SABRATEK CORP
8-K, 1999-07-14
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS
Previous: PHLO CORP, SC 13D, 1999-07-14
Next: HERITAGE PROPANE PARTNERS L P, 10-Q, 1999-07-14



<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 8-K


                             Current Report Pursuant
                          to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


      Date of report (Date of earliest event reported)   June 29, 1999
                                                      -------------------------

                              SABRATEK CORPORATION
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

          Delaware                     1-11831                  36-3700639
- --------------------------------------------------------------------------------
(State or Other Jurisdiction         (Commission             (I.R.S. Employer
      of Incorporation)              File Number)           Identification No.)

         8111 North St. Louis, Skokie, Illinois           60076
- --------------------------------------------------------------------------------
         (Address of Principal Executive Offices)      (Zip Code)

                                 (847) 720-2400
- --------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

                                 Not Applicable
- --------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)



<PAGE>   2

         ITEM 2:  ACQUISITION OR DISPOSITION OF ASSETS.

         (a)  On June 29, 1999, Sabratek Corporation, a Delaware corporation
("Sabratek"), consummated a transaction in which a newly-formed wholly-owned
subsidiary of Sabratek merged with and into Strategic Reimbursement Services,
Inc. ("SRS"), an Illinois corporation. As a result of the transaction, SRS
became a wholly-owned subsidiary of Sabratek. As consideration for the merger
and pursuant to a Merger Agreement, dated as of June 29, 1999, by and among
Sabratek, SRS and the shareholders of SRS, Sabratek paid the SRS shareholders an
aggregate of 1,636,359 shares of Sabratek common stock ("Merger Consideration").
This merger will be accounted for by Sabratek using the pooling of interests
method of accounting.

         Under the terms of the Merger Agreement and a separate escrow
agreement, 163,636 shares of the Merger Consideration were deposited with U.S.
Bank Trust National Association as escrow agent to secure Sabratek's right to
indemnification from any material breach of the representations and warranties
given by SRS to Sabratek. The escrow will terminate on the earlier of June 29,
2000 or the date of issuance of Sabratek's first independent audit report which
contains the operations of SRS. With respect to the shares of stock held in
escrow, the former shareholders of SRS will be entitled to vote and to direct
the sale of such shares and the escrow agent will have limited authority to sell
such shares in the event that it is determined that Sabratek is entitled to
reimbursement for any damages it incurs as a consequence of a breach of SRS's
representations and warranties.

              Under the terms of a separate Registration Rights Agreement
entered into in connection with the merger, Sabratek will be required to file a
Shelf Registration Statement registering the resale of 600,000 shares of
Sabratek common stock by the former SRS shareholders. In addition, on or before
the second month anniversary of the effective date of the above mentioned Shelf
Registration Statement, Sabratek will be required to file a second Shelf
Registration Statement registering the resale of the remaining 1,036,359 shares
of Sabratek common stock constituting the Merger Consideration by the former SRS
shareholders.

     (b) As a result of the merger, Sabratek will acquire (i) office space
subject to existing leases, (ii) furniture, (iii) fixtures, (iv) equipment and
(v) rights to intellectual property (together, the "Property"). Sabratek intends
to use the Property for the same purposes and in the same manner as it was used
by SRS prior to this merger.

ITEM 7:  FINANCIAL STATEMENTS AND EXHIBITS.

     (a) Financial Statements of Businesses Acquired.

         It is impracticable to provide the required financial statements of SRS
at this time. The required financial statements will be filed as an amendment to
this report on Form 8-K as soon as they are prepared and not later than sixty
days after the deadline for filing this current report.



                                      - 2 -

<PAGE>   3



     (b) Pro Forma Financial Information.

         It is impracticable to provide the required pro forma financial
statements at this time. The required pro forma financial statements will be
filed as an amendment to this report on Form 8-K as soon as they are prepared
and not later than sixty days after the deadline for filing this current report.

     (c) EXHIBITS                                                    PAGE NUMBER

     4.4    Registration Rights Agreement, dated
            as of June 29, 1999, by and between
            Sabratek Corporation and the former
            shareholders of Strategic
            Reimbursement Services, Inc. ....................................

     10.51  Agreement of Merger, dated as of June
            29, 1999, by and among Sabratek
            Corporation, SBTK I Acquisition
            Corporation, a wholly-owned
            subsidiary of Sabratek and Strategic
            Reimbursement Services, Inc.,
            (Sabratek hereby agrees to furnish
            supplementally to the Securities and
            Exchange Commission upon request a
            copy of any omitted schedule or
            exhibit, all of which are listed in
            the table of contents to the Agreement
            of Merger.) .....................................................







                                      - 3 -

<PAGE>   4


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



Date: July 14, 1999                By:   /s/ Stephen L. Holden
     --------------                   -----------------------------------------
                                      Stephen L. Holden, President




















                                      - 4 -


<PAGE>   1

                                                                     EXHIBIT 4.4


                          REGISTRATION RIGHTS AGREEMENT


                                 by and between

                              SABRATEK CORPORATION


                                       and


                           The former Stockholders of
                     STRATEGIC REIMBURSEMENT SERVICES, Inc.





                            Dated as of June 29, 1999







<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                         PAGE
<S>                                                                      <C>
1.   Definitions...........................................................1

2.   Shelf Registration....................................................3

3.   Registration Procedures...............................................5

4.   Holdback Arrangements.................................................8

5.   Registration Expenses.................................................8

6.   Indemnification.......................................................9

7.   Miscellaneous........................................................11

</TABLE>
















                                       -i-

<PAGE>   3

                                                                     EXHIBIT 4.4

                          REGISTRATION RIGHTS AGREEMENT


         THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of June
29, 1999, by and among Sabratek Corporation, a Delaware corporation (the
"Company"), and the former stockholders (collectively, the "Stockholders" and
individually, a "Stockholder") of Strategic Reimbursement Services, Inc., a
Delaware corporation ("SRS").


         The parties hereto agree as follows:

1.   Definitions. The following terms as used herein shall have the following
     meanings:

         "Agreement of Merger" means the Agreement of Merger, dated as of June
     29, 1999, by and among the Company, SBTK I Acquisition Corporation, an
     Illinois corporation and a wholly-owned subsidiary of the Company, and SRS.

         "Closing Registrable Securities" means the shares of Common Stock which
     comprise the Closing Stock Consideration, as defined in the Agreement of
     Merger.

         "Closing Shelf Registration Statement" shall have the meaning specified
     in Section 2.01.

         "Commission" means the Securities and Exchange Commission and any other
     similar or successor agency of the Federal government then administering
     the Securities Act or the Exchange Act.

         "Common Stock" means the Common Stock, par value $0.01 per share, of
     the Company and the related preferred stock purchase rights, as
     appropriate.

         "Company" shall have the meaning specified in the introductory
     paragraph of this Agreement.

         "Escrow Registrable Securities" means the shares of Common Stock which
     comprise the Escrow Stock Consideration, as defined in the Agreement of
     Merger.

         "Deferred Shelf Registration Statement" shall have the meaning
     specified in Section 2.02.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
     or any similar Federal statute then in effect, and any reference to a
     particular section thereof shall include a reference to the comparable
     section, if any, of any such similar Federal statute, and the rules and
     regulations thereunder.


                                       -1-

<PAGE>   4


         "Person" means any individual, corporation, partnership, limited
     liability company, association, trust or other entity or organization,
     including a government or political subdivision or any agency or
     instrumentality thereof.

         "Prospectus" means the prospectus included in any Registration
     Statement, as amended or supplemented by any prospectus supplement with
     respect to the terms of the offering of any of the Registrable Securities
     covered by such Registration Statement and by all other amendments and
     supplements to the prospectus, including post-effective amendments and all
     material incorporated by reference in such prospectus.

         "Registrable Securities" means (i) all of the shares of Common Stock
     issued by the Company pursuant to the Agreement of Merger, (ii) any shares
     of Common Stock issued pursuant to clause (iii) hereafter and (iii) any
     shares of Common Stock issued or issuable in respect of the securities
     described in clauses (i) and (ii) by reason of a stock split, stock
     dividend or other recapitalization of the Company. For the purposes of this
     Agreement, Registrable Securities will cease to be Registrable Securities
     when (i) a registration statement covering such Registrable Securities has
     been declared effective and they have been disposed of pursuant to such
     effective registration statement, (ii) they are distributed to the public
     pursuant to Rule 144 (or any similar provision then in force) or (iii) they
     have been otherwise sold or transferred by the Stockholders (other than
     pursuant to Section 7.02 below).

         "Registration Statements" means any registration statement filed by the
     Company under the Securities Act that covers any of the Registrable
     Securities, including the Prospectus, any amendments and supplements to
     such Registration Statements, including post-effective amendments and all
     exhibits and all material incorporated by reference in such registration
     statement.

         "Rule 144" means Rule 144 under the Securities Act.

         "Securities Act" means the Securities Act of 1933, as amended, or any
     similar Federal statute then in effect, and any reference to a particular
     section thereof shall include a reference to a comparable section, if any,
     of any such similar Federal statute, and the rules and regulations
     thereunder.

         "Shelf Registration Statements" means the Closing Shelf Registration
     Statement and the Deferred Shelf Registration Statement.

         "Stockholder" or "Stockholders" shall have the meanings specified in
     the introductory paragraph of this Agreement.






                                       -2-

<PAGE>   5



2.   Shelf Registration

     2.01 Closing Shelf Registration Statement. The Company shall file as
promptly as practicable (but in any event within 15 days after the date of this
Agreement) and use its reasonable best efforts to have declared effective a
shelf registration statement pursuant to Rule 415 (or any successor rule
thereto) under the Securities Act (the "Closing Shelf Registration Statement")
for a delayed or continuous public offering of 600,000 Closing Registrable
Securities, subject to the provisions of Section 2.03 and the other terms and
conditions of this Agreement. Such registration statement shall be on Form S-3
(or any successor form to Form S-3) or another appropriate form permitting
registration of such Registrable Securities for resale by the Stockholders on a
delayed or continuous basis as contemplated by this Section. In the event the
registration of a delayed or continuous offering of such Registrable Securities
is not permitted under the Securities Act, the Company will provide comparable
alternative registration rights under the Securities Act to the Stockholders.

     2.02 Deferred Shelf Registration Statement. The Company shall file on or
prior to the two month anniversary of the date of effectiveness of the Closing
Shelf Registration Statement (but not later than December 1, 1999) and use its
reasonable best efforts to have declared effective a shelf registration
statement pursuant to Rule 415 (or any successor thereto) under the Securities
Act (the "Deferred Shelf Registration Statement") for a delayed or continuous
public offering of all of the Registrable Securities (other than those
Registrable Securities already registered pursuant to Section 2.01) subject to
the provisions of Section 2.03 and the other terms and conditions of this
Agreement. Such registration statement shall be on Form S-3 (or any successor
form to Form S-3) or another appropriate form permitting registration of such
Registrable Securities for resale by the Stockholders on a delayed or continuous
basis as contemplated by this Section. In the event the registration of a
delayed or continuous offering of such Registrable Securities is not permitted
under the Securities Act, the Company will provide comparable alternative
registration rights under the Securities Act to the Stockholders.

     2.03 Limitations on Shelf Registrations. The shelf registration rights
granted to the Stockholders pursuant to Sections 2.01 and 2.02 are subject to
the following limitations:

          (a) the Company shall not be obligated under Section 2.01 to file more
than one Closing Shelf Registration Statement, provided that a Closing Shelf
Registration Statement which does not become or remain effective for the period
specified in Section 3.01(a) shall not be deemed to constitute a Closing Shelf
Registration Statement filed pursuant to Section 2.01 (unless such Closing Shelf
Registration Statement has not become effective or does not remain effective due
solely to the fault of the Stockholders);

          (b) the Company shall not be obligated under Section 2.02 to file more
than one Deferred Shelf Registration Statement, provided that a Deferred Shelf
Registration Statement which does not become or remain effective for the period
specified in Section 3.01(a) shall not be deemed to constitute a Deferred Shelf
Registration Statement filed pursuant to Section 2.02 (unless such


                                       -3-

<PAGE>   6

Deferred Shelf Registration Statement has not become effective or does not
remain effective due solely to the fault of the Stockholders);

          (c) the Company shall be entitled to postpone for a reasonable time,
not exceeding 20 days, the filing of any Shelf Registration Statement or its
efforts to cause any Shelf Registration Statement to become effective if at the
time the right to delay is exercised the Company shall determine in good faith
that such offering would interfere with any acquisition, financing or other
transaction which the Company is actively pursuing and is material to the
Company or would involve initial or continuing disclosure obligations that would
not be in the best interests of the Company; and

          (d) the Company by notice to the Stockholders may postpone all sales
under the Shelf Registration Statements for a reasonable time, not exceeding 20
days, if the Company shall determine in good faith that permitting such sales
would interfere in any material respect with any material acquisition, financing
or other transaction which the Company is actively pursuing or require premature
disclosure (if the Company is so advised by its legal counsel) of any other
material corporate development or event, which disclosure would adversely affect
the interests of the Company in any material respect; provided that (x) the
Company may not implement more than three such postponements and (y) all
postponements under this paragraph shall not exceed 60 days in any 12 month
period.

          (e) Notwithstanding Section 2.01, the Company shall be entitled to
postpone filing of the Closing Shelf Registration Statement if and so long as
the independent public accountant of the Company does not consent to the filing
thereof; provided that the Closing Shelf Registration Statement shall be filed
not later than October 15, 1999.

3.   Registration Procedures.

     3.01 Preparation and Filing. The Company will:

          (a) prepare and file with the Commission each Shelf Registration
Statement with respect to Registrable Securities as contemplated by this
Agreement and use its reasonable best efforts to cause each Shelf Registration
Statement to become and remain effective until the earlier of (i) the date on
which all of the respective Registrable Securities have ceased to be Registrable
Securities and (ii) the two year anniversary of the effective date of such Shelf
Registration Statement (such two year anniversary, the "Shelf Expiration Date");

          (b) otherwise use its reasonable best efforts to comply in all
material respects with all applicable rules and regulations of the Commission;

          (c) use its reasonable best efforts to cause all the Registrable
Securities to be listed on the Nasdaq Stock Market promptly following issuance,
if the Registrable Securities are not


                                       -4-

<PAGE>   7

already so listed, or such other principal trading market on which the Common
Stock then trades if the Common Stock is not then traded on the Nasdaq Stock
Market;

          (d) take such actions as the Stockholders shall reasonably request in
order to expedite or facilitate the disposition of the Registrable Securities,
subject to the terms and conditions of this Agreement; provided that the Company
shall not be obligated pursuant to this subsection or any other provision of
this Agreement to participate in or assist with a "road show" or other special
selling efforts with respect to the sale of any Registrable Securities;

          (e) permit the Stockholders to participate in the preparation of the
Shelf Registration Statements and to require the insertion therein of material
furnished to the Company in writing which in the judgment of the Stockholders
should be included and which is reasonably acceptable to the Company;

          (f) use such reasonable efforts to prevent the issuance of any stop
order suspending the effectiveness of any Shelf Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus and, if any
such order is issued, to obtain the lifting thereof at the earliest reasonable
time;

          (g) not at any time file or make any amendment to any Shelf
Registration Statement, or any amendment of or supplement to the respective
Prospectus (excluding the documents incorporated by reference into such
Prospectus), of which the Stockholders shall not have previously been advised or
furnished a copy or to which the Stockholders, or counsel for the Stockholders,
shall reasonably object;

          (h) furnish to the Stockholders without charge as many signed copies
of the Shelf Registration Statements (as originally filed) and of all amendments
thereto, whether filed before or after the Shelf Registration Statement becomes
effective, copies of all exhibits and documents filed therewith, including
documents incorporated by reference into the respective Prospectus, and signed
copies of all consents and certificates of experts, as the Stockholders may
reasonably request;

          (i) the Company will deliver to the Stockholders, without charge, from
time to time during the period when any Prospectus is required to be delivered
under the Securities Act, such number of copies of the respective Prospectus (as
supplemented or amended) as the Stockholders may reasonably request; and

          (j) comply in all material respects to the best of its ability with
the Securities Act and the rules and regulations of the Commission thereunder,
and the Exchange Act and the rules and regulations of the Commission thereunder,
and any applicable state "blue sky" laws, so as to permit the completion of the
distribution of the Registrable Securities in accordance with the intended
method or methods of distribution contemplated in the respective Prospectus and
permitted by this Agreement. If at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the Registrable
Securities any event shall occur or condition exist as a result


                                       -5-

<PAGE>   8

of which it is necessary or desirable, based on the advice of counsel for the
Stockholders or agents or counsel for the Company, to amend any Shelf
Registration Statement or amend or supplement the respective Prospectus in order
that such Prospectus will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary or desirable, based on the
advice of such counsel, at any such time to amend any Shelf Registration
Statement or amend or supplement the respective Prospectus of the Company, the
Company will promptly prepare and file with the Commission such amendment or
supplement as may be necessary to correct such untrue statement or omission or
to make such Shelf Registration Statement or Prospectus comply with such
requirements.

     3.02 Amendments. In connection with the Shelf Registration Statements filed
pursuant to this Agreement, the Company shall file any post-effective amendment
or amendments to the Shelf Registration Statements which may be required under
the Securities Act during the period required to effect the distribution
contemplated thereby; provided that the Company shall not be required to file
any post-effective amendment to the Shelf Registration Statements after the
second anniversary of the effective date of such Shelf Registration Statement.

     3.03 Notification of Certain Events.

          (a) During the period for which the Company is required to file and
keep effective each Shelf Registration Statement pursuant to this Agreement, the
Company shall promptly notify the Stockholders during the period such Shelf
Registration Statement is required to remain effective, or at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event or the existence of any fact, as a result of
such Shelf Registration Statement or such Prospectus contained in the Shelf
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
circumstances then existing. The Stockholders agree, upon receipt of such
notice, forthwith to cease making offers and sales of Registrable Securities
pursuant to the respective Shelf Registration Statement or deliveries of the
respective Prospectus contained therein for any purpose and to return to the
Company the copies of such Prospectus not theretofore delivered by the
Stockholders. Subject to Section 3.02, the Company shall promptly prepare and
furnish to the Stockholders a reasonable number of copies of any supplement to
or amendment of such Prospectus that may be necessary so that, as thereafter
delivered to the purchaser of Registrable Securities, such Prospectus shall not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make these statement therein
not misleading in the light of circumstances then existing.

          (b) The Company will promptly notify the Stockholders and confirm the
notice in writing, (i) when each Shelf Registration Statement, or any
post-effective amendment related thereto shall have become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of any request by the Commission to amend any Shelf Registration Statement
or amend or supplement any Prospectus or for additional information and (iii) of
the

                                       -6-

<PAGE>   9

issuance by the Commission of any stop order suspending the effectiveness of any
Shelf Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of the
Registrable Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes.

     3.04 Provision of Information. As a condition to the obligation of the
Company under Section 2 to cause any Shelf Registration Statement or an
amendment to be filed or shares to be included in any Shelf Registration
Statement, the Stockholders shall provide such information regarding them and
their intended method of distribution of Registrable Securities and execute such
documents, powers of attorney and questionnaires as may reasonably be required
by the Company in connection with such registration.

     3.05 Reports. The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the rules and regulations of the
Commission thereunder and it will take such further action as the Stockholders
may reasonably request, all to the extent required from time to time to enable
the Stockholders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.

     3.06 State Securities Laws. In connection with the offering of any
securities registered pursuant to this Agreement, the Company shall use its
reasonable best efforts to qualify or register the securities to be sold under
the securities or "blue sky" laws of such jurisdictions as may be reasonably
requested by the Stockholders or any other acts and things which may be
necessary or advisable to enable the Stockholders to consummate the disposition
in such jurisdiction of such securities; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any such jurisdiction in which it is not then qualified or to file
any general consent to service of process.

4.   Holdback Arrangements.

     The Company shall have the right to require that the Stockholders shall not
effect any public sale or distribution (including sales pursuant to any Shelf
Registration Statement or pursuant to Rule 144) of Common Stock during the ten
business days prior to, and the 45-day period beginning on, the effective date
of the registration under the Securities Act of any underwritten offering of
Common Stock for cash by the Company (or such an offering by the Company and
stockholders of the Company), if the managing underwriter(s) for the public
offering so request; provided, however, no stockholder shall be obligated
pursuant to this Section 4 with respect to any underwritten offering unless (a)
the Stockholders were provided an opportunity to include their Registrable
Securities in such offering, by written notice delivered not less than 30 days
prior to the filing of the Registration Statement with respect thereto, and (b)
either (i) all of the Registrable securities so requested to be included in such
Registration Statement have been included or (ii) the only securities sold in
such offering were sold by the Company, and no other stockholder of the Company
were permitted to include their securities in such Registration Statement. The
Company shall be entitled to exercise its rights under this Section not more
than once during any 12 month period.


                                       -7-

<PAGE>   10

5.   Registration Expenses.

          (a) The Company will pay and bear all costs and expenses incident to
the performance of its obligations under this Agreement with respect to the
registration pursuant to Section 2, including:

              (i)   the preparation, printing and filing of each Shelf
     Registration Statement (including financial statements and exhibits) as
     originally filed and as amended, any preliminary prospectuses and the
     Prospectus and any amendments or supplements thereto, and the cost or
     furnishing copies thereof to the Stockholders;

              (ii)  the preparation and printing of certificates representing
     the Registrable Securities, any blue sky survey and other documents
     relating to the performance of and compliance by the Company with this
     Agreement; and

              (iii) all fees and expenses incurred in connection with the
     listing of the Registrable Securities on any securities exchange or other
     trading market, if the Registrable Securities are not already so
     registered.

          (b) The Stockholders will pay and bear all costs and expenses incident
to the delivery of the Registrable Securities to be sold by them, including any
stock transfer taxes payable upon the sale of such Registrable Securities and
any underwriter discounts or commissions, broker or dealer fees or costs and any
similar costs and expenses in connection therewith; provided that if the then
applicable institutional investor broker fee of Bear Stearns & Co. Inc. (6 cents
per share) is not made available to any Stockholder with respect to any sale of
Registrable Securities, the Company shall bear the additional incremental broker
cost incurred with respect to such sale. The Stockholders will also bear the
costs and expenses of their own counsel and other agents retained in connection
with all Shelf Registration Statements, except that the Company shall pay for
the reasonable and documented costs and expenses incurred by legal counsel to
the Stockholders in connection with all Shelf Registration Statements in an
amount not to exceed $15,000.

     The Company and the Stockholders hereby mutually agree to use Bear Stearns
& Co. as selling broker in connection with all sales of Registrable Securities.

6.   Indemnification.

     6.01 Indemnification by the Company. In connection with any registration of
securities pursuant to this Agreement, to the extent permitted by law, the
Company shall indemnify and hold harmless the Stockholders and each agent of the
Stockholders (such holder and any such other Person being hereinafter an
"Indemnitee") (i) against any and all losses, claims, damages and expenses
whatsoever to which such Indemnitee may become subject, to the extent such
losses, claims, damages or expenses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Shelf Registration


                                       -8-

<PAGE>   11

Statement, Prospectus or any amendment or supplement to any of the foregoing, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; (ii) against any and all losses, claims, damages and
expenses whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the
Company; (iii) against any and all losses, claims, damages and expenses
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any alleged violation by the Company of the Securities Act, the Exchange Act or
any state "blue sky" law in connection with the offering covered by any Shelf
Registration Statement; and (iv) against any and all expense whatsoever
(including reasonable fees and disbursements of counsel chosen by the
Stockholders), as reasonably incurred in investigating, preparing for or
defending against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, or any such alleged violation to the extent that any such
expense is not paid under subparagraph (i) or (iii) above and provided that such
expense resulted from reliance upon written information furnished to the
Stockholders by or on behalf of the Company regarding distribution of
Registrable Securities and such information was provided expressly for use in
the preparation of such document; provided further, however, that the Company
shall not be required to indemnify and hold harmless or reimburse an Indemnitee
to the extent that any such loss, claim, damage or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in any document made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Indemnitee
expressly for use in the preparation of such documents; provided further that
the Company shall not be required to indemnify any Indemnitees, to the extent
that the loss, claim, damage, liability (or actions in respect thereof) or
expense for which indemnification is claimed results from the failure by such
Indemnitee to send or give a copy of the then current Prospectus (if theretofore
made available to the Stockholders) or a prospectus supplement to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission if such statement or omission was corrected in the then current
Prospectus or in a prospectus supplement; provided further that the Company
shall not be required to indemnify any Indemnitees to the extent that the loss,
claim, damage, liability (or actions in respect thereof) or expense for which
indemnification is claimed arises with respect to a sale or transfer of Common
Stock made during a period during which the sale or transfer thereof is not
permitted under this Agreement.

     6.02 Indemnification by the Stockholders. In connection with each Shelf
Registration Statement, the Stockholders will furnish to the Company in writing
such information as shall be reasonably requested by the Company for use in the
respective Shelf Registration Statement or prospectus and shall, to the extent
permitted by law, indemnify and hold harmless the Company, its directors,
officers and agents and each Person, if any, who controls the Company (within
the

                                       -9-

<PAGE>   12


meaning of the Securities Act or the Exchange Act) (the Company and any such
other Person being hereinafter a "Company Indemnitee") against all losses,
claims, damages or liabilities to which any such Company Indemnitee may become
subject, under the Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any Shelf Registration Statement, prospectus or any
preliminary prospectus or any amendment or supplement to any of the foregoing,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each
case, to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Stockholders regarding such Stockholder or his intended method
of distribution of Registrable Securities and such information was provided
expressly for use in the preparation of such documents; and, subject to Section
6.03, the Stockholders shall reimburse the Company Indemnitee for any and all
expenses whatsoever (including reasonable fees and disbursements of counsel
chosen by the Company), reasonably incurred by the Company Indemnitee in
connection with investigating, preparing for or defending against any such loss,
claim, damage, liability or action; provided, however, that the maximum amount
of liability of the Stockholders under this Section shall be limited to an
amount equal to the net after-tax proceeds actually received by the Stockholders
from the sale of securities effected pursuant to such registration.

     6.03 Indemnification Procedures. Promptly after receipt by an indemnified
party under Section 6.01 or Section 6.02 of notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made in writing for
which such Person will claim indemnification or contribution pursuant to this
Agreement, the indemnified party shall notify the indemnifying party thereof in
writing and, unless in such indemnified party's reasonable judgment a conflict
of interest may exist between such indemnified and indemnifying parties with
respect to such claim, shall permit such indemnifying party to assume and
control the defense of such claim at its expense with counsel reasonably
satisfactory to such indemnified party. The failure to so notify the
indemnifying party shall relieve the indemnifying party from any liability
hereunder with respect to the action if such failure prevents the indemnifying
party from contesting such action; provided, however that any such failure shall
not relieve the indemnifying party from any other liability which it may have to
any other party. If the indemnifying party gives notice to such indemnified
party of its election to assume and control the defense of such claim, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense or investigation of the action unless the indemnified party shall
have given the indemnifying party notice of a conflict of interest with respect
to such claim. The failure of an indemnifying party to give notice to the
indemnified party of its election to assume and control the defense of any
action for which notice has been received by the indemnifying party in
accordance with this Section within 45 days after the receipt of such notice
shall constitute an election by the indemnifying party not to assume and control
the defense of such action. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party


                                      -10-

<PAGE>   13


with respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other indemnified party with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of separate
counsel for such indemnified parties. No indemnified party shall consent to
entry of any judgment or enter into any settlement with respect to a claim
without the consent of the indemnifying party.

     6.04 Rights of Contribution. In order to provide for just and equitable
contribution in circumstances under with the indemnity contemplated by Section
6.01 and Section 6.02 is for any reason not available, other than by reason of
the exceptions provided therein, the parties required to indemnify by the terms
thereof shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
the Company and the Stockholders, except to the extent that contribution is not
permitted under Section 11(f) of the Securities Act. In determining the amounts
which the respective parties shall contribute, there shall be considered the
relative knowledge of the parties and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement or omission and any other equitable considerations
appropriate under the circumstances. The Company and the Stockholders agree with
each other that the Stockholders shall not be required to contribute any amount
in excess of the amount the Stockholders would have been required to pay to
indemnified parties if the indemnity under Section 6.02 were available. For
purposes of this Section, each director and each officer of the Company who
signed any Shelf Registration Statement, and each Person, if any, who controls
the Company or the Stockholders within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as the Company or the
Stockholders, as the case may be.

7.   Miscellaneous.

     7.01 Mergers and Other Transactions. The Company agrees that, as a
condition to any merger, consolidation or the sale of all or substantially all
of its assets in exchange for securities of another entity, it will use its
reasonable best efforts in light of the circumstances then existing to require
the surviving, consolidated or purchasing entity to enter into an agreement to
register the securities of such surviving, consolidated or purchasing entity, to
be received by the Stockholders, on substantially the same terms and provisions
as are provided in this Agreement.

     7.02 Assignment. The registration rights contained in Section 2 of this
Agreement shall be transferable by the Stockholders subject to:

              (i)   the Stockholders obtaining the prior written consent of the
     Company to transfer such registration rights, which consent shall not be
     unreasonably withheld or delayed;




                                      -11-

<PAGE>   14



              (ii)  the transferee shall agree to become subject (in a writing
     reasonably acceptable to the Company) to all of the term, conditions and
     obligations of this Agreement, including in form this Section 7.02; and

              (iii) giving effect to such transfer, there shall be no more than
     a total of 10 holders of Registrable Securities.

This Agreement is not assignable other than by operation of law or with the
consent of all parties hereto, and any purported assignment in violation hereof
shall be null and void.

     7.03 Limitation of Registration Rights. Nothing contained in this Agreement
shall create any obligation on behalf of the Company to register under the
Securities Act any securities which are not Registrable Securities held by the
Stockholders.

     7.04 No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the Stockholders in this Agreement. The Company has not
previously entered into any agreement, with respect to any of its securities,
granting any registration rights to any person, which agreement is in effect on
the date hereof.

     7.05 Remedies. The Stockholders, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of their rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.

     7.06 Dispute Resolution. To the extent feasible, the parties desire to
resolve any controversies or claims or issues arising out of or relating to this
Agreement through discussions and negotiations between each other. The parties
agree to use their reasonable best efforts to attempt to resolve any disputes,
controversies, claims or issues arising out of or relating to this Agreement by
face-to-face negotiations with each other. In the event that, after discussions,
such controversies, claims or issues cannot be resolved solely between the
parties, then the parties shall, within 10 days after either the Company or any
one of the Stockholders give notice to the other, jointly submit their dispute
(other than any dispute relating to any claim arising out of the ownership of
Common Stock) to binding arbitration in the City of Chicago, Illinois. Such
arbitration shall be administered by the American Arbitration Association (the
"Institute") in accordance with its then prevailing rules for arbitration of
business disputes (except as otherwise provided by this Agreement), by three
independent and impartial arbitrators, one of whom shall be appointed by the
Company, one of whom shall be appointed by a majority in interest of the
Stockholders (on the basis of the number of Registrable Securities owned by each
Stockholder) and one of whom shall be appointed by the Institute (collectively,
the "Arbitrator"). Throughout any Arbitration or Dispute Resolution process the
respective Stockholders, at that time, shall act by majority in interest.
Notwithstanding anything


                                      -12-

<PAGE>   15


to the contrary provided in Section 9.10 of this Agreement, the arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Section 1 et.
seq. The Arbitrator shall permit and facilitate such discovery as it shall
determine appropriate in the circumstances, taking into account the needs of the
parties hereto and the desirability of making discovery expeditious and cost
effective. The arbitrator may issue such interim orders in accordance with
principles of equity as may be necessary to protect any party from irreparable
harm during the pendency of any arbitration, including entry of a preliminary
injunction. Any such order shall be without prejudice to the final determination
of the controversy. Each party to this Agreement hereby agrees that such
arbitration shall be completed and a final arbitration decision rendered within
60 days of the submission of the respective dispute to arbitration, except as
otherwise specified in this Agreement, and each of such parties shall take all
actions appropriate and necessary to cause such arbitration to be so completed
within such 60 day period. The Arbitrator shall not be empowered to award any
party any punitive damages in connection therewith, and each party hereby
irrevocably waives any right to recover such punitive damages. The determination
of the Arbitrator as to a dispute shall be final and binding for all purposes of
this Agreement. Each party to any such arbitration shall use its best efforts
and utmost diligence to safeguard and to protect against disclosure, misuse,
espionage, loss and theft and shall keep and maintain in strict confidence and
shall not disclose to any third party any information that may be disclosed to
it in connection with such arbitration proceeding, other than to its employees
and agents who require access to such information to perform their duties and
other than is required or appropriate to disclose pursuant to applicable law
(including pursuant to securities laws and any reporting requirements
thereunder) or court order or in any arbitration contemplated by this Agreement;
the arbitrator shall to the extent permitted by the rules and regulations of the
Institute be likewise bound by this confidentiality provision and shall not make
public its opinion or findings in connection with the relevant proceeding. The
fees and expenses of the Arbitrator shall be equally shared by the parties and
each of the Parties shall bear its own costs and expenses in connection with any
such arbitrations.

     7.07 Notices. All notices and any other communications provided for or
permitted hereunder shall be made by hand delivery or registered first-class
mail:

          If to the Company:

               Sabratek Corporation
               8111 North St. Louis Avenue
               Skokie, Illinois 60076
               Attn: Chief Financial Officer

               with a copy (which shall not constitute notice) to:

                      Kirkland & Ellis
                      200 E. Randolph Drive
                      Chicago, Illinois 60601
                      Attn: Carter W. Emerson


                                      -13-

<PAGE>   16


          If to any Stockholder:

               Notice shall be sent to the address or facsimile
               number of the respective Stockholder as inserted on
               the execution pages of this Agreement

               with a copy (which shall not constitute notice) to:

                      Sonnenschein Nath & Rosenthal
                      8000 Sears Tower
                      Chicago, Illinois 60606
                      Attn: Kenneth G. Kolmin

          All Notices hereunder will be in writing. Any Notice hereunder shall
be deemed duly given if (and then two business days after) it is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth on the execution pages hereof,
unless otherwise provided for herein,.

          Any party hereto may send any Notice hereunder to the intended
recipient at the address provided using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail
or electronic mail), but no such Notice shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party to
this Agreement may change the address to which Notices hereunder are to be
delivered by giving the other parties hereto notice in the manner herein set
forth.

     7.08 Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement. A facsimile copy of this
Agreement and any signatures hereon shall be considered as originals for all
purposes.

     7.09 Headings. Section headings are inserted herein for convenience only
and do not form a part of this Agreement.

     7.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without regard to principles
of conflicts of law.

     7.11 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Stockholders shall be enforceable to the fullest extent permitted by law.


                                      -14-

<PAGE>   17


     7.12 Entire Agreement; Amendment. This agreement contains the entire
agreement among the parties hereto with respect to the transactions contemplated
herein, and supersedes all prior written agreements and negotiations and oral
understandings, if any, with respect to its subject matter. This Agreement may
not be amended, supplemented or discharged except by an instrument in writing
signed by the Company and a majority in interest of the Stockholders (on the
basis of the number of Registrable Securities owned by such stockholder).

                                     * * * *























                                      -15-

<PAGE>   18


          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.

                                 SABRATEK CORPORATION


                                 By:  /s/ Stephen L. Holden
                                    -----------------------------------------

                                 Its:     President
                                     ----------------------------------------

                                 STOCKHOLDERS:

                                      /s/ Robert Gienko
                                 --------------------------------------------
                                 Signature

                                 Printed Name: Robert Gienko
                                 Address:
                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------
                                 Facsimile:
                                            ---------------------------------
                                      /s/ Mark Pugh
                                 --------------------------------------------
                                 Signature


                                 Printed Name: Mark Pugh
                                 Address:
                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------
                                 Facsimile:
                                            ---------------------------------





<PAGE>   19


                                             /s/ Steve Fagerman
                                 --------------------------------------------
                                 Signature

                                 Printed Name: Steve Fagerman
                                 Address:
                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------
                                 Facsimile:
                                            ---------------------------------


                                             /s/ Kenneth Janowski
                                 --------------------------------------------
                                 Signature

                                 Printed Name: Kenneth Janowski
                                 Address:
                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------
                                 Facsimile:
                                            ---------------------------------


                                             /s/ Phillip Mitchell
                                 --------------------------------------------
                                 Signature

                                 Printed Name: Phillip Mitchell
                                 Address:
                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------

                                            ---------------------------------
                                 Facsimile:
                                            ---------------------------------




<PAGE>   1

                                                                   EXHIBIT 10.51

================================================================================



                               AGREEMENT OF MERGER

                                  BY AND AMONG


                              SABRATEK CORPORATION,
                             a Delaware corporation,

                         SBTK I ACQUISITION CORPORATION,
                             an Illinois corporation

                                       AND

                     STRATEGIC REIMBURSEMENT SERVICES, INC.
                             an Illinois corporation



================================================================================



                                  June 29, 1999

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
<S>                                                                                                              <C>
Section 1.        Basic Transaction...............................................................................1
         1A.      The Merger......................................................................................1
         1B.      Closing.........................................................................................1
         1C.      Actions at the Closing; Effective Time..........................................................1
         1D.      Effect of Merger................................................................................2
         1E.      Notice of Dissenting Shares.....................................................................3
         1F.      Escrow Fund; Procedure..........................................................................3
         1G.      Closing of Transfer Records.....................................................................4
         1H.      Delivery of Merger Consideration to Public Official.............................................4
         1I.      Lost, Stolen or Destroyed Certificates..........................................................4
         1J.      Transferability Restriction.....................................................................4

Section 2.        Conditions of the Obligations of the Buyer and the Transitory Subsidiary at the Closing.........4
         2A.      Representations and Warranties; Covenants.......................................................4
         2B.      Opinion of Counsel to the Target................................................................5
         2C.      Employment Agreements with Principals...........................................................5
         2D.      Termination of Certain Existing Agreements and Release..........................................5
         2E.      Contribution of Indebtedness....................................................................5
         2F.      Regulation D Questionnaire......................................................................5
         2G.      Litigation......................................................................................5
         2H.      Third Party Consents and Approvals..............................................................5
         2I.      Governmental Consents and Approvals.............................................................6
         2J.      Material Adverse Change.........................................................................6
         2K.      Proceedings.....................................................................................6
         2L.      Target Stockholder Approval.....................................................................6
         2M.      Consent of Target Stockholders..................................................................6
         2N.      HSR Approval ...................................................................................6
         2O.      Non-Compete and Non-Solicitation................................................................6
         2P.      Escrow Agreement................................................................................6
         2Q.      Closing Documents...............................................................................6

Section 3.        Conditions of the Obligations of the Target at the Closing......................................7
         3A.      Representations and Warranties; Covenants.......................................................7
         3B.      Registration Rights Agreement...................................................................7
         3C.      Opinion of Counsel to the Buyer.................................................................7
         3D.      Target Stockholder Approval.....................................................................7
         3E.      Litigation......................................................................................7
         3F.      Material Adverse Change.........................................................................7
</TABLE>


                                       -i-

<PAGE>   3


<TABLE>
<S>                                                                                                              <C>
         3G.      Price of Buyer Stock............................................................................8
         3H.      Governmental Consents and Approvals.............................................................8
         3I.      HSR Approval....................................................................................8
         3J.      Employment Agreements with Principals...........................................................8
         3K.      Escrow Agreement................................................................................8
         3L.      Closing Certificate.............................................................................8

Section 4.        Covenants and Transfer Restrictions.............................................................8
         4A.      General.........................................................................................8
         4B.      Maintenance of Business.........................................................................8
         4C.      Third Party Notices and Consents................................................................9
         4D.      Governmental Notices and Consents...............................................................9
         4E.      Special Target Meeting; Consent of Target Stockholders..........................................9
         4F.      Operation of Business...........................................................................9
         4G.      Full Access....................................................................................11
         4H.      Compliance with Agreements and Laws............................................................11
         4I.      Payment of Obligations.........................................................................11
         4J.      Notice of Developments.........................................................................11
         4K.      Exclusivity....................................................................................11
         4L.      Tax Matters....................................................................................11
         4M.      Press Release and Announcements................................................................12
         4N.      Indemnification................................................................................12
         4O.      Transition.....................................................................................12
         4P.      Audit of Target Financial Statements...........................................................12
         4Q.      Amounts Due to Phillip Mitchell................................................................12

Section 5.        Post-Closing Covenants.........................................................................13
         5A.      Non-Compete; Non-Solicitation..................................................................13
         5B.      Tax Matters....................................................................................14
         5C.      Defined Benefit Plan and Successor Target Plans................................................16
         5D.      Pooling Transfer Restriction...................................................................17
         5E.      Post-Closing Original Signatures...............................................................18

Section 6.        Representations and Warranties Concerning the Target...........................................18
         6A.      Organization, Corporate Power and Licenses.....................................................18
         6B.      Capital Stock and Related Matters..............................................................18
         6C.      Subsidiaries; Investments......................................................................19
         6D.      Authorization; No Breach.......................................................................19
         6E.      Financial Statements...........................................................................19
         6F.      Absence of Undisclosed Liabilities.............................................................20
         6G.      Accounts Receivable............................................................................20
         6H.      Warranty; Certifications.......................................................................21
         6I.      No Material Adverse Effect.....................................................................21

</TABLE>

                                      -ii-

<PAGE>   4



<TABLE>
<S>                                                                                                              <C>
         6J.      Absence of Certain Developments................................................................21
         6K.      Assets.........................................................................................23
         6L.      Tax Matters....................................................................................23
         6M.      Contracts and Commitments......................................................................26
         6N.      Intellectual Property Rights...................................................................29
         6O.      Litigation, etc................................................................................29
         6P.      Brokerage......................................................................................30
         6Q.      Insurance......................................................................................30
         6R.      Employees......................................................................................30
         6S.      ERISA..........................................................................................30
         6T.      Compliance with Laws; Permits; Certain Operations..............................................32
         6U.      Environmental and Safety Matters...............................................................33
         6V.      Affiliated Transactions........................................................................34
         6W.      Customers......................................................................................34
         6X.      Real Property..................................................................................34
         6Y.      Disclosure.....................................................................................35

Section 7.        Representations and Warranties of the Buyer and the Transitory Subsidiary......................35
         7A.      Organization, Power and Authority..............................................................35
         7B.      Authorization; No Breach.......................................................................35
         7C.      Capitalization of the Buyer....................................................................36
         7D.      Capitalization of Transitory Subsidiary........................................................36
         7E.      SEC Reports....................................................................................36
         7F.      Compliance with Laws...........................................................................36
         7G.      Financing the Deal.............................................................................36
         7H.      Litigation.....................................................................................37
         7I.      Brokerage......................................................................................37

Section 8.        Indemnification and Other Agreements...........................................................37
         8A.      Survival of Covenants and Representations and Warranties.......................................37
         8B.      General Indemnification........................................................................38

Section 9.        Definitions....................................................................................41

Section 10.       Termination....................................................................................49
        10A.      Conditions of Termination......................................................................49
        10B.      Effect of Termination..........................................................................50

Section 11.       Miscellaneous..................................................................................50
        11A.      Dispute Resolution.............................................................................50
        11B.      Fees and Expenses..............................................................................51
        11C.      Remedies.......................................................................................52
        11D.      Consent to Amendments..........................................................................52
</TABLE>


                                      -iii-

<PAGE>   5



<TABLE>
<S>                                                                                                             <C>
         11E.     Successors and Assigns.........................................................................52
         11F.     Severability...................................................................................53
         11G.     Counterparts...................................................................................53
         11H.     Descriptive Headings; Interpretation...........................................................53
         11I.     Entire Agreement...............................................................................53
         11J.     No Third-Party Beneficiaries...................................................................53
         11K.     Schedules......................................................................................53
         11L.     Schedules and Exhibits.........................................................................54
         11M.     Governing Law..................................................................................54
         11N.     Notices........................................................................................54
         11O.     No Strict Construction.........................................................................55
</TABLE>




                                      -iv-

<PAGE>   6


<TABLE>
<CAPTION>
Exhibits:
- --------
<S>                      <C>
Exhibit A         -      Plan of Merger
Exhibit B         -      Articles of Incorporation of the Transitory Subsidiary
Exhibit C         -      Bylaws of the Transitory Subsidiary
Exhibit D         -      Merger Consideration Payments
Exhibit E         -      Escrow Agreement
Exhibit F         -      Escrow Terms
Exhibit G         -      Opinion of Counsel to the Target
Exhibit H         -      Robert C. Gienko Employment Agreement
Exhibit I-1       -      List of Employees to enter into Employment Agreement
                         and Principal Employment Terms
Exhibit I-2       -      Form of Employment Agreement
Exhibit J         -      Form of Release Agreement
Exhibit K         -      Regulation D Questionnaire
Exhibit L         -      Consent of Target Stockholders
Exhibit M         -      Registration Rights Agreement
Exhibit N         -      Opinion of Counsel to the Buyer

</TABLE>

                                       -v-
<PAGE>   7
                               AGREEMENT OF MERGER


                  THIS AGREEMENT OF MERGER (this "Agreement") is entered into as
of June 29, 1999 by and among Sabratek Corporation, a Delaware corporation (the
"Buyer"), SBTK I Acquisition Corporation, an Illinois corporation and a
wholly-owned subsidiary of the Buyer (the "Transitory Subsidiary"), and
Strategic Reimbursement Services, Inc., an Illinois corporation (the "Target").
The Buyer, the Transitory Subsidiary and the Target are sometimes referred to
herein individually as a "Party" and collectively as the "Parties." Certain
capitalized terms used herein are defined in Section 9 and in the remaining
portions of this Agreement.

                  This Agreement contemplates a transaction in which the Target
shall become a wholly-owned Subsidiary of the Buyer through a merger of the
Transitory Subsidiary with and into the Target. Stockholders of the Target will
receive capital stock of the Buyer, cash and contingent rights to additional
capital stock of the Buyer in exchange for their capital stock in the Target.

                  NOW, THEREFORE, in consideration of the mutual covenants,
agreements and understandings herein contained, the Parties hereby agree as
follows:

Section 1.        Basic Transaction.

                  a.        The Merger.  On and subject to the terms and
                       conditions of this Agreement and in accordance with the
                       Business Corporation Act of 1983 of the State of Illinois
                       ("BCA"), the Transitory Subsidiary shall merge with and
                       into the Target (the "Merger") at the Effective Time.
                       Following the Merger, (i) the separate corporate
                       existence of the Transitory Subsidiary shall cease, (ii)
                       the Target shall be the surviving corporation in the
                       Merger (the "Surviv ing Corporation") and shall succeed
                       to and assume all of the rights and obligations of the
                       Transitory Subsidiary in accordance with the BCA and
                       (iii) the Target shall be a wholly-owned Subsidiary of
                       the Buyer.

                  b.        Closing.  The closing of the Merger contemplated
                       hereunder (the "Closing") shall take place at the offices
                       of Kirkland & Ellis, Chicago, Illinois, or at such other
                       place as may be mutually agreeable to the Parties, at
                       10:00 a.m., local time, on the second business day
                       following the satisfaction or waiver of all conditions to
                       the obligations of the Parties to consummate the
                       transactions contemplated hereby (other than conditions
                       with respect to actions the respective Parties are to
                       take at the Closing itself) or such other date as the
                       Parties may mutually determine (the "Closing Date"). The
                       foregoing notwithstanding, the Closing shall be deemed to
                       occur at the Effective Time.


                                        1

<PAGE>   8



                  c.        Actions at the Closing; Effective Time. Subject to
                       the satisfaction or waiver of the conditions set forth in
                       Sections 2 and 3, at the Closing the Parties shall cause
                       the filing with the Secretary of State of the State of
                       Illinois of a plan of merger with regard to the Merger
                       meeting the requirements of the BCA (the "Plan of
                       Merger") executed in accordance with the BCA. Such Plan
                       of Merger is attached hereto as Exhibit A. The Merger
                       shall become effective at such time as the Plan of Merger
                       is duly filed with the Secretary of State of the State of
                       Illinois or at such later time as is agreed by the Buyer
                       and the Target and specified in the Plan of Merger (the
                       "Effective Time"). The Surviving Corporation may, at any
                       time after the Effective Time, take any action (including
                       executing and delivering any document) in the name and on
                       behalf of either the Target or the Transitory Subsidiary
                       in order to carry out and effectuate the transactions
                       contemplated by this Agreement.

                  d.        Effect of Merger.

                  i.        General.  The Merger shall have the effects set
                       forth in Section 11.50 of the BCA.

                  ii.       Articles of Incorporation. At the Effective Time,
                       the Articles of Incorporation of the Transitory
                       Subsidiary in effect immediately prior to the Effective
                       Time shall become the Articles of Incorporation of the
                       Surviving Corporation, without any modification or
                       amendment, except that the name of the Surviving
                       Corporation shall be changed to Strategic Reimbursement
                       Services, Inc. (attached as Exhibit B hereto).

                  iii.      Bylaws. At the Effective Time, the Bylaws of the
                       Transitory Subsidiary in effect immediately prior to the
                       Effective Time shall become the Bylaws of the Surviving
                       Corporation, without any modification or amendment,
                       except that the name of the Surviving Corporation set
                       forth therein shall be changed to Strategic Reimbursement
                       Services, Inc. (attached as Exhibit C hereto).

                  iv.       Directors. At the Effective Time, the directors of
                       the Transitory Subsidiary immediately prior to the
                       Effective Time and Robert C. Gienko (the current sole
                       director of the Target) shall become the directors of the
                       Surviving Corporation.

                  v.        Conversion of Target Shares.  At and as of the
                       Effective Time,



                                        2

<PAGE>   9



                       (A)  Target Shares held in the treasury of the Target
                            immediately prior to the Effective Time shall be
                            canceled and extinguished without any conversion
                            thereof and no payment shall be made with respect
                            thereto.

                       (B)  Each Target Share (other than any Dissenting Share)
                            of each particular class shall be converted
                            automatically and without any action on the part of
                            the holder thereof into the following rights,
                            subject to the subsequent provisions of this Section
                            1, and shall have no other rights:

                            (i)  the right to receive the applicable Closing
                                 Stock Consideration per Target Share as set
                                 forth on Exhibit D attached hereto; and

                            (ii) the right, subject to the terms and conditions
                                 of this Agreement, to receive the applicable
                                 Escrow Stock Consideration per Target Share as
                                 set forth on Exhibit D attached hereto.

                       (C)  Each Dissenting Share shall be converted into the
                            right to receive payment from the Surviving
                            Corporation with respect thereto in accordance with
                            the BCA; provided, that each Dissenting Share which
                            after the Effective Time ceases to be a Dissenting
                            Share shall thereupon be deemed to be converted as
                            of the Effective Time into the right to receive the
                            Merger Consideration for such share, without
                            interest thereon.

                            From and after the Effective Time, all Target Shares
                            converted in accordance with Section 1D(v)(B) shall
                            no longer be outstanding and shall automatically be
                            canceled and shall cease to exist, and each holder
                            of a certificate representing any such Target Shares
                            shall cease to have any rights with respect thereto,
                            except the right to receive the Merger
                            Consideration, without any interest thereon.

                  vi.       Conversion of Capital Stock of the Transitory
                       Subsidiary. At the Effective Time, each share of Common
                       Stock, par value $0.01 per share, of the Transitory
                       Subsidiary shall be converted automatically and without
                       any action on the part of the holder thereof into one
                       share of Common Stock, par value $0.01 per share, of the
                       Surviving Corporation.

                  e.        Notice of Dissenting Shares. The Target shall give
                       the Buyer (i) prompt notice of any demand of appraisal
                       rights received by the Target prior


                                        3


<PAGE>   10
                       to or at the Special Target Meeting and (ii) the
                       opportunity to direct all negotiations and proceedings
                       with respect to the appraisal rights and any related
                       demand of any Dissenting Stockholder. The Target shall
                       not, without the prior written consent of the Buyer,
                       voluntarily make any payment with respect to, or settle,
                       offer to settle or otherwise negotiate any such demand or
                       proceeding.

                  f.        Escrow Fund; Procedure.  At the Effective Time, the
                       Buyer shall deliver to U.S. Bank Trust National
                       Association (together with any successor thereto pursuant
                       to the Escrow Agreement, the "Escrow Agent") the Escrow
                       Stock Consideration to secure the indemnification rights
                       of the Buyer Parties pursuant to this Agreement. All of
                       the Escrow Stock Consideration so delivered to the Escrow
                       Agent, together with any proceeds of the investment or
                       sale thereof, and any income, dividends or distributions
                       thereon, shall be held, invested, administered and
                       distributed by the Escrow Agent in accordance with the
                       terms of the Escrow Agreement (attached as Exhibit E
                       hereto), and shall be dealt with by the Buyer and the
                       Target Stockholders Representative in accordance with
                       Exhibit F attached hereto. The Buyer and the Target
                       acknowledge that income earned with respect to the assets
                       held in the Escrow Fund shall be attributed for Tax
                       purposes to the Target Stockholders, who shall be
                       responsible for filing all necessary Tax Returns with
                       respect thereto and for the payment of all Taxes thereon
                       and related thereto.

                  g.        Closing of Transfer Records. After the Effective
                       Time, transfers of Target Shares shall not be made on the
                       stock transfer books of the Surviving Corporation. If,
                       after the Effective Time, certificates representing
                       Target Shares are presented to the Surviving Corporation,
                       they shall be canceled and exchanged for the
                       consideration set forth in this Section 1 deliverable in
                       respect thereof pursuant to this Agreement in accordance
                       with the procedures contemplated by this Section 1.

                  h.        Delivery of Merger Consideration to Public Official.
                       None of the Buyer, the Transitory Subsidiary, the Target,
                       the Surviving Corporation or any other Person shall be
                       liable to any former holder of Target Shares for any
                       amount properly delivered to a public official pursuant
                       to applicable abandoned property, escheat or similar
                       laws.

                  i.        Lost, Stolen or Destroyed Certificates. If any
                       certificate representing Target Shares shall have been
                       lost, stolen or destroyed, upon the making of an
                       affidavit of that fact by the Person claiming such
                       certificate to be lost, stolen or destroyed, the Buyer
                       shall issue in exchange for such lost, stolen or


                                        4

<PAGE>   11



                       destroyed certificate the Merger Consideration as
                       contemplated by this Section.

                  j.        Transferability Restriction. The right of a Target
                       Stockholder to receive any Escrow Stock Consideration
                       shall not be sold, assigned, pledged, transferred or
                       otherwise disposed of (a "Transfer") by any Target
                       Stockholder, except by will, judicial order or the laws
                       of descent and distribution or intestacy. Any Transfer in
                       violation of this Section 1J shall be null and void.

                  This Section 1 and the defined terms used in this Section
(which are defined in Section 9) shall constitute the plan of merger
contemplated by Article 11 of the BCA.

Section 2.             Conditions of the Obligations of the Buyer and the
                  Transitory Subsidiary at the Closing. The obligation of each
                  of the Buyer and the Transitory Subsidiary to consummate the
                  transactions contemplated hereby is subject to satisfaction as
                  of the Closing of the following conditions:

                  a.        Representations and Warranties; Covenants.  The
                       representations and warranties contained in Section 6
                       hereof (taking into account the exceptions referred to in
                       the introduction to such Section) shall be true and
                       correct in all material respects at and as of the Closing
                       Date as if made at and as of the Closing Date, except for
                       the effects of actions contemplated herein or permitted
                       hereunder prior to the Closing, and the Target shall have
                       performed in all material respects all of the covenants
                       required to be performed by the Target hereunder on or
                       prior to the Closing.

                  b.        Opinion of Counsel to the Target. The Buyer shall
                       have received from Sonnenschein Nath & Rosenthal, special
                       counsel to the Target, an opinion substantially in the
                       form attached hereto as Exhibit G which shall be
                       addressed to the Buyer and dated as of the Closing Date.

                  c.        Employment Agreements with Principals. The Target
                       shall have entered into an employment agreement with
                       Robert C. Gienko substantially in the form attached
                       hereto as Exhibit H and with each of the individuals
                       listed on Exhibit I-1 (and on the certain respective
                       principal terms also set forth thereon) substantially in
                       the form attached hereto as Exhibit I-2, and each of such
                       employment agreements shall be in full force and effect
                       as of the Closing.

                  d.        Termination of Certain Existing Agreements and
                       Release. All agreements, contracts and understandings
                       between any of the stockholders of the Target and their
                       Affiliates, on the one hand (including any employment,


                                        5

<PAGE>   12



                       change of control, severance or similar agreement), and
                       the Target, on the other hand, shall have been canceled
                       or terminated without any liability to the Target, and
                       all of the stockholders of the Target shall have executed
                       and delivered to the Target a release of all past,
                       present and future liabilities and obligations (other
                       than any Indebtedness) of the Target to the stockholders
                       of the Target and their Affiliates substantially in the
                       form attached hereto as Exhibit J (the "Release"), and
                       such Release shall be in full force and effect as of the
                       Closing.

                  e.        Contribution of Indebtedness. There shall have been
                       contributed to the capital of the Target all Indebtedness
                       of the Target to each of the stockholders of the Target
                       and their Affiliates in form and substance reasonably
                       satisfactory to the Buyer. Such contributions are
                       intended to be contributions to capital as contemplated
                       by Section 108(e)(6) of the Code.

                  f.        Regulation D Questionnaire. Each of the stockholders
                       of the Target shall have delivered to the Buyer a fully
                       completed and duly executed Regulation D Questionnaire in
                       form and substance as attached hereto as Exhibit K.

                  g.        Litigation. No suit, action or other proceeding
                       shall be pending before any court or governmental or
                       regulatory official, body or authority or threatened
                       seeking to restrain or prohibit (or seeking damages in
                       connection with) the transactions contemplated hereby or
                       that would have a Material Adverse Effect, and no
                       injunction, judgment, order, decree or ruling with
                       respect thereto shall be in effect.

                  h.        Third Party Consents and Approvals.  The Target
                       shall have received or obtained all third party consents
                       and approvals that are necessary for the consummation of
                       the transactions contemplated hereby or that are required
                       in order to prevent a breach of or default under, a
                       termination or modification of, or acceleration of the
                       terms of, any contract, agreement or document required to
                       be listed on the Target Disclosure Schedule corresponding
                       to Section 6D and which is expressly indicated on the
                       Target Disclosure Schedule as being subject to this
                       closing condition (collectively, the "Third Party
                       Approvals"), in each case on terms and conditions
                       reasonably satisfactory to the Buyer.

                  i.        Governmental Consents and Approvals. The Parties
                       shall have received or obtained all governmental and
                       regulatory consents, permits and approvals (and shall
                       have made all filings) that are necessary for the
                       consummation of the transactions contemplated hereby
                       (collectively, the


                                        6

<PAGE>   13



                       "Government Approvals"), in each case on terms and
                       conditions reasonably satisfactory to the Buyer.

                  j.        Material Adverse Change. Since the date of this
                       Agreement, there shall have been no material adverse
                       change or development in the business, financial
                       condition, operating results, assets, operations, cash
                       flow or net worth of the Target.

                  k.        Proceedings. All corporate and other proceedings
                       taken or required to be taken by the Target at or prior
                       to the Closing in connection with the transactions
                       contemplated hereby shall have been taken and all
                       documents incident thereto shall be reasonably
                       satisfactory in form and substance to the Buyer and its
                       counsel.

                  l.        Target Stockholder Approval.  The Target shall have
                       received the Requisite Stockholder Approval in relation
                       to this Agreement and the Plan of Merger.

                  m.        Consent of Target Stockholders. All of the Target
                       Stockholders shall have duly entered into a written
                       consent substantially in the form attached hereto as
                       Exhibit L (the "Consent").

                  n.        HSR Approval. All applicable waiting periods (and
                       any extensions thereof) under the Hart-Scott-Rodino Act
                       shall have expired or otherwise been terminated.

                  o.        Non-Compete and Non-Solicitation. Each stockholder
                       of the Target (other than Phillip Mitchell) shall have
                       agreed to be bound by the non-compete, non-solicitation
                       and other restrictions contemplated by Section 5A of this
                       Agreement, and each such stockholder shall have duly
                       executed the signature page hereto labeled "Non-Compete
                       Signature Page to Agreement of Merger."

                  p.        Escrow Agreement. The Buyer, the Escrow Agent and
                       the Target Stockholders Representative shall have entered
                       into the Escrow Agreement, and such agreement shall be in
                       full force and effect as of the Closing.

                  q.        Closing Documents. At the Closing, the Target shall
                       have delivered to the Buyer all of the following
                       documents:

                  i.        a certificate of an officer of the Target, dated the
                       Closing Date, stating that the conditions specified in
                       Section 1 and Sections 2A through 2M, have been fully
                       satisfied;


                                        7

<PAGE>   14
                  ii.       certified copies of the resolutions duly adopted by
                       the board of directors of the Target authorizing the
                       execution, delivery and performance of this Agreement and
                       each of the other agreements contemplated hereby;

                  iii.      certified copies of the articles of incorporation
                       and the bylaws of the Target, each as in effect at the
                       Closing;

                  iv.       copies of all Third Party Approvals and Governmental
                       Approvals; and

                  v.        good standing certificates of the Target from its
                       jurisdiction of incorporation and each jurisdiction in
                       which the Target is qualified to do business as a foreign
                       corporation, in each case dated as of a recent date prior
                       to the Closing Date.

         Any condition specified in this Section 2 may be waived if consented to
in writing by the Buyer at or prior to the Closing. All deliveries made at the
Closing shall be deemed to be simultaneously made, and no party shall be
obligated to consummate the transactions contemplated by this Agreement unless
and until all deliveries required hereunder have been fully made.

Section 3.             Conditions of the Obligations of the Target at the
                  Closing. The obligations of the Target to consummate the
                  transactions contemplated hereby is subject to the
                  satisfaction as of the Closing of the following conditions:

                  a.        Representations and Warranties; Covenants.  The
                       representations and warranties contained in Section 7
                       hereof (taking into account the exceptions referred to in
                       the introduction to such Section) shall be true and
                       correct in all material respects at and as of the Closing
                       Date as if made at and as of the Closing Date, except for
                       the effects of actions contemplated herein or permitted
                       hereunder prior to the Closing, and the Buyer shall have
                       performed in all material respects all of the covenants
                       required to be performed by the Buyer hereunder at or
                       prior to the Closing.

                  b.        Registration Rights Agreement. The Buyer shall have
                       entered into the Registration Rights Agreement,
                       substantially in the form attached hereto as Exhibit M,
                       and such agreement shall be in full force and effect as
                       of the Closing and shall not have been amended or
                       modified.

                  c.        Opinion of Counsel to the Buyer. The Target shall
                       have received from Kirkland & Ellis, special counsel to
                       the Buyer, an opinion substantially in the form attached
                       hereto as Exhibit N, which shall be addressed to the
                       Target and dated as of the Closing Date.


                                        8

<PAGE>   15



                  d.        Target Stockholder Approval.  The Target shall have
                       received the Requisite Stockholder Approval in relation
                       to this Agreement and the Plan of Merger.

                  e.        Litigation. No suit, action or other proceeding
                       shall be pending before any court or governmental or
                       regulatory official, body or authority seeking to
                       restrain or prohibit the transactions contemplated
                       hereby, and no injunction, judgment, order, decree or
                       ruling with respect thereto shall be in effect.

                  f.        Material Adverse Change. Since the date of this
                       Agreement, there shall have been no material adverse
                       change or development in the business, financial
                       condition, operating results, assets, operations, cash
                       flow or net worth of the Buyer.

                  g.        Price of Buyer Stock. The closing price of Buyer
                       Stock on the principal market for such stock on the
                       trading day immediately preceding the Closing Date shall
                       not be less than $13.00.

                  h.        Governmental Consents and Approvals. The Parties
                       shall have received or obtained all Governmental
                       Approvals that are necessary for the consummation of the
                       transactions contemplated hereby.

                  i.        HSR Approval. All applicable waiting periods (and
                       any extensions thereof) under the Hart-Scott-Rodino Act
                       shall have expired or otherwise been terminated.

                  j.        Employment Agreements with Principals. The Target
                       shall have entered into an employment agreement with
                       Robert C. Gienko substantially in the form attached
                       hereto as Exhibit H and with each of the individuals
                       listed on Exhibit I-1 (and on the certain respective
                       principal terms also set forth thereon) substantially in
                       the form attached hereto as Exhibit I-2, and each of such
                       employment agreements shall be in full force and effect
                       as of the Closing.

                  k.        Escrow Agreement. The Buyer, the Escrow Agent and
                       the Target Stockholders Representative shall have entered
                       into the Escrow Agreement, and such agreement shall be in
                       full force and effect as of the Closing.

                  l.        Closing Certificate. The Buyer shall have delivered
                       to the Target a certificate of an officer of the Buyer,
                       dated the Closing Date, stating that the conditions
                       specified in Sections 3A, 3D, 3E and 3F have been fully
                       satisfied.


                                        9

<PAGE>   16



         Any condition specified in this Section 3 may be waived if consented to
in writing by the Target. All deliveries made at the Closing shall be deemed to
be simultaneously made, and no party shall be obligated to consummate the
transactions contemplated by this Agreement unless and until all deliveries
required hereunder have been fully made.

Section 4.           Covenants and Transfer Restrictions.

                  a.        General. Each of the Parties shall use reasonable
                       best efforts to take all action and to do all things
                       necessary, proper or advisable in order to consummate and
                       make effective the transactions contemplated by this
                       Agreement. At the Closing, the applicable Parties shall
                       execute and deliver the agreements and instruments
                       contemplated hereby to be executed and delivered at the
                       Closing.

                  b.        Maintenance of Business.  The Target shall (i)
                       maintain its assets in good operating condition and
                       repair (normal wear and tear excepted), (ii) maintain
                       insurance reasonably comparable to that in effect on the
                       date of the Latest Balance Sheet, (iii) maintain
                       inventory and supplies at customary operating levels
                       consistent with current practices, and replace in
                       accordance with past practice any inoperable, worn out or
                       obsolete assets with assets of comparable quality, (iv)
                       maintain its books, accounts and records in accordance
                       with past custom and practice as used in the preparation
                       of the Latest Balance Sheet and the financial statements
                       described in Section 6E below and (v) maintain in full
                       force and effect the existence of all Intellectual
                       Property Rights. The Target shall collect amounts due to
                       the Target and pay amounts owing by the Target only in
                       the ordinary course of business consistent with past
                       practice. The Target shall not offer or accept any
                       discounts with respect to the collection of accounts
                       receivable and other rights to payment other than in the
                       ordinary course of business consistent with past
                       practice.

                  c.        Third Party Notices and Consents. The Target shall
                       give all required notices to third parties and use
                       reasonable best efforts to obtain any required third
                       party consents in connection with the matters
                       contemplated by this Agreement.

                  d.        Governmental Notices and Consents. Each of the
                       Parties shall give any notices to, make any filings with,
                       and use reasonable best efforts to obtain, any
                       authorizations, consents and approvals of governments and
                       governmental agencies in connection with the matters
                       contemplated by this Agreement. The Buyer and the Target
                       each acknowledge that the Notification and Report Forms
                       and related material that are required to be filed with
                       the Federal Trade Commission and the Antitrust Division
                       of the

                                       10

<PAGE>   17



                       United States Department of Justice under the
                       Hart-Scott-Rodino Act have already been filed as so
                       required, will use their reasonable best efforts to
                       obtain an early termination of the applicable waiting
                       period under the Hart-Scott-Rodino Act upon the election
                       of the Buyer in its sole discretion (in the event of such
                       election by the Buyer, the Target and the Buyer shall
                       each promptly file with the appropriate government
                       agencies any necessary or appropriate letters and other
                       forms to request such early termination) and will make
                       any further filings pursuant thereto that may be
                       necessary, proper or advisable in connection therewith.

                  e.        Special Target Meeting; Consent of Target
                       Stockholders. The Target shall use its reasonable best
                       efforts to obtain the approval of this Agreement and the
                       Plan of Merger by the Target Stockholders in accordance
                       with its charter and bylaws and the BCA on the date of
                       this Agreement. The board of directors of the Target
                       shall unanimously recommend adoption of this Agreement
                       and the Plan of Merger by the Target Stockholders in
                       connection with the solicitation of such approval. In
                       addition, each of the Target Stockholders shall enter
                       into the Consent on or prior to the date of this
                       Agreement.

                  f.        Operation of Business. The Target shall operate its
                       business only in the usual and ordinary course of
                       business consistent with past practice and use reasonable
                       best efforts to preserve the goodwill and organization of
                       its business and the relationships with its customers,
                       suppliers, employees and other Persons having business
                       relations with the Target. Without limiting the
                       generality of the foregoing, prior to the Closing, the
                       Target shall not:

                  i.        take or omit to take any action that would require
                       disclosure under Section 6J below; provided that
                       notwithstanding clauses (iv) and (viii) of Section 6J,
                       the Target may declare and pay (x) bonuses to its
                       employees and (y) distributions of cash to its
                       stockholders so long as the Target has at Closing (i) at
                       least $750,000 of cash and/or other immediately available
                       funds, (ii) at least $2.1 million of accounts receivable
                       (not including any contingent rights to payment for
                       services rendered by the Target) and (iii) at least $18
                       million of contingent rights to payment for services
                       rendered by the Target (not including any accounts
                       receivable); provided further that if the Target at the
                       Closing has cash and/or other immediately available
                       funds, accounts receivable or contingent rights to
                       payment in an amount less than the respective minimum
                       amount set forth above in this sentence, then the number
                       of shares of Buyer Stock which comprises the Closing
                       Stock Consideration shall be reduced by a number equal to
                       (i) an amount equal to the aggregate of all such
                       shortfalls divided by (ii) $16.50, rounded up to the
                       nearest whole number.


                                       11

<PAGE>   18


                  ii.       take any action or omit to take any action which act
                       or omission would to have a Material Adverse Effect;

                  iii.      (a) enter into any contract out of the ordinary
                       course of business or restricting in any material respect
                       the conduct of its business, (b) make any loans or
                       Investments (other than advances to the Target's
                       employees in the ordinary course of business consistent
                       with past custom and practice), (c) increase any
                       officer's or employee's compensation, incentive
                       arrangements or other benefits, except for increases or
                       bonuses made in the ordinary course of business
                       consistent with past custom and practice, (d) redeem,
                       purchase or otherwise acquire directly or indirectly any
                       of its issued and outstanding capital stock, or any
                       outstanding rights or securities exercisable or
                       exchangeable for or convertible into its capital stock
                       (except for the transactions contemplated by this
                       Agreement) or make any distribution or dividend to any of
                       its shareholders or other Persons (other than to Phillip
                       Mitchell as contemplated by Section 4Q), (e) amend its
                       articles of incorporation or bylaws or issue or agree to
                       issue any capital stock or any rights to acquire, or
                       securities convertible into or exchangeable for, any of
                       its capital stock, (f) directly or indirectly engage in
                       any transaction, arrangement or contract with any
                       officer, director, shareholder or other insider or
                       Affiliate of the Target which is not in the ordinary
                       course of business consistent with past practice and at
                       arm's length, (g) execute any guaranty, issue any debt or
                       borrow any money or (h) buy or sell any assets out of the
                       ordinary course of business consistent with past
                       practice;

                  iv.       enter into any transaction, arrangement or contract
                       except on an arm's-length basis in the ordinary course of
                       business consistent with past custom and practice; or

                  v.        extend, renew or enter into any material contract,
                       agreement or arrangement except upon the prior approval
                       of the chief executive officer or the chief financial
                       officer of the Buyer.

                  Notwithstanding the foregoing, nothing in this Section 4F
shall prohibit the Target from taking any action or omitting to take any action
as required or as expressly contemplated by this Agreement.

                  g.        Full Access. The Target shall afford, and cause its
                       officers, directors, employees, attorneys, accountants
                       and other agents to afford, to the Buyer and its
                       accounting, legal and other representatives, full and
                       complete access at all reasonable times and during normal
                       business hours to the Target's personnel and to business,
                       financial, legal, tax, compensation and other data and

                                       12


<PAGE>   19



                       information concerning the Target's affairs and
                       operations; provided, that the Buyer shall coordinate all
                       such access through and with the chief executive officer
                       of the Target.

                  h.        Compliance with Agreements and Laws. The Target
                       shall (i) comply with all material obligations pursuant
                       to any material contract or agreement, whether oral or
                       written, express or implied and (ii) comply with all
                       material applicable laws.

                  i.        Payment of Obligations. The Target shall pay and
                       discharge when payable all Taxes, assessments and
                       governmental charges imposed upon its properties or upon
                       the income or profits therefrom (in each case before the
                       same becomes delinquent and before penalties accrue
                       thereon unless contested in good faith by appropriate
                       proceedings) and pay and discharge all claims for labor,
                       materials or supplies in the ordinary course of business
                       consistent with past practice.

                  j.        Notice of Developments.  Each Party shall give
                       prompt written notice to the others in the event its own
                       representations and warranties (in Sections 6 and 7, as
                       applicable, taking into account the exceptions referred
                       to in the introduction to such Section) are discovered to
                       be untrue in any material respect as of the time made or
                       in the event such Party determines that such
                       representations and warranties shall be untrue as if made
                       at and as of the Closing Date. No disclosure by the
                       Target pursuant to this Section 4J, however, shall be
                       deemed to amend or supplement the Target Disclosure
                       Schedule or to cure any misrepresentation or breach of
                       warranty.

                  k.        Exclusivity.  Neither the Target nor any of its
                       representatives, officers, employees, directors or agents
                       shall, directly or indirectly, (i) submit, solicit,
                       initiate or encourage any proposal or offer from any
                       Person (other than the Buyer or the Transitory Subsidiary
                       in connection with the transactions contemplated hereby)
                       or enter into any agreement or accept any offer relating
                       to or consummate any (a) reorganization, liquidation,
                       dissolution or recapitalization of the Target, (b) merger
                       or consolidation involving the Target, (c) purchase or
                       sale of any assets or capital stock (or any rights to
                       acquire, or securities convertible into or exchangeable
                       for, any such capital stock) of the Target (other than in
                       the ordinary course of business consistent with past
                       custom and practice) or (d) similar transaction or
                       business combination involving the Target or its assets
                       (each of the foregoing transactions described in clauses
                       (a) through (d), a "Target Transaction") or (ii) furnish
                       any information with respect to, assist or participate in
                       or facilitate in any other manner any effort or attempt
                       by any Person to do or seek to do any of the foregoing.
                       The Target agrees to notify the Buyer immediately if


                                       13

<PAGE>   20



                       any Person makes any proposal or offer or written inquiry
                       or contact with respect to a Target Transaction.

                  l.        Tax Matters.  Without the prior written consent of
                       the Buyer, which shall not be unreasonably withheld or
                       delayed, the Target shall not make or change any
                       election, change an annual accounting period, adopt or
                       change any accounting method, file any amended Tax
                       Return, enter into any closing agreement, settle any Tax
                       claim or assessment relating to the Target, surrender any
                       right to claim a refund of Taxes, consent to any
                       extension or waiver of the limitation period applicable
                       to any Tax claim or assessment relating to the Target, or
                       take any other similar action, or omit to take any action
                       relating to the filing of any Tax Return or the payment
                       of any Tax, if such election, adoption, change,
                       amendment, agreement, settlement, surrender, consent or
                       other action or omission would have the effect of
                       increasing the present or future Tax liability or
                       decreasing any present or future Tax asset of the Target
                       or the Buyer.

                  m.        Press Release and Announcements. No press releases
                       or other releases of information related to this
                       Agreement or the transactions contemplated hereby will be
                       issued or released by the Buyer or the Target without the
                       prior consent of the other Party (which consent shall not
                       be unreasonably withheld or delayed), except as is
                       required or appropriate to disclose pursuant to
                       applicable law (including pursuant to securities laws and
                       any reporting requirements thereunder) or court order or
                       in any dispute resolution process contemplated by this
                       Agreement; provided that if disclosure is required or
                       appropriate by the Buyer pursuant to applicable law as
                       contemplated by this sentence, the Buyer shall notify the
                       Target Stockholders Representative prior to any such
                       disclosure and afford the Target Stockholder
                       Representative the opportunity to comment on any such
                       disclosure. Only the Buyer and its representatives shall
                       be permitted to communicate with financial analysts,
                       investors and the press regarding this Agreement and the
                       transactions contemplated hereby; the Parties to this
                       Agreement agree that all such contacts shall be directed
                       to the Buyer.

                  n.        Indemnification. Subsequent to the Effective Time,
                       the Buyer shall not take, or permit to be taken, any
                       action to alter or impair any exculpatory or
                       indemnification provision for the benefit of any
                       individual now existing in the articles of incorporation
                       or bylaws of the Target insofar as such provision relates
                       to any act or inaction by such individual at any time
                       prior to the Effective Time.

                  o.        Transition.  The Target agrees to cooperate with the
                       Buyer, and to use its commercially reasonable efforts,
                       prior to the Closing to facilitate the


                                       14

<PAGE>   21



                       expedient transition of ownership and operation of the
                       business of the Target to the Buyer at the Closing.

                  p.        Audit of Target Financial Statements. At the
                       election of the Buyer, any financial statements of the
                       Target shall be audited by an independent accounting firm
                       selected by the Buyer, at the sole cost and expense of
                       the Buyer, and the Target shall promptly cooperate in
                       such audit. The Target shall grant such selected
                       accountant access to its books, records, employees and
                       agents and otherwise as customary in connection with a
                       year-end financial statement audit.

                  q.        Amounts Due to Phillip Mitchell. Prior to the
                       Closing, the Target shall reissue and deliver to Phillip
                       Mitchell (and any others similarly situated) all dividend
                       and distribution checks previously issued to but not yet
                       cashed by him as set forth on Schedule 4Q.

                  r.        Transfer Restrictions.  None of the Target
                       Stockholders shall prior to termination of this Agreement
                       (without the express prior written consent of the Buyer)
                       directly or indirectly transfer, sell, assign, give,
                       mortgage, pledge, hypothecate, encumber or otherwise
                       dispose of, or permit to be sold, assigned, encumbered,
                       attached or otherwise disposed of, in any manner, the
                       whole or any part of the Target Shares of such
                       Stockholder, or the certificate or certificates
                       representing the same, or any interest therein, except by
                       will, judicial order or the laws of descent and
                       distribution or intestacy.

Section 5.             Post-Closing Covenants.

                  a.        Non-Compete; Non-Solicitation.

                  i.        Each of the Stockholders of the Target, other than
                       Philip Mitchell (the "Non-Compete Persons"), acknowledge
                       that they are familiar with the trade secrets of the
                       Target and with other Confidential Information concerning
                       the Target, including all (a) inventions, technology and
                       research and development of the Target, (b) customers and
                       clients and customer and client lists of the Target, (c)
                       products (including products under development) and
                       services of the Target and related costs and pricing
                       structures and manufacturing techniques, (d) accounting
                       and business methods and practices of the Target and (e)
                       similar and related Confidential Information and trade
                       secrets of the Target. Each Non-Compete Person further
                       acknowledges that such Person's services have been and
                       shall be of special, unique and extraordinary value to
                       the Target and that each such Person has been
                       substantially responsible for the growth and development
                       of the Target and the creation and preservation of the
                       Target's goodwill. Each Non-Compete


                                       15

<PAGE>   22



                       Person acknowledges and agrees that the Target would be
                       irreparably damaged if such Person were to provide
                       services to any Person competing with the Target or
                       engaged in a similar business and that such competition
                       by such Non-Compete Person would result in a significant
                       loss of goodwill by the Target. Each Non-Compete Person
                       further acknowledges and agrees that the covenants and
                       agreements set forth in this Section 5A were a material
                       inducement to the Buyer to enter into this Agreement and
                       to perform its obligations hereunder, and that the Buyer
                       would not obtain the benefit of the bargain set forth in
                       this Agreement as specifically negotiated by the Parties
                       if any Non-Compete Person breached the provisions of this
                       Section 5A. Therefore, Robert C. Gienko agrees that until
                       the third anniversary of the Closing and each of Mark
                       Pugh, Steve Fagerman and Kenneth Janowski agree that
                       until the first anniversary of the Closing, such
                       Non-Compete Person shall not directly or indirectly own
                       any interest in, manage, control, participate in (whether
                       as an officer, director, employee, partner, agent,
                       representative or otherwise), consult with, render
                       services for, or in any other manner engage anywhere in
                       the United States in any business competing with, or
                       similar to, the business conducted and proposed to be
                       conducted by the Target; provided that nothing herein
                       shall prohibit such Non-Compete Person from being a
                       passive owner of not more than 5% of the outstanding
                       stock of any class of a corporation which is publicly
                       traded so long such Non-Compete Person has no active
                       participation in the business of such Person. Each
                       Non-Compete Person acknowledges that the geographic
                       restrictions set forth above are reasonable and necessary
                       to protect the goodwill of the Target's business being
                       sold by the Non-Compete Persons pursuant to this
                       Agreement.

                  ii.       For so long as a Non-Compete Person has continuing
                       obligations under Section 5A(i) above, such Person shall
                       not directly, or indirectly through another entity, (a)
                       induce or attempt to induce any employee of the Target to
                       leave the employ of the Target, or in any way interfere
                       with the relationship between the Target and any employee
                       thereof, (b) hire any person who was an employee of the
                       Target at any time during the six month period
                       immediately prior to the date on which such hiring would
                       take place or (c) call on, solicit or service any
                       customer, supplier, licensee, licensor or other business
                       relation of the Target in order to induce or attempt to
                       induce such Person to cease doing business with the
                       Target, or in any way interfere with the relationship
                       between any such customer, supplier, licensee or business
                       relation and the Target (including making any negative
                       statements or communications about the Target).

                  iii.      If, at the time of enforcement of the covenants
                       contained in this Section 5A (the "Restrictive
                       Covenants"), a court shall hold that the duration,


                                       16

<PAGE>   23



                       scope or area restrictions stated herein are unreasonable
                       under circumstances then existing, the Parties agree that
                       the maximum duration, scope or area reasonable under such
                       circumstances shall be substituted for the stated
                       duration, scope or area and that the court shall be
                       allowed to revise the restrictions contained herein to
                       cover the maximum period, scope and area permitted by
                       law. Each Non-Compete Person has had the opportunity to
                       consult with legal counsel regarding the Restrictive
                       Covenants and has determined and hereby acknowledges that
                       the Restrictive Covenants are reasonable in terms of
                       duration, scope and area restrictions and are necessary
                       to protect the goodwill of the Target's business and the
                       substantial investment in the Target made by the Buyer
                       hereunder. Each Non-Compete Person further acknowledges
                       and agrees that the Restrictive Covenants are being
                       entered into by such Person solely in connection with the
                       sale of the Target to the Buyer and not directly or
                       indirectly in connection with such Non-Compete Person's
                       employment or other relationship with the Target.

                  iv.       If a Non-Compete Person breaches, or threatens to
                       commit a breach of, any of the Restrictive Covenants, the
                       Target shall have the following rights and remedies, each
                       of which rights and remedies shall be independent of the
                       others and severally enforceable, and each of which is in
                       addition to, and not in lieu of, any other rights and
                       remedies available to the Target at law or in equity: the
                       right to apply to have the Restrictive Covenants
                       specifically enforced by any court of competent
                       jurisdiction, it being agreed that any breach or
                       threatened breach of the Restrictive Covenants would
                       cause irreparable injury to the Target and that money
                       damages would not provide an adequate remedy to the
                       Target.

                  b.        Tax Matters.  The following provisions shall govern
                       the allocation of responsibility as between the Buyer and
                       the Target Stockholders for certain tax matters following
                       the Closing Date:

                  i.        Tax Periods Ending on or Before the Closing Date.
                       The Buyer shall prepare or cause to be prepared, in a
                       manner consistent with those of prior tax returns, and
                       file or cause to be filed all Tax Returns for the Target
                       for all periods ending on or prior to the Closing Date
                       which are filed after the Closing Date. The Buyer shall
                       permit the Target Stockholders Representative to review
                       and comment on each such Tax Return described in the
                       preceding sentence prior to filing. The Buyer and the
                       Target Stockholders Representative shall use their
                       reasonable best efforts to resolve any disputes regarding
                       any such Tax Returns, and if such parties cannot resolve
                       such dispute between themselves, they shall follow the
                       dispute resolution process set forth in Section 11A. To
                       the extent permitted by applicable law, the Target
                       Stockholders shall include any income, gain, loss,
                       deduction or other


                                       17

<PAGE>   24



                       tax items for such periods on their Tax Returns in a
                       manner consistent with the Schedule K-1s furnished by the
                       Target to the Target Stockholders for such periods. The
                       Target Stockholders shall reimburse the Buyer for Taxes
                       of the Target with respect to such periods within 15 days
                       of payment by the Buyer or the Target of such Taxes to
                       the extent such Taxes are not reflected in the reserve
                       for Tax liability (rather than any reserve for deferred
                       Taxes established to reflect timing differences between
                       book and Tax income) shown on the face of the Latest
                       Balance Sheet or as set forth on Schedule 6F.

                  ii.       Tax Periods Beginning Before and Ending After the
                       Closing Date. The Buyer shall prepare or cause to be
                       prepared, in a manner consistent with those of prior tax
                       returns, and file or cause to be filed any Tax Returns of
                       the Target for Tax periods which begin before the Closing
                       Date and end after the Closing Date. The Buyer shall
                       permit the Target Stockholders Representative to review
                       and comment on each such Tax Return described in the
                       preceding sentence prior to filing. The Buyer and the
                       Target Stockholders Representative shall use their
                       reasonable best efforts to resolve any disputes regarding
                       any such Tax Returns, and if such parties cannot resolve
                       such dispute between themselves, they shall follow the
                       dispute resolution process set forth in Section 11A. The
                       Target Stockholders shall pay to the Buyer within 15 days
                       of the date on which Taxes are paid with respect to such
                       periods an amount equal to the portion of such Taxes
                       which relates to the portion of such Taxable period
                       ending on the Closing Date to the extent such Taxes are
                       not reflected in the reserve for Tax liability (rather
                       than any reserve for deferred Taxes established to
                       reflect timing differences between book and Tax income)
                       shown on the face of the Latest Balance Sheet. For
                       purposes of this Section, in the case of any Taxes that
                       are imposed on a periodic basis and are payable for a
                       Taxable period that includes (but does not end on) the
                       Closing Date, the portion of such Tax which relates to
                       the portion of such Taxable period ending on the Closing
                       Date shall (x) in the case of any Taxes other than Taxes
                       based upon or related to income, be deemed to be the
                       amount of such Tax for the entire Taxable period
                       multiplied by a fraction the numerator of which is the
                       number of days in the Taxable period ending on the
                       Closing Date and the denominator of which is the number
                       of days in the entire Taxable period, and (y) in the case
                       of any Tax based upon or related to income be deemed
                       equal to the amount which would be payable if the
                       relevant Taxable period ended on the Closing Date. Any
                       credits relating to a Taxable period that begins before
                       and ends after the Closing Date shall be taken into
                       account as though the relevant Taxable period ended on
                       the Closing Date. All determinations necessary to give
                       effect to the foregoing allocations shall be made in a
                       manner consistent with prior practice of the Target.


                                       18

<PAGE>   25




                  iii.      Cooperation on Tax Matters.

                       (1)       The Buyer and the Target Stockholders shall
                            cooperate fully, as and to the extent reasonably
                            requested by the other party, in connection with the
                            filing of Tax Returns pursuant to this Section and
                            any audit, litigation or other proceeding with
                            respect to Taxes. Such cooperation shall include the
                            retention and (upon the other party's request) the
                            provision of records and information which are
                            reasonably relevant to any such audit, litigation or
                            other proceeding and making employees available on a
                            mutually convenient basis to provide additional
                            information and explanation of any material provided
                            hereunder. The Target and Target Stockholders agree
                            (A) to retain all books and records with respect to
                            Tax matters pertinent to the Target relating to any
                            taxable period beginning before the Closing Date
                            until the expiration of the statute of limitations
                            (and, to the extent notified by the Buyer or the
                            Target Stockholders, any extensions thereof) of the
                            respective taxable periods, and to abide by all
                            record retention agreements entered into with any
                            taxing authority, and (B) to give the other party
                            reasonable written notice prior to transferring,
                            destroying or discarding any such books and records
                            and, if the other party so requests, the Target or
                            the Target Stockholders, as the case may be, shall
                            allow the other party to take possession of such
                            books and records.

                       (2)       The Buyer, the Target Stockholders
                            Representative and the Target Stockholders further
                            agree, upon request, to use their best efforts to
                            obtain any certificate or other document from any
                            governmental authority or any other Person as may be
                            necessary to mitigate, reduce or eliminate any Tax
                            that could be imposed (including, but not limited
                            to, with respect to the transactions contemplated
                            hereby).

                       (3)       The Buyer, the Target Stockholders
                            Representative and the Target Stockholders further
                            agree, upon request, to provide the other party with
                            all information that either party may be required to
                            report pursuant to Section 6043 of the Code and all
                            Treasury Department Regulations promulgated
                            thereunder.

                  iv.       Tax Sharing Agreements. All tax-sharing agreements
                       or similar agreements with respect to or involving the
                       Target shall be terminated as of the Closing Date and,
                       after the Closing Date, the Target shall not be bound
                       thereby or have any liability thereunder.


                                       19

<PAGE>   26

                  v.        Tax Free Transaction. The Parties shall agree to
                       report this transaction as a tax free transaction under
                       Section 368(a) of the Code and to comply with all
                       requirements imposed with regard to such.

                  c.        Defined Benefit Plan and Successor Target Plans. The
                       Buyer acknowledges that the Target maintains the
                       Strategic Reimbursement Services, Inc. Employees' Defined
                       Benefit Pension Plan (the "Defined Benefit Plan") for its
                       current employees.

                  i.        Target will amend the Defined Benefit Plan,
                       effective as of the Closing, or as soon thereafter as
                       practicable after complying with the notice requirement
                       of Section 204(h) of the Employee Retirement Income
                       Security Act of 1974, as amended ("ERISA"), to cease the
                       accrual of benefits and entry of new participants. The
                       Target will further amend the Defined Benefit Plan,
                       effective as of the Closing, to provide that excess funds
                       upon termination of the Defined Benefit Plan may not
                       under any circumstances revert to the Employer (as
                       defined in the Defined Benefit Plan); to provide that
                       excess assets upon termination be applied to increase
                       benefits or otherwise reallocated in a nondiscriminatory
                       manner to Participants (as defined in the Defined Benefit
                       Plan) in the Defined Benefit Plan. The Target and/or the
                       Surviving Corporation will terminate the Defined Benefit
                       Plan in a standard termination under Title IV of ERISA
                       effective as soon as reasonably practicable after the
                       Closing after complying with the notice requirements of
                       Section 4041 of ERISA, liquidate the trust for the
                       Defined Benefit Plan; and cause all assets of the Defined
                       Benefit Plan to be applied to the purchase of annuity
                       contracts or otherwise distributed to Participants.
                       Target and/or the Surviving Corporation may further amend
                       the Defined Benefit Plan in such manner consistently with
                       the foregoing as the Target and/or the Surviving
                       Corporation deem appropriate to carry out the termination
                       of the Defined Benefit Plan and to maintain its
                       qualification under section 401(a) of the Code pending
                       and upon its termination.

                  ii.       Effective as of the Closing the Surviving
                       Corporation may at its option (a) adopt for the benefit
                       of its eligible employees the 401(k) plan of the Buyer,
                       or (b) adopt for the benefit of its eligible employees a
                       qualified defined contribution plan (as defined in
                       Section 414(i) of the Code on such terms as the Surviving
                       Corporation deems appropriate or (c) a combination of (a)
                       and (b). Any such employee benefit plan shall recognize
                       service with the Target before the Closing as service
                       with the employer for purposes of eligibility and (if
                       relevant) vesting.

                  d.        Pooling Transfer Restriction.  The Target and each
                       Target Stockholder expressly acknowledges and agrees that
                       the acquisition of the Target by the Buyer


                                       20

<PAGE>   27




                       will be accounted for as a pooling-of-interests
                       transaction for financial, accounting and regulatory
                       purposes in accordance with GAAP and the rules and
                       regulations of the SEC governing pooling. Therefore, no
                       Target Stockholder shall sell, transfer or otherwise
                       dispose of any Buyer Shares owned by such Stockholder
                       until such time as financial statements/information that
                       includes at least 30 days of combined operations of the
                       Target and Buyer after the Closing Date shall have been
                       publicly reported by the Buyer (and no such transfer has
                       occurred in the 30 day period prior to the date of this
                       Agreement); provided that the Buyer shall issue a press
                       release which contains such requisite financial
                       statements/information and file a report with the SEC on
                       Form 8-K with respect thereto as soon as possible after
                       the Closing, but in any event not more than 45 days after
                       the Closing Date, unless agreed to in writing by the
                       Buyer and the Target Stockholders Representative. The
                       transfer restrictions set forth in this Section shall not
                       apply to a sale, transfer or other disposition of Buyer
                       Stock if, prior to such disposition, such Target
                       Stockholder delivers to the Buyer the written opinion of
                       a nationally recognized independent public accounting
                       firm to the effect that: (i) the disposition contemplated
                       by such Target Stockholder will not cause the acquisition
                       of the Target not to be treated as a pooling-of-interest
                       transaction for financial, accounting and regulatory
                       purposes in accordance with GAAP and the rules and
                       regulations of the SEC governing pooling (the "SEC
                       Pooling Rules"); or (ii) the disposition contemplated by
                       such Target Stockholder will not affect the treatment by
                       the Buyer of the acquisition of the Target because the
                       SEC Pooling Rules do not permit pooling-of-interest
                       accounting. The foregoing restriction on transfers by the
                       Target Stockholders shall be in addition to, and not in
                       lieu of, any securities law restrictions or any
                       restrictions set forth in this or any other Agreement.
                       The Target represents and warrants that its has not taken
                       any action which would adversely affect the ability of
                       the Buyer to account for the acquisition as a
                       pooling-of-interests transaction for financial,
                       accounting and regulatory purposes in accordance with
                       GAAP and the rules and regulations of the SEC governing
                       pooling, and shall not take any such action prior to the
                       Closing.

                  e.        Post-Closing Original Signatures. The Target
                       Stockholders Representative shall secure and deliver to
                       the Buyer as promptly as practicable after the Closing
                       originally executed signature pages to each of this
                       Agreement and the other agreements and documents
                       contemplated hereby which are executed at the Closing by
                       facsimile from each applicable Target Stockholder, and
                       each Target Stockholder hereby covenants and agrees to
                       promptly so cooperate.

Section 6.             Representations and Warranties Concerning the Target. The
                  Target represents and warrants to the Buyer and the Transitory
                  Subsidiary that, subject to the exceptions set forth in any
                  section of the Target Disclosure Schedule, the following
                  statements are true and correct as of the date of this
                  Agreement and will be true and correct as of the Closing Date.


                                       21

<PAGE>   28



                  a.        Organization, Corporate Power and Licenses.  The
                       Target is a corporation duly organized, validly existing
                       and in good standing under the laws of the State of
                       Illinois and is qualified to do business in the State of
                       California. The Target possesses all requisite corporate
                       power and authority necessary to own and operate its
                       properties, to carry on its businesses as now conducted
                       and presently proposed to be conducted and to carry out
                       the transactions contemplated by this Agreement. The
                       copies of the Target's articles of incorporation and
                       bylaws which have been furnished to the Buyer's counsel
                       reflect all amendments made thereto at any time prior to
                       the date of this Agreement and are correct and complete.
                       Robert C. Gienko is the sole director of the Target.

                  b.        Capital Stock and Related Matters.

                  i.        The authorized capital stock of the Target consists
                       of 5,000 shares of Class A Stock and 5,000 shares of
                       Class B Stock, of which 755 shares of Class A Stock and
                       245 shares of Class B Stock are issued and outstanding
                       and are held of record as set forth on the Target
                       Disclosure Schedule corresponding to this Section. As of
                       the date hereof and as of immediately prior to the
                       Closing, all of the outstanding shares of the Target's
                       capital stock are or shall be validly issued, fully paid
                       and nonassessable.

                  ii.       Except as set forth in the immediately preceding
                       sentence, the Target does not have and as of the Closing
                       Date will not have outstanding any stock or securities
                       convertible or exchangeable for any shares of its capital
                       stock or containing any profit participation features,
                       nor any rights or options to subscribe for or to purchase
                       its capital stock or any stock or securities convertible
                       into or exchangeable for its capital stock or any stock
                       appreciation rights or phantom stock plans. The Target is
                       not subject to any obligation (contingent or otherwise)
                       to repurchase or otherwise acquire or retire any shares
                       of its capital stock or any warrants, options or other
                       rights to acquire its capital stock, other than as
                       expressly provided in this Agreement.

                  iii.      Except for the Shareholders Agreement, dated as of
                       October 1, 1995, by and among the Target, Robert C.
                       Gienko and certain other stockholders of the Target,
                       there are no statutory or contractual shareholder
                       preemptive rights or rights of first refusal or other
                       similar restrictions with respect to the Target Shares.
                       The Target has not violated any applicable federal or
                       state securities laws in connection with the offer, sale
                       or issuance of any of its capital stock. There are no
                       agreements, instruments or other documents defining the
                       rights of, or granting rights to, the Target's
                       securityholders. There are no agreements or
                       understandings binding on the Target or its


                                       22

<PAGE>   29



                       shareholders with respect to the voting or transfer of
                       the Target's capital stock or with respect to any other
                       aspect of the Target's governance.

                  c.        Subsidiaries; Investments. The Target does not have
                       any Subsidiaries. The Target does not own or hold the
                       right to acquire any shares of stock or any other
                       security or interest in any other Person. The Target has
                       never had any Subsidiaries. The Target does not have any
                       obligation to make any additional Investments in any
                       Person.

                  d.        Authorization; No Breach.

                  (i)       The execution, delivery and performance of this
                       Agreement and all of the other agreements and instruments
                       contemplated hereby to which the Target is a party, have
                       been duly authorized by the Target. This Agreement and
                       all of the other agreements and instruments contemplated
                       hereby to which the Target is a party constitute valid
                       and binding obligations of the Target, enforceable in
                       accordance with their respective terms, and when executed
                       and delivered by the Target in accordance with the terms
                       hereof shall each constitute a valid and binding
                       obligation of the Target, enforceable in accordance with
                       their respective terms.

                  (ii)      The execution and delivery by the Target of this
                       Agreement and all other agreements and instruments
                       contemplated hereby to which the Target is or will become
                       a party, the fulfillment of and compliance with the
                       respective terms hereof and thereof by the Target do not
                       and shall not (i) conflict with or result in a breach of
                       the terms, conditions or provisions of, (ii) constitute a
                       default under (whether with or without the passage of
                       time, the giving of notice or both), (iii) result in the
                       creation of any Lien upon the Target's capital stock or
                       assets pursuant to, (iv) give any third party the right
                       to modify, terminate or accelerate any obligation under,
                       (v) result in a violation of or (vi) require any
                       authorization, consent, approval, exemption or other
                       action by or notice or declaration to, or filing with,
                       any third party or any court or administrative or
                       governmental body or agency pursuant to, the Target's
                       articles of incorporation or bylaws, or any agreement,
                       instrument, order, judgment or decree to which the Target
                       is subject, or to the knowledge of the Target, any law,
                       statute, rule or regulation to which the Target is
                       subject. Except as expressly set forth herein, the Target
                       is not a party to or bound by any written or oral
                       agreement or understanding with respect to a Target
                       Transaction other than this Agreement, and the Target has
                       terminated all discussions with third parties (other than
                       the Buyer) regarding Target Transactions.

                  e.        Financial Statements. Attached hereto as the
                       Financial Statements Schedule are the following financial
                       statements:

                  i.        the unaudited balance sheets of the Target as of
                       December 31, 1997 and December 31, 1998 and the related
                       statement of income for the fiscal years then ended (cash
                       basis only); and


                                       23

<PAGE>   30


                  ii.       the unaudited balance sheet of the Target as of May
                       31, 1999 (the "Latest Balance Sheet"), and the related
                       statements of income for the month then ended (cash basis
                       only).

Each of the foregoing financial statements (including in all cases the notes
thereto, if any), is accurate and complete in all material respects, is
consistent with the books and records of the Target (which, in turn, are
accurate and complete in all material respects) and fairly presents the
financial condition and operating results of the Target.

                  f.        Absence of Undisclosed Liabilities.

                  i.        To the knowledge of the Target, the Target does not
                       have any obligation or liability (whether accrued,
                       absolute, contingent, unliquidated or otherwise, whether
                       due or to become due and regardless of when asserted),
                       other than: (i) liabilities set forth on the liabilities
                       side of the Latest Balance Sheet (including any notes
                       thereto), (ii) liabilities and obligations which have
                       arisen after the date of the Latest Balance Sheet in the
                       ordinary course of business (none of which is a liability
                       resulting from noncompliance with any applicable laws,
                       breach of contract, breach of warranty (in excess of any
                       warranty reserve specifically established with respect
                       thereto and included on the Latest Balance Sheet), tort,
                       infringement, claim or lawsuit) and (iii) other
                       liabilities and obligations expressly disclosed in the
                       schedules referred to in this Section 6.

                  ii.       The Target does not have any obligation or liability
                       (whether accrued, absolute, contingent, unliquidated or
                       otherwise, whether due or to become due and regardless of
                       when asserted) which would have a Material Adverse
                       Effect, other than: (i) liabilities set forth on the
                       liabilities side of the Latest Balance Sheet (including
                       any notes thereto), (ii) liabilities and obligations
                       which have arisen after the date of the Latest Balance
                       Sheet in the ordinary course of business (none of which
                       is a liability resulting from noncompliance with any
                       applicable laws, breach of contract, breach of warranty
                       (in excess of any warranty reserve specifically
                       established with respect thereto and included on the
                       Latest Balance Sheet), tort, infringement, claim or
                       lawsuit) and (iii) other liabilities and obligations
                       expressly disclosed in the schedules referred to in this
                       Section 6.

                  g.        Accounts Receivable.  All accounts receivable of the
                       Target and all rights and contingent rights to receive
                       payment for services rendered by the Target reflected on
                       the books and records of the Target as of the date hereof
                       and all accounts receivable and all rights and contingent
                       rights to receive payment for services rendered by the
                       Target to be reflected on the books and records of the
                       Target as of the Closing Date are or shall be valid
                       receivables,


                                       24
<PAGE>   31

                       rights, contingent rights or the equivalent of the Target
                       arising in the ordinary course of business, and to the
                       knowledge of the Target, are or shall be current and
                       collectible, subject to no valid counterclaims or
                       setoffs, at the aggregate recorded amount therefor as
                       shown on the books and records of the Target as of the
                       Closing Date, as the case may be, upon satisfaction if
                       applicable of the respective contingency. To the
                       knowledge of the Target, no Person has any Lien on such
                       receivables or rights or contingent rights to payment of
                       the Target or any part thereof, and no agreement for
                       deduction, free goods, discount or other deferred price
                       or quantity adjustment has been made with respect to any
                       such receivables.

                  h.        Warranty; Certifications.  All services rendered by
                       the Target have been in conformity in all material
                       respects with all applicable contractual commitments and
                       all express and implied warranties, and to the knowledge
                       of the Target, the Target does not have any liability
                       (and, to the Target's knowledge, there is no reasonable
                       basis for any present or future action, suit, proceeding,
                       hearing, investigation, charge, complaint, claim or
                       demand against it giving rise to any such liability) for
                       damages in connection therewith in excess of any warranty
                       reserve specifically established with respect thereto and
                       included on the Latest Balance Sheet. No services
                       rendered by the Target are subject to any guaranty,
                       warranty or other indemnity beyond the applicable
                       standard terms and conditions of such service consistent
                       with past practice (including as a result of any course
                       of conduct between the Target and any Person or as a
                       result of any statements in any of the Target's product
                       or promotional literature). The Target Disclosure
                       Schedule corresponding to this Section includes copies of
                       such standard terms and conditions of service for the
                       Target (containing applicable guaranty, warranty and
                       indemnity provisions). The Target has not been notified
                       in writing of any claims for (and the Target has no
                       knowledge of any threatened claims for) any extraordinary
                       product returns, warranty obligations or product services
                       relating to any of its products or services.

                  i.        No Material Adverse Effect. Since December 31, 1998,
                       there has occurred no fact, event or circumstance to the
                       knowledge of the Target which has had or would reasonably
                       be expected to have a Material Adverse Effect.

                  j.        Absence of Certain Developments. Except as set forth
                       on the Target Disclosure Schedule and except as expressly
                       contemplated by this Agreement since December 31, 1998,
                       the Target has not:

                  i.        issued any notes, bonds or other debt securities or
                       any capital stock or other equity securities or any
                       securities or rights convertible, exchangeable or
                       exercisable into any capital stock or other equity
                       securities;

                                       25
<PAGE>   32

                ii.         borrowed any amount or incurred or become subject to
                       any material liabilities, except current liabilities
                       incurred in the ordinary course of business consistent
                       with past practice;

                iii.        discharged or satisfied any material Lien or paid
                       any material obligation or liability, other than current
                       liabilities paid in the ordinary course of business;

                iv.         declared, set aside or made any payment or
                       distribution of cash or other property to any of the
                       Target's shareholders with respect to such shareholder's
                       capital stock or other equity securities or purchased,
                       redeemed or otherwise acquired any shares of its capital
                       stock or other equity securities (including any warrants,
                       options or other rights to acquire its capital stock or
                       other equity securities);

                v.          mortgaged or pledged any of its properties or assets
                       or subjected them to any Lien, except for Permitted
                       Encumbrances;

                vi.         sold, assigned, transferred, leased, licensed or
                       otherwise encumbered any of its tangible assets, except
                       in the ordinary course of business consistent with past
                       practice, or canceled any material debts or claims;

                vii.        sold, assigned, transferred, leased, licensed or
                       otherwise encumbered any Intellectual Property Rights or
                       other intangible assets, disclosed any material
                       proprietary Confidential Information to any Person (other
                       than to the Buyer or the Transitory Subsidiary and other
                       than in the ordinary course of business consistent with
                       past practice in circumstances in which it has imposed
                       reasonable confidentiality restrictions), or abandoned or
                       permitted to lapse any Intellectual Property Rights;

                viii.       made or granted any bonus or any wage or salary
                       increase to any employee or group of employees (except as
                       required by pre-existing contracts described on the
                       Target Disclosure Schedule), or made or granted any
                       increase in any employee benefit plan or arrangement, or
                       amended or terminated any existing employee benefit plan
                       or arrangement or adopted any new employee benefit plan
                       or arrangement;

                ix.         suffered any extraordinary losses or waived any
                       rights of material value (whether or not in the ordinary
                       course of business or consistent with past practice) in
                       excess of $50,000 in the aggregate;



                                       26

<PAGE>   33




                  x.          made capital expenditures or commitments therefor
                         that aggregate in excess of $100,000;

                  xi.         delayed or postponed the payment of any accounts
                         payable or any other liability or obligation or agreed
                         or negotiated with any party to extend the payment date
                         of any accounts payable or accelerated the collection
                         of any accounts or notes receivable, other than in the
                         ordinary course of business consistent with past
                         practice;

                  xii.        made any loans or advances to, guarantees for the
                         benefit of, or any Investments in, any Persons (other
                         than advances to the Target's employees in the ordinary
                         course of business consistent with past practice);

                  xiii.       made any charitable contributions or pledges
                         exceeding in the aggregate $10,000;

                  xiv.        suffered any damage, destruction or casualty loss
                         exceeding in the aggregate $100,000, not covered by
                         insurance;

                  xv.         made any change in any method of accounting or
                         accounting policies, other than those required by GAAP
                         which have been disclosed in writing to the Buyer, or
                         made any write-down in the value of its inventory that
                         is material or that is other than in the usual, regular
                         and ordinary course of business consistent with past
                         practice;

                  xvi.        made any Investment in or taken any steps to
                         incorporate any Subsidiary;

                  xvii.       amended its articles of incorporation, bylaws or
                         other organizational documents;

                  xviii.      entered into any agreement or arrangement
                         prohibiting or restricting it from freely engaging in
                         any business or otherwise restricting the conduct of
                         its business;

                  xix.        entered into any contract other than in the
                         ordinary course of business consistent with past
                         practice, entered into any other material transaction,
                         whether or not in the ordinary course of business or
                         consistent with past practice, or materially changed
                         any business practice; or

                  xx.         agreed, whether orally or in writing, to do any of
                         the foregoing.


                                       27

<PAGE>   34


                  k.          Assets.

                  i.          The Target has good and valid title to, a valid
                          leasehold interest in, or a valid license to use, the
                          properties and assets, tangible or intangible, used by
                          it, located on its premises or shown on the Latest
                          Balance Sheet or acquired thereafter, free and clear
                          of all Liens, except for properties and assets
                          disposed of in the ordinary course of business since
                          the date of the Latest Balance Sheet and except for
                          Liens disclosed on the Latest Balance Sheet (including
                          any notes thereto) and Permitted Encumbrances.

                  ii.         All of the Target's buildings, equipment,
                          machinery, fixtures, improvements and other tangible
                          assets (whether owned or leased) are in good condition
                          and repair (ordinary wear and tear excepted) and are
                          fit for use in accordance with past practice and in
                          the ordinary course of the Target's business as
                          presently conducted and as presently proposed to be
                          conducted. To the knowledge of the Target, all such
                          assets have been installed and maintained in all
                          material respects in accordance with all applicable
                          laws, regulations and ordinances.

                  iii.        The Target owns, has a valid leasehold interest
                          in, or has a valid license to use, all of the material
                          assets, properties and rights, whether tangible or
                          intangible, necessary for the conduct of its business
                          as presently conducted and as presently proposed to be
                          conducted.

                  l.          Tax Matters.

                  i.          The Target has filed all material Tax Returns
                          which it is required to file under applicable laws and
                          regulations, and such Tax Returns are complete and
                          correct in all material respects and have been
                          prepared in compliance in all material respects with
                          all applicable laws and regulations. The Target has
                          paid all Taxes due and owing by it (whether or not
                          such Taxes are shown or required to be shown on a Tax
                          Return) and has withheld and paid over to the
                          appropriate taxing authority all Taxes which it is
                          required to withhold from amounts paid or owing to any
                          employee, shareholder, creditor or other third party.

                  ii.         Except as set forth on the Target Disclosure
                          Schedule corresponding to this Section:

                          (1)     the Target has not waived any statute of
                              limitations with respect to any Taxes or agreed to
                              any extension of time for filing any Tax Return
                              which has not been filed; and the Target has not


                                       28
<PAGE>   35

                               consented to extend to a date later than the date
                               hereof the period in which any Tax may be
                               assessed or collected by any taxing authority;

                          (2)      since December 31, 1998, the Target has not
                               incurred any liability for Taxes other than in
                               the ordinary course of business;

                          (3)      the Tax Returns of the Target are closed for
                               all tax years through December 31, 1992;

                          (4)      to the knowledge of the Target, no foreign,
                               federal, state or local Tax audits or
                               administrative or judicial Tax proceedings are
                               pending or being conducted with respect to the
                               Target;

                          (5)      the Target has not received from any foreign,
                               federal, state or local taxing authority
                               (including jurisdictions where the Target has
                               filed Tax Returns) any (i) written notice
                               indicating an intent to open an audit or other
                               review, (ii) request for information related to
                               Tax matters or (iii) notice of deficiency or
                               proposed adjustment for any amount of Tax
                               proposed, asserted or assessed by any taxing
                               authority against the Target;

                          (6)      to the knowledge of the Target, there are no
                               material unresolved questions or claims
                               concerning the Target's Tax liability;

                          (7)      the Target has never received any claim by a
                               taxing authority in a jurisdiction where the
                               Target does not file Tax Returns that the Target
                               is or may be subject to Taxes assessed by such
                               jurisdiction;

                          (8)      the Target has not been a member of an
                               Affiliated Group or filed or been included in a
                               combined, consolidated or unitary income Tax
                               Return;

                          (9)      the Target is not a party to or bound by any
                               Tax allocation or Tax sharing agreement;

                          (10)     there are no Liens for Taxes (other than for
                               current Taxes not yet due and payable) upon the
                               assets of the Target;

                          (11)     the Target shall not be required to (i) as a
                               result of a change in method of accounting for a
                               taxable period ending on or prior to the Closing
                               Date, include any adjustment in taxable income
                               for any taxable period (or portion thereof)
                               ending after the Closing Date, (ii) as a result
                               of any "closing agreement," as described in


                                       29
<PAGE>   36

                               Section 7121 of the Code (or any corresponding
                               provision of state, local or foreign income Tax
                               law) executed on or before the Closing Date,
                               include any item of income in, or exclude any
                               item of deduction from, taxable income for any
                               taxable period (or portion thereof) ending after
                               the Closing Date, (iii) as a result of any sale
                               reported on the installment method where such
                               sale occurred on or prior to the Closing Date,
                               include any item of income in, or exclude any
                               item of deduction from, taxable income for any
                               taxable period (or portion thereof) ending after
                               the Closing Date, or (iv) as a result of any
                               prepaid amount received on or prior to the
                               Closing Date, include any item of income in, or
                               exclude any item of deduction from, taxable
                               income for any taxable period (or portion
                               thereof) ending after the Closing Date;

                          (12)     the Target has not made any payments, and is
                               not and will not become obligated (under any
                               contract entered into on or before the Closing
                               Date) to make any payments, that will be
                               non-deductible under Section 280G of the Code
                               (or any corresponding provision of state, local
                               or foreign income Tax law); and

                          (13)     the Buyer will not be required to deduct and
                               withhold any amount pursuant to Section 1445(a)
                               of the Code upon the Merger.

                  iii.         The Target:

                           (1)     has not made an election under Section
                               341(f) of the Code;

                           (2)     is not presently liable for the Taxes of
                               another Person (1) under Treas. Reg. Section
                               1.1502-6 (or comparable provisions of state,
                               local or foreign law), (2) as a transferee or
                               successor or (3) by contract or indemnity or
                               otherwise;

                           (3)     has been a validly electing S corporation
                               within the meaning of Sections 1361 and 1362 of
                               the Code at all times during its existence and
                               will be an S corporation up to and including the
                               Closing Date; and

                           (4)     will not be liable for any Tax under Section
                               1374 of the Code in connection with the deemed
                               sale of Target's assets caused by the Section
                               338(h)(10) Election, and has not, in the past 10
                               years, (A) acquired assets from another
                               corporation in a transaction in which Target's
                               Tax basis for the acquired assets was
                               determined, in whole or in part, by reference to
                               the Tax basis of the acquired assets (or any


                                       30
<PAGE>   37

                               other property) in the hands of the transferor
                               or (B) acquired the stock of any corporation
                               which is a qualified subchapter S subsidiary.

                  m.           Contracts and Commitments.

                  i.           Except as set forth on the Target Disclosure
                          Schedule, the Target (or to the knowledge of the
                          president of the Target, any employee of the Target
                          with respect to the business of the Target) is not a
                          party to or bound by any written or oral:

                          (1)      pension, profit sharing, stock option,
                               employee stock purchase or other plan or
                               arrangement providing for deferred or other
                               compensation to employees or any other employee
                               benefit plan, arrangement or practice, whether
                               formal or informal;

                          (2)      collective bargaining agreement or any other
                               contract with any labor union, or severance
                               agreements, programs, policies or arrangements;

                          (3)      management agreement, contract for the
                               employment of any officer, individual employee or
                               other Person on a full-time, part-time,
                               consulting or other basis providing annual cash
                               or other compensation in excess of $50,000 or
                               providing for the payment of any cash or other
                               compensation or benefits upon the consummation of
                               the transactions contemplated hereby;

                          (4)      material contract or agreement requiring the
                               consent of any party thereto upon a change in
                               control of the Target, containing any provision
                               which would result in a modification of any
                               rights or obligations of any party thereunder
                               upon a change in control of the Target or which
                               would provide any party any remedy (including
                               rescission or liquidated damages) in the event of
                               a change in control of the Target;

                           (5)     contract under which it has advanced or
                               loaned monies to any other Person or otherwise
                               agreed to advance, loan or invest any funds;

                           (6)     agreement or indenture relating to borrowed
                               money or other Indebtedness or the mortgaging,
                               pledging or otherwise placing a Lien on any
                               material asset or material group of assets of the
                               Target or any letter of credit arrangements;



                                       31
<PAGE>   38

                          (7)       guaranty of any obligation for borrowed
                               money or otherwise (other than endorsements made
                               for collection in the ordinary course of
                               business);

                          (8)       lease or agreement under which the Target is
                               lessee of or holds or operates any property, real
                               or personal, owned by any other Person, except
                               for any lease of personal property under which
                               the aggregate annual rental payments do not
                               exceed $25,000;

                          (9)       lease or agreement under which the Target is
                               lessor of or permits any third party to hold or
                               operate any property, real or personal, owned or
                               controlled by the Target;

                          (10)      license or royalty agreements, other than
                               any license or royalty agreements related to
                               third party off-the-shelf software;

                          (11)      nondisclosure or confidentiality agreements,
                               other than such entered into with customers in
                               the ordinary course of business and consistent
                               with past practice;

                          (12)      contract or group of related contracts with
                               the same party or group of affiliated parties for
                               the purchase of raw materials, commodities,
                               supplies, products, equipment or other personal
                               property or for the receipt of services under
                               which the undelivered balance of such products
                               and services has a selling price in excess of
                               $50,000;

                          (13)      contract or group of related contracts with
                               the same party or group of affiliated parties for
                               the sale of raw materials, commodities, supplies,
                               products or other personal property or for the
                               furnishing of services under which the
                               undelivered balance of such products or services
                               due from the Target has a selling price in excess
                               of $50,000;

                          (14)      other contract or group of related contracts
                               with the same party or group of affiliated
                               parties continuing over a period of more than six
                               months from the date or dates thereof, not
                               terminable by the Target upon 30 days' or less
                               notice without penalty or involving more than
                               $50,000;

                          (15)      contract relating to the marketing, sale,
                               advertising or promotion of its products;


                                       32
<PAGE>   39


                           (16)     warranty agreement with respect to products
                                sold or leased (other than any such agreement
                                containing the standard terms and conditions
                                described on the Target Disclosure Schedule
                                corresponding to this Section or indemnity
                                agreement with any supplier under which it is
                                obligated to indemnify such supplier against
                                product liability claims;

                           (17)     agreements relating to the ownership of or
                                investments in any business or enterprise,
                                including investments in joint ventures and
                                minority equity investments;

                           (18)     assignment, license, indemnification or
                                other agreement with respect to any intangible
                                property (including any Intellectual Property
                                Rights);

                           (19)     agreement under which it has granted any
                                Person any registration rights (including demand
                                or piggyback registration rights);

                           (20)     broker, agent, sales representative, sales
                                or distribution agreement or material agreement
                                relating to the export and/or import of any
                                goods or equipment;

                           (21)     power of attorney or other similar agreement
                                or grant of agency;

                           (22)     contract or agreement prohibiting it from
                                freely engaging in any business or competing
                                anywhere in the world; or

                           (23)     other agreement which is material to its
                                operations or business prospects or involves an
                                annual consideration in excess of $50,000,
                                whether or not in the ordinary course of
                                business, other than any agreement specified by
                                paragraphs (a) through (v) above.

                  ii.           All of the contracts, agreements and instruments
                           set forth or required to be set forth on the Target
                           Disclosure Schedule corresponding to this Section and
                           with respect to which the Target does or may
                           recognize sales or revenues and all of the material
                           contracts, agreements and instruments set forth or
                           required to be set forth on the Target Disclosure
                           Schedule corresponding to this Section are valid,
                           binding and enforceable in accordance with their
                           respective terms and shall be in full force and
                           effect in accordance with their terms upon
                           consummation of the transactions contemplated hereby;
                           provided that the representations and warranties set


                                       33
<PAGE>   40

                           forth in this sentence shall only be to the knowledge
                           of the Target if and to the extent such relate to any
                           regulatory or governmental investigation that is or
                           may become pending that do or would affect whether
                           any such contracts, agreements or instruments are
                           valid, binding and enforceable or are in full force
                           and effect. The Target has performed all material
                           obligations required to be performed by it and is not
                           in default under or in breach of nor in receipt of
                           any claim of default or breach under any such
                           contract, agreement or instrument to which the Target
                           is subject; no event has occurred which is
                           controllable by or known to the Target which with the
                           passage of time or the giving of notice or both would
                           result in a default, breach or event of noncompliance
                           by the Target under any of these contracts,
                           agreements or instruments to which the Target is
                           subject; the Target does not have any present
                           expectation or intention of not fully performing on a
                           timely basis all such obligations required to be
                           performed by the Target under any contract, agreement
                           or instrument to which the Target is subject.

                  iii.         To the knowledge of the Target, all contracts,
                           agreements and instruments set forth or required to
                           be set forth on the Target Disclosure Schedule
                           corresponding to this Section with respect to which
                           the Target does not recognize sales or revenues or
                           which are not material are valid, binding and
                           enforceable in accordance with their respective terms
                           and shall be in full force and effect in accordance
                           with their terms upon consummation of the
                           transactions contemplated hereby. The Target has
                           performed all material obligations required to be
                           performed by it and is not in default under or in
                           breach of nor in receipt of any claim of default or
                           breach under any such contract, agreement or
                           instrument to which the Target is subject; no event
                           has occurred which is controllable by or known to the
                           Target which with the passage of time or the giving
                           of notice or both would result in a default, breach
                           or event of noncompliance by the Target under any of
                           these contracts, agreements or instruments to which
                           the Target is subject; the Target does not have any
                           present expectation or intention of not fully
                           performing on a timely basis all such obligations
                           required to be performed by the Target under any
                           contract, agreement or instrument to which the Target
                           is subject.

                  iv.          The Target does not have any knowledge of any
                           breach or cancellation or anticipated cancellation by
                           the other parties to any contract, agreement,
                           instrument or commitment to which it is a party.

                  v.           The Buyer has been supplied with a true and
                           correct copy of each of the written instruments,
                           plans, contracts and agreements and an accurate
                           description of each of the oral arrangements,
                           contracts and agreements which are referred to on the
                           Target Disclosure Schedule corresponding to this
                           Section, together with all amendments, waivers or
                           other changes thereto.



                                       34
<PAGE>   41

                  n.           Intellectual Property Rights.  (a)  There have
                           been no claims received by the Target asserting the
                           invalidity, misuse or unenforceability of any of the
                           Intellectual Property Rights owned or used by the
                           Target and, to the Target's knowledge, there is no
                           basis for any such claim, (b) the Target has not
                           received any notices of, and has no knowledge of any
                           facts which indicate a likelihood of, any
                           infringement or misappropriation by, or conflict
                           with, any third party with respect to any
                           Intellectual Property Rights (including any demand or
                           request that the Target license any rights from a
                           third party), (c) the conduct of the Target's
                           businesses has not infringed, misappropriated or
                           conflicted with and does not infringe, misappropriate
                           or conflict with any Intellectual Property Rights of
                           other Persons, (d) to the Target's knowledge, the
                           Intellectual Property Rights owned by or licensed to
                           the Target have not been infringed, misappropriated
                           or conflicted by other Persons and (e) the Target has
                           not transferred or otherwise disposed of any
                           Intellectual Property owned or used by it in the
                           two-year period prior to the date of this Agreement.
                           The transactions contemplated by this Agreement will
                           have no material adverse effect on the Target's
                           right, title or interest in and to the Intellectual
                           Property Rights listed on the Target Disclosure
                           Schedule corresponding to this Section and all of
                           such Intellectual Property Rights shall be owned or
                           available for use by the Target on substantially
                           identical terms and conditions immediately after the
                           Closing.

                  o.           Litigation, etc.  There are no (and, during the
                           two years preceding the date hereof, there have not
                           been any) actions, suits, proceedings (including any
                           arbitration proceedings) or orders pending against or
                           affecting the Target, or to the knowledge of the
                           Target, investigations or claims pending or
                           threatened against or affecting the Target (or to the
                           actual knowledge of the president of the Target,
                           pending or threatened against or affecting any of the
                           officers, directors, employees or past or current
                           clients or customers of the Target with respect to
                           the business or proposed business activities of the
                           Target), or pending or threatened by the Target
                           against any Person, at law or in equity, or before or
                           by any governmental department, commission, board,
                           bureau, agency or instrumentality (including any
                           actions, suits, proceedings or investigations with
                           respect to the transactions contemplated by this
                           Agreement); the Target is not subject to any
                           arbitration proceedings under collective bargaining
                           agreements or otherwise or any governmental
                           investigations or inquiries; and, to the Target's
                           knowledge, there is no basis for any of the
                           foregoing. The foregoing includes, without
                           limitation, actions pending or threatened involving
                           the prior employment of any of the Target's
                           employees, their use in connection with the Target's
                           businesses of any information or techniques allegedly
                           proprietary to any of their former employers or their
                           obligations under any agreements with prior
                           employers. The Target is not subject to any judgment,
                           order or decree of any court or other governmental
                           agency. To the actual knowledge of the president of
                           the


                                       35

<PAGE>   42


                           Target, there are no actions, suits, proceedings
                           (including any arbitration proceedings), orders,
                           investigations or claims pending or threatened
                           against or affecting any past or current client or
                           customer of the Target that would reasonably be
                           expected to have an adverse impact on the Target or
                           its receivables or revenues.

                  p.           Brokerage. There are and shall be no claims for
                           brokerage commissions, finders' fees or similar
                           compensation in connection with the transactions
                           contemplated by this Agreement based on any
                           arrangement or agreement to which the Target is a
                           party or to which the Target is subject.

                  q.           Insurance. The Target Disclosure Schedule
                           corresponding to this Section contains a description
                           of each insurance policy maintained by the Target
                           with respect to its properties, assets and business,
                           and each such policy shall be in full force and
                           effect as of the Closing. The Target is not in
                           default with respect to its obligations under any
                           insurance policy maintained by it, and the Target has
                           never been denied insurance coverage. The Target has
                           no self-insurance or co-insurance programs.

                  r.           Employees.

                  i.           To the Target's knowledge, no executive or key
                           employee of the Target and no group of employees of
                           the Target has any plans to terminate employment with
                           the Target. The Target has no material labor
                           relations problems (including any union organization
                           activities, threatened or actual strikes or work
                           stoppages or material grievances). The Target
                           Disclosure Schedule corresponding to this Section
                           contains a correct and complete list of all employees
                           of the Target who are not citizens of the United
                           States and who are not permanent residents of the
                           United States (together with a listing of each such
                           employee's visa status and visa expiration date).
                           None of the Target nor, to Target's knowledge, any of
                           its other employees or consultants are subject to any
                           noncompete, nondisclosure, confidentiality,
                           employment, consulting or other agreement or
                           judgment, decree or order of any court or
                           administrative agency, relating to, affecting or in
                           conflict with the present or proposed business
                           activities of the Target or such Person's duties to
                           the Target, except for agreements between the Target
                           and its present and former employees. The Target has
                           not received any notice alleging that any violation
                           of any such agreements has occurred. The Target
                           Disclosure Schedule corresponding to this Section
                           contains a correct and complete list of all employees
                           and consultants of the Target which have executed and
                           delivered to the Target any (i) agreement providing
                           for the nondisclosure by such Person of any
                           confidential information of the Target or (ii)
                           agreement providing for the assignment or license by
                           such Person to the Target of any



                                       36
<PAGE>   43

                           Intellectual Property Rights (an "Inventions
                           Agreement"). No current employee or consultant of the
                           Target has excluded works or inventions made prior to
                           his or her employment with the Target from any
                           Inventions Agreement between the Target and such
                           Person.

                  ii.          The Target has provided to the Buyer a true,
                           complete and correct list as of the date of this
                           Agreement of all employees and officers of the Target
                           and their current compensation (salary, bonus and
                           other compensation).

                  s.           ERISA.

                  i.           The Target does not have any obligation to
                           contribute to (or any other liability, including
                           current or potential withdrawal liability, with
                           respect to) any "multiemployer plan" (as defined in
                           Section 3(37) of ERISA).

                  ii.          The Target does not maintain or have any
                           obligation to contribute to (or any other liability
                           with respect to) any plan or arrangement, whether or
                           not terminated, which provides medical, health, life
                           insurance or other welfare-type benefits for current
                           or future retired or terminated employees or any
                           dependents of such employees (except for limited
                           continued medical benefit coverage required to be
                           provided under Section 4980B of the Code ("COBRA") or
                           as required under applicable state law).

                  iii.         The Target does not maintain, contribute to or
                           have any actual or potential liability under (or with
                           respect to) any employee plan which is a "defined
                           benefit plan" (as defined in Section 3(35) of ERISA),
                           other than the Defined Benefit Plan. The Defined
                           Benefit Plan does not have an "accumulated funding
                           deficiency" as such term is defined in Section
                           302(a)(2) of ERISA.

                  iv.          The Target does not maintain, contribute to or
                           have any actual or potential liability under (or with
                           respect to) any employee plan which is a "defined
                           contribution plan" (as defined in Section 3(34) of
                           ERISA), whether or not terminated.

                  v.           Except as set forth on the Target Disclosure
                           Schedule corresponding to this Section under the
                           heading "Other Plans" (the "Other Plans"), the Target
                           does not maintain, contribute to or have any actual
                           or potential liability under (or with respect to) any
                           plan or arrangement providing benefits or
                           remuneration to current or former employees or
                           independent contractors, including any employment
                           contract, bonus or incentive plan, plan for deferred
                           compensation, employee health or other welfare
                           benefit plan, severance arrangement or other material
                           policy, program or arrangement, whether or not


                                       37
<PAGE>   44

                           terminated. The attached Target Disclosure Schedule
                           corresponding to this Section sets forth the
                           aggregate amount of bonuses and other incentive
                           compensation reasonably expected to be paid by the
                           Target through the Closing.

                  vi.          The fair market value of the assets of each plan
                           that is a defined benefit plan equals or exceeds the
                           present value of all vested and non-vested benefit
                           liabilities thereunder determined in accordance with
                           applicable PBGC methods, factors and assumptions
                           applicable to a defined benefit plan terminating as
                           of the date of the last actuarial valuation. With
                           respect to each such plan, all required contributions
                           which are due for all periods ending prior to or as
                           of the Closing Date (including periods from the first
                           day of the current plan year to the Closing Date and
                           including all quarterly contributions required in
                           accordance with the Code) shall have been made, and
                           all other contributions have been properly accrued in
                           accordance with acceptable accounting principles.
                           With respect to the Defined Benefit Plan and the
                           Other Plans set forth on the Target Disclosure
                           Schedule corresponding to this Section (the "Plans"),
                           all required payments, premiums, contributions,
                           reimbursements or accruals for all periods ending
                           prior to or as of the Closing Date shall have been
                           made or properly accrued. None of the Plans has any
                           material unfunded liabilities which are not reflected
                           on the most recent actuarial valuation of the Defined
                           Benefit Plan (the "Latest Actuarial Valuation") in
                           the case of the Defined Benefit Plan, or on the
                           Latest Balance Sheet.

                  vii.         The Plans and all related trusts, insurance
                           contracts and funds have been maintained, funded and
                           administered in compliance in all material respects
                           with the applicable provisions of ERISA, the Code and
                           other applicable laws. The Target has timely complied
                           with all reporting and disclosure obligations as they
                           apply to the Plans, and the Target has complied with
                           the requirements of COBRA. To the Target's knowledge,
                           none of the Target or any trustee or administrator of
                           any Plan has engaged in any transaction with respect
                           to the Plans which would subject the Target or any
                           trustee or administrator of the Plans, or any party
                           dealing with any such Plan, nor do the transactions
                           contemplated by this Agreement constitute
                           transactions which would subject any such party, to
                           either a civil penalty assessed pursuant to Part
                           502(i) of ERISA, or any other penalty or excise tax
                           or the tax or penalty on prohibited transactions
                           imposed by Section 4975 of the Code or any other
                           penalty or excise tax. No actions, suits or claims
                           with respect to the assets of the Plans (other than
                           routine claims for benefits) are pending or, to the
                           Target's knowledge, threatened which could result in
                           or subject the Target to any liability and there are
                           no circumstances which would give rise to or be
                           expected to give rise to any such actions, suits or
                           claims.


                                       38
<PAGE>   45

                  viii.        A favorable determination letter from the
                           Internal Revenue Service has been received by the
                           Target with respect to the Defined Benefit Plan to
                           the effect that it is qualified under Section 401(a)
                           of the Code (including requirements imposed by the
                           Tax Reform Act of 1986 and subsequent legislation),
                           and, to the Target's knowledge, there are no
                           circumstances which would cause the Defined Benefit
                           Plan to lose such qualified status, except for the
                           enactment of subsequent legislation, under which the
                           time for the Defined Benefit Plan to adopt responsive
                           amendments and apply for a favorable determination
                           letter does not expire prior to December 31, 2000.

                  ix.          The Target has provided the Buyer with (a) the
                           most recent favorable determination letter issued
                           with respect to the Defined Benefit Plan, (b) true
                           and complete copies of all documents pursuant to
                           which the Plans are maintained and administered,
                           including the most recent summary plan description
                           and (c) the two most recent annual reports (Form 5500
                           and attachments) for the Plans.

                  x.           For purposes of this Section 6S, the term
                           "Target" includes all organizations under common
                           control with the Target pursuant to Section 414 of
                           the Code.

                  xi.          The section of the Target Disclosure Schedule
                           corresponding to this Section lists all agreements,
                           contracts, plans and arrangements which would
                           obligate the Target to pay any separation, severance,
                           termination or similar benefit, and, except with
                           respect to vesting and payment of benefits in
                           connection with the termination of the Defined
                           Benefit Plan in accordance with this Section 6S, none
                           of the Plans call for the payment of any benefits or
                           the vesting of any rights in benefits, solely as a
                           result of the Merger or solely as a result of a
                           change in control or ownership within the meaning of
                           Section 280G of the Code.

                  t.           Compliance with Laws; Permits; Certain
                           Operations.

                  i.           The Target has complied in all material respects
                           and is in compliance in all material respects with
                           all material applicable laws, ordinances, codes,
                           rules, requirements and regulations of foreign,
                           federal, state and local governments and all agencies
                           thereof relating to the operation of its business and
                           the maintenance and operation of its properties and
                           assets. No notices have been received by and to the
                           knowledge of the Target no claims have been filed
                           against the Target alleging a violation of any such
                           laws, ordinances, codes, rules, requirements or
                           regulations.


                                       39
<PAGE>   46

                  ii.          The Target holds and is in compliance with all
                           permits, licenses, bonds, approvals, certificates,
                           registrations, accreditations and other
                           authorizations of all foreign, federal, state and
                           local governmental agencies required for the conduct
                           of its business and the ownership of its properties
                           (including as the same relate to International Trade
                           Laws and Regulations and Environmental and Safety
                           Requirements), and the Target Disclosure Schedule
                           corresponding to this Section sets forth a list of
                           all of such material permits, licenses, bonds,
                           approvals, certificates, registrations,
                           accreditations and other authorizations. No notices
                           have been received by the Target alleging the failure
                           to hold any of the foregoing. All of such permits,
                           licenses, bonds, approvals, accreditations,
                           certificates, registrations and authorizations will
                           be available for use by the Target, as the case may
                           be, immediately after the Closing.

                  iii.         To the knowledge of the Target, there are no
                           proposed or pending laws, statutes, regulations or
                           the like (or changes thereto) which would have a
                           Material Adverse Effect.

                  u.           Environmental and Safety Matters.

                  i.           Except as set forth on the attached Target
                           Disclosure Schedule corresponding to this Section, to
                           the knowledge of the Target:

                           (1)     The Target has complied with and is in
                               compliance with all Environmental and Safety
                               Requirements. The Target has not received any
                               oral or written notice, report or information
                               regarding any actual or alleged violation of
                               Environmental and Safety Requirements or any
                               liabilities or potential liabilities relating to
                               it or its facilities arising under Environmental
                               and Safety Requirements.

                           (2)     Neither this Agreement nor the consummation
                               of the transactions contemplated hereby will
                               result in any obligations for site investigation
                               or cleanup, or notification to or consent of any
                               government agencies or third parties under any
                               Environmental and Safety Requirements (including
                               any so called "transaction-triggered" or
                               "responsible property transfer" laws and
                               regulations).

                           (3)     None of the following exists at any property
                               or facility owned, occupied or operated by the
                               Target or any of its predecessors:

                               (1)  underground storage tanks;

                               (2)  asbestos-containing material in any form or
                                    condition;



                                       40
<PAGE>   47


                               (3)  materials or equipment containing
                                    polychlorinated biphenyls; or

                               (4)  landfills, surface impoundments or other
                                    disposal areas.

                           (4)      The Target has not treated, stored, disposed
                               of, arranged for or permitted the disposal of,
                               transported, handled or Released any substance
                               (including any hazardous substance) or owned,
                               occupied or operated any facility or property
                               (and no such property or facility is contaminated
                               by any such substance) in a manner that has given
                               or could give rise to any liabilities (including
                               any liability for response costs, corrective
                               action costs, personal injury, natural resource
                               damages, property damage or attorneys fees or any
                               investigative, corrective or remedial
                               obligations) pursuant to CERCLA or any other
                               Environmental and Safety Requirements.

                           (5)      The Target has not, either expressly or by
                               operation of law, assumed or undertaken any
                               liability or corrective, investigatory or
                               remedial obligation of any other Person relating
                               to any Environmental and Safety Requirements.

                           (6)      No Environmental Lien has attached to any
                               property owned, leased or operated by the Target.

                  v.           Affiliated Transactions. Except as set forth on
                           the Target Disclosure Schedule corresponding to this
                           Section, no officer, director, shareholder, employee
                           or Affiliate of the Target or, to the Target's
                           knowledge, any individual related by blood, marriage
                           or adoption to any such individual or any entity in
                           which any such Person or individual owns any
                           beneficial interest, is a party to any agreement,
                           contract, commitment or transaction with the Target
                           or has any material interest in any material property
                           used by the Target (including any Intellectual
                           Property Rights).

                  w.           Customers. The Target has not received any notice
                           from any material customer of the Target to the
                           effect that, and the Target has no reason to believe
                           that, such customer will stop, or materially decrease
                           the rate of, buying products or services of the
                           Target (whether as a result of the consummation of
                           the transactions contemplated hereby or otherwise).

                  x.           Real Property.  The Target does not own any real
                           property. The Target Disclosure Schedule
                           corresponding to this Section sets forth a list of
                           all of the leases, subleases and licenses ("Leases")
                           of real property (the "Leased Real Property") in
                           which the Target has a leasehold, subleasehold


                                       41
<PAGE>   48

                           and licensed interest. The Target holds a valid and
                           existing leasehold, subleasehold or license interest
                           under each of the Leases. With respect to each Lease
                           listed on the attached Target Disclosure Schedule
                           corresponding to this Section, there are no disputes,
                           oral agreements, or forbearance programs in effect as
                           to such Lease and the Target has not assigned,
                           transferred, conveyed, mortgaged, deeded in trust or
                           encumbered any interest in the Lease. Except for the
                           Leased Real Property, there is no real property which
                           is leased or otherwise used in the Target's business.

                  y.           Disclosure. Neither this Agreement, any of the
                           exhibits or schedules attached hereto nor any of the
                           written statements, documents, certificates or other
                           items prepared and supplied to the Buyer by or on
                           behalf of the Target with respect to the transactions
                           contemplated hereby, when taken together as a whole,
                           contain any untrue statement of a material fact or
                           omit a material fact necessary to make each statement
                           contained herein or therein, in light of the
                           circumstances in which they were made, not
                           misleading.

Section 7.             Representations and Warranties of the Buyer and the
                  Transitory Subsidiary. The Buyer and the Transitory Subsidiary
                  represent and warrant to the Target that, subject to the
                  exceptions set forth in any section of the Buyer Disclosure
                  Schedule, the following statements are true and correct as of
                  the date of this Agreement and will be true and correct as of
                  the Closing Date.

                  a.           Organization, Power and Authority. The Buyer is
                           duly organized, validly existing and in good standing
                           under the laws of the State of Delaware. The
                           Transitory Subsidiary is duly organized, validly
                           existing and in good standing under the laws of the
                           State of Illinois. The Buyer and the Transitory
                           Subsidiary possess all requisite corporate power and
                           authority necessary to carry out the transactions
                           contemplated by this Agreement. The Buyer has all
                           requisite corporate and other power and authority and
                           all necessary governmental approvals to own, lease
                           and operate its properties and to carry on its
                           business as now being conducted, except where the
                           failure to have such power, authority and
                           governmental approvals would not have a material
                           adverse effect on the Buyer and its Subsidiaries
                           taken as a whole.

                  b.           Authorization; No Breach.  The execution,
                           delivery and performance of this Agreement and all
                           other agreements contemplated hereby to which the
                           Buyer and the Transitory Subsidiary are a party have
                           been duly authorized by both the Buyer and the
                           Transitory Subsidiary. This Agreement and all other
                           agreements contemplated hereby to which the Buyer and
                           the Transitory Subsidiary are a party, when executed
                           and delivered by the Buyer or the Transitory
                           Subsidiary, as the case may be, in accordance with
                           the terms hereof, shall each constitute a valid and
                           binding obligation of the Buyer and



                                       42
<PAGE>   49

                           the Transitory Subsidiary, enforceable in accordance
                           with its terms. The execution and delivery by the
                           Buyer and the Transitory Subsidiary of this Agreement
                           and all other agreements contemplated hereby to which
                           either the Buyer, or the Transitory Subsidiary are a
                           party, the purchase of the Target Shares hereunder,
                           and the fulfillment of and compliance with the
                           respective terms hereof and thereof by the Buyer and
                           the Transitory Subsidiary, do not and shall not (i)
                           conflict with or result in a breach of the terms,
                           conditions or provisions of, (ii) constitute a
                           default under (whether with or without the passage of
                           time, the giving of notice or both), (iii) give any
                           third party the right to modify, terminate or
                           accelerate any obligation under, (iv) result in a
                           violation of or (v) require any authorization,
                           consent, approval, exemption or other action by or
                           notice or declaration to, or filing with, any court
                           or administrative or governmental body or agency
                           pursuant to, the organizational documents of the
                           Buyer and the Transitory Subsidiary, or any law,
                           statute, rule or regulation to which the either party
                           is subject, or any agreement, instrument, order,
                           judgment or decree to which either party is subject.
                           The Buyer Stock to be issued in connection with the
                           Merger is duly authorized and when issued in
                           accordance with this Agreement (and upon receipt of
                           the consideration to be paid for such stock) will be
                           validly issued, fully paid and nonassessable.

                  c.           Capitalization of the Buyer.  The authorized
                           capital stock of the Buyer consists of 25,000,000
                           shares of the Buyer Stock and 12,500,000 shares of
                           preferred stock, par value $0.01 per share (the
                           "Buyer Preferred Stock"). As of the close of
                           business on June 1, 1999, (a) 10,817,112 shares of
                           the Buyer Stock were issued and outstanding and (b)
                           no shares of the Buyer Preferred Stock were issued
                           and outstanding. As of the close of business on June
                           1, 1999, 100,000 shares of the Buyer Stock were held
                           in treasury. All of the issued and outstanding shares
                           of the Buyer Stock are duly authorized, validly
                           issued, fully paid and non-assessable.

                  d.           Capitalization of Transitory Subsidiary.  The
                           capital stock of the Transitory Subsidiary consists
                           of 1,000 shares of Common Stock, par value $0.01 per
                           share, of which 100 shares are issued and
                           outstanding. The Transitory Subsidiary has no other
                           class of securities authorized, issued or
                           outstanding. All of the issued and outstanding shares
                           of capital stock of the Transitory Subsidiary have
                           been duly authorized and are validly issued, fully
                           paid and nonassessable. The Buyer holds of record and
                           owns beneficially all of the outstanding shares of
                           each class of capital stock of the Transitory
                           Subsidiary. There are no outstanding options,
                           warrants, purchase rights, subscription rights,
                           conversion rights, exchange rights or other contracts
                           or commitments that could require the Transitory
                           Subsidiary to issue, sell or otherwise cause to
                           become outstanding any additional capital stock of
                           the


                                       43
<PAGE>   50

                           Transitory Subsidiary. There are no outstanding stock
                           appreciation, phantom stock, profit participation or
                           similar rights with respect to the Transitory
                           Subsidiary.

                  e.           SEC Reports.  The Buyer has heretofore filed with
                           the Securities Exchange Commission true and complete
                           copies of all forms, reports, schedules, statements
                           and other documents required to be filed by it since
                           December 31, 1997 under the Securities Act and the
                           Exchange Act (as such documents have been amended
                           since the time of their filing, collectively, the
                           "Buyer SEC Documents"). As of their respective dates
                           or, if amended, as of the date of the last such
                           amendment, the Buyer SEC Documents, including,
                           without limitation, any financial statements and
                           schedules included therein, complied in all material
                           respects with the applicable requirements of the
                           Securities Act and the Exchange Act, as the case may
                           be, and the applicable rules and regulations of the
                           Securities Exchange Commission thereunder.

                  f.           Compliance with Laws.  The Buyer and its
                           Subsidiaries have complied with all laws (including
                           Federal and state securities laws), statutes,
                           regulations, rules, ordinances and judgments,
                           decrees, orders, writs and injunctions, of any court
                           or governmental entity relating to any of the
                           property owned, leased or used by them, or applicable
                           to their business, including, but not limited to,
                           equal employment opportunity, discrimination,
                           occupational safety and health, environmental,
                           insurance, regulatory, antitrust laws, ERISA and laws
                           relating to Taxes, except to the extent that any such
                           non-compliance would not have a material adverse
                           effect on the Buyer and its Subsidiaries taken as a
                           whole.

                  g.           Financing the Deal. The Buyer has the ability to
                           fully finance the transactions contemplated by this
                           Agreement out of its cash, liquid short-term
                           investments and/or available lines of credit.

                  h.           Litigation. The Buyer has not asserted a right to
                           indemnification against any seller of any business
                           acquired by it in the past three years, and the Buyer
                           has not been involved in any litigation or other
                           proceeding (including any arbitration) with any
                           seller of any business acquired by it in the past
                           three years.

                  i.           Brokerage. There are no claims for brokerage
                           commissions, finders' fees or similar compensation in
                           connection with the transactions contemplated by this
                           Agreement based on any arrangement or agreement to
                           which the Buyer or the Transitory Subsidiary is a
                           party or to which the Buyer or the Transitory
                           Subsidiary is subject, except for compensation to and
                           expenses of EGS Securities, Inc.



                                       44
<PAGE>   51

Section 8.              Indemnification and Other Agreements.

                  a.        Survival of Covenants and Representations and
                        Warranties. The covenants and representations and
                        warranties of the Buyer and the Target in this
                        Agreement and the schedules and exhibits attached
                        hereto, or in any closing certificate or the like,
                        shall survive the Closing (even if the Buyer knew or
                        had reason to know of any misrepresentation or breach
                        of warranty at the time of Closing) as follows:

                  i.        the covenants of the Buyer and the Target
                        contained in this Agreement shall terminate on the
                        Survival Expiration Date, except that the covenants
                        of the Buyer specified in this Agreement to be
                        performed after the Closing (including pursuant to
                        Sections 1F, 5B, 8 and 11A of this Agreement) shall
                        continue until the expiration of the applicable
                        statute of limitations, plus 60 days;

                  ii.       all representations and warranties of the Buyer
                        (other than those contained in Sections 7E and 7F)
                        and the Target in this Agreement and the schedules
                        and exhibits attached hereto or in any closing
                        certificate or the like delivered by the Buyer or the
                        Target in connection with this Agreement shall
                        terminate on the Survival Expiration Date; and

                  iii.      all representations and warranties of the Buyer
                        contained in Sections 7E and 7F shall survive until
                        the expiration of the applicable statute of
                        limitations;

provided that any representation or warranty in respect of which indemnity may
be sought under Section 8B, and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this Section
8A if notice of the inaccuracy or breach or potential inaccuracy or breach
thereof giving rise to such right or potential right of indemnity shall have
been given to the Party against whom such indemnity may be sought prior to such
time as contemplated by this Section 8.

                  b.        General Indemnification.

                  i.        Indemnification by the Target Stockholders.  The
                        Buyer, the Transitory Subsidiary and their respective
                        officers, directors, employees, agents,
                        representatives, successors and permitted assigns
                        (collectively, the "Buyer Parties") shall be held
                        harmless and indemnified as contemplated by this
                        Section 8 by the Target Stockholders against any
                        loss, liability, demand, claim, action, cause of
                        action, cost, damage, deficiency, Tax, penalty, fine
                        or expense, whether or not arising out of third party
                        claims (including interest, penalties, reasonable
                        attorneys' fees and expenses and all amounts paid in


                                       45
<PAGE>   52

                           investigation, defense or settlement of any of the
                           foregoing) (collectively, "Losses"), which any such
                           Buyer Party may suffer, sustain or become subject to,
                           as a result of, in connection with, relating or
                           incidental to or by virtue of: (a) any breach of any
                           representation or warranty of the Target under this
                           Agreement or any of the schedules or exhibits
                           attached hereto, or in any of the agreements,
                           certificates or other instruments or documents
                           furnished by the Target pursuant to this Agreement;
                           (b) any nonfulfillment or breach of any covenant,
                           agreement or other provision by the Target or the
                           Target Stockholders under this Agreement or any of
                           the schedules and exhibits attached hereto or in any
                           of the agreements, certificates or other instruments
                           or documents furnished by the Target or the Target
                           Stockholders pursuant to this Agreement required to
                           be performed or complied with by the Target or the
                           Target Stockholders; or (c) any claim by any Person
                           (other than the Buyer or the Transitory Subsidiary)
                           with respect to, or arising as a result of, any
                           Target Transaction (other than the Target Transaction
                           that is the subject of this Agreement); or (d) any
                           liability of the Target or the Target Stockholders
                           (x) for any Taxes of the Target with respect to any
                           taxable period (or portion thereof) ending on or
                           prior to the Closing Date (or for any taxable period
                           beginning before and ending after the Closing Date to
                           the extent allocable to the portion of such period
                           beginning before and ending on the Closing Date) to
                           the extent such Taxes are not reflected in the
                           reserve for Tax liability (rather than any reserve
                           for deferred Taxes established to reflect timing
                           differences between book and Tax income) shown on the
                           face of the Latest Balance Sheet (rather than in any
                           notes thereto) and (y) for the unpaid Taxes of any
                           Person (other than the Target) under Treas. Reg.
                           Section 1.1502-6 (or any similar provision of state,
                           local or foreign law), as a transferee or successor,
                           by contract or otherwise. The indemnification rights
                           of the Buyer Parties pursuant to this Agreement shall
                           be limited as specified in Section 8B(ii).

                  ii.          Indemnification Limitations. The rights of the
                           Buyer Parties to indemnification shall be limited as
                           follows:

                  (a) The Buyer Parties shall not be entitled to indemnification
         from and against any Losses resulting from, arising out of, relating
         to, in the nature of, or caused by the breach of any representation or
         warranty of the Target contained in Section 6 until the Buyer Parties
         have suffered Losses by reason of all such breaches in excess of a
         $250,000 aggregate threshold (the "Threshold"), at which point the
         Buyer Parties shall have the right to be indemnified from and against
         all such Losses exceeding in the aggregate $175,000 (that is, the Buyer
         Parties shall bear a one time aggregate deductible of $175,000).

                  (b) The right of the Buyer to seek a distribution out of the
         Escrow Fund as contemplated by, among other things Section 8B(iii)
         below, shall constitute the exclusive



                                       46
<PAGE>   53

         remedy of the Buyer Parties with respect to any Losses resulting from,
         arising out of, relating to, in the nature of, or caused by the breach
         of any representation or warranty of the Target contained in Section 6
         and the covenants of the Target contained in this Agreement.

                  (c) The Buyer Parties agree not to (and shall not be entitled
         to) bring a claim for indemnification hereunder for any breach or
         inaccuracy or nonfulfillment of any covenant of the Target hereunder of
         which the Buyer had actual knowledge of on or before the date of this
         Agreement. The Target Stockholders Representative shall have the burden
         of proof with respect to the actual knowledge of the Buyer.

                  iii.         Special Indemnification Rights.  Notwithstanding
                           among other things Section 8B(ii)(c), the Buyer
                           Parties shall be entitled to indemnification
                           hereunder as contemplated by this Section 8 for any
                           breach or inaccuracy of representation and warranty
                           contained in Sections 6B(i), 6D(i) and/or 6L(iii)(c)
                           (x) even if any Buyer Party knew or had reason to
                           know of any such misrepresentation or breach of
                           warranty and (y) as though no exceptions to such
                           representations and warranties were contained in the
                           Target Disclosure Schedule.

                  iv.          Right to Distributions from Escrow Fund. The
                           Buyer (on behalf of any of the Buyer Parties) shall
                           be entitled to receive from the Escrow Fund a
                           distribution equal to each amount for which any Buyer
                           Party is entitled to indemnification pursuant to this
                           Section 8 (which right to indemnification shall be
                           asserted by the Buyer in accordance with Exhibit F).

                  v.           Indemnification by the Buyer. The Buyer shall,
                           with respect to the representations, warranties,
                           covenants and agreements made by the Buyer and the
                           Transitory Subsidiary, indemnify the stockholders of
                           the Target and their successors and permitted assigns
                           (collectively, the "Seller Parties") and hold them
                           harmless against any Losses which the Seller Parties
                           may suffer, sustain or become subject to, as a result
                           of, in connection with, relating or incidental to or
                           by virtue of: (a) any breach of any representation or
                           warranty of the Buyer or the Transitory Subsidiary
                           under this Agreement or any of the schedules or
                           exhibits attached hereto, or in any of the
                           agreements, certificates or other instruments or
                           documents furnished by such Buyer pursuant to this
                           Agreement; (b) any nonfulfillment or breach of any
                           covenant, agreement or other provision by the Buyer
                           or the Transitory Subsidiary under this Agreement or
                           any of the schedules and exhibits attached hereto; or
                           (c) any events or circumstances which arise or occur
                           after the Closing Date.

                  vi.          Nature of Certain Indemnification Obligations.
                           The covenants and agreements made by the
                           stockholders of the Target under this Agreement and



                                       47
<PAGE>   54

                           the agreements contemplated hereby shall be several
                           obligations of the stockholders of the Target.

                  vii.         Defense of Third Party Claims.  Any Person making
                           a claim for indemnification under this Section 8B (an
                           "Indemnitee") shall notify the indemnifying party (an
                           "Indemnitor") of the claim in writing promptly after
                           receiving written notice of any action, lawsuit,
                           proceeding, investigation or other claim against it
                           (if by a third party), describing the claim, the
                           amount thereof (if known and quantifiable) and the
                           basis thereof; provided that the failure to so notify
                           an Indemnitor shall not relieve the Indemnitor of its
                           obligations hereunder except to the extent that (and
                           only to the extent that) such failure shall have
                           caused the damages for which the Indemnitor is
                           obligated to be greater than such damages and
                           expenses related thereto would have been had the
                           Indemnitee given the Indemnitor prompt notice
                           hereunder. Any Indemnitor shall be entitled to
                           participate in the defense of such action, lawsuit,
                           proceeding, investigation or other claim giving rise
                           to an Indemnitee's claim for indemnification at such
                           Indemnitor's expense, and at its option (subject to
                           the limitations set forth below) shall be entitled to
                           assume the defense thereof by appointing a reputable
                           counsel reasonably acceptable to the Indemnitee to be
                           the lead counsel in connection with such defense;
                           provided that, prior to the Indemnitor assuming
                           control of such defense it shall first (a) verify to
                           the Indemnitee in writing that such Indemnitor shall
                           be fully responsible for all liabilities and
                           obligations relating to such claim for
                           indemnification and that it shall provide full
                           indemnification (whether or not otherwise required
                           hereunder) to the Indemnitee with respect to such
                           action, lawsuit, proceeding, investigation or other
                           claim giving rise to such claim for indemnification
                           hereunder and (b) enter into an agreement with the
                           Indemnitee in form and substance reasonably
                           satisfactory to the Indemnitee which agreement
                           unconditionally guarantees the payment and
                           performance of any liability or obligation which may
                           arise with respect to such action, lawsuit,
                           proceeding, investigation or facts giving rise to
                           such claim for indemnification hereunder; provided
                           further that if the Indemnitor has assumed the
                           defense thereof, the fees and expenses of counsel to
                           the Buyer Parties related thereto and incurred after
                           the Indemnitor undertakes the defense thereof, shall
                           not be deemed to be Losses of the Buyer Parties with
                           respect to such action, lawsuit, proceeding,
                           investigation or other claim; and provided further,
                           that:

                           (1) the Indemnitee shall be entitled to participate
                  in the defense of such claim and to employ counsel of its
                  choice for such purpose; provided that the fees and expenses
                  of such separate counsel shall be borne by the Indemnitee
                  (other than any fees and expenses of such separate counsel
                  that are incurred prior to the date the



                                       48

<PAGE>   55
                  Indemnitor effectively assumes control of such defense which,
                  notwithstanding the foregoing, shall be borne by the
                  Indemnitor);

                           (2) the Indemnitor shall not be entitled to assume
                  control of such defense and shall pay the fees and expenses of
                  counsel retained by the Indemnitee if (A) the claim for
                  indemnification relates to or arises in connection with any
                  criminal proceeding, action, indictment, allegation or
                  investigation; (B) the Indemnitee reasonably believes an
                  adverse determination with respect to the action, lawsuit,
                  investigation, proceeding or other claim giving rise to such
                  claim for indemnification would be materially detrimental to
                  or injure the Indemnitee's reputation or future business
                  prospects; or (C) the claim seeks an injunction or equitable
                  relief against the Indemnitee; (D) the Indemnitee has been
                  advised in writing by counsel that a reasonable likelihood
                  exists of a conflict of interest between the Indemnitor and
                  the Indemnitee (which conflict is not waivable); or (E) upon
                  petition by the Indemnitee, the appropriate court rules that
                  the Indemnitor failed or is failing to vigorously prosecute or
                  defend such claim or (F) if the claim for indemnification
                  related thereto exceeds or is expected to exceed in the
                  reasonable judgment of the Indemnitee the amount of the Escrow
                  Account less the amount of all other then pending indemnity
                  claims against the Escrow Account (not taking into account
                  whether such amounts are in dispute); and

                           (3) if the Indemnitor shall control the defense of
                  any such claim, the Indemnitor shall obtain the prior written
                  consent (which consent shall not be unreasonably withheld or
                  delayed) of the Indemnitee before entering into any settlement
                  of a claim or ceasing to defend such claim if, pursuant to or
                  as a result of such settlement or cessation, injunctive or
                  other equitable relief will be imposed against the Indemnitee
                  or if such settlement does not expressly and unconditionally
                  release the Indemnitee from all liabilities and obligations
                  with respect to such claim, without prejudice, or if such
                  claim relates to Taxes (in which case consent shall not be
                  unreasonably withheld).

                  viii.            Certain Waivers and Consents.  No stockholder
                           of the Target shall be entitled to make any claim for
                           indemnification hereunder against the Target by
                           reason of the fact that such stockholder is or was a
                           shareholder, director, officer, employee or agent of
                           the Target or is or was serving at the request of the
                           Target as a partner, trustee, director, officer,
                           employee or agent of another entity (whether such
                           claim is for judgments, damages, penalties, fines,
                           costs, amounts paid in settlement, losses, expenses
                           or otherwise) with respect to any action, suit,
                           proceeding, complaint, claim or demand brought by any
                           of the Buyer Parties against such stockholder
                           pursuant to this Agreement and no such stockholder
                           shall have any claims or right to contribution or
                           indemnity from the Target with respect to any amounts
                           paid pursuant to this Section 8B.



                                       49
<PAGE>   56

Section 9.             Definitions.  For the purposes of this Agreement, the
                  following terms have the meanings set forth below:

                  "Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.

                  "Affiliated Group" means any affiliated group as defined in
Code ss.1504 that has filed a consolidated return for federal income tax
purposes (or any similar group under state, local or foreign law) for a period
during which the Target was a member.

                  "Agreement" has the meaning set forth in the Preamble.

                  "BCA" has the meaning set forth in Section 1A.

                  "Buyer" has the meaning set forth in the Preamble.

                  "Buyer Disclosure Schedule" means the schedule entitled "Buyer
Disclosure Schedule" heretofore delivered by the Target and initialed by the
Parties for identification, which schedule is arranged in sections corresponding
to the numbered and lettered subsections contained in Section 7.

                  "Buyer Parties" has the meaning set forth in Section 8B(i).

                  "Buyer Preferred Stock" has the meaning set forth in Section
7E.

                  "Buyer SEC Documents" has the meaning set forth in Section 7C.

                  "Buyer Stock" means shares of common stock, par value $0.01
per share, of the Buyer, together with the associated preferred stock purchase
rights, as appropriate.

                  "Ceiling" has the meaning set forth in Section 8B(ii).

                  "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.

                  "Class A Stock" means the Class A Common Stock, par value
$0.01 per share, of the Target.

                  "Class B Stock" means the Class B Common Stock, par value
$0.01 per share, of the Target.




                                       50
<PAGE>   57

                  "Class B Stock" has the meaning set forth in Section 6B(i).

                  "Closing" has the meaning set forth in Section 1B.

                  "Closing Date" has the meaning set forth in Section 1B.

                  "Closing Stock Consideration" means 1,636,363 shares of Buyer
Stock, less any reduction pursuant to Section 4F(i).

                  "COBRA" has the meaning set forth in Section 6S(ii).

                  "Code" means the Internal Revenue Code of 1986, as amended,
and any reference to any particular Code section shall be interpreted to include
any revision of or successor to that section regardless of how numbered or
classified.

                  "Confidential Information" means all information of a
confidential or proprietary nature (whether or not specifically labeled or
identified as "confidential"), in any form or medium, that is or was disclosed
to, or developed or learned by, any stockholder of the Target and that relates
to the business, products, services or research or development of the Target or
their respective suppliers, distributors or customers. Confidential Information
includes, but is not limited to, the following: internal business information
(including information relating to strategic and staffing plans and practices,
business, training, marketing, promotional and sales plans and practices, cost,
rate and pricing structures and accounting and business methods); identities of,
individual requirements of, specific contractual arrangements with, and
information about, the Target's suppliers, distributors and customers and their
confidential information; trade secrets, know-how, compilations of data and
analyses, techniques, systems, formulae, research, records, reports, manuals,
documentation, models, data and data bases relating thereto; inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) and
(v) other Intellectual Property Rights. Confidential Information shall not
include information that a stockholder of the Target can demonstrate is publicly
known through no wrongful act or breach of any obligation of confidentiality or
was rightfully received by such stockholder from a third party without a breach
of any obligation of confidentiality by such third party.

                  "Consent" has the meaning set forth in Section 2M.

                  "Defined Benefit Plan" has the meaning set forth in Section
5C.

                  "Dispute Notice" has the meaning set forth in Section
8B(iv)(b).

                  "Dissenting Share" means any Target Share the appraisal of the
fair market value of which under the BCA has been properly demanded in
accordance with the BCA and with respect to which the right to such an appraisal
under such Section has not terminated (whether on account of



                                       51
<PAGE>   58

a vote by the holder thereof in favor of, or a written consent by the holder
thereof to, the Merger, a waiver or withdrawal of such demand or otherwise).

                  "Dissenting Stockholder" means the holder of a Dissenting
Share.

                  "Effective Time" has the meaning set forth in Section 1C.

                  "Environmental Lien" shall mean any Lien, whether recorded or
unrecorded, in favor of any governmental entity, relating to any liability of
the Target arising under any Environmental and Safety Requirements.

                  "Environmental and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law, in
each case concerning public health and safety, worker health and safety and
pollution or protection of the environment (including, without limitation, all
those relating to the presence, use, production, generation, handling,
transport, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, Release, threatened Release, control or cleanup of any
hazardous or otherwise regulated materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise,
radiation or radon), each as amended and as now or hereafter in effect.

                  "ERISA" has the meaning set forth in Section 5C.

                  "Escrow Agent" has the meaning set forth in Section 1F.

                  "Escrow Agreement" means an Escrow Agreement substantially in
the form of Exhibit E attached hereto.

                  "Escrow Fund" means all assets from time to time held pursuant
to the Escrow Agreement.

                  "Escrow Stock Consideration" means a number of shares of Buyer
Stock equal to (i) the number of shares of Buyer Stock which comprise the
Closing Stock Consideration multiplied by (ii) 0.10, rounded down to the nearest
whole number of shares.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "GAAP" means United States generally accepted accounting
principles.

                  "Government Approvals" has the meaning set forth in Section
2I.

                                       52
<PAGE>   59

                  "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended from time to time.

                  "Indebtedness" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business which are not more than six months past due),
(iv) any commitment by which a Person assures a creditor against loss (including
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including guarantees in the
form of an agreement to repurchase or reimburse), (vi) any obligations under
capitalized leases with respect to which a Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vii) any indebtedness
secured by a Lien on a Person's assets and (viii) any unsatisfied obligation for
"withdrawal liability" to a "multiemployer plan" as such terms are defined under
ERISA; provided that Indebtedness shall not include accrued but unpaid employee
compensation or any obligations to reimburse employees for travel and related
business expenses.

                  "Indemnitee" has the meaning set forth in Section 8B(vii).

                  "Indemnitor" has the meaning set forth in Section 8B(vii).

                  "Institute" has the meaning set forth in Section 11A.

                  "Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) internet domain names,
trademarks, service marks, trade dress, trade names, logos and corporate names
and registrations and applications for registration thereof together with all of
the goodwill associated therewith, (iii) copyrights (registered or unregistered)
and copyrightable works and registrations and applications for registration
thereof, (iv) mask works and registrations and applications for registration
thereof, (v) computer software, data, data bases and documentation thereof, (vi)
trade secrets and other confidential information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial and
marketing plans and customer, client and supplier lists and information, costs
and pricing structures, manufacturing techniques, accounting and business
methods and practices and similar and related Confidential Information and trade
secrets), (vii) other intellectual property rights and (viii) copies and
tangible embodiments thereof (in whatever form or medium); provided that
Intellectual Property shall not include any third party off-the-shelf software.

                  "Inventions Agreement" has the meaning set forth in Section
6R(i).



                                       53
<PAGE>   60

                  "Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interests (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.

                  "Latest Actuarial Valuation" has the meaning set forth in
Section 6S(vi).

                  "Latest Balance Sheet" has the meaning set forth in Section
6E(ii).

                  "Leases" has the meaning set forth in Section 6X.

                  "Leased Real Property" has the meaning set forth in Section
6X.

                  "Lien" or "Liens" means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including any conditional
sale or other title retention agreement or lease in the nature thereof), any
sale of receivables with recourse against the Target, any filing or agreement to
file a financing statement as debtor under the Uniform Commercial Code or any
similar statute (other than to reflect ownership by a third party of property
leased to the Target under a lease which is not in the nature of a conditional
sale or title retention agreement), or any subordination arrangement in favor of
another Person.

                  "Loss" or "Losses" has the meaning set forth in Section 8B(i).

                  "Material Adverse Effect" means a material and adverse change
or development in the business, financial condition, operating results, assets,
operations, cash flow or net worth of the Target.

                  "Merger" has the meaning set forth in Section 1A.

                  "Merger Consideration" means the Closing Stock Consideration
and the Escrow Stock Consideration.

                  "Non-Compete Persons" has the meaning set forth in Section
5A(i).

                  "Other Plans" has the meaning set forth in Section 6S(v).

                  "Party" or "Parties" has the meaning set forth in the
Preamble.

                  "PBGC" means the Pension Benefit Guaranty Corporation.

                  "Permitted Encumbrances" shall mean (i) statutory liens for
current Taxes or other governmental charges not yet due and payable or the
amount or validity of which is being contested in good faith by appropriate
proceedings by the Target and for which appropriate reserves have been


                                       54
<PAGE>   61

established in accordance with GAAP; (ii) mechanics', carriers', workers',
repairers' and similar statutory liens arising or incurred in the ordinary
course of business for amounts which are not delinquent and which are not,
individually or in the aggregate, material to the Target's business; (iii)
zoning, entitlement, building and other land use regulations imposed by
governmental agencies having jurisdiction over the Leased Real Property which
are not violated by the current use and operation of the Leased Real Property;
and (iv) covenants, conditions, restrictions, easements and other similar
matters of record affecting title to the Leased Real Property which do not
materially impair the occupancy or use of the Leased Real Property for the
purposes for which it is currently used in connection with the Target's
business.

                  "Person" means an individual, a partnership, a corporation, a
limited liability target, an association, a joint stock target, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

                  "Plan of Merger" has the meaning set forth in Section 1C.

                  "Plans" has the meaning set forth in Section 6S(vi).

                  "Release" shall have the meaning set forth in CERCLA.

                  "Requisite Stockholder Approval" means the affirmative vote in
favor of the Plan of Merger and adoption of this Agreement of the following: (i)
the holders of greater than 66.66 percent of the Class A Stock; (ii) the holders
of greater than 66.66 percent of the Class B Stock; and (iii) the holders of
greater than 66.66 percent of the Class A Stock and the Class B Stock voting
together as a single class.

                  "Restrictive Covenants" has the meaning set forth in Section
5A(iii).

                  "Section 338(h)(10) Election" has the meaning set forth in
Section 5B(iii).

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Seller Parties" has the meaning set forth in 8B(v).

                  "Special Target Meeting" has the meaning set forth in Section
4E.

                  "Subsidiary" means, with respect to any Person, any
corporation, limited liability Target, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability Target, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time



                                       55
<PAGE>   62

owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability Target, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
Target, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability Target, partnership, association or other business entity.

                  "Survival Expiration Date" means the earlier of (i) the one
year anniversary of the Closing Date or (ii) the date of issuance of the first
independent audit report on the combined company (that is, the Target and the
Buyer together) following the consummation of the Merger.

                  "Surviving Corporation" has the meaning set forth in Section
1A.

                  "Target" has the meaning set forth in Section 6S(x).

                  "Target Disclosure Schedule" means the schedule entitled
"Target Disclosure Schedule" heretofore delivered by the Target and initialed by
the Parties for identification, which schedule is arranged in sections
corresponding to the lettered and numbered subsections contained in Section 6.

                  "Target Shares" means any share of Class A Stock and any share
of Class B Stock of the Target outstanding immediately prior to the Effective
Time.

                  "Target Stockholder" means any Person who or which holds any
Target Share immediately prior to the Effective Time.

                  "Target Stockholders Representative" initially means Robert C.
Gienko. In the event that Robert C. Gienko ceases to serve as the Target
Stockholders Representative for any reason, Mark Pugh, Steve Fagerman and
Kenneth Janowski shall then replace such individual in such capacity, who shall
serve together in such capacity and while serving together shall act upon the
written direction of a majority of such individuals. The Target Stockholders
shall promptly elect an individual to serve as Target Stockholders
Representative if and after the above succession rules are exhausted. The
individual serving as the Target Stockholders Representative shall not be
entitled to any remuneration. Upon any change in or succession pursuant to the
foregoing, the then acting or successor Target Stockholders Representative shall
immediately notify the Buyer of such change or succession (including the name of
the individual then serving as the Target Stockholders Representative). The
Target Stockholders Representative is authorized to act as contemplated by this
Agreement and the exhibits hereto. In acting or refraining from acting
(including without limitation in determining whether to dispute any claim or
other matter, in determining what further action, if any, to take with respect
to a disputed claim or other matter and in determining what actions to take or
not take in connection with any arbitration or other dispute), the Target
Stockholders Representative shall have complete discretion provided the Target
Stockholders Representative acts in good faith. Without limiting the generality
of the foregoing, the Target



                                       56
<PAGE>   63

Stockholders Representative may, in good faith employ accountants, attorneys and
other representatives or advisors, and undertake the dispute, defense or
settlement of any claim or other matter.

                  "Target Transaction" has the meaning set forth in Section 4K.

                  "Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and including
any amendment thereof.

                  "Tax" or "Taxes" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including
deficiencies, penalties, additions to tax, and interest attributable thereto)
whether disputed or not.

                  "Third Party Approvals" has the meaning set forth in Section
2H.

                  "Threshold" has the meaning set forth in Section 8B(ii)(x).

                  "Transitory Subsidiary" has the meaning set forth in the
Preamble.

Section 10.            Termination.

                  a.               Conditions of Termination.  This Agreement
                           may be terminated at any time prior to the Closing:

                  i.               by the mutual written consent of the Parties;

                  ii.              by the Buyer by written notice to the Target
                           given on or prior to 5:00 p.m. on the seventh
                           business day after the date of this Agreement if the
                           Buyer determines that it is not satisfied with the
                           results of its due diligence with respect to the
                           accounts receivable of the Target and the rights and
                           contingent rights to receive payment for services
                           rendered by the Target.

                  iii.             by the Buyer if there shall be any proposed
                           or pending laws, statutes, regulations or the like
                           (or changes thereto), or if any of such shall have
                           been enacted or otherwise become effective, which
                           would have a Material Adverse Effect;

                  iv.              by the Buyer if there has been a material
                           misrepresentation, material breach of warranty or
                           material breach of a covenant by the Target in the
                           representations and warranties or covenants set forth
                           in this Agreement or the



                                       57
<PAGE>   64

                           schedules and exhibits attached hereto, which in the
                           case of any breach of covenant has not been cured
                           within ten business days after written notification
                           thereof by the Buyer to the Target;

                  v.               by the Target if there has been a material
                           misrepresentation, material breach of warranty or
                           material breach of covenant by the Buyer or the
                           Transitory Subsidiary in the representations and
                           warranties or covenants set forth in this Agreement
                           or the schedules and exhibits attached hereto, which
                           in the case of any breach of covenant has not been
                           cured within ten days after written notification
                           thereof by the Target to the Buyer; or

                  vi.              by the Buyer or the Seller if the
                           transactions contemplated hereby have not been
                           consummated by June 30, 1999;

provided that the Party electing termination pursuant to clause (vi) of this
Section 10A is not in breach of any of its representations, warranties,
covenants or agreements contained in this Agreement or the schedules and
exhibits attached hereto and has acted in good faith to consummate the
transactions contemplated by this Agreement within the contemplated time
periods.

                  b.               Effect of Termination.  In the event of
                           termination of this Agreement as provided above, this
                           Agreement shall forthwith become void and of no
                           further force and effect, except that the covenants
                           and agreements set forth in Sections 10A, 10B, 11A,
                           11B, 11C, 11E, 11F, 11G, 11I, 11J, 11M, 11N and 11O
                           shall survive such termination indefinitely, and
                           except that nothing in Section 10A or this Section
                           10B shall be deemed to release any Party from any
                           liability for any breach by such Party of the terms
                           and provisions of this Agreement or to impair the
                           right of any Party to compel specific performance by
                           another Party of its obligations under this
                           Agreement.

Section 11.            Miscellaneous.

                  a.               Dispute Resolution.

                  i.               To the extent feasible, the Parties and the
                           Non-Compete Persons desire to resolve any
                           controversies or claims or issues arising out of or
                           relating to this Agreement through discussions and
                           negotiations between each other. Such parties agree
                           to use their reasonable best efforts to attempt to
                           resolve any disputes, controversies, claims or issues
                           arising out of or relating to this Agreement by
                           face-to-face negotiations with each other.

                  ii.      In the event that, after good faith discussions, such
                           controversies, claims or issues cannot be resolved
                           solely between such parties, then such parties shall,
                           within 10 days after any of such parties thereto
                           gives notice to



                                       58
<PAGE>   65

                           the other parties, jointly submit their dispute to
                           nonbinding mediation in the City of Chicago,
                           Illinois. Such nonbinding mediation shall be
                           administered by a reputable mediator mutually agreed
                           upon by such parties.

                  iii.             In the event of any dispute, controversy,
                           claim or issue relating to this Agreement having been
                           submitted to nonbinding mediation and the said
                           dispute, controversy, claim or issue is not resolved
                           following nonbinding mediation, or such longer period
                           as agreed between the parties, then the dispute
                           (other than any dispute relating to any claim arising
                           out of the ownership of Buyer Stock) shall be
                           referred to binding arbitration in the City of
                           Chicago, Illinois. Such arbitration process shall be
                           administered by the American Arbitration Association
                           (the "Institute") in accordance with its then -
                           prevailing rules for arbitration of business disputes
                           (except as otherwise provided by this Agreement), by
                           three independent and impartial arbitrators, one of
                           whom shall be appointed by the Buyer, one of whom
                           shall be appointed by the Target Stockholders
                           Representative (or as appropriate, the respective
                           Non-Compete Person) and one of whom shall be
                           appointed by the Institute (collectively, the
                           "Arbitrator"). Notwithstanding anything to the
                           contrary provided in Section 11 of this Agreement,
                           the arbitration shall be governed by the United
                           States Arbitration Act, 9 U.S.C. Section 1 et. seq.
                           The Arbitrator shall permit and facilitate such
                           discovery as it shall determine appropriate in the
                           circumstances, taking into account the needs of a
                           reputable mediator as mutually agreed by the parties
                           thereto and the desirability of making discovery
                           expeditious and cost effective. The Arbitrator may
                           issue such interim orders in accordance with
                           principles of equity as may be necessary to protect
                           any party from irreparable harm during the pendency
                           of any arbitration, including entry of a preliminary
                           injunction. Any such order shall be without prejudice
                           to the final determination of the controversy. Each
                           party hereby agrees that such arbitration shall be
                           completed and a final arbitration decision rendered
                           within 60 days of the submission of the respective
                           dispute to arbitration, and each of such parties
                           shall take all actions appropriate and necessary to
                           cause such arbitration to be so completed within such
                           60 day period. The Arbitrator shall not be empowered
                           to award any party any punitive damages in connection
                           therewith, and each party hereby irrevocably waives
                           any right to recover such punitive damages. The
                           determination of the Arbitrator as to a dispute shall
                           be final and binding for all purposes of this
                           Agreement.

                  iv.              Each party to any such mediation or
                           arbitration shall use its best efforts and utmost
                           diligence to safeguard and to protect against
                           disclosure, misuse, espionage, loss and theft and
                           shall keep and maintain in strict confidence and
                           shall not disclose to any third party any information
                           that may be disclosed to it in connection with such
                           mediation or arbitration



                                       59
<PAGE>   66

                           proceeding, other than to its employees and agents
                           who require access to such information to perform
                           their duties and other than is required or
                           appropriate to disclose pursuant to applicable law
                           (including pursuant to securities laws and any
                           reporting requirements thereunder) or court order or
                           in any mediation or arbitration contemplated by this
                           Agreement; one Arbitrator shall to the extent
                           permitted by the rules and regulations of the
                           Institute and also any mediator shall be likewise
                           bound by this confidentiality provision and neither
                           shall make public its opinion or findings in
                           connection with the relevant proceeding.

                  v.                The fees and expenses of the mediator and/or
                           the Arbitrator shall be equally shared by the parties
                           and each of the parties shall bear its own costs and
                           expenses in connection with process; provided that if
                           the right of a party or parties to indemnification
                           for any particular matter is upheld or sustained in
                           such mediation or arbitration, the other party or
                           parties to such mediation or arbitration shall bear
                           all of the fees and expenses of the mediator or the
                           Arbitrator, all of their own costs and expenses and
                           the reasonable costs and expenses (including
                           reasonable attorneys' fees and expenses) of the party
                           or parties whose claim to indemnity is so upheld or
                           sustained.

                  vi.               The Target Stockholders Representative shall
                           be deemed for purposes of this Section to be a Party
                           and shall represent the Target Stockholders in any
                           proceeding or dispute contemplated by this Section.

                  b.                Fees and Expenses. Each Party shall pay all
                           of its own fees and expenses (including fees and
                           expenses of legal counsel, accountants, investment
                           bankers and other representatives and consultants) in
                           connection with this Agreement and the consummation
                           of the transactions contemplated hereby. The
                           foregoing notwithstanding, the Target shall not pay
                           any fees or expenses in connection with the
                           transactions contemplated by this Agreement (it being
                           understood that any fees or expenses associated with
                           the Target's review, execution or delivery of this
                           Agreement, or the Target's performance of its
                           obligations under this Agreement prior to the
                           Closing, shall be borne by the Buyer). If any legal
                           action or other proceeding relating to this
                           Agreement, the agreements contemplated hereby, the
                           transactions contemplated hereby or thereby or the
                           enforcement of any provision of this Agreement or the
                           agreements contemplated hereby is brought against any
                           Party, the prevailing Party in such action or
                           proceeding shall be entitled to recover all
                           reasonable expenses relating thereto (including
                           attorneys' fees and expenses) from the Party against
                           which such action or proceeding is brought in
                           addition to any other relief to which such prevailing
                           Party may be entitled.



                                       60
<PAGE>   67

                  c.                Remedies.  The Buyer shall have all rights
                           and remedies set forth in this Agreement and all
                           rights and remedies which the Buyer has been granted
                           at any time under any other agreement or contract
                           executed in connection with the transactions
                           contemplated hereby and, with respect to any
                           additional rights the Buyer may have against the
                           Target and the Target Stockholders, all of the rights
                           which the Buyer would have under applicable law. Each
                           of the Parties acknowledges and agrees that the other
                           Parties would be damaged irreparably in the event any
                           of the provisions of this Agreement are not performed
                           in accordance with their specific terms or otherwise
                           are breached. Accordingly, each of the Parties agrees
                           that the other Parties shall be entitled to an
                           injunction or injunctions to prevent breaches of the
                           provisions of this Agreement and to enforce
                           specifically this Agreement and the terms and
                           provisions hereof in any action instituted in any
                           court of the United States or any state thereof
                           having jurisdiction over the Parties and the matter.

                  d.                Consent to Amendments. This Agreement may be
                           amended, or any provision of this Agreement may be
                           waived; provided that any such amendment or waiver
                           shall be binding upon the Target only if set forth in
                           a writing executed by the Target and referring
                           specifically to the provision alleged to have been
                           amended or waived, and any such amendment or waiver
                           shall be binding upon the Buyer only if set forth in
                           a writing executed by the Buyer and referring
                           specifically to the provision alleged to have been
                           amended or waived. No course of dealing between or
                           among the Parties shall be deemed effective to
                           modify, amend or discharge any part of this Agreement
                           or any rights or obligations of any Party under or by
                           reason of this Agreement.

                  e.                Successors and Assigns.

                  i.                This Agreement and all covenants and
                           agreements contained herein and rights, interests or
                           obligations hereunder, by or on behalf of any of the
                           Parties hereto, shall bind and inure to the benefit
                           of the respective successors and permitted assigns of
                           the Parties hereto whether so expressed or not,
                           except that neither this Agreement nor any of the
                           covenants and agreements herein or rights, interests
                           or obligations hereunder may be assigned or delegated
                           by the Target prior to the Closing, without the prior
                           written consent of the Buyer; provided that the
                           obligation of the Buyer shall be assigned at Closing
                           to a trust with respect to the Target Bonus Plan.

                  The Buyer may (at any time prior to the Closing), in its sole
discretion, assign in whole or in part its rights and obligations pursuant to
this Agreement; provided that the Buyer shall remain primarily liable for its
obligations under this Agreement following any such assignment. In connection
with any such assignment, the Buyer shall cause the prospective assignee to
execute and



                                       61
<PAGE>   68

deliver to the Parties a counterpart to this Agreement and an acknowledgment by
such Person agreeing to be bound by all terms and provisions hereof as a "Buyer"
hereunder. The Buyer may assign this Agreement and its rights and obligations
hereunder in connection with a merger or consolidation involving the Buyer or in
connection with a sale of stock or assets of the Buyer or other disposition of
the Buyer.

                  f.                Severability.  Whenever possible, each
                           provision of this Agreement shall be interpreted in
                           such manner as to be effective and valid under
                           applicable law, but if any provision of this
                           Agreement or the application of any such provision to
                           any Person or circumstance shall be held to be
                           prohibited by, illegal or unenforceable under
                           applicable law in any respect by a court of competent
                           jurisdiction, such provision shall be ineffective
                           only to the extent of such prohibition or illegality
                           or unenforceability, without invalidating the
                           remainder of such provision or the remaining
                           provisions of this Agreement.

                  g.                Counterparts. This Agreement may be executed
                           simultaneously in counterparts (including by means of
                           telecopied signature pages), any one of which need
                           not contain the signatures of more than one Party,
                           but all such counterparts taken together shall
                           constitute one and the same Agreement.

                  h.                Descriptive Headings; Interpretation. The
                           headings and captions used in this Agreement and the
                           table of contents to this Agreement are for reference
                           purposes only and shall not affect in any way the
                           meaning or interpretation of this Agreement. Any
                           capitalized terms used in any schedule or exhibit
                           attached hereto and not otherwise defined therein
                           shall have the meanings set forth in this Agreement.
                           The use of the word "including" herein
                           shall mean "including without limitation." The
                           Parties intend that each representation, warranty and
                           covenant contained herein shall have independent
                           significance. If any Party has breached any
                           representation, warranty or covenant contained herein
                           in any respect, the fact that there exists another
                           representation, warranty or covenant relating to the
                           same subject matter (regardless of the relative
                           levels of specificity) which the Party has not
                           breached shall not detract from or mitigate the fact
                           that the Party is in breach of the first
                           representation, warranty or covenant.

                  i.                Entire Agreement. This Agreement and the
                           agreements and documents referred to herein contain
                           the entire agreement and understanding between the
                           Parties with respect to the subject matter hereof and
                           supersede all prior agreements and understandings,
                           whether written or oral, relating to such subject
                           matter in any way.



                                       62
<PAGE>   69

                  j.                No Third-Party Beneficiaries. This Agreement
                           is for the sole benefit of the Parties and their
                           permitted successors and assigns and nothing herein
                           expressed or implied shall give or be construed to
                           give any Person, other than the Parties and such
                           permitted successors and assigns, any legal or
                           equitable rights hereunder.

                  k.                Schedules.  Nothing in any schedule attached
                           hereto shall be adequate to disclose an exception to
                           a representation or warranty made in this Agreement
                           unless such schedule identifies the exception with
                           reasonable particularity. Without limiting the
                           generality of the foregoing, the mere listing (or
                           inclusion of a copy) of a document or other item
                           shall not be adequate to disclose an exception to a
                           representation or warranty made in this Agreement,
                           unless the representation or warranty has to do with
                           the existence of the document or other item itself.

                  l.                Schedules and Exhibits. All schedules and
                           exhibits attached hereto or referred to herein are
                           hereby incorporated in and made a part of this
                           Agreement as if set forth in full herein.

                  m.                Governing Law.  The corporate law of the
                           State of Illinois shall govern all issues and
                           questions concerning the relative rights and
                           obligations of the Target and the holders of its
                           equity securities. All other issues and questions
                           concerning the construction, validity, enforcement
                           and interpretation of this Agreement and the
                           schedules and exhibits hereto shall be governed by,
                           and construed in accordance with, the laws of the
                           State of Illinois without giving effect to any choice
                           of law or conflict of law rules or provisions
                           (whether of the State of Illinois or any other
                           jurisdiction) that would cause the application of the
                           laws of any jurisdiction other than the
                           State of Illinois. In furtherance of the foregoing,
                           the internal law of the State of Illinois shall
                           control the interpretation and construction of this
                           Agreement (and all schedules and exhibits hereto),
                           even though under that jurisdiction's choice of law
                           or conflict of law analysis, the substantive law of
                           some other jurisdiction would ordinarily apply.

                  n.                Notices.  All notices, demands or other
                           communications to be given or delivered under or by
                           reason of the provisions of this Agreement shall be
                           in writing and shall be deemed to have been given
                           when delivered personally to the recipient, one day
                           after being sent to the recipient by reputable
                           overnight courier service (charges prepaid), upon
                           machine-generated acknowledgment of receipt after
                           transmittal by facsimile or five days after being
                           mailed to the recipient by certified or registered
                           mail, return receipt requested and postage prepaid.
                           Such notices, demands and other communications shall
                           be sent to the Buyer and the Target at the addresses


                                       63
<PAGE>   70

                           indicated below or to such other address or to the
                           attention of such other person as the recipient party
                           has specified by prior written notice to the sending
                           party.

                  The Target
                  ----------

                  Strategic Reimbursement Services, Inc.
                  3315 W. Algonquin Road
                  Suite 110
                  Rolling Meadows, Illinois  60008
                  Attn: Robert C. Gienko, President
                  Phone:            (847) 259-7373
                  Facsimile:        (847) 259-9869

                  with copies to:
                  (which shall not constitute notice to the Target)

                  Sonnenschein Nath & Rosenthal
                  8000 Sears Tower
                  233 South Wacker Drive
                  Chicago, Illinois 60606
                  Attn: Kenneth G. Kolmin
                  Phone:            (312) 876-3191
                  Facsimile:        (312) 876-7934


                  The Buyer:
                  ----------

                  Sabratek Corporation
                  8111 North St. Louis Avenue
                  Skokie, Illinois  60076
                  Attn:  Chief Financial Officer
                  Phone:            (847) 720-2400
                  Facsimile:        (847) 720-2345

                  with copy to:
                  (which shall not constitute notice to the Buyer)



                                       64
<PAGE>   71

                  Kirkland & Ellis
                  200 East Randolph Drive
                  Chicago, Illinois 60601
                  Attn:  Carter W. Emerson
                  Phone:            (312) 861-2000
                  Facsimile:        (312) 861-2200

                  o.               No Strict Construction. The Parties have
                           participated jointly in the negotiation and drafting
                           of this Agreement. In the event an ambiguity or
                           question of intent or interpretation arises, this
                           Agreement shall be construed as if drafted jointly by
                           the Parties, and no presumption or burden of proof
                           shall arise favoring or disfavoring any Party by
                           virtue of the authorship of any of the provisions of
                           this Agreement.

                                *     *     *      *     *


                                       65

<PAGE>   72



                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement of Merger on the date first written above.

                                        STRATEGIC REIMBURSEMENT SERVICES, INC.


                                        By:  /s/ Robert C. Gienko
                                           -------------------------------------
                                        Its:     President
                                            ------------------------------------


                                        SABRATEK CORPORATION


                                        By:  /s/ Stephen L. Holden
                                           -------------------------------------
                                        Its:     President
                                            ------------------------------------


                                        SBTK I ACQUISITION CORPORATION


                                        By:  /s/ Stephen L. Holden
                                           -------------------------------------
                                        Its:     President
                                            ------------------------------------


<PAGE>   73




                      SIGNATURE PAGE OF TARGET STOCKHOLDERS
                             TO AGREEMENT OF MERGER

         THE UNDERSIGNED HAS RECEIVED AND REVIEWED A COPY OF THE
AGREEMENT OF MERGER AND UNDERSTANDS THE TERMS AND CONDITIONS
THEREOF.  DEFINED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASCRIBED
THERETO IN THE AGREEMENT OF MERGER.

         EACH OF THE UNDERSIGNED REPRESENTS AND WARRANTS TO THE BUYER THAT (i)
THE NUMBER AND TYPE OF TARGET SHARES SET FORTH ON THE TARGET DISCLOSURE SCHEDULE
CORRESPONDING TO SECTION 6B OF THE AGREEMENT OF MERGER ACROSS FROM THE NAME OF
THE RESPECTIVE UNDESIGNED IS TRUE AND CORRECT IN ALL RESPECTS, (ii) THE TARGET
HAS BEEN A VALIDLY ELECTING S CORPORATION WITHIN THE MEANING OF SECTION 1361 AND
1362 OF THE CODE AT ALL TIMES DURING ITS EXISTENCE AND WILL BE AN S CORPORATION
UP TO AND INCLUDING THE CLOSING DATE AND (iii) THE UNDERSIGNED HAS AND WILL HAVE
FULL AUTHORITY TO SURRENDER THE CERTIFICATE OR CERTIFICATES REPRESENTING HIS
TARGET SHARES IN CONNECTION WITH THE MERGER AND HAS GOOD AND MARKETABLE TITLE TO
SUCH TARGET SHARES, FREE AND CLEAR OF ANY LIEN, PLEDGE, MORTGAGE, SECURITY
INTEREST, CLAIM, LEASE, CHARGE, OPTION, RIGHT OF FIRST REFUSAL, EASEMENT,
SERVITUDE, TRANSFER RESTRICTION UNDER ANY SHAREHOLDER OR SIMILAR AGREEMENT,
ENCUMBRANCE OR ANY OTHER RESTRICTION OR LIMITATION WHATSOEVER.

         PHILLIP MITCHELL REPRESENTS AND WARRANTS TO THE BUYER THAT HE HAS
CONSULTED WITH COUNSEL PRIOR TO SIGNING THIS AGREEMENT.

         EACH OF THE UNDERSIGNED HEREBY AGREES TO BE BOUND BY AND TO
PERFORM THE APPLICABLE COVENANTS SET FORTH IN THE AGREEMENT WITH
RESPECT TO THE TARGET STOCKHOLDERS.

         THE UNDERSIGNED AGREES TO VOTE ALL OF HIS, HER OR ITS TARGET SHARES IN
FAVOR OF THE APPROVAL AND ADOPTION OF THIS AGREEMENT AND THE PLAN OF MERGER AND
THE TRANSACTIONS CONTEMPLATED THEREBY OR SHALL ENTER INTO AN EQUIVALENT WRITTEN
CONSENT




<PAGE>   74



                      SIGNATURE PAGE OF TARGET STOCKHOLDERS
                       TO AGREEMENT OF MERGER - CONTINUED


         THE SIGNATURE OF THE UNDERSIGNED CONSTITUTES HIS, HER OR ITS
ACKNOWLEDGMENT OF AND CONSENT TO THE CREATION OF THE TARGET STOCKHOLDERS
REPRESENTATIVE PURSUANT TO THE AGREEMENT OF MERGER AND THE DELEGATION TO THE
TARGET STOCKHOLDERS REPRESENTATIVE OF ALL OF THE RIGHTS, POWERS AND
RESPONSIBILITIES DELEGATED THERETO IN THE AGREEMENT OF MERGER.

                                            TARGET STOCKHOLDERS:
                                            /s/ Robert C. Gienko
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Robert C. Gienko

                                            /s/ Mark Pugh
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Mark Pugh


                                            /s/ Steve Fagerman
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Steve Fagerman

                                            /s/ Kenneth Janowski
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Kenneth Janowski

                                            /s/ Phillip Mitchell
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Phillip Mitchell






<PAGE>   75



         The undersigned hereby agrees to act as the Target Stockholders
Representative in accordance with the provisions of the Agreement of Merger and
to be bound by and perform the obligations of the Target Stockholders
Representative set forth therein.

/s/ Robert C. Gienko
- ---------------------------
Robert C. Gienko


Date:  June 29, 1999
     ----------------------


<PAGE>   76



                           NON-COMPETE SIGNATURE PAGE
                             TO AGREEMENT OF MERGER

         Each of the undersigned hereby acknowledge that he or she has received,
reviewed and understands the non-compete, non-solicitation and other
restrictions set forth in Section 5B of the Agreement of Merger, and each of the
undersigned hereby agrees to be bound by and to comply with such restrictions
and provisions in return for the Merger Consideration and other valuable
consideration (the receipt of which is hereby acknowledged).

                                            /s/ Robert C. Gienko
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Robert C. Gienko


                                            /s/ Mark Pugh
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Mark Pugh


                                            /s/ Steve Fagerman
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Steve Fagerman

                                            /s/ Kenneth Janowski
Date: June 29, 1999                         ------------------------------------
     ---------------                        Signature
                                            Printed Name:       Kenneth Janowski



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission