|
Exhibit 2.3
DTLL, INC.
_________________
CONTRIBUTION AND STOCK ACQUISITION AGREEMENT
As of January 1, 2004
_________________
CONTRIBUTION AND STOCK ACQUISITION AGREEMENT
CONTRIBUTION
AND STOCK ACQUISITION AGREEMENT effective as of January 1, 2005 by
and among DTLL, Inc., a Minnesota corporation (the
“Corporation”), and GS Pharma, Inc.
(“GSPI”).
W I T N E S S E T H:
WHEREAS, the
Corporation desires to obtain from GSPI assignment of an exclusive
license agreement attached hereto as Exhibit 1 (the
“License”) in consideration of 12,500,000 shares of
common stock of the Corporation on the terms and conditions
contained herein;
NOW, THEREFORE,
the parties hereto, intending to be bound hereby, do agree as
follows:
Authorized and Outstanding Capital Stock.
The Corporation’s Articles of Incorporation
(the “Articles”) provide for, among other things, (a)
50,000,000 shares of common stock, par value $0.01 per share, and
(b) 50,000,000 shares of undesignated stock. As of the date of this
Agreement, 825,693 shares of common stock are issued and
outstanding, no shares of undesignated stock have been designated,
no shares of undesignated stock are issued or outstanding, and
611,329 shares of common stock are reserved for issuance (as
reported on Exhibit 2, attached), and no shares of
undesignated stock are reserved for issuance.
Issuance of Stock; Closing.
Issuance
of Stock. Subject to the terms and conditions
hereof, the Corporation has authorized the issuance to GSPI at the
Closing (as such term is defined in Section 2.4 hereof) of
12,500,000 shares of common stock (the “Stock”) which
will represent approximately 94% of the shares of common stock
issued and outstanding immediately following the
Closing.
Agreement
to Assign License. Subject to the terms and
conditions hereof, GSPI agrees to assign all of its rights in the
License to the Corporation.
Delivery of the Stock.
| |
(a) |
|
At the Closing, or as soon as possible thereafter, the
Corporation shall deliver to GSPI a certificate or certificates,
registered in the name of GSPI, representing the total number of
shares of Stock. |
| |
(b) |
|
Delivery of such certificates shall be made against receipt by
the Corporation of the assignment of the License (“License
Assignment”) in the form attached hereto as
Exhibit 2.3 . |
Closing. The assignment of the
License and the issuance of the Stock contemplated by this
Agreement (the “Closing”) shall take place at the
offices of GelStat Corporation, 1650 West 82 nd Street,
Suite 1200, Bloomington, MN 55431, simultaneously with the
execution and delivery of this Agreement (the “Closing
Date”) or, if a physical stock certificate cannot be
delivered simultaneous with the closing, said stock certificate
shall be issued as soon as practical thereafter, with evidence of
the proper authorizations and instructions, satisfactory to GSPI,
being evidenced at the closing.
Representations and Warranties of the
Corporation.
The Corporation
represents and warrants to GSPI to the best of its actual knowledge
(and the actual knowledge of its key officers) that except as
expressly set forth in the Disclosure Schedule attached hereto and
made a part hereof (the “Disclosure Schedule”), the
following representations and warranties are true and correct as of
the date hereof.
Organization; Power and Authority; Qualifications.
The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Minnesota and has all requisite corporate power and authority to
own, lease and operate its properties, to carry on its business as
presently conducted and as proposed to be conducted and to carry
out the transactions contemplated by this Agreement and any
Agreement incorporated herein by reference to the extent such
agreement requires action by the Corporation (as hereinafter
defined) (each, a “Transaction Document” and
collectively, the “Transaction Documents”). The
Corporation is qualified to transact business as a foreign
corporation in those jurisdictions listed on Schedule 3.1(a) of the
Disclosure Schedule, which jurisdictions constitute all such
jurisdictions where the failure to be so qualified or licensed
would have a material adverse effect on the Corporation. A true,
correct and complete copy of the Articles and the Bylaws (the
“Bylaws”) of the Corporation, in each case, as amended
to, and as in effect on, the date hereof, are attached hereto as
Exhibits 3.1.1 and 3.1.2 ,
respectively.
1
Authorization of the Transaction Documents, No Conflicts,
etc. The execution, delivery and performance
by the Corporation of the Transaction Documents, have been duly
authorized by all requisite corporate action by the Corporation and
each such Transaction Document constitutes a valid and binding
obligation of the Corporation, enforceable against the Corporation
in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws
now or hereafter in effect relating to or limiting creditors’
rights generally, and general principles of equity, whether such
enforceability is considered in a proceeding at law or in equity.
The execution, delivery and performance by the Corporation of the
Transaction Documents and the consummation of the transactions
contemplated thereby and compliance by the Corporation with the
provisions thereof and the issuance by the Corporation of the
Stock, will not:
| |
(a) |
|
violate any provision of law, statute, rule or regulation, or
any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable
to the Corporation or any of its properties or assets where such
violation, conflict, breach or default would have a material
adverse effect on the operations, financial condition or prospects
of the Corporation, or |
| |
(b) |
|
conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with due notice or
lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the
creation of any Encumbrance (as defined in Section 3.10 hereof)
upon any of the properties or assets of the Corporation under its
Articles or Bylaws, or any note, indenture, mortgage, lease
agreement or other contract, agreement or instrument to which the
Corporation is a party or by which any of its properties or assets
are bound or affected where (other than in the case of the Articles
and the Bylaws) such conflict, breach or default would have a
material adverse effect on the operations, financial condition or
prospects of the Corporation. |
Authorization of the Stock. The
authorization, issuance, and delivery of the Stock has been duly
authorized by all requisite corporate action of the Corporation,
and when issued, sold and delivered in accordance with this
Agreement for the consideration stated herein, the Stock will be
validly issued and outstanding, fully paid and nonassessable with
no personal liability attaching to the ownership thereof, and not
subject to: (a) preemptive or any other similar rights of the
stockholders of the Corporation or others or (b) any other
restriction on transfer other than restrictions on transfer under
applicable state and federal laws. The terms, designations, powers,
preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions, of
the Stock are as stated in the Articles.
No
Governmental Consent or Approval Required. No
consent, approval or authorization of, or declaration to or filing
with, any governmental or regulatory authority is required for the
valid authorization, execution and delivery by the Corporation of
the Transaction Documents or for the consummation of the
transactions contemplated thereby or for the valid authorization,
issuance and delivery by the Corporation of the Stock hereunder,
other than (i) those consents, approvals, authorizations,
declarations or filings which have been obtained or made, as the
case may be, (ii) the filing of the Certificate with the Minnesota
Secretary of State, (iii) the filing of a Form D with the
Securities and Exchange Commission (the “SEC”), and
(iv) filings pursuant to state securities laws in connection
with the issuance of the Stock. Except as set forth in
Section 3.4 of the Disclosure Schedule, no other
third-party consents or approvals are required for the valid
authorization, execution and delivery by the Corporation of the
Transaction Documents or for the consummation of the transactions
contemplated thereby or for the valid authorization, issuance and
delivery by the Corporation of the Stock hereunder.
Subsidiaries; Equity Investments.
Except as set forth in Section 3.5 of
the Disclosure Schedule, the Corporation does not own or control,
directly or indirectly, any capital stock or other proprietary
interest or participation in any corporation, association, trust,
partnership, association or other entity.
Capitalization.
| |
(a) |
|
The authorized capital stock of the Corporation immediately
upon the consummation at the Closing of the transactions
contemplated hereby shall be as set forth in Section 1 of the
Agreement and the related Exhibit 2 . |
2
| |
(b) |
|
Section 3.6(b) of the Disclosure Schedule contains a list of
all outstanding warrants, options, agreements, convertible
securities or other commitments pursuant to which the Corporation
is or may become obligated to issue any shares of the capital stock
or other securities of the Corporation, which list names all
persons entitled to receive such shares or other securities
immediately prior to the consummation at the Closing of the
transactions contemplated by the Transaction Documents and the
shares of capital stock or other securities required to be issued
thereunder. Except as set forth in such Section 3.6(b) or as
contemplated by the Transaction Documents, there are no preemptive
or similar rights to purchase or otherwise acquire shares of the
capital stock of the Corporation pursuant to any provision of law,
the Articles or Bylaws or any agreement to which the Corporation is
a party; and, there are no agreements, restrictions or encumbrances
(such as a right of first refusal, right of first offer, proxy,
voting trust, voting agreement, etc.) with respect to the sale or
voting of any shares of capital stock of the Corporation (whether
outstanding or issuable upon conversion or exercise of outstanding
securities). The Corporation has not been and will not be, in
violation of the Securities Act or any applicable state securities
or “blue sky” laws in connection with the issuance of
any shares of capital stock or other securities, including the
issuance of the Stock pursuant to this Agreement. |
Financial Information.
| |
(a) |
|
The balance sheet (“Balance Sheet”) and the related
statements of income and retained earnings for Corporation as of
the period ended September 30, 2004 (the “Financial
Statements”) as contained in the Corporation’s report
on Form 10-QSB filed with the SEC are certified to be true,
complete and accurate in all material respects. |
| |
(b) |
|
The Financial Statements and Balance Sheet (i) are in
accordance with the books and records of the Corporation, (ii)
present fairly the financial condition and the results of
operations of the Corporation as of the date and for the period
indicated and (iii) have been prepared in accordance with generally
accepted accounting principles consistently applied other than the
absence of (i) accruals generally made in full year financial
statements and (ii) notes to financial statements. |
| |
(c) |
|
The books of account, records and work papers of the
Corporation up to the date hereof are in all material respects
complete and correct, have been maintained in accordance with good
business and accounting practices and accurately reflect in all
material respects the basis for the financial position and results
of operations of the Corporation as set forth in the Financial
Statements. |
| |
(d) |
|
All receivables listed in the Balance Sheet, including without
limitation the note receivable from Card Acquisition LLC, are
collectible in full at maturity. |
Absence
of Undisclosed Liabilities. Except as set
forth in Section 3.8 of the Disclosure Schedule, (a) the
Corporation has no material liability of any nature (matured or
unmatured, fixed or contingent) which is not provided for or
disclosed on the Balance Sheet and (b) all liability reserves
established by the Corporation and set forth on the Balance Sheet
were adequate in all material respects for all such liabilities at
that date. There were no loss contingencies (as such term is used
in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which were not
adequately provided for on the Balance Sheet.
Absence
of Changes. Except as set forth in Section
3.9 of the Disclosure Schedule since September 30, 2004, there has
not been:
| |
(a) |
|
any material adverse change in the financial condition, results
of operations, assets or liabilities of the
Corporation; |
| |
(b) |
|
any borrowing or agreement to borrow funds or any liability or
obligation of any nature whatsoever (contingent or otherwise)
incurred by the Corporation, other than current liabilities or
obligations incurred in the ordinary course of
business; |
| |
(c) |
|
any mortgage, pledge, transfer of a security interest in, or
lien, created by the Corporation, with respect to any of its
material properties or assets, except for liens for taxes not yet
due or payable; |
3
| |
(d) |
|
any waiver or cancellation by the Corporation of a valuable
right or claim of a material debt owed to it; |
| |
(e) |
|
any declaration, setting aside or payment or other distribution
in respect of any of the Corporation’s capital stock, or any
direct or indirect redemption, purchase or other acquisition of any
stock by the Corporation, or any agreement or commitment
therefore; |
| |
(f) |
|
any issuance of any stock, bond or other security of the
Corporation, (including, without limitation, options, warrants or
rights); |
| |
(g) |
|
any sale, assignment or transfer of any tangible or intangible
assets of the Corporation, except, with respect to tangible assets,
in the ordinary course of business; |
| |
(h) |
|
any loans or guarantees made by the Corporation for the benefit
of any officer, director, employee, consultant or shareholder of
the Corporation, or to any members of their immediate families or
any agreement or commitment therefore (other than advances to such
persons in the ordinary course of business in connection with
travel and travel related expenses); |
| |
(i) |
|
any damage, destruction or loss (whether or not covered by
insurance) affecting the assets, properties, financial condition,
results of operations or prospects or business of the
Corporation; |
| |
(j) |
|
any material change, direct or indirect, in the compensation
paid or payable to any officer, director, employee, consultant or
agent of the Corporation; |
| |
(k) |
|
any change in the accounting methods, practices or policies
followed by the Corporation or any change in depreciation or
amortization policies or rates theretofore adopted; |
| |
(l) |
|
any change or material amendment to a material contract or
arrangement by which the Corporation or any of its assets or
properties is bound or subject which is likely to materially
adversely affect the business operations of the
Corporation; |
| |
(m) |
|
any sale, assignment, transfer or license of any Intellectual
Property (as hereinafter defined); |
| |
(n) |
|
any receipt of notice that there has been a loss of, or
material contract cancellation by, any material customer or
supplier of the Corporation; or |
| |
(o) |
|
any agreement or commitment by the Corporation to take any of
the actions described in this Section 3.9. |
Title to
Assets, Properties and Rights. The
Corporation has good and marketable title to all of its properties,
interests in properties and assets, real, personal, intangible or
mixed, reflected on the Balance Sheet (or not so reflected because
not required to be reflected but which are used or useful in the
business of the Corporation), free and clear of all mortgages,
judgments, claims, liens, security interests, pledges, escrows,
charges or other encumbrances of any kind or character whatsoever
(“Encumbrances”) except liens for current taxes not yet
due and payable (or similar liens) and except for liens that would
not cause a material adverse effect on the operations of the
Corporation. With respect to the property and assets it leases, the
Corporation is in compliance with such leases and holds a valid
leasehold interest free of any Encumbrances.
Intellectual Property.
| |
(a) |
|
Section 3.11(a) contains a complete and accurate list of (i)
all material Intellectual Property (as hereinafter defined) owned
by the Corporation and used, held for use, or intended to be used
in its business, (ii) all material rights granted by the
Corporation to any third party with respect to such Intellectual
Property, and (iii) all material Intellectual Property which the
Corporation has a license or other right to use and which is used,
held for use, or intended to be used in its business. |
| |
(b) |
|
The Corporation owns and possesses all right, title and
interest in and to, has the exclusive right to use, has the right
to bring actions for the infringement of, and, where necessary, has
made timely and proper application for, all of the
Corporation’s Intellectual Property rights or has valid and
subsisting licenses to use such Intellectual Property and none of
such Intellectual Property has been abandoned. |
4
| |
(c) |
|
No royalties or fees are payable by the Corporation to other
persons by reason of the ownership or use of the Intellectual
Property. |
| |
(d) |
|
No product, service or process manufactured, marketed, sold or
used, or proposed to be manufactured, marketed, sold or used, by
the Corporation violates, or will violate, any license or
infringes, or will infringe, any Intellectual Property or assumed
name of another; and there is no pending or threatened claim or
litigation against the Corporation (nor does there exist any basis
therefore) contesting the validity of or right to use any of the
foregoing, nor has the Corporation received any notice that any of
the Intellectual Property or the operation or proposed operation of
the Corporation’s business conflicts, or will conflict, with
the asserted rights of others, nor does there exist any basis for
any such conflict, except for liens that would not cause a material
adverse effect on the operations, financial conditions or prospects
of the Corporation. |
| |
(e) |
|
No person has in the past violated or infringed upon, or is
currently violating or infringing upon, any of the
Corporation’s Intellectual Property. |
| |
(f) |
|
As used herein, the term “Intellectual Property”
means all industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights,
trademarks, trademark applications, trade names, logos, service
marks, service mark applications, copyrights, know-how, inventions,
certificates of public convenience and necessity, franchises,
licenses, trade secrets, industrial secrets, proprietary rights,
technology, formulae, designs, methodologies, computer programs
(including all source codes) and related documentation. |
Agreements. Except as set forth in
Section 3.12 of the Disclosure Schedule, the Corporation is not a
party to any agreement, understanding, instrument or contract,
whether written or oral contract not made in the ordinary course of
business and, whether or not made in the ordinary course of
business, the Corporation is not party to any written or
oral:
| |
(a) |
|
contract with any labor union; |
| |
(b) |
|
contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess of
normal operating requirements; |
| |
(c) |
|
agreement or indenture relating to the borrowing of money or to
the mortgaging, pledging or placement of a lien on any assets of
the Corporation; |
| |
(d) |
|
guaranty of any obligation for borrowed money or
otherwise; |
| |
(e) |
|
lease or agreement under which the Corporation is lessee of or
holds or operates any property, real or personal, owned by any
other party; |
| |
(f) |
|
lease or agreement under which the Corporation is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by the Corporation; |
| |
(g) |
|
agreement(s) or other commitment(s) for capital expenditures
cumulatively in excess of $10,000.00; |
| |
(h) |
|
contract, agreement or commitment under which the Corporation
is obligated to pay any broker’s fees, finder’s fees or
any such similar fees, to any third party; |
| |
(i) |
|
contract, agreement or commitment not otherwise specified
herein under which the Corporation has issued or may become
obligated to issue, any shares of capital stock of the Corporation
or any warrants, options, convertible securities or other
commitments pursuant to which the Corporation is or may become
obligated to issue any shares of its capital stock; |
| |
(j) |
|
any contract(s), agreement(s), arrangement(s) or
understanding(s) under which cumulatively the Corporation may be
obligated to pay or be entitled to receive in excess of
$10,000.00; |
| |
(k) |
|
any other contract, agreement, arrangement or understanding
which is material to the business of the Corporation;
or |
| |
(l) |
|
any amounts payable or that will become payable to each present
or former director, officer, consultant or employee of the
Corporation pursuant to any agreement or understanding set forth in
Schedule 3.12 as a result of the execution and delivery of this
Agreement and the other Transaction Documents and/or the
consummation of the transactions contemplated hereby or
thereby. |
The
Corporation has fu
|
