbrance
or indebtedness outside the ordinary course of business;
(11) institute, settle or agree to settle any litigation,
action or proceeding before any court or governmental body;
(12) authorize any compensation increase of any kind
whatsoever for any employee, consultant or other representative; or
(13) engage in any extraordinary transaction.
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5.4 Preparation of the Proxy Statement; Stockholders Meetings.
(1) As soon as practicable, Dynamic shall prepare and
file with the SEC and any appropriate foreign governmental
authorities a proxy statement relating to the meeting of Dynamic's
shareholders to be held in connection with obtaining the approval
of Dynamic's shareholders (as the same may be amended or
supplemented from time to time, the "Proxy Statement"). Dynamic
will cause the Proxy Statement to be mailed to the holders of
Dynamic Common Stock as promptly as practicable thereafter.
Dynamic shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or
to file a general consent to service of process) required to be
taken under any applicable state or foreign securities laws in
connection with the issuance of the Dynamic Common Stock in the
Merger, and Tele-Lawyer shall furnish all information concerning
Tele-Lawyer and the Original Tele-Lawyer Stockholders as may be
reasonably requested in connection with any such action. No filing
of, or amendment or supplement to, the Proxy Statement will be made
by Dynamic without providing Tele-Lawyer and its counsel ample
opportunity to review and comment thereon. Dynamic will advise
Tele-Lawyer of the time when the Proxy Statement is filed, the
Proxy Statement is mailed to shareholders, any supplement or
amendment has been filed or mailed, or comments thereon and
responses thereto or requests by governmental authorities for
additional information. If at any time prior to the Effective Time
any information relating to Dynamic or Tele-Lawyer, or any of their
respective affiliates, officers or directors, should be discovered
by Dynamic or Tele-Lawyer which should be set forth in an amendment
or supplement to the Proxy Statement so that such document would
not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be
promptly filed and, to the extent required by law, disseminated to
the stockholders of Dynamic.
(2) Dynamic shall, as promptly as reasonably practicable
after the date hereof give notice of, convene and hold a meeting of
its shareholders (the "Dynamic Shareholders Meeting") in accordance
with Chapter 78 "Private Corporations" and Chapter 92A "Mergers and
Exchanges of Interest" of the Nevada Revised Statutes
(collectively, the "Nevada Acts") and the requirements of the
Nasdaq Over-The-Counter Bulletin Board and any applicable foreign
authorities for the purpose of obtaining Dynamic's shareholder
approval of the Merger and shall, through its Board of Directors,
recommend to its shareholders that they approve of the Merger in
all respects.
(3) As an integral part of its obligations Dynamic will
comply with the provisions of Rule 144(c) under the Securities Act
in order that affiliates of Tele-Lawyer may resell the Dynamic
Common Stock they receive pursuant to the Merger pursuant to Rule
145(d) under the Securities Act, and agrees that the registration
statements to be filed will include such information as may be
requested by Tele-Lawyer to permit re-sales of such Dynamic Common
Stock by persons who may be deemed to be underwriters of Dynamic
Common Stock pursuant to Rule 145 under the Securities Act.
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5.5 Certain Tax Matters.
(1) During the period from the date hereof through the
Effective Time, no party will knowingly or negligently take or fail
to take any action that would jeopardize the treatment of the
Merger as a "reorganization" within the meaning of Section
368(a)(1)(A) of the Code (and any comparable provisions of
applicable state law). Each party hereto shall report the Merger,
and the Exchange, as a reorganization under Section 368(a) of the
Code, and shall not take any position inconsistent with this
characterization except in the event of a contrary final
determination of the Internal Revenue Service. If any party
receives notice of any contrary position by the Internal Revenue
Service any party hereto may, at its option and sole expense,
contest such position, in which event the other parties hereto
shall cooperate with such contest as reasonably requested by the
contesting party.
(2) Each party hereto shall provide to the other
parties, at the expense of the requesting party, with such
assistance as may reasonably be requested by any of them in
connection with the preparation of any tax return, any audit or
other examination by any regulatory authority, or any judicial or
administrative proceedings relating to liability for taxes, and
each party will retain and provide the requesting party with any
records or information that may be relevant to any of the
foregoing.
5.6 Legal Conditions to Merger. Each party hereto will take
all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger
and will promptly cooperate with and furnish information to each
other party in connection with any such requirements imposed upon
either any of them in connection with the Merger.
5.7 Preserve Accuracy of Representations and Warranties.
Each party hereto will refrain from taking any action which would
render any of its representations and warranties contained in this
Agreement untrue, inaccurate or misleading as of Closing and the
Effective Time. Through Closing, each party will promptly notify
the other parties of any lawsuit, claim, audit, investigation,
administrative action or other proceeding asserted or commenced
against such party that may involve or relate in any way to
another party to this Agreement. Each party hereto will promptly
notify the other parties of any facts or circumstances that come to
its attention and that cause, or through the passage of time may
cause, any of a party's representations, warranties or covenants
to be untrue or misleading at any time from the date hereof through
Closing.
5.8 Notice of Subsequent Events. Each party hereto shall
notify the other parties of any changes, additions or events of
which it has knowledge which would cause any material change in or
material addition to this Agreement (including but not limited to
the Exhibits attached hereto and thereto) promptly after occurrence
of the same. If the effect of such change or addition would,
individually or in the aggregate with the effect of changes or
additions previously disclosed pursuant to this Section, constitute
a material adverse effect on the notifying party, any non-notifying
party may, within ten (10) days after receipt of such notice, elect
to terminate this Agreement. If no non-notifying party gives
written notice of such termination with such 10-day period, the
non-notifying parties shall be deemed to have consented to such
change or addition and shall not be entitled to terminate this
Agreement by reason thereof.
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5.9 Medicare and Medicaid Reporting. Through Closing, the
parties will timely file or cause to be filed all reports and
claims of every kind, nature or description, required by law or by
written or oral contract to be filed with respect to the purchase
of services by third party payors, including, but not limited to,
Medicare, Medicaid and Blue Cross.
5.10 Current Return Filing. Each party will be responsible
for the preparation and filing of all of such party's own tax
returns which were due on or before the Closing, and the payment of
all taxes due.
5.11 Maintain Books and Accounting Practices. From the date
hereof until the Closing, each party will maintain its books of
account in the usual, regular and ordinary manner on a basis
consistent with prior years and will make no change in its
accounting methods or practices.
5.12 Compliance with Laws and Regulatory Consents. From the
date hereof until the Closing, (a) each party will comply with all
applicable statutes, laws, ordinances and regulations, (b) each
party will keep, hold and maintain all Licenses, (c) each party
will use its reasonable efforts and will cooperate fully with the
other parties hereto to obtain all consents, stockholder and other
approvals, exemptions and authorizations of third parties, whether
governmental or private, necessary to consummate the Merger, and
(d) each party will make and cause to be made all filings and give
and cause to be given all notices which may be necessary or
desirable on their part under all applicable laws and under their
respective contracts, agreements and commitments in order to
consummate the Merger.
5.13 Maintain Insurance Coverage. From the date hereof until
the Closing, each party will maintain and cause to be maintained in
full force and effect all its currently existing insurance on such
party's assets and the operations of such party's business.
5.14 Closing Deliveries. At Closing, the parties hereto will
deliver or cause to be delivered the following, fully executed and
in form and substance reasonably satisfactory to the receiving
party:
(1) Tele-Lawyer will deliver to Dynamic stock
certificates of Tele-Lawyer, duly endorsed by the original Tele-
Lawyer Stockholders or with stock powers attached, representing all
of the issued and outstanding shares of Tele-Lawyer Common Stock;
provided, however, that a failure by Tele-Lawyer to deliver the
same will not be deemed a breach of this Agreement.
(2) Dynamic will deliver to the Original Tele-Lawyer
Stockholders' certificates representing the shares of Dynamic
Common Stock comprising the Merger Consideration set forth herein.
(3) Each party will deliver the Certificates of Merger
in form acceptable for filing with the applicable Secretaries of
State.
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(4) Each party shall deliver such customary certificates
of its officers and such other customary closing documentation as
may be reasonably requested by the other parties, including without
limitation:
(i) Certificates of Existence and/or "Good
Standing" regarding the delivering party
and its subsidiaries, certified by the appropriate
Secretary of State and dated within (10) business
days of Closing;
(ii) Incumbency Certificates certifying the identity
of the officers of the delivering party and its
subsidiaries; and
(iii) Charters, Operating Agreement or Certificates of
Incorporation, as certified by the appropriate
Secretary of State within ten (10) business days of
Closing, and Bylaws, as certified by an appropriate
officer as of Closing, of the delivering party and
its subsidiaries.
ARTICLE IVI.
CONDITIONS TO CLOSING
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The obligation of each party hereto to effect the Merger
shall be subject to the fulfillment at or prior to the Closing of
the following conditions:
(1) Dynamic shall have purchased or caused to be
purchased on or before December 15, 2000, 100,000 shares of Tele-
Lawyer, Inc. stock at a price of $3 per share.
(2) This Agreement and the transactions contemplated
hereunder shall have been approved by shareholders of Dynamic in
the manner required by the applicable laws of the State of Nevada
and the Charter and Bylaws of Dynamic.
(3) The Original Tele-Lawyer Stockholders will have
executed and delivered such documents and performed such acts as
reasonably required to effectuate the Merger.
(4) Each party hereto shall have received from the other
parties copies of all resolutions and/or consent actions adopted by
or on behalf of the boards of directors and shareholders of such
other parties hereto, certified as of the date of Closing and
evidencing approval of this Agreement and the transactions
contemplated hereunder.
(5) No action or proceeding before a court or other
governmental body by any governmental agency or public authority
shall have been instituted or threatened to restrain or prohibit
the transactions contemplated under this Agreement or to obtain an
amount of damages or other material relief in connection with the
execution of this Agreement or any related agreements or the
consummation of the Merger; and no governmental agency shall have
given notice to any party hereto to the effect that consummation of
the transactions contemplated under this Agreement would constitute a
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violation of any law or that it intends to commence proceedings
to restrain consummation of the Merger.
(6) All consents, authorizations, orders and approvals
of (or filings or registrations with) any governmental commission,
board or other regulatory body or any other third party (including
lenders and lessors) required in connection with the execution,
delivery and performance of this Agreement shall have been obtained
or made.
(7) Dynamic shall have extinguished all of its
outstanding debt, including all existing notes, through a
conversion to common stock or otherwise.
(8) Dynamic shall have settled any outstanding claims,
liabilities, actions or lawsuits to the satisfaction of Tele-
Lawyer.
(9) Dynamic shall have enacted through its board of
directors a reverse split of its shares so as to have after
conversion of its debt to equity at the Effective Time no more than
250,000 shares of Common Stock outstanding.
(10) Dynamic shall have extinguished all of its
outstanding warrants, options and any other rights to acquire any
shares of its Common Stock.
(11) The board of directors of Dynamic shall have created
an incentive stock option plan consistent with the current Tele-
Lawyer plan in which the existing option holders of Tele-Lawyer can
be granted comparable rights to purchase common shares of Dynamic
following consummation of the Merger.
(12) Dynamic shall have voted to amend its articles of
incorporation to change its name to Tele-Lawyer, Inc. or such
other name as approved by Tele-Lawyer, and such name change shall
have become effective.
(13) The parties shall each will have raised at
least $1,500,000 in capital through the sale of Tele-Lawyer common
stock. It is acknowledged that Tele-Lawyer is in the process of
raising a maximum of $9 million through the sale of 3 million
shares of its common stock and that such sale shall not be a
violation of this agreement.
(14) Tele-Lawyer shall have entered into a
management agreement with Dynamic to manage its business operations
at no cost to Dynamic during the period from the execution of this
Agreement to the Effective Time or termination date of this
Agreement as provided herein.
ARTICLE VII.
TERMINATION; AMENDMENT; EXTENSION AND WAIVER
7.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval of this Agreement by
Tele-Lawyer and/or Dynamic, by the mutual consent of the Boards of
Directors of Tele-Lawyer and Dynamic.
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7.2 Termination by Certain Parties. Any party hereto may
terminate this Agreement at any time pursuant to Section 5.9. This
Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of Tele-Lawyer or Dynamic if: (a)
the Merger shall not have been consummated by April 1, 2000; (b)
the approval of the Merger by Dynamic's shareholders shall not have
been obtained by March 15, 2000 at a meeting duly convened therefor
or at any adjournment thereof; or (c) a United States federal or
state court of competent jurisdiction or United States federal or
state governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final
and non-appealable; provided, that the party seeking to terminate
this Agreement pursuant to this clause (c) shall have used all
reasonable efforts to remove such injunction, order or decree.
7.3 Termination by Dynamic. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption and approval by the shareholders
of Dynamic, by action by the Board of Directors of Dynamic, if: (a)
there has been a breach by Tele-Lawyer of any representation or
warranty contained in this Agreement which would have or would be
reasonably likely to have a material adverse effect on the
operations of Tele-Lawyer; or (b) there has been a breach of any of
the covenants or agreements set forth in this Agreement on the part
of Tele-Lawyer, which breach is not curable or, if curable, is not
cured within thirty (30) days after written notice of such breach
is given by Dynamic to Tele-Lawyer.
7.4 Termination by Tele-Lawyer. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after adoption and approval of the
Original Tele-Lawyer Stockholders, by action of the Board of
Directors of Tele-Lawyer, if: (a) there has been a breach by
Dynamic or the Dynamic Subsidiary of any representation or warranty
contained in this Agreement which would have or would be reasonably
likely to have a material adverse effect on the operations of Tele-
Lawyer, or (b) there has been a breach of any of the covenants or
agreements set forth in this Agreement on the part of Dynamic or
the Dynamic Subsidiary, which breach is not curable or, if curable,
is not cured within thirty (30) days after written notice of such
breach is given by Tele-Lawyer to Dynamic.
7.5 Effect of Termination and Abandonment. Upon termination
of this Agreement pursuant to Section 5.9 or this Article VII, this
Agreement and all agreements and documents (including legal
opinions) related hereto shall be void and of no force or effect,
and there shall be no liability by reason of this Agreement or the
termination thereof on the part of any party hereto, or on the part
of the respective directors, officers, managers, employees, agents,
representatives or shareholders of any of them; provided that this
Section 7.5 will not relieve any party from liability for damages
incurred as a result of any willful breach by such party or by an
affiliate of such party of any of its respective representations,
warranties, covenants or obligations set forth in this Agreement.
7.6 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties hereto.
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7.7 Extension; Waiver. At any time prior to the Effective
Time, any party hereto, by action taken by its Board of Directors
evidenced in writing, may, to the extent legally allowed: (a)
extend the time for the performance of any of the obligations or
other acts of the other parties hereto; (b) waive any inaccuracies
in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto; and (c) waive
compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
8.1 Survival. The covenants, obligations, representations
and warranties of each party contained in this Agreement, or in any
certificate or document delivered pursuant to this Agreement, will
be deemed to be material and to have been relied upon by the other
parties notwithstanding any investigation prior to the Closing,
will not be merged into any documents delivered in connection with
the Closing, and will terminate two (2) years after Closing;
provided however, that if a notice claiming indemnity is properly
delivered pursuant to Section 8.5, the indemnification obligations
will not expire with respect to such claim(s) until the same are
resolved as contemplated hereunder.
8.2 Indemnification by Dynamic. Dynamic shall indemnify,
defend and hold Tele-Lawyer its officers, directors, employees,
agents and representatives, and the Original Tele-Lawyer
Stockholders harmless against any and all losses, costs and
expenses (including reasonable cost of investigation, court costs
and legal fees actually incurred) and other damages resulting from:
(a) any breach by Dynamic or any Dynamic Subsidiary of any of their
covenants, obligations, representations or warranties or breach or
untruth of any representation, warranty, fact or conclusion
contained in this Agreement or any certificate or document of
Dynamic or any Dynamic Subsidiary delivered pursuant to this
Agreement, and (b) any claim that is brought or asserted by any
third party(ies) against the Original Tele-Lawyer Stockholders
arising out of the ownership, licensing, operation or conduct of
Dynamic and the Dynamic Subsidiaries through the Closing.
8.3 Indemnification by Tele-Lawyer. Tele-Lawyer shall
indemnify, defend and hold Dynamic and the Dynamic Subsidiaries,
their respective officers, directors, employees and representatives
harmless against any and all losses, costs and expenses (including
reasonable cost of investigation, court costs and legal fees
actually incurred) and other damages resulting from: (a) any breach
by Tele-Lawyer of any of its covenants, obligations,
representations or warranties or breach or untruth of any
representation, warranty, fact or conclusion contained in this
Agreement or any certificate or document of Tele-Lawyer delivered
pursuant to this Agreement, and (b) any claim that is brought or
asserted by any third party(ies) arising out of the ownership,
licensing, operation or conduct of Tele-Lawyer through Closing.
8.4 Exclusive Remedy. The indemnification obligations under
this Article are the sole and exclusive remedies available to Tele-
Lawyer and Dynamic with respect to this
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Agreement and the transactions contemplated hereunder. The parties
hereto expressly acknowledge and agree that they may make no claim nor
institute any action against any Original Tele-Lawyer Stockholder with
respect to this Agreement, any related agreement or the transactions
contemplated hereunder and thereunder.
ARTICLE IX. MISCELLANEOUS
9.1 Other Expenses. Except as otherwise provided in this
Agreement, each party will pay all of its expenses in connection
with the negotiation, execution, and implementation of the
transactions contemplated under this Agreement.
9.2 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this
Agreement will be in writing and will be deemed to have been 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, and (c) if mailed, five days after mailing with
postage prepaid. Any such notice will be sent as follows:
To Tele-Lawyer:
---------------
Tele-Lawyer, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
To Dynamic:
-----------
Dynamic Associates, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
9.3 Confidentiality; Prohibition on Trading. All parties
agree to maintain the confidentiality of the existence of this
Agreement and the transactions contemplated hereunder, unless
disclosure is required by law and except for disclosures to be made
in connection with obtaining shareholder approval and third party
consents, and actions required to consummate the contemplated
transactions. Tele-Lawyer agrees not to trade in the securities of
Dynamic based upon any nonpublic information.
9.4 Controlling Law. This Agreement will be construed,
interpreted and enforced in accordance with the substantive laws of
the State of Nevada, without giving effect to its conflicts of laws
provisions.
9.5 Headings. Any table of contents and Section headings in
this Agreement are for convenience of reference only and will not
be considered or referred to in resolving questions of
interpretation.
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9.6 Benefit. This Agreement will be binding upon and will
inure to the exclusive benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
No party hereto may assign any rights or delegate any duties
hereunder without the prior written consent of the other parties
hereto and any prohibited assignment or delegation will be deemed
null and void.
9.7 Partial Invalidity. The invalidity or unenforceability
of any particular provision of this Agreement will not affect the
other provisions hereof, and this Agreement will be construed in
all respects as if such invalid or unenforceable provisions were
omitted. Further, there will be automatically substituted for such
invalid or unenforceable provision a provision as similar as
possible which is valid and enforceable.
9.8 Counterparts and Facsimiles This Agreement may be
executed simultaneously in two (2) or more counterparts each of
which will be deemed an original and all of which together will
constitute but one and the same instrument. The signature page to
this Agreement and all other documents required to be executed at
Closing may be delivered by facsimile and the signatures thereon
will be deemed effective upon receipt by the intended receiving
party.
9.9 Interpretation. All pronouns and any variation thereof
will be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or entity, or the
context, may require. Further, it is acknowledged by the parties
that this Agreement has undergone several drafts with the
negotiated suggestions of both; and, therefore, no presumptions
will arise favoring either party by virtue of the authorship of any
of its provisions or the changes made through revisions.
9.10 Entire Agreement; Waivers. This Agreement, including the
Exhibits and Attachments hereto and those portions incorporated
herein by reference, constitutes the entire agreement between the
parties hereto with regard to the matters contained herein and it
is understood and agreed that all previous undertakings,
negotiations and agreements between the parties are merged herein.
This Agreement may not be modified orally, but only by an agreement
in writing signed by the parties hereto. The failure of any party
to this Agreement to assert any of its rights under this Agreement
or otherwise will not constitute a waiver of such rights. Neither
the failure nor any delay on the part of any party hereto in
exercising any rights, power or remedy hereunder will operate as a
waiver thereof or of any right, power or remedy; nor will any
single or partial exercise of any right, power or remedy preclude
any further or other exercise thereof, or the exercise of any other
right, power or remedy.
9.11 Legal Fees and Costs. In the event any party hereto
incurs legal expenses to enforce or interpret any provision of this
Agreement, the prevailing party will be entitled to recover such
legal expenses, including, without limitation, attorney's fees,
costs and disbursements, in addition to any other relief to which
such party will be entitled.
9.12 Conflict of Interest - ▇▇▇▇▇▇▇ ▇▇▇▇. The parties
acknowledge that ▇▇▇▇▇▇▇ ▇▇▇▇ has acted as legal counsel for
Dynamic and Perspectives in the past and is currently the
President, on the board of directors and a majority shareholder of
Tele-Lawyer, Inc. As a consequence, Mr. Cane has a conflict of
interest in regard to this agreement and has not acted
19
as attorney or counsel for Dynamic or Perspectives with regard to
this agreement in any respect. Further, Dynamic and Perspectives
have been advised and acknowledge that they have sought the advice
and services of independent counsel with regard to this agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and Plan of Merger as of the date first above written.
Tele-Lawyer, Inc.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
By: ______________________________
President
Title: ______________________________
Dynamic Associates, Inc.
/s/ ▇▇▇ ▇▇▇▇▇▇▇
By: ______________________________
C.E.O.
Title: ______________________________
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