<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 4)*
Gull Laboratories, Inc.
(Name of Issuer)
Common Stock, $.001 par value
(Title of Class of Securities)
402901 20 1
(CUSIP Number)
Ulrich Wagner, Esq.
O'Melveny & Myers LLP
The Citicorp Center
153 East 53rd Street, 54th Floor
New York, New York 10022-4611
(212) 326-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 21, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
- ----------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("ACT") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
Page 1 of __ Pages
<PAGE> 2
CUSIP NO. 358031 10 2
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FRESENIUS AKTIENGESELLSCHAFT
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,930,693
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
EACH REPORT- 9 SOLE DISPOSITIVE POWER
ING PERSON 4,930,693
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,930,693
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
62%
14 TYPE OF REPORTING PERSON
CO
2
<PAGE> 3
This Schedule 13D/A (Amendment No. 4) amends and supplements the
Statement on Schedule 13D dated May 4, 1994, as amended and supplemented by
Schedule 13D/A (Amendment No. 1) dated June 28, 1994, by Schedule 13D/A
(Amendment No. 2) dated August 15, 1994 and Schedule 13D/A (Amendment No. 3)
dated December 23, 1996 (as so amended, the "Statement"), filed by Fresenius
Aktiengesellschaft ("Fresenius AG"), with respect to the common stock, $0.001
par value ("Common Stock") of Gull Laboratories, Inc. ("Gull"). Capitalized
terms used herein without definition have the meanings ascribed to them in the
Statement.
Item 2. IDENTITY AND BACKGROUND.
Item 2 of the Statement is hereby amended by adding the following:
Mr. Mathias R. Klingler has resigned from the Management Board of
Fresenius AG, effective April 30, 1997. Mr. Rainer Baule is designated to become
a member of the Management Board of Fresenius AG and Head of the Fresenius AG
Intensive Care and Diagnostics Division on June 1, 1997. Current information
with respect to the members of the Supervisory Board and the Members of the
Management Board of Fresenius AG is set forth in Schedule A to this Amendment
No. 4.
Item 4. PURPOSE OF TRANSACTION.
Item 4 of the Statement is hereby amended by adding the following:
On April 21, 1997 Fresenius AG, Gull GmbH, a wholly-owned subsidiary of
Gull (the "Purchaser") and Gull entered into an Asset Purchase Agreement (the
"Asset Purchase Agreement"), setting forth their agreement for the Purchaser's
acquisition of the diagnostics business (the "Business") of the Intensive Care
and Diagnostics Division of Fresenius AG. The Purchaser has assigned all of its
rights under the Asset Purchase Agreement to Gull. After the Closing Date, Gull
will contribute the assets of the Business to the Purchaser in exchange for
non-voting stock of the Purchaser. Under the Asset Purchase Agreement, Gull,
through the Purchaser, agreed to purchase, and Fresenius AG agreed to sell, all
fixed assets, all inventory stocks, and all rights belonging to the Business as
of the date of the Asset Purchase Agreement ("Assets") as well as certain
industrial property rights, intangible objects and rights of usage related
thereto. "Assets" does not include receivables, checks, cash or credit balances
existing or accrued as of December 31, 1996. The closing date (the "Closing
Date") is presently anticipated to occur after all of the conditions to closing
have been satisfied and, if appropriate, at the end of a fiscal quarter. Under
the Asset Purchase Agreement, the purchase price for the Business will be
$10,942,800, subject to adjustment, as described below. The purchase price will
be payable in shares of Gull Common Stock, with each share having an agreed
value of $8.29, which was the average of closing sale prices of a share of Gull
Common Stock on the American Stock Exchange for the twenty trading days
preceding and the twenty trading days following the first public announcement of
the execution of the letter of intent on December 13, 1996. The Purchaser has
agreed to assume all liabilities pertaining to the operations of the Business
after December 31, 1996 (the "Effective Date"). Fresenius AG has agreed to
operate the Business from the Effective Date to the Closing Date on behalf and
for the account of the Purchaser. Fresenius AG has also agreed that from April
21, 1997 to the Closing Date, it will conduct the operations, activities, and
practices of the Business in the ordinary course of business, consistent with
past practices. In addition, Fresenius AG has agreed to enter into certain
service contracts with the Purchaser.
The consummation of the sale of the Business is subject to receipt of
the following approvals: (a) Fresenius AG Supervisory Board approval; (b) Gull
Board of Directors approval,
3
<PAGE> 4
including the unanimous approval of the members of the Special Committee of
Independent Directors; (c) approval of a majority of the non-Fresenius AG
shareholders actually voting at the Gull annual meeting; and (d) approval for
listing by the American Stock Exchange of the shares of Common Stock to be
issued to Fresenius AG. Conditions precedent include: (a) delivery to the Gull
Board of Directors of a satisfactory opinion of Vector Securities, in form and
substance satisfactory to Fresenius AG, Gull and the Purchaser, to the effect
that the purchase price for the Business and the other terms and conditions of
the Asset Purchase Agreement are fair, from a financial point of view, to the
shareholders of Gull (other than Fresenius AG); (b) non-denial of the asset sale
by the German Federal Cartel Office; and (c) execution of a Registration Rights
Agreement, as described below. There can be no assurance that acquisition of the
Business by Gull will be consummated.
Pursuant to a Retransfer of Shares Agreement by and among Fresenius AG,
the Purchaser and Gull, dated April 21, 1997, the purchase price described above
is subject to adjustment under certain circumstances and could change the amount
of Fresenius AG's beneficial ownership of Gull, as described below. The parties
agreed that the purchase price would be reduced by the amount of 33,000 shares
of Gull Common Stock if the present commercial relationship between Fresenius AG
and a certain supplier (the "Supplier") is entirely terminated ("Entire
Termination") on or before December 31, 1997. If the commercial relationship
between Fresenius AG and the Supplier relating to the Supplier's
syphilis-detection product line is terminated ("Partial Termination") on or
before such date, the purchase price would only be reduced by an amount of
18,721 shares of Gull Common Stock. If either an Entire Termination or a Partial
Termination takes place after payment of the purchase price, Fresenius AG will
be obliged to retransfer the 33,000 or 18,721 shares of Common Stock, as
applicable, to Gull. Likewise, if within two years after Entire Termination or
Partial Termination, the Purchaser, Gull or an affiliate of either enters into a
commercial relationship with the Supplier or a successor to the Supplier, which
is in quality and volume comparable with the terminated commercial relationship
between Fresenius AG and the Supplier, then Gull and the Purchaser shall
transfer the 33,000 or 18,721 shares of Common Stock, as applicable, back to
Fresenius AG.
Fresenius AG continues to regard its investment in Gull as an
attractive business opportunity, both for Fresenius AG and Gull, and believes
that the sale of the Business to Gull and the combination of the Business with
Gull's existing worldwide diagnostics business could result in increased
efficiencies and enhanced performance by Gull. Accordingly, Fresenius AG
believes that the acquisition would be in the best interests of Fresenius AG,
Gull and Gull's shareholders.
In connection with the execution of the Asset Purchase Agreement,
Fresenius AG and Gull agreed that at the closing under the Asset Purchase
Agreement, they would enter into a Registration Rights Agreement pursuant to
which Fresenius AG would have the
4
<PAGE> 5
right on two separate occasions to require that Gull file a registration
statement under the Securities Act of 1933, as amended (the "1933 Act") for the
registration of shares of Common Stock issued to Fresenius AG as the
consideration for the Business. The Registration Rights Agreement provides that
Gull will bear the costs of registering such shares, up to a maximum of $20,000.
Fresenius AG would also have the right to include such shares in certain
registration statements filed by Gull under the 1933 Act for its own account or
for the registration of shares of Common Stock held by other persons.
Other than the shares it would receive upon consummation of the
transactions contemplated by the Asset Purchase Agreement and the Retransfer of
Shares Agreement, Fresenius AG does not presently intend to acquire additional
shares of Gull Common Stock, but reserves the right to do so in open market
transactions or in privately negotiated transactions with Gull or shareholders
of Gull. Whether Fresenius AG acquires any such additional shares of Gull Common
Stock will depend on Fresenius AG's continuing evaluation of Gull, the market
price for Gull Common Stock, alternative investment opportunities which may be
available, and all other factors deemed relevant.
Except for the transactions described in this Item 4, Fresenius AG does
not have any present intention to effect or cause Gull to effect any of the
transactions described in paragraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Statement is hereby amended by adding the following:
Fresenius AG is presently the record and beneficial owner of 3,610,693
shares of Gull Common Stock, and may be deemed to be the beneficial owner of
1,320,000 shares issuable upon the closing under the Asset Purchase Agreement.
Based on 6,588,696 shares of Common Stock outstanding (as set forth on the cover
page of Gull's Annual Report on Form 10-K for the year ended December 31, 1996),
Fresenius AG may be deemed to be the beneficial owner of 4,930,693 shares of
Common Stock, or 62% of the Gull Common Stock, as determined in accordance with
Rule 13d-3 of the Securities and Exchange Commission.
Except as stated in this Item 5, Fresenius AG (and to the best of its
knowledge, the members of the Supervisory Board and the Managing Board of
Fresenius AG) does not own or have any right to acquire, directly or indirectly,
any shares of Gull Common Stock and, except as herein described, none of such
persons has effected any transaction in Gull Common Stock in the last sixty
days.
5
<PAGE> 6
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
For a description of the Asset Purchase Agreement, the Retransfer of
Shares Agreement and the Registration Rights Agreement, see Item 4 above. The
descriptions of the Asset Purchase Agreement, the Retransfer of Shares Agreement
and the Registration Rights Agreement set forth in Item 4 are qualified in their
entirety by the provisions of such agreements. A copy of the Asset Purchase
Agreement is filed as Exhibit 1 to this Schedule 13D/A (Amendment No. 4). A copy
of the Retransfer of Shares Agreement is filed as Exhibit 2 to this Schedule
13D/A (Amendment No. 4).
Item 7. MATERIALS TO BE FILED IN EXHIBITS.
EXHIBIT EXHIBIT NO.
------- -----------
Asset Purchase Agreement by and among Fresenius AG,
the Purchaser and Gull dated April 21, 1997 1
Retransfer of Shares Agreement by and among
Fresenius AG, the Purchaser and Gull dated April 21,
1997 2
6
<PAGE> 7
SIGNATURES
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: May 7, 1997 FRESENIUS AKTIENGESELLSCHAFT
By: /s/ Matthias Schmidt
-----------------------------------
Name: Matthias Schmidt
Title: Member of the Managing Board
By: /s/ Udo Werle
-----------------------------------
Name: Udo Werle
Title: Member of the Managing Board
S-1
<PAGE> 8
SCHEDULE A
The members of Fresenius AG's Supervisory Board and Management Board, their
present principal occupations or employment (including the name, principal
business and address of any such employer), their citizenship and their business
and/or residence addresses are set forth below. All members of the Supervisory
Board and Management Board listed on Schedule A are German citizens.
MEMBERS OF SUPERVISORY BOARD
- ----------------------------
Dr. Alfred Stiefenhofer
Chairman of Supervisory Board
Attorney, Norr, Stiefenhofer & Lutz (law firm)
Brienner Strasse 28, 80333 Munchen, Germany
Dr. Gabriele Kroner
Doctor of Medicine
Department of Cardiac, Thoracic and Vascular Surgery
University Clinic - Hamburg-Eppendorf UKE
Harthauserstrasse 135, 81545 Munchen, Germany
Wolfgang Rietzschel
Member of Works Council
Herzbergstrasse 33, 61350 Bad Homburg v.d.h., Germany
Christel Neumann
Deputy Member of Works Council
Muhlweg 20, 97525 Schwebheim, Germany
Vera Kluge
Labor Union Representative
c/o IG Chemie-Papier-Keramik Bereich Hessen
Wilh.-Leuschner Strasse 69-77, 60329 Frankfurt/Main, Germany
Arnold Danneck
Member of Works Council
In Matzenecken 6, 66636 Tholey, Germany
Dr. Oswald Jacobi
Doctor of Medicine
Sandmuhle 75, 55262 Heidesheim, Germany
Ulrich Mattik
Labor Union Representative
In der Steinriede 4, 30161 Hannover, Germany
Friedrich Meyer
Sales Manager
Usinger Strasse 16, 61273 Wehrheim, Germany
Sch. A-1
<PAGE> 9
Hans-Peter Sattele
Member of the Managing Board of
Westdeutsche Landesbank Girozentrale
Westdeutsche Landesbank Girozentrale
Herzogstrasse 15, 40217 Dusseldorf, Germany
Dr. Manfred Schaudwet
Executive Manager of Dresdner Bank AG
Dresdner Bank AG
Jurgen-Ponto-Platz 1, 60329 Frankfurt/Main, Germany
Dr. Karl Schneider
Retired Chairman of the Executive Board
Suedzucker AG
Maximilianstrasse 10, 68045 Mannheim, Germany
MEMBERS OF THE MANAGEMENT BOARD
- -----------------------------
Dr. Gerd Krick
Chairman of the Management Board
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
and
Chairman of the Management Board
Fresenius Medical Care AG
Borkenberg 14, 61440 Oberursel, Germany
Dr. Matthias Schmidt
Member of the Management Board and Head of
Pharmaceutical Division
Fresenius AG
Brokenberg 14, 61440 Oberursel, Germany
Udo Werle
Member of the Management Board and Head of
Finance, Administration and Personnel Matters
Fresenius AG
Borkenberg 14, 61440 Oberursel, Germany
and
Member of the Management Board and Head of
Finance, Administration and Personnel Matters
Fresenius Medical Care AG
Borkenberg 14, 61440 Oberursel, Germany
Rainer Baule
Member of the Management Board and
Head of Intensive Care and Diagnostics Division*
Fresnius AG
Borkenberg 14, 61440 Oberursel, Germany
- ----------
* Effective June 1, 1997.
Sch. A-2
<PAGE> 1
Exhibit 1
ASSET PURCHASE AGREEMENT
By and among
Fresenius AG, Borkenberg 14, 61440 Oberursel, registered with the Commercial
Register Bad Homburg HRB 2617 and represented by Frank Simon, acting according
to the power of attorney dated 16. April 1997,
- "Seller" -
and
Gull GmbH, registered with the Commercial Register Koln, HRB 24160 and
represented by Mike Malan as its Managing Director with full authority to
represent the company alone,
- "Purchaser" -
and
Gull Laboratories Inc., a Utah corporation, represented by George Evanega, as
its Chief Executive Officer and President with full authority to represent the
company alone
- "Gull" -.
<PAGE> 2
PREAMBLE
The Seller is engaged in the business of developing, manufacturing and marketing
of diagnostic test kits and material designed to detect past and present
infection with kits and materials based on established immunological assay
methods (the "Business"), including indirect immunofluorescent antibody assay
("IFA"), enzyme-linked immunosorbent assay ("ELISA"), blood grouping reagents
("BG"), tissue typing products ("HLA"), immunodiffusion and Western Blot
(collectively referred to herein as the "products") through its unincorporated
Intensive Care and Diagnostic Division as reflected in its business unit
diagnostics. The Seller desires to sell and the Purchaser desires to purchase
all of the assets and properties held in connection with, necessary for, or
material to the Business as a going concern but excluding claims and liabilities
of the Business incurred prior to the Effective Date as defined in Article 9
(2).
Now, therefore, the Parties hereto agree as follows:
ARTICLE 1
ASSETS AND PROPERTIES
(1) The Seller hereby agrees to sell to the Purchaser all fixed assets
within the meaning of Sec. 266 sub-sec. 2A of the German Commercial Code [HGB]
belonging to the Business as of the Closing Date as set forth in Article 9, all
inventory stocks within the meaning of Sec. 266 sub-sec. 2 B I HGB belonging to
the Business as of this date, and all rights belonging to the Business as of
this date which form the basis of any accrued and deferred items within the
meaning of Sec. 266 sub-sec. 2 C HGB. This also includes down-payments already
effected.
The Seller hereby agrees to sell to the Purchaser all books of
accounting records, files, invoices, customer lists, supplier lists, designs,
drawings, business records and plans, computer print-outs, plans and
specifications, trade correspondence, sales or promotional literature, operating
data and other books and records or parts of the above mentioned documents
related exclusively to the Business, including, without limitation, those
required to be kept under applicable law, and other data or information
associated with, used or employed in connection with the Business. The Purchaser
shall be obliged to store all sold documents as required by applicable law and
shall transfer this obligation to any successor in the rights and obligation of
the sold assets and properties. The Seller shall be entitled to have free access
to these documents at any time during normal business hours and cost-free as far
the Seller has a justified interest. This right includes the right to copy the
documents and borrow the documents for an appropriate period of time if
necessary.
(2) The fixed assets sold according to para. (1) above shall include, in
particular, the assets listed in EXHIBIT 1 hereto existing as of the Effective
Date.
The assets listed in EXHIBIT 1 which have been alienated or in any
other way withdrawn from the Company within the ordinary course of business in
the period between the Effective Date and prior to the Closing Date ("Interim
Period") shall not be deemed sold under this Agreement. Any assets produced,
2
<PAGE> 3
acquired or in any other way added to the Business in the period between
December 31, 1996 and the Closing Date within the ordinary course of business as
a substitute of or addition to the assets listed in the list of assets shall be
deemed sold under this Agreement.
(3) Except as set forth in Article 14, section (1), any receivables and
other assets within the meaning of Sec. 266 sub-sec. 2 B II HGB, any securities
within the meaning of Sec. 266 sub-sec. 2 B III HGB as well as any checks, cash
assets, credit balances with the Federal Bank, on a postal giro account and with
any credit institutions within the meaning of Sec. 266 sub-sec. 2 B IV HGB which
have accrued or exist as of the Closing Date shall not belong to the assets sold
according to para. (1) above, even if they are part of the Business.
ARTICLE 2
INDUSTRIAL PROPERTY RIGHTS, COPYRIGHTS
AND OTHER INTANGIBLE ASSETS
(1) The Seller hereby agrees to transfer to the Purchaser all product names
as listed in EXHIBIT 2 hereto, including but not limited to the exclusive right
to use, to sell or otherwise to exploit these product names.
With respect to the product names listed in EXHIBIT 3 which contain the
partial name of "FRE", the Seller hereby agrees to grant to the Purchaser the
exclusive right to use such product names but only within those countries as
listed in EXHIBIT 3 and only for a period of three years after the Effective
Date. The Purchaser is not entitled to create or use new product names or other
product names already in existence which contain the partial word "FRE". The
right to usage in any form whatsoever of the Fresenius name or the Fresenius
logo shall not be transferred or licensed in any form whatsoever under this
Agreement, except as provided in Article 2 (4).
Trademarks which contain the partial word "FRE" do not belong to the
assets sold to the Purchaser.
Seller waives its right to claim against the Purchaser's use of the
listed product names which contain "FRE" as used on the Effective Date in
product names listed in EXHIBIT 2 in the countries listed in EXHIBIT 3 and only
for a period of 3 years. If any other third party will use product names or
marks which are similar to the listed product names which contain the partial
name of "FRE", both parties will agree on coordinated actions against such third
parties; either Purchaser or Seller may at its own cost, and for its own
recovery take independent action to protect the use of such product name or
marks if the other does not do so.
(2) The parties hereto agree that the assets sold under Article 1 para. (1)
hereof shall include all rights relative to the Business to inventions,
technical know-how, trade secrets, procedures, formulas and other intangible
objects not already covered by industrial property rights as well as any
embodiments of such objects such as, for example, written descriptions, sample
drawings, designs, etc..
3
<PAGE> 4
The assets sold under Article 1 para. (1) hereof shall equally include all
rights of usage and similar rights in and to the rights mentioned in the
preceding sentence.
(3) The parties hereto further agree that the assets sold under Article 1
para. (1) hereof shall also include all rights relative to the Business to
commercial know-how, business secrets as well as administration and distribution
procedures such as any documents regarding the administrative and distribution
organization, documents on and correspondence with suppliers and customers as
well as other business records.
(4) As defined in this section, Purchaser shall be entitled to use the
Seller's name to the extent the trademark, service mark, brand name, or
corporate name of Seller is used by the Business on finished goods, advertising
and promotional materials, product, training and service literature and
materials or appear on inventory at the Closing. Purchaser may use such
materials or sell such inventory after the Closing for a period of six (6)
months but at least until December 31, 1997 without altering or modifying such
materials or inventory or removing such trademarks, service marks, brand names,
or trade or business names, but the Purchaser shall not thereafter use such
trademarks, service marks, brand names, or trade names in any manner without the
prior written consent of Seller, except as provided in Article 2. Section (1)
hereof.
ARTICLE 3
PURCHASER'S TAKEOVER OF AGREEMENTS AND OFFERS
Seller shall assign to Purchaser, and Purchaser shall take over and
assume and agree to perform all agreements and offers to enter into agreements
which are listed in EXHIBIT 4 hereto and belong to the Business as of the
Closing Date, i.e. the Purchaser shall take over from the Seller all rights and
duties under such agreements and offers to enter into agreements by way of a
takeover, with a releasing effect for the Seller. Article 6 below shall apply
with respect to the approvals of third parties necessary for such takeover.
The parties agree that they will delimit the rights and duties out of
the abovementioned agreements on the Effective Date in accordance with generally
accepted accounting principles according to German law.
ARTICLE 4
LIABILITIES
(1) Except for the liabilities and contingent liabilities listed in EXHIBIT
5 hereto and except as contemplated by Article 14, the Purchaser will not assume
any other liabilities or contingent liabilities of the Seller which have accrued
as of the Effective Date or which relate to the operations of the Business prior
to the Effective Date. Any liabilities or contingent liabilities not listed in
EXHIBIT 5 shall remain with the Seller. The Seller shall fully hold harmless the
Purchaser against any claims arising from such liabilities which remain with the
Seller.
4
<PAGE> 5
(2) Any and all liabilities pertaining to the operations of the Business
after the Effective Date, including any tax liabilities, liabilities towards
employees or pension and social insurance companies, trade accounts payable as
well as any debts resulting from warranty claims for goods manufactured or
distributed after the Effective Date, shall be assumed by the Purchaser. The
Purchaser shall fully hold harmless the Seller against any and all claims
arising from liabilities which have occurred after the Effective Date within the
meaning of sentence 1 of this paragraph.
ARTICLE 5
TRANSFER OF EMPLOYMENT RELATIONSHIPS
(1) The parties agree that on the Closing Date the employment relationships
with the Seller which are attributable to the Business and are listed in EXHIBIT
6 hereto shall transfer to the Purchaser pursuant to Section 613 a of the German
Civil Code [BGB] together with all rights and duties.
(2) Together with the employment relationships of the working employees the
obligations existing for these employees as of the Closing Date under the
company pension scheme as listed in EXHIBIT 7 hereto shall transfer to the
Purchaser.
(3) Any obligations attributable to the Business under current benefits of
the company pension scheme as listed in EXHIBIT 7 shall be transferred to the
Purchaser. The Purchaser undertakes toward the Seller to hold the Seller
harmless against any claims under such current benefits.
(4) The Purchaser undertakes to take over, effective as of the Closing
Date, the works agreement attached hereto as EXHIBIT 8 and to ensure the rights
resulting for the employees therefrom.
(5) The Purchaser further undertakes to grant to the employees taken over
by it the Company's bonuses and perquisites granted to the employees so far and
listed in EXHIBIT 9 hereto also after the Closing Date.
(6) The Purchaser shall be obligated to join, effective as of the Closing
Date, the Chemical Industry's basic collective agreement as attached in EXHIBIT
10.
(7) It is agreed that the employees taken over by the Purchaser will still
be represented by the Seller's workers' council until the employees taken over
elect their own workers' council after the Closing Date.
ARTICLE 6
APPROVAL OF THIRD PARTIES
(1) As far as the approval of any third parties, in particular, the
approval of debtors of receivables, creditors of certain liabilities or
contracting parties, is necessary for the transfer of the assets, the takeover
of obligations, liabilities and contingent liabilities, the takeover of the
agreements and offers to enter into agreements, the parties hereto will jointly
endeavor to obtain any such approval.
(2) If it is impossible or improper to obtain such approval, the Parties
hereto will, with respect to their internal relationship, act and allow to be
treated in such
5
<PAGE> 6
a way as if the transfer of the obligations and liabilities, the takeover of the
agreements or offers to enter into agreements had been validly effected on the
Closing Date. In such case, the Seller will, in the external relationship,
remain the owner of the asset item concerned, debtor of the respective
obligation, liability or contingent liability and party to the respective
agreement or offer for an agreement. In the internal relationship, however, the
Seller shall hold, assume and implement the respective asset item, obligation,
liability or contingent liability or the respective agreement or offer for an
agreement for the account of the Purchaser.
ARTICLE 7
TRANSFER OF OWNERSHIP, GRANT OF POSSESSION
(1) The parties hereto agree that the ownership in the assets sold under
Article 1 hereof (including the property rights and intangible assets listed in
Article 2) shall transfer to the Purchaser on the Closing Date. To the extent
that on the Closing Date any third parties have any title retention rights in
the sold assets or these assets are transferred to any third parties by way of
security, the Seller shall transfer to the Purchaser as of the Closing Date the
expectant right due to the Seller. All the liens and title retention rights
other than title retention rights as customary in the ordinary course of the
business (those which extinguish upon payment for the goods purchased) are
listed in EXHIBIT 11.
(2) The Seller shall on the Closing Date grant to the Purchaser possession
of the tangible assets sold according to Article 1 hereof. To the extent that
the Purchaser is not yet granted possession of any fixed asset items as of the
Closing Date, the delivery necessary for the transfer of ownership shall be
replaced by the agreement that such items will be kept in custody by the Seller
for the Purchaser as from the Closing Date. With respect to any assets which on
the Closing Date are in possession of a third party, the delivery shall be
replaced by the Seller assigning to the Purchaser its claim for return of such
assets against such third party.
(3) Effective as of the Closing Date, the Purchaser will take over all
obligations, liabilities and contingent liabilities assumed under Article 4
hereof, and, effective as of the Closing Date, will take over all agreements and
offers to enter into agreements taken over under Article 3 hereof.
(4) The assignment of any assets, the transfer of the rights as well as the
takeover of the agreements shall be subject to the condition precedent that the
full purchase price according to Article 8 of this Agreement shall be paid.
ARTICLE 8
PURCHASE PRICE
(1) The Purchaser shall pay to the Seller on the Closing Date as full
payment for the assets and properties, liabilities and agreements belonging to
the Business
6
<PAGE> 7
1,320,000 shares of the common stock of Gull with $.001 par value per share (the
"Shares").
(2) The parties assume that since it constitutes a transfer of a separate
part of a business, the sale of all assets of the Business will not be subject
to turnover tax pursuant to Sec. 1 sub-sec. 1a of the Turnover Tax Law. If,
despite this assumption, any turnover tax is to be paid, such tax shall be borne
by the Purchaser.
(3) In case of a failure of payment, including a failure to transfer shares
in accordance with para. (1), default interest in cash or shares as determined
by the Seller at a rate of 5% above the Bundesbank's discount rate shall be
paid. This shall not affect the assertion of damage claims in excess thereof.
(4) Beside the Purchaser Gull hereby assumes the joint and several
liability for the payment of the Purchase Price according to the preceding
paragraphs.
ARTICLE 9
CLOSING DATE
(1) The Parties agree that the Closing Date shall be after all conditions
precedent as defined in Article 18 have been satisfied, including the obtaining
of shareholder approval and all required governmental approvals, and if
appropriate and whenever possible, at the end of a fiscal quarter. The Parties
may at any time jointly determine another date as the Closing Date.
(2) The Effective Date as defined in this Agreement shall be December 31,
1996, 12:00 midnight.
ARTICLE 10
SELLER'S WARRANTIES
(1) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the Federal Republic of Germany. The Seller is
authorized or licensed to do business in each jurisdiction in which the
character and location of its assets or the nature of its business makes such
qualification necessary, except in those cases in which a failure to be so
authorized or qualified would not have a material adverse effect on the
Business. The Seller has all requisite power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby and has all requisite power and authority, licenses, permits and
franchises to carry on the Business as it is presently being conducted.
(2) This Agreement has been duly and validly executed and delivered by the
Seller. This Agreement constitutes valid and binding obligations of the Seller,
each enforceable in accordance with its terms.
(3) The Seller has delivered to the Purchaser, and included as EXHIBIT 12
hereto, a true copy of:
unaudited monthly statements of the Business' revenues from the
Effective Date through March 1997.
7
<PAGE> 8
The monthly statements are in accordance with the books and records of
the Seller, fairly present the financial results of the Business for the periods
indicated and based on management accounting methods of Seller.
(4) To the best of Seller's knowledge neither the Seller, any officer,
employee or agent of the Seller, or any other person acting on its behalf, has,
directly or indirectly, within the last two (2) years given or agreed to give
any gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the Business (or
assist Seller in connection with any actual proposed transaction relating to the
Business) (a) which subjected or might have subjected Seller to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (b)
which, if not given in the past, might have had a material adverse effect on the
Business, (c) which, if not continued in the future, might have a material
adverse effect or subject Seller to suit or penalty in any private or government
litigation or proceeding, or (d) for the purpose of establishing or maintaining
any concealed fund or concealed bank account.
(5) Except as set forth in EXHIBIT 13, the execution, delivery and
performance of this Agreement by the Seller and consummation by the Seller of
the transactions contemplated hereby and thereby, will not, with or without
giving of notice and lapse of time, or both: (a) violate any provision of law,
statute, rule, regulation or executive order to which the Seller, the Business
or the Assets is subject; (b) violate any judgment, order, writ or decree of any
court to which the Seller, the Business or the Assets is subject; or (c) result
in the breach of or conflict with any material term, convenant, condition or
provision or result in or permit any other party to cause the modification or
termination of, constitute a default under, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon any of the
assets pursuant to any partnership agreement, corporate charter or bylaws,
commitment, lease, mortgage, contract or other agreement or instrument to which
the Seller is a party or by which any of the assets of the Business are bound or
affected or from which the Business derives benefit except as set forth
otherwise in this agreement.
(6) Except as set forth in EXHIBIT 14, the Seller is not a party to any
contract, commitment or agreement, nor is the Seller or any of the Assets
subject to, or bound by, any order, judgment, degree, law, statute, ordinance,
rule, regulation or other restriction of any kind or character, which would
prevent the Seller from entering into this Agreement or from consummating in all
material aspects the transactions contemplated hereby.
(7) Except as set forth in EXHIBIT 15, to the best of Seller's knowledge no
consent, authorization or approval of or exemption by or filing with any foreign
or domestic governmental, public or self-regulatory body or authority is
required in connection with the execution, delivery and performance by the
Seller of this Agreement, the taking of any action herein contemplated.
(8) To the best of Seller's knowledge, there are no proposed laws, rules,
regulations, ordinances, orders, decrees, or other proceedings which would be
applicable to the business, operations, or properties of the Business which
might
8
<PAGE> 9
adversely affect the properties, assets, operations or prospects of the
Business, either before or after the Closing Date.
(9) Except as set forth on EXHIBIT 16, since December 31, 1996, the Seller
has not: (a) to the best of Seller's knowledge suffered any material adverse
change in, or the occurrence of any events, which had or might reasonably be
expected to have a material adverse effect on the Business; (b) to the best of
Seller's knowledge incurred damage to or destruction of any of the material
assets of the Business by casualty, whether or not covered by insurance, or
suffered or became subject to any pending or threatened condemnation of property
of the Business; (c) incurred any material obligations or liabilities (fixed or
contingent) with respect to the Business except (i) in the ordinary course of
business, (ii) obligations and liabilities under the agreements mentioned in
Art. 3 to the extent required thereby, and (iii) obligations and liabilities
under this Agreement; (d) made any change in the nature of the Business; (e)
mortgaged, pledged, assigned, hypothecated or subjected to lien or any other
encumbrance any of the assets of the Business; (f) sold, transferred or leased
any of the assets, except in each case in the ordinary course of business; (g)
sold, assigned, transferred, or granted any rights under or with respect to any
of its licenses, agreements, patents, inventions, trademarks, trade names,
copyrights or formulae or with respect to know-how or any other intangible asset
in each case to the extent related to the Business and, in each case, other than
in the ordinary course of business; (h) amended or terminated any of its
contracts, relating to the Business other than in the ordinary course of
business; (i) waived or released any other rights with respect to the Business
having a value in excess of $10,000 in the aggregate; (j) to the best of
Seller's knowledge had work performed which could give rise to liens with
respect to any of the Assets which has not been paid or which payment has not
been provided for; or (k) entered into any other transaction with respect to the
Business not in the ordinary course of business and having a materially adverse
effect on the Business.
(10) Seller is acquiring the shares for its own account and not with a view
to their distribution within the meaning of section 2 (11) of the United States
Securities Act of 1933.
(11) Except as disclosed in EXHIBIT 17, to the best of Seller's knowledge
the Seller has complied and is in compliance in all material respects with all
applicable laws and rules and regulations of foreign, federal, state and local
governments and all agencies thereof and other regulatory bodies which affect
the Business or the Assets. There are no pending claims which have been filed
against the Seller or any affiliate (relating to the operation of the Business
or the ownership of the Assets) alleging a material violation of any such law or
regulation. No notice has been received by the Seller with respect to any such
violation of any such legal requirements.
(12) Except as set forth in EXHIBITS 1 AND 11 the Seller has good and valid
title to, and owns outright, the assets as described in Article 1 free and clear
of all mortgages, claims, liens, charges, leases, subleases, encumbrances,
security interests, restrictions on use or transfer or other defects of any
nature, whether or
9
<PAGE> 10
not recorded, and the sale and delivery of the assets pursuant hereto will vest
in the Purchaser good and valid title to the assets free and clear of all
mortgages, claims, liens, charges, encumbrances, leases, subleases, security
interests, restrictions on use or transfer, or other defects of any nature. All
of the leases and other agreements or instruments included as part of the assets
listed on EXHIBIT 1 are assignable to the Purchaser only with the consent of any
third party.
(13) The contracts listed on EXHIBIT 4 are all of the material contracts
(material in the meaning of this section are all contracts which include a
payment obligation of more than US$ 10,000.00 p.a.) with respect to the Business
the Seller is a party to and no other material contracts with respect to the
Business are in existence.
Except as set forth on EXHIBIT 18 hereto and except as not having
materially adverse effect, each of the contracts is valid, in full force and
effect and enforceable by the Seller in accordance with its terms, subject to
third party consent.
Except as indicated in EXHIBIT 19, there has not occurred any default
by the Seller or to best of Seller's knowledge any event which, with the giving
of notice or the lapse of time or both, and/or the election of any person other
than the Seller will become a material default, nor, to the knowledge of the
Seller has there occurred any default by others or any event which, with the
lapse of time and/or the election of any of the Seller, will become a default
under any of the contracts. Neither the Seller nor to the best of Seller's
knowledge any other party is in arrears in any material respect in the
performance or satisfaction of any material term or condition to be performed or
satisfied by it under any of the contracts, and, to the best knowledge of the
Seller, no waiver or indulgence has been granted by any of the parties thereto.
(14) The rental estates listed on EXHIBIT 20 are all of the rental estates
under which the Business is a lessee or sublessee of any real property or
interest therein used in connection with the operation of the Business or where
any of the assets of the Business are located.
The Seller agrees to conclude with the Purchaser on the Closing Date
the Lease contract attached hereto as EXHIBIT 21.
(15) To the best of Seller's knowledge EXHIBIT 15 sets forth all
governmental approvals and consents necessary for, or otherwise material to, the
conduct of the Business. To the best of Seller's knowledge except as set forth
in EXHIBIT 15, all such governmental approvals and consents have been duly
obtained and are in full force and effect, and Seller is in compliance in all
material respects with each approval and consent held by it with respect to the
assets and the Business.
(16) The customer list which has been provided is a correct and complete
list of the name and locations of each of the customers of the products or
services of the Business (the "Customer"). EXHIBIT 22 hereto contains a correct
and complete list of the names and locations of each of the suppliers of the
Seller who supplied goods and/or services (other than utilities) to the Seller
with respect to the Business in an aggregate amount of DM 15,000.00 or more
during 1996 and the amount and type of supplies furnished by such suppliers
during such period. Except as set forth in EXHIBIT 23, the Seller has not
received any notifications
10
<PAGE> 11
(whether written or verbal) that any of such Customers or suppliers will cease
to continue such relationship with the Seller, or will substantially reduce the
extent of such relationship, at any time prior to or after the Closing Date. The
Seller has no knowledge of any other material modification or change in the
Business' business relationship with such Customers or suppliers.
(17) EXHIBIT 6 hereto contains a true and correct schedule of the names and
job descriptions of all present officers, employees and agents of the Seller
with respect to the Business; as well as the aggregate amount of the monthly
benefits of these officers, employees and agents for the month of January 1997.
The employees listed on EXHIBIT 6 constitute all of the employees of the Seller
who perform services (other than insignificant services) with respect to the
Business except those employees whose services are rendered by Seller according
to the Service Contracts described in Article 14 (4).
(18) To the best of Seller's knowledge the books of account and other
financial records of the Seller with respect to the Business are in all material
respects complete, correct and up to date and are maintained in accordance with
good business practices.
(19) No portion of the Business is conducted by any person or entity other
than the Seller. Except as set forth on EXHIBIT 24 hereto or as made available
under the Service Contracts described in Article 14, section (4), the
transferred assets as described in Article 1 and EXHIBIT 1 constitute all of the
assets necessary to, immediately following the Closing, operate the Business in
manner consistent with past practice.
(20) All inventory is recorded on the books of the Business at the lower of
cost or market value determined in accordance with GOB (Generally accepted
accounting principles according to German Law). All Inventory and equipment is
of good, usable and merchantable quality in all material respects, and does not
include obsolete or discontinued items except as depreciated on the books of the
Business. Except as set forth in EXHIBIT 25, all Inventory is of such quality as
to meet the quality control standards of Seller and any applicable governmental
quality control standards. All inventory that is finished goods are saleable as
current inventories at the current prices thereof in the ordinary course of the
Business, except as depreciated in the books of the Business.
(21) Except as set forth in EXHIBIT 26 and for warranties under applicable
law, (a) there are no warranties expressed or implied, written or oral, with
respect to the Products of the Business, and (b) to the best of Seller's
knowledge there are no pending or threatened claims with respect to any such
warranty, and Seller has no liability with respect to any such warranty.
(22) EXHIBIT 27 sets forth all insurance contracts concluded for the
Business. The Seller agrees to continue to maintain insurance coverage also for
the
11
<PAGE> 12
Business against reimbursement of the proportionate insurance premiums until one
week after Closing Date.
The Seller warrants that the insurance premiums for the insurance
coverage it has agreed to maintain through the dates specified in the preceding
paragraph have been paid fully and properly, subject to the final annual
accounts. The Seller warrants that, to the best of its knowledge and belief, an
underinsurance did not exist.
(23) Except as set forth on EXHIBIT 28 hereto, there are no claims, actions,
suits, proceedings, arbitrations, investigations or hearings or notices of
hearing pending or, to the best knowledge of the Seller, threatened, before any
court of governmental or administrative authority or private arbitration
tribunal against or relating to either: (a) the transactions contemplated
hereby; or (b) the Seller with respect to the Business or any of the assets
(including, without limitation, any Business Agreement), nor, to the best
knowledge of the Seller, circumstances or conditions which are reasonably likely
to give rise to any such claim, action, suit, proceeding, arbitration,
investigation or hearing. Except as set forth on EXHIBIT 29 hereto, there is no
continuing order, injunction, suspension, exclusion or decree of any court,
arbitrator or governmental or administrative authority (domestic or foreign)
which relates to the operation of the Business or the ownership or use of the
assets.
ARTICLE 11
LEGAL CONSEQUENCES IN CASE OF BREACH
OF REPRESENTATIONS AND WARRANTIES
(1) In case of breach of any of the representations and warranties pursuant
to Article 10, Seller shall have the right to cure such breach. It is agreed
that, as a rule, a period of sixty (60) days be sufficient for this purpose.
(2) If the condition according to Contract cannot be achieved, Purchaser
shall be entitled to reduce the purchase price, excluding other legal
consequences. In case of a reduction, Purchaser shall be reimbursed for the
expenditure or paid for the decrease in value - at the option of the Seller
payable either in cash or in Gull common shares, valued at US$ 8.29 each share
- - actually incurred by it including reasonable attorneys' fees, with any
advantages gained by the Purchaser in connection with the expenditure accrued to
be considered in the calculation.
(3) Section 460 German Civil Code (BGB) shall apply on the representations
and warranties pursuant to Article 10.
ARTICLE 12
LIMITATION ON REPRESENTATION AND WARRANTIES,
STATUE OF LIMITATION
(1) Seller's liability with respect to the representation and warranties
assumed by Seller in Article 10 hereof, will arise only if and to the extent
that the warranty claims in their entirety exceed an amount of US$ 50,000.00
(fifty thousand US Dollars). Seller's liability for the representation and
warranties
12
<PAGE> 13
assumed by Seller in Article 10 will be limited to the total amount US$
4,000,000.00 (four million US Dollars).
(2) In addition to the representation and warranties made under Article 10
hereto, any further warranty or representation of Seller, no matter for what
legal reason, shall be excluded to the legally permissible extent.
(3) Any claims of either party under this Agreement shall become
statute-barred twelve months after Closing Date, except for claims of the
Purchaser against the Seller under Art. 4 sec. (1) 3rd sentence and claims of
Seller against the Purchaser under Art. 4 sec. (2) 2nd sentence which in each
case will become statute-barred five years after Closing Date.
The period of limitation shall be interrupted through written assertion of
the claim on the merits and in terms of amount with registered letter / return
receipt provided that, within three (3) months following the service of the
written assertion of the claim, court proceedings according the written
assertion are instituted.
ARTICLE 13
REPRESENTATION AND WARRANTIES OF THE PURCHASER AND GULL
Gull and the Purchaser hereby, jointly and severely, represent and warrant to
and agree with the Seller as follows:
(1) Gull is a corporation duly organized, validly existing and in good
standing under the laws of the state of Utah. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
Federal Republic of Germany. Each of Gull and the Purchaser has all requisite
power and authority to execute, deliver and perform this Agreement and
consummate the transactions contemplated hereby.
(2) This Agreement has been duly and validly executed and delivered each by
Gull and the Purchaser. This Agreement constitutes valid and binding obligations
of Gull and the Purchaser, each enforceable in accordance with its terms.
(3) The shares of Gull Common Stock to be issued at Closing will be duly
and validly issued, fully paid and nonassessable and subject to no preemptive
rights.
(4) Except as set forth in EXHIBIT 30 no consent, authorization or approval
of or exemption by or filing with any foreign or domestic governmental, public
or self-regulatory body or authority is required in connection with the
execution, delivery and performance by the Purchaser and Gull of this Agreement,
or the taking of any action herein contemplated.
(5) Except as set forth in EXHIBIT 30A, the execution, delivery and
performance of this Agreement by the Purchaser and Gull and consummation of the
transactions contemplated hereby and thereby, will not, with or without giving
of notice and lapse of time, or both: (a) violate any provision of law, statute,
rule, regulation or executive order to which the Purchaser or Gull is subject;
(b) violate any judgment, order, writ or decree of any court to which the
Purchaser or Gull is
13
<PAGE> 14
subject; or (c) result in the breach of or conflict with any material term,
convenant, condition or provision or result in or permit any other party to
cause the modification or termination of, constitute a default under, or result
in the creation or imposition of any partnership agreement, corporate charter or
bylaws, commitment, contract or other agreement or instrument to which the
Purchaser or Gull are a party.
In case of breach of any of the representations and warranties pursuant to
Article 13, Purchaser and Gull shall have the right to cure such breach. It is
agreed that, as a rule, a period of sixty (60) days be sufficient for this
purpose.
(6) If the condition according to Contract cannot be achieved, Purchaser
and Gull shall fully indemnify Seller from all losses and damages or if
Purchaser and Gull fail to fulfil that indemnification within 30 days, Seller
shall have the right to rescind the contract.
ARTICLE 14
CONDUCT OF BUSINESS
(1) From the Effective Date and until the Closing Date, the Business shall
be deemed to have been carried on and further on will be carried on on behalf
and for the account of the Purchaser. The parties agree that the profits or
losses ascertained for the period from the Effective Date through the Closing
Date shall be due to or shall be borne by the Purchaser.
The determination of any profits or losses shall be made in accordance with
the accounting principles as exercised by the Seller, consistent with past
practice.
(a) In order to determine the cash flow, including interest related to the
cummulative cash flow balance of the Business from the Effective Date through
the Closing ("the Interim Period") and allocate them to Purchaser, Seller shall
establish as of the Effective Date a separate account in accordance with the
outlined procedure on EXHIBIT 31 (the "Separate Account") for the Business to
reflect the investments by the Seller in, and the distributions to the Seller
by, the Business as a separate entity for the period from January 1, 1997,
through the Closing Date.
(b) During the Interim Period, Seller shall advance to the Business its
working capital needs in accordance with past practice. All cash so advanced by
the Seller shall be credited to the Seller and charged to the Business. All cash
or other assets transferred by the Business to or for the benefit of Seller
during the Interim Period (including, without limitation, any payment or other
satisfaction by the Business out of the assets of any liabilities arising out of
any business other than the Business or relating to any assets other than the
assets to be sold or representing a return of invested capital) shall be
credited to the Business and charged to the Seller in the Separate Account. All
such charges and credits shall be allocated in accordance with GOB. Any
corporate service allocations to be charged to the Business shall be in
accordance with the terms of the service contracts described on EXHIBIT 32. The
quarterly balance of the Separate Account will be charged with an interest rate
of 5 % p.a.. The quarterly balance will be
14
<PAGE> 15
determined by the amount due at the beginning of the quarter plus the balance at
the end of the quarter divided by 2.
(c) No later than ninety (90) days after the Closing, Seller shall prepare
and deliver to the Purchaser a final report of any net balance due to the Seller
by the Business or due to the Business as reflected in the Separate Account as
of the Closing Date. Unless an audit is requested under Section (d) below,
within fifteen (15) days after the delivery of the foregoing report (the
"Separate Account Closing Report") to the Purchaser, Seller shall pay to
Purchaser an amount equal to any net balance due the Business from Seller as
reflected in the Separate Account as of the Closing Date. Any amount due to
Seller from Purchaser shall be set off or paid to the Seller accordingly.
(d) Purchaser shall have the right within thirty (30) days after the
delivery of the Separate Account Closing Report to the Purchaser, to have a
certified public accounting firm audit at Purchaser's expense the Separate
Account Closing Report. The decision of the certified public accounting firm
with respect to such dispute shall be final and binding. Any resulting
adjustment to the final payment due to the Purchaser, on the one hand, or the
Seller, on the other hand, shall be promptly paid by the Purchaser or the
Seller, as the case may be, to the other party.
(2) The Seller agrees that on and after the date hereof and prior to the
Closing Date, the operations, activities and practices of the Business shall be
conducted in the ordinary course of the business and consistent with past
practice.
Without limiting the foregoing, Seller agrees that on and after the date
hereof and prior to the Closing Date and except as otherwise consented to or
approved by the Purchaser or as contemplated or required by this Agreement,
including the matters delegated to the committee referred to in para. 5 below,
Seller shall comply with the following covenants in regards to the Business:
(a) The operations, activities and practices of the Business shall be
conducted in the ordinary course of business and consistent with past practice,
and the Seller shall use commercially reasonable efforts to: (i) keep and
maintain in good operating condition and repair, reasonable wear and tear
excepted, all of the Business's properties and assets (whether owned or leased),
(ii) preserve the organization of the Business intact, (iii) keep available to
the Business the present services of its employees, and (iv) to preserve for the
Business the goodwill of its suppliers and customers and others with whom it has
business relationships.
(b) No action shall be taken in furtherance of the liquidation or
dissolution of the Business.
(c) The Seller shall not grant any irrevocable powers of attorney or
comparable delegations of authority regarding to the Business.
(d) No change shall be made in the accounting methods or practices followed
by the Seller or in the depreciation or amortization policies or rates
heretofore adopted in regards to the Business or the Assets except as indicated
by German law.
(e) The Seller without prior consent of the Purchaser has not entered since
the Effective Date and shall not enter into or assume any lease, contract,
15
<PAGE> 16
agreement or commitment related to the Business or the Assets, except for any
normal and ordinary contract, agreement or commitment for the sale of products,
the performance of services or the purchase of raw materials, supplies, services
or utilities which does not involve payments or receipts of more than DM 120,000
per transaction for the time period between Effective Date and signing of this
Agreement and DM 70,000 from signing until Closing Date and which is terminable
by the Seller without penalty or is to be fully performed on or before ninety
(90) days after the Closing.
(f) The Seller shall not grant any increase in the compensation payable or
to become payable by the Seller to any officer or employee involved with the
Business except as provided in already existing employment contracts, in
collective wage agreements or otherwise in the ordinary course of the Business
and consistent with past practice.
(g) The Seller shall not (i) incur any additional indebtedness for the
Business except for inter-company borrowings under the Separate Account within
the normal course of operations and trade accounts payable, (ii) incur any
liability other than as referenced under clause (i), contingent or otherwise
except in the ordinary and normal course of business of the Business, (iii)
mortgage, pledge or otherwise subject any of the Assets to, or otherwise permit
to exist, any lien or encumberance on any of the Assets, other than liens or
encumberances relating to real property taxes and assessments not yet due and
payable, or (iv) make any modification or change in or terminate or renew any
contracts, except in the ordinary and normal course of its business.
(h) The Seller shall not take any action that would constitute, or fail to
take any action that would prevent, a breach by Seller or a default by Seller
under any Business agreement.
(i) The Seller shall maintain complete and accurate records of the interim
receivables and the interim liabilities incurred within the Interim Period.
(j) The Seller shall not make any distribution of assets related to the
Business to itself or its affiliates other than reflected within the Separate
Account.
(k) The Seller will not settle, or agree to settle, any suit, action, claim
or other legal, administrative or arbitration proceeding, involving the Business
or any of the Assets, or waive or relinquish any right, claim or cause of action
other than in the ordinary course of the Business consistent with past practice.
(l) The Seller shall notify the Purchaser in writing of any action, event,
condition or circumstance, or group of actions, events, conditions or
circumstances, relating to the Business that is out of the ordinary course of
business or that results in, or threatens to result in a material adverse effect
on the Business or of the commencement of any proceedings seeking to enjoin or
rescind the transactions contemplated hereby or to which the Seller is a party
or involving any of the Assets, or any breach by the Seller of any
representation or warranty or any covenant or agreement contained in this
Agreement, such notification to be made promptly upon the Seller gaining
knowledge of such breach, proceeding, threat, event, action, condition or
circumstance, or group thereof.
16
<PAGE> 17
(3) Between the date of this Agreement and the Closing Date, the Seller
shall: (i) provide the Purchaser and its accountants, counsel and other
authorized representatives, full access, during reasonable business hours and
under reasonable circumstances, to any and all premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation and any tax related agreements) of the Seller related
to the Business, and will cause its officers to furnish to the Purchaser and
such entities and its authorized representatives any and all financial,
technical and operating data and other information pertaining to the Business,
as the Purchaser shall from time to time reasonably request and (ii) make
available for inspection and copying by its authorized representatives true and
correct copies of all documents referred to herein or in the Exhibits hereto;
provided however that no access to properties and records shall be given if such
properties and records do not exclusively refer to the Business. With respect to
properties and records which do not exclusively refer to the Business, the
Purchaser shall only have the right to obtain the relevant information as
necessary for the Purchaser. All such access, inspections, copying, contacts and
other investigations will be conducted in such a manner as not to interfere
unreasonably with the normal conduct of the business of the Seller.
(4) In the past, Seller has provided various services for the Business.
Seller agrees to continue to provide for the Purchaser the services stated in
EXHIBIT 32 hereto for the period set forth on EXHIBIT 32. All other services so
far provided for the Business by Seller and stated in EXHIBIT 33 hereto will be
discontinued without any further notification immediately after closing of this
transaction. As part of the service contracts included in EXHIBIT 32, Seller
will provide Purchaser with an unaudited balance sheet and income statement of
the Business as of the end of each fiscal quarter, through and including the
quarter ending 31/12/1997, within thirty (30) business days after the end of
such fiscal quarter. Seller shall also provide information to Purchaser to
adjust such statements to US GAAP.
Purchaser undertakes, by 31/12/1997, to implement a data processing system
which will meet its own business management system requirements. Purchaser shall
inform Seller prior August 30th, 1997 whether or not Purchaser desires to use
the data processing system of Seller beyond December 31, 1997. For the current
business year, Purchaser accepts the separation of the business unit Diagnostics
from the books of Seller as set out in EXHIBIT 31. If and to the extent that
Purchaser continues to use the business management systems of Seller after the
Closing, Purchaser shall pay the agreed fees according to the service contracts.
Audit costs, if any, after the Closing shall be borne by the Purchaser.
(5) From signing of this Agreement until the Date of Closing, matters
relating to employment issues, capital asset acquisitions and operating
strategies will be decided by a steering committee, consisting of Dr. Silke
Humberg from Fresenius and John Turner from Gull.
(6) The Seller has delivered to the Purchaser the Financial Statements of
the diagnostic business of Fresenius AG including Independent Auditor's Report,
Statement of Operations and Net Assets for the years ended December 31, 1995
17
<PAGE> 18
and 1996, Balance Sheets as of December 31, 1995 and 1996 and Statements of Cash
Flows for the years ended December 31, 1995 and 1996, stated in accordance with
US GAAP.
(7) During the period prior to the Closing Date, after the end of each
calender month, the Seller shall deliver to the Purchaser, as soon as available,
but in any event within ten (10) days, unaudited summary monthly profit and loss
statements of the Business for each calender month. All such profit and loss
statements shall be prepared in accordance with the Seller's customary practice
based on the management accounting and shall fairly and accurately present the
results of operations of the Business for such month. Within thirty (30) days
after the end of each fiscal quarter after the date hereof and prior to the
Closing Date, the Seller shall also deliver to the Purchaser an unaudited
balance sheet of the Business as of the end of such fiscal quarter. Seller shall
also provide information to Purchaser to adjust such statements to US GAAP.
ARTICLE 15
PROXY STATEMENT PROVISION
(1) As soon as practicable after the execution of this Agreement (but
subject to the financial statement age requirements of Regulation S-X of the
United States Securities and Exchange Commission ("SEC")), Gull will prepare and
file preliminary proxy materials with the SEC with respect to the meeting of the
Gull shareholders referred to in paragraph (2) of this Article. Gull will use
its best efforts to respond to comments of the SEC Staff on such proxy materials
and to mail definitive proxy materials to its shareholders as soon thereafter as
practicable. At the time the definitive proxy statement is mailed to the
shareholders of Gull soliciting proxies for the approval of this Agreement and
any related matters and at all times subsequent to such mailing, up to and
including the Closing Date, such definitive proxy statement (including any
supplements thereto), with respect to all information relating to Gull (and its
shareholders), this Agreement, the Common Stock of Gull, and, as to Gull, the
transactions contemplated by this Agreement will:
(i) Comply in all material respects with applicable provisions of the
United States Securities Exchange Act of 1934 (the "Exchange Act") and
regulations thereunder and the rules and regulations of the American Stock
Exchange ("AMEX"); and
(ii) not contain any statement which, at the time and in light of the
circumstances under which it is made, is an untrue statement of material facts
or omit to state any material fact necessary in order to make the statements
therein not misleading, or required to be stated therein or necessary to correct
any statement in an earlier communication with respect to such matters which has
become false or misleading.
(2) Gull will call a special meeting of its shareholders to consider and
vote upon, or the matters submitted to shareholders at Gull's 1997 annual
meeting of shareholders will include, this Agreement and the consummation of the
18
<PAGE> 19
transactions contemplated hereby and thereby. Subject to the review and
clearance of Gull's preliminary proxy materials and SEC financial statement age
requirements, the date of such annual or special meeting shall be as soon as
practicable after the date of this Agreement. Subject to receipt of a favorable
fairness opinion referred to in Art. 18 sec. 4, Gull will, through its Board of
Directors, recommend that its shareholders approve such matters and use its best
efforts to solicit the votes required for approval. Seller is not obligated to
recommend the approval of this transaction to its Supervisory Board if the
aforementioned fairness opinion is not considered favourable by Seller.
(3) Seller will cooperate in the preparation of the proxy statement of Gull
referred to in paragraph (1) above and furnish such financial statements and
other information with respect to Seller and the Business as is required by the
Exchange Act and the rules and regulations of the SEC thereunder and/or the AMEX
to be included in such proxy statement. Such information furnished by Seller
will comply in all material respects with applicable provisions of the Exchange
Act and regulations thereunder and will not contain any statement which, at the
time and under the circumstances under which it is made, is an untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements made therein not misleading or is required to be stated
therein or necessary to correct any statement in an earlier communication with
respect to such matters which has become false or misleading.
(4) At the Gull shareholder meeting, provided that Seller's Supervisory
Board shall have approved this agreement, Seller and any of its Affiliates will
vote any securities of Gull owned by them and entitled to vote in favor of the
approval of this Agreement and the transactions contemplated hereby.
ARTICLE 16
PUBLICATION / CONFIDENTIALITY
(1) The parties shall concurrently coordinate the text of a publication
and/or announcement relating to the takeover agreed herein. The disclosure of
information to affiliated enterprises or advisers bound by their professional
duty of secrecy shall remain unaffected by the obligation of such joint
coordination.
(2) The parties agree that, subject to applicable securities law disclosure
obligations, neither of them will disclose the terms of this Agreement without
the prior written consent of the other, which consent will not be unreasonably
withheld. However, both Gull and Fresenius may inform their employees regarding
the existence of this Agreement.
ARTICLE 17
COSTS
Each party shall bear its own expenses and costs accruing in connection with
the preparation, conclusion and performance of this Agreement and the contracts
19
<PAGE> 20
and the Proxy Statement mentioned herein, including the fees for legal and tax
and/or financial advice.
ARTICLE 18
CONDITIONS PRECEDENT, APPROVALS
(1) The obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the following conditions:
- - the approval of Seller's Supervisory Board and
- - the approval of Gull's board of directors including the unanimous approval
of the members of the Special Committee of Independent Directors of Gull
appointed at the board of directors meeting of Gull held June 17, 1996 to be
effective,
- - the approval of Gull's shareholders, including the majority of Non-Fresenius
shareholders actually voting on the transaction, pursuant to the proxy
solicitation referred to in Article 15,
- - the approval of the relevant stock exchange commission.
(2) Both parties agree to see to the necessary resolutions of their
respective supervisory boards or boards of directors being adopted without delay
and to immediately inform the other party thereof. Subject to the limitations of
Article 15, the parties agree to subsequently submit the declarations of
approval of their supervisory boards or boards of directors to this instrument.
(3) As soon as practicable after the execution and delivery of this
Agreement, Gull will file a listing application with the AMEX for the approval
of the listing thereon of the Gull Common Stock issuable to Seller as the
consideration for the Business, and will use its best efforts to cause such
listing application to be approved. Seller's obligation to consummate the
transactions contemplated by this Agreement shall be subject to the condition
that the AMEX shall have authorized the listing of the shares of Gull Common
Stock to be issued as the consideration for the Business, subject only to
official notice of issuance.
(4) The obligations of the parties to consummate the transactions required
by this Agreement shall be subject to the conditions that (i) the Special
Committee of Gull's Board of Directors established on June 17, 1996 shall have
received an opinion of Vector Securities, Inc., a nationally recognized firm of
investment bankers, in form and substance satisfactory to Gull, Purchaser, and
Seller, to the effect that the purchase price for the Business and the other
terms and conditions of this Agreement are fair to the shareholders of Gull
(other than Seller) from a financial point of view, (ii) such firm shall have
consented to the inclusion of its opinion, and such opinion shall have been
included, in Gull's definitive proxy materials, and (iii) such opinion shall not
have been withdrawn on or prior to the Closing Date.
(5) The parties shall according to Sect. 23 GWB [German Act Against
Restraints of Competition] immediately file to the Federal Cartel Office the
20
<PAGE> 21
notification of the merger constituting this Agreement; each party hereto shall
be obligated to promptly provide the correct and complete data and information
to be furnished by it under Sec. 23 sub-sec. 5, 6 GWB.
If the Federal Cartel Office denies the merger according to Sec. 24 sub-sec.
2 sent. 1 GWB the agreement shall be dissolved.
If, as a result of the denial of the merger by the Federal Cartel Office,
this Agreement shall be dissolved, the statutory provisions regarding the
withdrawal from an agreement shall apply with respect to the restoration of what
has already been received by the parties in performance of this Agreement. In
case of the dissolution of this Agreement, each party hereto shall bear the
expenses it has incurred or will incur in connection with the execution,
performance and reversal, if any, of this Agreement.
(6) On the Closing Date Gull is obliged to enter into an agreement with the
Seller with respect to the right to register the shares owned by the Seller
under the U.S. Securities Act of 1933 according to EXHIBIT 34.
(7) The obligations of the Purchaser under this Agreement to consummate its
purchase of the Business shall be further subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, each of which
may be waived by the Purchaser as provided herein except as otherwise provided
by law.
(a) All corporate action necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Seller shall have been duly and validly taken.
(b) None of the Seller, the Purchaser or Gull shall be subject to any rule,
regulation, order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the issuance of Gull common stock.
(c) No litigation or proceeding shall have been instituted or, to the
parties' knowledge, threatened after the date of this Agreement by any
governmental agency or other person or entity seeking to restrain or prohibit
the performance of, or to obtain damages or other relief in conjunction with
this Agreement of any of the transactions contemplated hereby that (a) has a
reasonable possibility of success on the merits, and (b) if decided in favor of
the agency, person or entity who instituted the same, would have a material
adverse effect on the Seller or on the Purchaser.
(d) The representation and warranties of the Seller contained in Art. 10
sec. (1), (2), (6), (7), (10), (12) and (15) shall have been true and correct as
of the date hereof and shall be true and correct in all material respects as of
the Closing Date with the same effect as though made as of the Closing Date. If
such representations or warranties are not true and correct as of the closing
date Seller has the right to cure it within a period of 60 days. If such cure
can not be reached Purchaser is no longer obligated to consummate the
transaction as contemplated in this Agreement.
21
<PAGE> 22
ARTICLE 19
TERMINATION
(1) This Agreement may be terminated at any time prior to the Closing; (a)
by mutual consent of the Seller and the Purchaser, (b) by the Purchaser if there
is a material breach by the Seller of any representation, warranty, covenant or
other agreement contained in this Agreement, which breach is not cured after
fifteen (15) days' written notice thereof is given to the Seller by the
Purchaser, (c) by the Seller if there is a material breach by the Purchaser of
any representation, warranty, covenant or other agreement contained in this
Agreement, which breach is not cured after fifteen (15) days' written notice
thereof is given to the Purchaser by the Seller, or (d) by either the Seller or
the Purchaser if the Closing shall not have occurred on or before June 30th,
1997, for reasons other than the failure of the terminating party to perform its
obligations hereunder.
(2) If this Agreement is terminated pursuant to this Section 19 by any
party hereto for any reason other than the breach of a warranty, representation,
covenant or agreement contained herein by the other, all further obligations of
the parties hereunder will terminate without further liability of the parties.
ARTICLE 20
GENERAL
(1) In case of a failure of payments of any amounts due under the
Agreement, default interest at a rate of 5 % above the Bundesbank discount rate
shall be paid. This shall not affect the assertion of damage claims in excess
thereof.
(2) If either party claims against the other for a breach of
representations or warranties given under this agreement, the successful party
shall be reimbursed by the other party for all legal expenses including
attorney's fees.
(3) Any modifications of and amendments to this Agreement shall be valid
only if in writing unless notarial or another form is required by mandatory law.
This shall apply also to the modification and/or cancelation of this provision.
(4) If any provisions of the foregoing Agreement are or become invalid, in
whole or in part, or if there are unintended gaps, this shall not affect the
effectiveness or validity of the other provisions hereof. In such case, the
contract parties agree to replace the ineffective provisions by legally
effective provisions and close the gaps in such a way as they would have done
upon preparation of this Agreement, properly and subject to a reasonable
consideration of their interests, had they been aware of the ineffectiveness of
the provisions or of such gaps.
(5) Any breach of any obligation, convenant, agreement of condition
contained herein shall be deemed waived by the non-breaching party only by a
writing, setting forth with particularity the breach being waived and the scope
of the waiver, but such waiver shall not operate as a waiver of, or estoppel
with respect to, any subsequent breach. No waiver shall be implied from any
conduct
22
<PAGE> 23
or action of the non-breaching party. No failure or delay by any party in
exercising any right, power or privilege hereunder or under any ancillary
document, and no course of dealing by any party, shall operate as a waiver of
any right, power or privilege hereunder, nor shall any single or partial
exercise of any other right, power or privilege.
All notices, requests, demands and other communications which are required
to be or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person, or transmitted by
telecopy, or upon receipt after dispatch by certified or registered first class
mail, postage prepaid, return receipt requested, to the party to whom the same
is so given or made, at the following address or telecopy numbers (or such
others as shall be provided in writing hereinafter):
If Seller, to: Fresenius AG
Borkenberg 14
61440 Oberursel
Attention: Frank Simon
Telecopy No.: 06171 - 602218
If to Purchaser
or Gull, to: Gull Laboratories, Inc.
1011 East Murray Holladay Road
Salt Lake City, UT 84117
George Evanega
Telecopy No.: (801) 265-9268
(6) This Agreement (including the Schedules and Exhibits hereto)
constitutes the entire agreement and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof, including without limitation, the Letter of Intent, dated
December 13, 1996, between the Purchaser and the Seller.
Nothing in this Agreement is intended to, or shall be construed so as to
create any third party beneficiary to this Agreement or otherwise confer any
rights upon any person, firm or corporation that is not a party hereto.
ARTICLE 21
APPLICABLE LAW, LANGUAGE, JURISDICTION
(1) This Agreement shall be governed exclusively by German law.
(2) The courts in Frankfurt am Main shall, as far as legally permissible,
have exclusive jurisdiction for any and all disputes arising out of or in
connection
23
<PAGE> 24
with this Agreement. Gull hereby expressly submits to the jurisdiction of the
courts in Frankfurt am Main and agrees to service of process by mail. Gull
further agrees to appoint an agent in Germany for such service of process.
(3) This Agreement shall be concluded in the English language. The English
version shall be controlling also in the event that there exist versions in
another language.
24
<PAGE> 25
A counterpart of this instrument shall each be given to
- - Seller
- - Purchaser
- - Gull Laboratories Inc.
Oberursel, 21. April 1997
Fresenius AG
..............................
Frank Simon
Gull GmbH
..............................
Mike Malan
Gull Laboratories Inc.
.............................
George Evanega
25
<PAGE> 1
Exhibit 2
RETRANSFER OF SHARES AGREEMENT
By and among
Fresenius AG, Borkenberg 14, 61140 Oberursel, registered with the Commercial
Register Bad Homburg HRB 2617 and represented by Frank Simon as special
representative, acting according to the power of attorney dated 16. April 1997,
- "Seller" -
and
Gull GmbH, registered with the Commercial Register Koln HRB 24160 and
represented by Michael Malan as its Managing Director with full authority to
represent the company alone,
- "Purchaser" -
and
Gull Laboratories Inc., a Utah corporation, represented by George Evanega as its
Chief Executive Officer and President with full authority to represent the
company alone
- "Gull" -.
<PAGE> 2
The Seller, the Purchaser and Gull are going to enter into an Asset Purchase
Agreement ("Asset Purchase Agreement") with respect to all of the assets and
properties of Seller's business of developing, manufacturing and marketing of
diagnostic test kits and material designed to detect past and present infection
with kits and materials based on established immunological assay methods (the
"Business"). Article 8 of the Asset Purchase Agreement provides for a purchase
price to be paid by the Purchaser of 1,320,000 shares of the common stock of
Gull with US$ .001 par value per share.
The parties expect that the infectious disease business of a company called
[name of supplier deleted] ("Supplier") will be sold by its present shareholder
in the near future. Supplier has substantial relationship with the Business of
the Seller. The parties agree that a potential termination of that relationship
upon an acquisition of Supplier will have a negative influence on the acquired
Business.
Now, therefore, the parties hereto agree as follows:
ARTICLE 1
REDUCTION OF PURCHASE PRICE
(1) The parties agree that the purchase price to be paid in accordance with
Article 8 of the Asset Purchase Agreement will be reduced by an amount of 33,000
shares of the common stock of Gull with US$ .001 par value per share ("Shares"),
if and when the present commercial relationship, i.e. delivery of infectious
disease products manufactured by Supplier as specified in the contract between
Fresenius AG and Supplier dated February 20, 1994 will be terminated by Supplier
entirely on or before the 31. December 1997 at the latest ("the Termination").
If and when only the part of the commercial relationship with respect to the
syphilis product line will be terminated by Supplier, the reduction of the
purchase price will only be 56.7307 % of 33,000 Shares, i.e. 18.721 Shares. If
the Termination takes place after the 31. December 1997, no reduction of the
purchase price shall be due.
(2) If and when the Termination takes place after the purchase price has
already been paid to the Seller - but prior 31. December 1997 - the Seller shall
be obliged to repay and retransfer to the Purchaser the amount of 33,000 or
respectively 18.721 Shares.
(3) If and when within two years after the Termination the Purchaser or
Gull or an affiliate of the Purchaser or Gull will enter again into a commercial
relationship with Supplier or with the Purchaser of Supplier's Business, which
is in quality and volume comparable with the terminated relationship, Gull and
the Purchaser shall pay and transfer the 33,000 or respectively 18.721 Shares to
the Seller.
2
<PAGE> 3
ARTICLE 2
APPLICABLE LAW, LANGUAGE, JURISDICTION
(1) This Agreement shall be governed exclusively by German law.
(2) The courts in Frankfurt am Main shall, as far as legally permissable,
have exclusive jurisdiction for any and all disputes arising out of or in
connection with this Agreement. Gull hereby expressly submits to the
jurisdiction of the courts of Frankfurt am Main and agrees to service of process
by mail. Gull further agrees to appoint an agent in Germany for such service of
process.
(3) This Agreement shall be concluded in the English language. The English
version shall be controlling also in the event that there exist versions in
another language.
Date ................. 1997 Date ............... 1997
Fresenius AG Gull Laboratories Inc.
........................... .........................
Gull Deutschland GmbH
.........................
3
