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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) July 1, 1999
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SABRATEK CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-11831 36-3700639
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
8111 North St. Louis, Skokie, Illinois 60076
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(Address of Principal Executive Offices) (Zip Code)
(847) 720-2400
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
(a) On July 1, 1999, Sabratek Corporation, a Delaware corporation,
consummated a transaction in which it acquired approximately 99% of the issued
and outstanding capital stock of Unitron Medical Communications, Inc., a Florida
corporation, which does business as MOON Communications in exchange for 542,926
shares of Sabratek common stock. Sabratek acquired the Unitron stock under the
terms of an Option Agreement, dated as of January 22, 1999, by and among
Sabratek, Unitron and those Unitron shareholders who executed the Option
Agreement.
Under the terms of the Option Agreement and a separate Escrow
Agreement, 532,195 shares of Sabratek's common stock were delivered directly to
the former Unitron shareholders and 10,731 shares of Sabratek's common stock
were delivered in escrow to Michael T. Cronin of Johnson Blakely Pope Bokor
Ruppel & Burns, P.A., who is acting as escrow agent under the Escrow Agreement.
The purpose of the escrow is to secure payment of any amounts to which Sabratek
may be entitled in the event it is determined that Unitron breached any of its
representations and warranties contained in the Option Agreement. In connection
with the transaction, Sabratek also entered into a Registration Rights Agreement
in which Sabratek agreed to file a registration statement registering the resale
by the former Unitron shareholders of all 542,926 shares of Sabratek common
stock issued to them.
Sabratek may attempt to acquire shares of Unitron's capital stock it
did not acquire through the exercise of its option on terms substantially
similar to those contained in the Option Agreement. Sabratek anticipates that it
will be required to issue less than 10,000 additional shares of its common stock
to acquire all of the Unitron capital stock it does not already own and intends
to register the resale of any additional shares of its common stock which it
issues in such acquisitions.
Prior to Sabratek's acquisition of Unitron, the companies were
associated through several agreements. In July, 1997, Unitron granted Sabratek a
fifteen-year technology license for use of Unitron's continuous, real-time
patient monitoring and reporting software for which Sabratek paid Unitron $7
million. In January, 1998, Sabratek acquired rights to access Unitron's customer
database. In addition, Sabratek provided consulting services to Unitron under a
Marketing and Clinical Support Agreement, dated as of January 1, 1998. Further,
in October, 1998, Sabratek entered into a Standby Senior Credit Facility with
Unitron whereby Sabratek may lend up to $10 million to Unitron.
(b) As part of its acquisition of Unitron, Sabratek acquired (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 Unitron prior to this acquisition.
A copy of the Option Agreement is filed with this report as Exhibit
10.54 and the description set forth above is qualified in its entirety by
reference to the complete terms and conditions contained in the Option
Agreement.
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(c) EXHIBITS
4.5 Registration Rights Agreement, dated as of January 22, 1999, by
and among Sabratek Corporation and the holders of common stock,
options and warrants issued by Unitron Medical Communications,
Inc
10.54 Option Agreement, dated as of January 22, 1999, by and among
Sabratek Corporation, Unitron Medical Communications, Inc. and
the holders of all of the common stock, options and warrants
issued by Unitron Medical Communications, 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
Option Agreement.)
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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 16, 1999 By: \s\ Stephen L. Holden
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Stephen L. Holden, President
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EX. 4.5
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into on January 22, 1999, by and
between Sabratek Corporation, a Delaware corporation (the "Company"), and the
holders the ("Unitron Shareholders")of common stock, options and warrants of
Unitron Medical Communications, Inc., a Florida corporation ("Unitron"), who are
signatories hereto.
The Company, Unitron and certain equity holders of Unitron are parties
to that certain Stock Option Agreement of even date herewith (the "Option
Agreement") whereby (a) the Company has obtained the right to purchase all of
the equity interests in Unitron, (b) the Unitron equity holders obtained from
the Company the right to require the Company to purchase all of their equity
interests in Unitron and (c) the Company may, at its election, acquire all of
the assets and assume the liabilities of Unitron as provided in the Option
Agreement in lieu of the equity of Unitron, in each case subject to and in
accordance with the terms of the Option Agreement.
The issuance of Sabratek common stock and the related preferred share
purchase rights ("Common Stock") to the Unitron Shareholders pursuant to the
Option Agreement will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon the exemption provided by
Section 4(2) thereof and Rule 506 of Regulation D promulgated under the
Securities Act. In order to induce the Unitron Shareholders to enter into the
Option Agreement, the Company has agreed to provide the registration rights set
forth in this Agreement. Unless otherwise provided in this Agreement,
capitalized terms used herein shall have the meanings set forth in the Option
Agreement, other than the capitalized terms defined in paragraph 9 hereof.
The parties hereto agree as follows:
1. Shelf Registration.
(a) Upon the exercise of the Call Option or the Put Option, as the case
may be, pursuant to the Option Agreement, the Company will use its best efforts
to register under the Securities Act (prior to the date which is 20 days after
the consummation of the closing of the Call Option or the Put Option as the case
may be) the resale by the Unitron Shareholders of any or all Registrable
Securities in a delayed or continuous offering to the extent permitted by Rule
415 (or any successor rule thereto) promulgated under the Securities Act (the
"Shelf Registration"), subject to paragraph (f) below. Such a 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 Unitron Shareholders in the manner or manners designated in
writing to the Company by them (including, without limitation, one or more
underwritten offerings). In the event the registration of a delayed or
continuous offering is not permitted under the Securities Act, the Company will
provide comparable alternative registration rights under the Securities Act to
the holders of Registrable Securities.
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(b) The Company shall use its reasonable best efforts (i) to cause the
Shelf Registration to be declared effective as promptly as practical after its
filing and (ii) to keep the Shelf Registration continuously effective under the
Securities Act from the initial effectiveness thereof until the earliest to
occur of (A) the date when all Registrable Securities registered under the Shelf
Registration have been sold in the manner set forth and as contemplated in the
Shelf Registration or (B) the date when all remaining Registrable Securities are
freely transferable in the open market without limitations as to volume and
without being required to file any forms or reports with the Securities and
Exchange Commission ("SEC") under the Securities Act or the rules and
regulations thereunder by persons other than affiliates of the Company or (C)
the date which is two years (or such other period specified by Rule 144(k)
promulgated under the Securities Act or any successor rule thereto) after the
Closing Date (such period being referred to herein as the "Effectiveness
Period").
(c) If the registration statement relating to the Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period, the Company shall use its reasonable best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any event
shall within 30 days of such cessation of effectiveness amend such registration
statement in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional registration
statement covering all of the Registrable Securities for an offering to be made
by the holders on a delayed or continuous basis as permitted by the rules and
regulations under the Securities Act. In the event the registration of a delayed
or continuous offering is not permitted under the Securities Act, the Company
will provide alternative registration rights under the Securities Act to the
holders of Registrable Securities. If an additional registration statement is
filed, the Company shall use its reasonable best efforts to cause such
registration statement to be declared effective as soon as practicable after
such filing and to keep such registration statement continuously effective for
the remainder of the Effectiveness Period.
(d) The Company shall pay for all Registration Expenses associated with
a Shelf Registration as set forth in paragraph 5 hereof.
(e) The holders of a majority of the Registrable Securities initially
included in the Shelf Registration shall have the right to select the investment
banker(s) and manager(s), if any, to administer any underwritten offering
pursuant to the Shelf Registration, subject to the Company's approval of such
person(s), which approval shall not be unreasonably withheld.
(f) The Company shall be entitled to postpone for a reasonable time,
not exceeding 20 days, the filing of the Shelf Registration or its efforts to
cause the Shelf Registration 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 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
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corporate development, which disclosure would adversely affect the interests of
the Company in any material respect; provided that this delay right may be
utilized by the Company only once.
(g) The Company by notice to the holders of Registrable Securities may
postpone all sales under such effective Shelf Registration for a reasonable
time, not exceeding 45 days (provided that (x) the Company may not implement
more than two such postponements in any 12 month period and (y) all
postponements under this paragraph in any 12-month period shall not exceed 60
days), if the Company shall determine in good faith that permitting such sales
would interfere in any material respect with any material acquisition, financing
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, which disclosure would adversely affect the
interests of the Company in any material respect.
2. Piggyback Registration.
(a) In the event that the Company intends to register at any time an
underwritten offering of Common Stock by the Company and/or stockholders of the
Company, the Company shall offer the Unitron Shareholders the right to include
any or all of their Registrable Securities in such registered offering (a
"Piggyback Notice"). The Company shall include in such registration (a
"Piggyback Registration") all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 10 days after
delivery of the Piggyback Notice. In the event of a Piggyback Registration, the
Company shall process to effectiveness such registration as promptly as
practicable, subject to the provisions of paragraph 2(g).
(b) In any underwritten Piggyback Registration, each holder of
Registrable Securities who has elected to participate pursuant to paragraph 2(a)
must agree to sell such holder's Registrable Securities on the same basis
provided in the underwriting arrangements approved by the Company and to timely
complete and execute all questionnaires, powers of attorney, indemnities,
holdback agreements, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements or by the SEC.
(c) If the managing underwriter(s) for a Piggyback Registration advise
the Company in writing that in their opinion the number of Registrable
Securities and other securities, if any, requested to be included in such
offering exceeds the number of Registrable Securities and other securities, if
any, which can be sold in an orderly manner in such offering without adversely
affecting the marketability of the offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, and (ii)
second, the Registrable Securities and other securities, if any, requested to be
included in such offering, pro rata among the holders of such Registrable
Securities and other securities, if any, on the basis of the number of shares
requested to be included by each such holder.
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(d) The Company shall have the right to select the investment banker(s)
and manager(s) to administer any Piggyback Registration.
(e) The Company shall pay for all Registration Expenses associated with
a Piggyback Registration as set forth in paragraph 5 hereof.
(f) A holder who has given notice to the Company under paragraph 2(a)
requesting inclusion of any Registrable Securities shall have the right to
withdraw its Registrable Securities from the Piggyback Registration, but only
during the time period and on terms agreed upon among the underwriters for such
underwritten offering and the other holders who wish to continue to register
securities under such Piggyback Registration.
(g) Notwithstanding the foregoing, the Company shall, on written notice
to the holders who have given notice to the Company under paragraph 2(a), have
the right to withdraw any registration statement filed pursuant to this
paragraph 2 for a Piggyback Registration at any time prior to the effective date
thereof.
3. Holdback Agreements.
(a) The Company shall have the right to require that each holder of
Registrable Securities who holds at the time of the request one-half of 1
percent or more of the capital stock of the Company shall not effect any public
sale or distribution (including sales pursuant to the Shelf Registration or
pursuant to Rule 144) of common stock of the Company during the ten business
days prior to, and the 90-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. In order to exercise its rights under this paragraph 3(a),
the Company shall provide such holders of Registrable Securities (i) the right
to participate in such underwritten offering as provided in paragraph 2 and (ii)
written notice of the estimated effective date of any such registration at least
ten business days prior to such effectiveness. The restrictions of this
paragraph 3(a) shall apply whether or not such holder of Registrable Securities
elects to participate on a Piggyback Registration or is able to include in such
Piggyback Registration all Registrable Securities desired to be so included. The
Company shall be entitled to exercise its rights under this paragraph 3(a) not
more than twice during any calendar year.
(b) The Company shall not effect any public sale or distribution of its
common stock, or any securities convertible into or exchangeable or exercisable
for such securities, during the ten business days prior to and during the 90-day
period beginning on the effective date of any underwritten Piggyback
Registration (except as part of such underwritten registration or an Exempt
Registration), unless the managing underwriter(s) for the Piggyback Registration
otherwise agree.
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(c) Each holder of Registrable Securities shall not effect any public
sale or distribution (including sales pursuant to the Shelf Registration or
pursuant to Rule 144) of common stock of the Company until such time as the
Company has prepared and filed ifnecessary and delivered to such holder a
supplement or amendment to the Shelf Registration or the related prospectus as
contemplated by Section 4(e).
4. Registration Procedures. Whenever any Registrable Securities are
required to be registered pursuant to this Agreement, the Company shall use its
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective as promptly as practicable after such
filing (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall furnish to the counsel
selected by the holders of a majority of the Registrable Securities covered by
such registration statement copies of all such documents proposed to be filed);
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period of time set forth in paragraph
1, as applicable, and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
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(e) promptly notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the existence of facts or the happening of any event (without
necessarily identifying such facts or event to such sellers) as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and the Company shall prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such Registrable Securities to be listed or quoted for
trading on each securities exchange on which similar securities issued by the
Company are then listed;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities in any underwritten offering of Registrable Securities;
(i) make available for reasonable inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, such financial and other
records, corporate documents and properties of the Company as are customarily
made available to such persons on a confidential basis by the issuer in
connection with a registered public offering of securities similar to the
Registrable Securities, and cause the Company's officers, directors, employees
and independent accountants to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection with
such registration statement; and
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of at least
twelve months beginning with the first day of the Company's first full calendar
quarter after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses,
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fees and disbursements of custodians, and fees and disbursements of counsel for
the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Company
(all such expenses being herein called "Registration Expenses"), shall be borne
as provided in this Agreement, except that the Company shall, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed or quoted for trading.
(b) In connection with the Shelf Registration or any other registration
statement in lieu thereof and any amendment to either of such as contemplated by
this Agreement, the Company shall reimburse the holders of Registrable
Securities included in such registration for the reasonable fees (not exceeding
$25,000 for such registration) and disbursements of Shumaker, Loop & Kendrick,
LLP or one other counsel chosen by the holders of a majority of the Registrable
Securities included in such registration.
6. Indemnification.
(a) The Company agrees to indemnify each holder of Registrable
Securities, its officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by (i) any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto; (ii) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any other federal or state securities
law, rule or regulation in connection with the registration of the resale of the
Registrable Securities as contemplated by this Agreement, except insofar as the
same is caused by or results from any information furnished in writing to the
Company by any such holder expressly for use therein or from a failure by any
such holder to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished any such
holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
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(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and shall indemnify the Company, its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. The failure to so notify the indemnifying
party shall not relieve the indemnifying party from any liability hereunder with
respect to the action, except to the extent that such failure prevents the
indemnifying party from contesting such action or otherwise prejudices the
indemnifying party; provided that any such failure shall not relieve the
indemnifying party from any other liability which it may have to any other
person. 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 between the indemnified
party and indemnifying party 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 given to
the indemnifying party in accordance with this paragraph within 30 days after
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 shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party 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 of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of one separate counsel for such indemnified
parties. No indemnified party shall consent to the entry of any judgment or
enter into any settlement with respect to a claim for which indemnification may
be sought without the prior written consent of the indemnifying party.
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(d) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
7. Participation in Underwritten Registrations, Sale and Other
Information. No Unitron Shareholder may participate in any registration
hereunder which is underwritten unless such person (i) agrees to sell such
person's securities on the basis provided in any underwriting arrangements
approved by the person or persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements. Upon the request of
the Company, each Unitron Shareholder shall provide to the Company such
information regarding its ownership of Common Stock, relationships with the
Company and intended method(s) of distribution, as are reasonably requested by
the Company in connection with the preparation of any Registration Agreement
pursuant to this Agreement. Promptly following any sale or other transfer of any
Registrable Securities covered by the Shelf Registration, the person selling or
transferring such securities shall promptly notify the Company in writing
thereof, which notice shall specify the amount of securities involved and the
market, if any, on which such sale or transfer occurred.
8. Rule 144 Information. With a view to making available the benefits
of Rule 144 under the Securities Act or a successor provision to the holders of
Registrable Securities, the Company agrees to use its best efforts to file with
the Commission for a period of two years subsequent to the date of this
Agreement (or such lesser period of time specified by Rule 145(k) under the
Securities Act) in a timely manner (taking into account any extensions of filing
deadlines) all reports required to be filed by the Company under the Exchange
Act.
9. Definitions.
(a) "Exempt Registration" means any registration of securities by the
Company under the Securities Act pursuant to a (i) Registration Statement on a
Form S-8 (or any successor thereto), (ii) Registration Statement on Form S-4
covering solely securities issued in connection with a business combination or
other transaction specified in Rule 145(a) under the Securities Act, or (iii)
Registration Statement on Form S-3 covering solely securities issued under a
dividend reinvestment program.
(b) "Registrable Securities" means (i) any Sabratek common stock issued
upon exercise of the Call Option or the Put Option, as the case may be, pursuant
to the Option Agreement, (ii) any Sabratek common stock issued in connection
with a merger of consolidation of Unitron and Sabratek (or a wholly owned
subsidiary of Sabratek) in which the outstanding common stock of Unitron is
converted into common stock of Sabratek, or (iii) any Sabratek
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common stock issued or issuable with respect to the outstanding Sabratek common
stock by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (A) they have been distributed to
the public pursuant to a offering registered under the Securities Act; (B) sold
to the public through a broker, dealer or market maker in compliance with Rule
144 under the Securities Act (or any similar rule then in force); or (C)
repurchased by the Company or any subsidiary of the Company.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) Adjustments Affecting Registrable Securities. The Company shall not
take any action, or permit any change to occur, with respect to its securities
which would materially and adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would materially and adversely
affect the marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of more than 50% of the Registrable
Securities.
(e) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities, provided that
prior to any transfer of Registrable Securities the holder thereof shall obtain
the written acknowledgment and agreement of the transferee to be bound by the
terms of this Agreement.
10
<PAGE> 11
(f) Severability. If any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction or as a result
of legislative or administrative action, such holding or action shall be
strictly construed and shall not affect the validity of or affect any other
provision of this Agreement.
(g) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. A facsimile copy of this Agreement and any
signatures hereon shall be considered as originals for all purposes.
(h) Notices. All notices and other communications must be in writing
and shall be deemed given on the date delivered if delivered in person or by
facsimile or by overnight courier, or on the third business day after mailing if
mailed by registered or certified mail, postage pre-paid, return receipt
requested, to the persons at the addresses set forth below (or such other
address for a party as shall be specified by like notice):
If to the Company: Sabratek Corporation
8111 N. St. Louis Avenue
Skokie, Illinois 60076
Attention: Chief Financial Officer
with a copy to: Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Carter W. Emerson
If to the Unitron Shareholders: To the address set forth on the
signature page affixed hereto for
each such Unitron Shareholder
with a copy to: Unitron Medical Communications, Inc.
17757 U.S. Highway 19 North
Suite 600
Clearwater, FL 33764
Attention: Chief Executive Officer
and to: Johnson Blakely Pope Bokor
Ruppel & Burns, P.A.
911 Chestnut Street
Clearwater, Florida 34617
Attention: Michael T. Cronin, Esq.
and to: Shumaker, Loop & Kendrick, LLP
Barnett Plaza, Suite 2800
101 East Kennedy Boulevard
Post Office Box 172609
Tampa, Florida 33672-0609
Attention: Darrell Smith
11
<PAGE> 12
(i) Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings, agreements or
representations by or between the parties, written or oral, to the extent they
related in any way to the subject matter.
(j) Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of the State
of Delaware without regard to principles of conflicts of law.
(k) Interpretation. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof. Terms such as "herein", "hereof", and "hereinafter" refer to
this Agreement as a whole and not to the particular sentence or paragraph where
they appear, unless the context otherwise requires. Whenever the context
requires, references in this Agreement to the singular number shall include the
plural, the plural number shall include the singular and words denoting gender
shall include the masculine, feminine and neuter.
* * * * *
12
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SABRATEK CORPORATION
By /s/ STEPHEN L. HOLDEN
----------------------------------
Its: President
UNITRON SHAREHOLDER:
Printed Name:
------------------------
Signature:
---------------------------
Title (if applicable):
Address:
----------------------------
----------------------------
----------------------------
13
<PAGE> 1
EX 10.54
================================================================================
OPTION AGREEMENT
BY AND AMONG
SABRATEK CORPORATION,
UNITRON MEDICAL COMMUNICATIONS, INC.
AND
CERTAIN OF THE SHAREHOLDERS OF UNITRON
================================================================================
JANUARY 22, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1.
CALL OPTION AND PUT OPTION...............................................................................2
1.1 Grant of Call Option...................................................................2
1.2 Exercise of Call Option................................................................2
1.3 Grant of Put Option....................................................................3
1.4 Term of Put Option.....................................................................3
1.5 Exercise of Put Option.................................................................3
1.6 Restrictions on Transfer of Unitron Shares and Unitron Options.........................4
1.7 Documents Evidencing Unitron Shares....................................................5
1.8 Unitron Options........................................................................5
ARTICLE 2.
DETERMINATION AND PAYMENT OF PURCHASE PRICE..............................................................7
2.1 Purchase Price for Unitron Shares and Unitron Options..................................7
2.2 Payment of Purchase Price..............................................................8
ARTICLE 3.
CLOSING OF PURCHASE AND SALE OF SHARES..................................................................10
3.1 Closing...............................................................................10
3.2 Delivery of Certificates and Payment for Shares.......................................10
3.3 Election to Acquire Unitron Assets....................................................11
3.4 Sabratek Closing Representation.......................................................15
3.5 Final Legal Statements................................................................15
3.6 Notices and Consents..................................................................15
3.7 Time..................................................................................15
ARTICLE 4.
ADDITIONAL AGREEMENTS...................................................................................16
4.1 Conduct of Unitron Business...........................................................16
4.2 Financial Information; Access.........................................................18
4.3 Unitron Shareholder Solicitation......................................................19
4.4 Engagement of Unitron CEO.............................................................19
4.5 Audit of Unitron Financial Statements.................................................19
4.6 Sabratek Reports......................................................................20
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
4.7 Covenants by Unitron Affiliates With Respect to Sabratek Stock........................20
4.8 HSR Filing............................................................................20
4.9 Additional Unitron Financing..........................................................21
4.10 Public and Other Statements...........................................................21
4.11 Unitron Legal Opinion.................................................................21
4.12 Sabratek Legal Opinion................................................................21
4.13 Unitron Special Meeting...............................................................21
4.14 Waiver of Known Breaches..............................................................22
4.15 Unitron Source Code...................................................................22
4.16 Transactions in Sabratek Stock by Unitron Shareholders................................22
4.17 Release of Sponaugle..................................................................22
4.18 Buyout of Non-Accredited Investors....................................................22
4.19 ......................................................................................22
4.20 Sexual Harassment Policy..............................................................23
ARTICLE 5.
CONDITIONS TO CLOSING...................................................................................23
5.1 Conditions to Obligation of Sabratek..................................................23
5.2 Conditions to Obligations of Unitron and the Unitron Shareholders.....................25
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES..........................................................................25
6.1 Representations and Warranties of Unitron Shareholders................................25
6.2 Representations and Warranties of Unitron.............................................28
6.3 Representations and Warranties of Sabratek............................................39
ARTICLE 7.
PURCHASE PRICE OFFSET; INDEMNIFICATION..................................................................43
7.1 Purchase Price Offset: Determination of Damages Offset...............................43
7.2 Indemnification.......................................................................45
7.3 Third Party Claims....................................................................47
7.4 Exclusivity...........................................................................48
ARTICLE 8.
TERMINATION.............................................................................................48
8.1 Right to Terminate....................................................................48
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 9.
GENERAL PROVISIONS......................................................................................50
9.1 Dispute Resolution....................................................................50
9.2 Remedies Cumulative...................................................................51
9.3 Assignment; Binding Effect............................................................51
9.4 Notices...............................................................................51
9.5 Entire Agreement; Amendment; Treatment of Other Agreements............................53
9.6 Severability..........................................................................54
9.7 Governing Law.........................................................................54
9.8 Interpretation........................................................................54
9.9 Disclosure Schedules..................................................................54
9.10 Counterparts..........................................................................54
9.11 Waiver................................................................................55
9.12 Expenses..............................................................................55
9.13 Exhibits and Schedules................................................................55
EXHIBITS:
Exhibit A Certificates Escrow Agreement
Exhibit B Frasca Closing Escrow Terms
Exhibit C Frasca Closing Escrow Agreement
Exhibit D Form of Regulation D Questionnaire
Exhibit E Form of Release Agreement
Exhibit F Substance of Opinion of Special Counsel to Unitron
Exhibit G Substance of Opinion of Special Counsel to Sabratek
</TABLE>
-iii-
<PAGE> 5
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made and entered into on
January 22, 1999 (the "Effective Date") by and among SABRATEK CORPORATION, a
Delaware corporation ("Sabratek"), UNITRON MEDICAL COMMUNICATIONS, INC., a
Florida corporation ("Unitron"), and the holders of Unitron common stock,
options, warrants and/or other rights to purchase Unitron common stock parties
hereto (collectively, the "Unitron Shareholders").
RECITALS:
A. Unitron, certain shareholders of Unitron and Sabratek are parties to
that certain Stock Option Agreement dated July 1, 1997 (the "1997 Option
Agreement") and that certain Registration Rights Agreement dated July 1, 1997
(the "1997 Registration Agreement" and together with the 1997 Option Agreement,
the "1997 Agreements"). Sabratek and Unitron desire to terminate the 1997
Agreements and to replace them with this Agreement and the agreements
contemplated hereby, except that the termination of the 1997 Agreements is
contingent upon among other things Unitron Shareholders holding 92.5% or more of
the fully diluted equity of Unitron becoming a party to this Agreement in
accordance with the terms of this Agreement (the "Necessary Shareholder
Parties"). All other agreements between Sabratek and Unitron and the rights of
the parties thereunder will remain unaffected by the replacement of the 1997
Agreements with this Agreement and the agreements contemplated hereby, and such
other agreements remain in full force and effect and not be terminable as a
result of this Agreement and the agreements contemplated hereby.
B. Sabratek desires to obtain the right to purchase all of the equity
interests in Unitron as contemplated by this Agreement. The Unitron Shareholders
are willing to grant to Sabratek the right to purchase all of the equity
interests in Unitron that may be held by them from time to time at or after the
Effective Date, subject to and in accordance with the terms and conditions set
forth in this Agreement. The Unitron Shareholders desire to obtain from Sabratek
the right to require Sabratek to purchase all of their equity interests in
Unitron, and Sabratek is willing to grant such right to the Unitron
Shareholders, subject to and in accordance with the terms and conditions set
forth in this Agreement.
C. At the election of Sabratek, Sabratek may acquire all of the assets
of Unitron (in lieu of the equity of Unitron) and in connection therewith assume
or pay for certain Unitron liabilities, subject to and in accordance with the
terms of this Agreement.
D. Concurrently with the execution and delivery of this Agreement, the
following agreements and instruments are being entered into and delivered:
1
<PAGE> 6
- Registration Rights Agreement by and among Sabratek and certain
of the equity holders of Unitron (the "Registration Agreement").
- Term sheets involving Sabratek and Unitron and certain other
parties regarding the commercialization of the Unitron technology
in the United Kingdom (the "UK Agreements").
- Resignations from Unitron of Ralph V. Frasca ("Frasca").
- Shareholders Agreement by and among Sabratek, Frasca, Marvin L.
Sponaugle ("Sponaugle"), Roger L. Overby ("Overby") and Edward
Presutti.
- Separation Agreement by and between Sabratek and Frasca (the
"Frasca Separation Agreement").
- Consulting and Non-Competition Agreement by and between Sabratek
and Overby (the "Overby Consulting Agreement").
E. Prior to the execution and delivery of this Agreement by Unitron and
Sabratek, the sole director of the Board of Directors of Unitron (the "Unitron
Board") duly elected Chuck Hall, Jay Hill and Paul Jurewicz to the Unitron
Board. Immediately following such elections, Frasca duly resigned from the
Unitron Board as contemplated by the resignations described above.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, the parties agree as follows:
ARTICLE 1
CALL OPTION AND PUT OPTION
1.1 Grant of Call Option. On the terms and subject to
the conditions set forth in this Agreement, each of the
Unitron Shareholders hereby grants to Sabratek an option
to purchase all, but not less than all, of the shares of
capital stock (Class A and/or Class B Common Shares) of
Unitron (the "Unitron Shares") owned by such Unitron
Shareholder from time to time at or after the Effective
Date and to purchase (or to cause Unitron to repurchase
or terminate) as provided in this Agreement all, but not
less than all, of the issued and outstanding options,
warrants and other rights to purchase Unitron Shares
(the "Unitron Options") owned by such Unitron
Shareholder from time to time at or after the Effective
2
<PAGE> 7
Date (the "Call Option") for the consideration
determined in accordance with the terms of this
Agreement.
1.2 Exercise of Call Option. Unless this Agreement is
terminated pursuant to Section 8.1, the Call Option may
be exercised by Sabratek in its sole discretion at any
time after the Effective Date and at or before 5:00 p.m.
(Central Time) on July 15, 1999 (the "Call Option
Period") by delivery of written notice of exercise to
Unitron and the Unitron Representative Shareholders (the
"Call Exercise Notice") on any date during the Call
Option Period (the "Call Exercise Date"). The form of
the Call Exercise Notice shall be as set forth on
Schedule 1.2. The Call Exercise Notice shall be
irrevocable. Consummation of the purchase and sale of
the Unitron Shares and the Unitron Options (the
"Closing") shall occur (subject to the following
sentence and the terms and conditions of this Agreement)
on the date specified by Sabratek in the Call Exercise
Notice; provided that the specified Closing Date shall
be a date occurring at least 3 business days after the
Call Exercise Date but not more than 8 business days
after the Call Exercise Date. The "Closing Date" shall
be such date as is specified by Sabratek in the Call
Exercise Notice, or if later the third business day
following the satisfaction or waiver of all conditions
to the obligations of the parties to this Agreement to
consummate the transactions contemplated hereby (other
than conditions with respect to actions the respective
parties will take at the Closing itself) or if later the
third business day following the completion of any
arbitration conducted with respect to Section 7.1 or
with respect to the determination of the amount of the
Differential Tax Liability or the Unitron Cash Asset
Sale Tax Liability (as each is hereinafter defined) as
contemplated by Section 3.3. Upon the Closing, the
Unitron Shareholders shall have no further rights with
respect to their previously owned Unitron Shares and
Unitron Options.
1.3 Grant of Put Option. On the terms and subject to
the conditions set forth in this Agreement, Sabratek
hereby grants to the Unitron Shareholders the right to
require Sabratek to purchase all, but not less than all,
of the Unitron Shares and Unitron Options owned by the
Unitron Shareholders from time to time at or after the
Effective Date (the "Put Option") for the consideration
determined in accordance with the terms of this
Agreement.
3
<PAGE> 8
1.4 Term of Put Option. The Put Option granted
hereunder shall become exercisable on and as of the
first business day immediately following the expiration
of the Call Option Period and shall continue in effect
for a period of 10 business days (the "Put Option
Period").
1.5 Exercise of Put Option. The Put Option may be
exercised during the Put Option Period by the Unitron
Representative Shareholders (as hereinafter defined)
delivering to Sabratek written notice (the "Put Exercise
Notice") of exercise at any time (the "Put Option
Exercise Date") on or before 5:00 p.m. (Central Time) on
the last day of the Put Option Period. The form of the
Put Exercise Notice shall be as set forth on Schedule
1.2. Such election of the Unitron Representative
Shareholders shall be binding on all Unitron
Shareholders, and each of the Unitron Shareholders
hereby agrees to any such exercise of the Put Option.
This provision constitutes a power of attorney granted
to the Unitron Representative Shareholders, and this
power or attorney shall be irrevocable and coupled with
an interest from the date of execution of this Agreement
by such Unitron Shareholder through the last day of the
Put Option Period. All of the Unitron Shareholders will
sell all of their Unitron Shares and Unitron Options to
Sabratek in the event the Put Option is exercised in
accordance with this Section. The power of attorney
granted to the Unitron Representative Shareholders
herein includes all powers necessary to exercise the Put
Option and effectuate a sale of Unitron Shares and
Unitron Options on behalf of any Unitron Shareholder in
accordance with the terms of this Section. The Put
Exercise Notice shall be irrevocable. Consummation of
the purchase and sale of the Unitron Shares (also the
"Closing") shall occur (subject to the following
sentence and the terms and conditions of this Agreement)
on the date specified by Sabratek; provided that the
specified Closing Date shall be a date occurring at
least 3 business days after the end of the Put Option
Period but not more than 8 business days after the end
of the Put Option Period. The "Closing Date" shall be
such date as is specified by Sabratek, or if later the
third business day following the satisfaction or waiver
of all conditions to the obligations of the parties to
this Agreement to consummate the transactions
contemplated hereby (other than conditions with respect
to actions the respective parties will take at the
Closing itself) or if later the third business day
following the completion of any arbitration conducted
with respect to Section 7.1 or with respect to the
determination of the amount of the Differential Tax
Liability or the Unitron Cash Asset Sale Tax Liability
(as each is hereinafter defined) as contemplated by
Section 3.3. Immediately following the Closing, the
4
<PAGE> 9
Unitron Shareholders shall have no further rights with
respect to their previously owned Unitron Shares and
Unitron Options.
1.6 Restrictions on Transfer of Unitron Shares and
Unitron Options.
(a) Transfer Restrictions. Each of the Unitron
Shareholders expressly agrees that, prior to
termination of this Agreement in accordance with
Section 8.1 hereof, such Shareholder will not,
without the express prior written consent of
Sabratek:
(i) 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 Unitron Shares or
Unitron Options, or the certificate or
certificates representing the same, or any
interest therein, except as expressly set
forth in this Agreement; provided, that a
Unitron Shareholder may transfer all or part
of its Unitron Shares or Unitron Options
without any consideration to not more than
three transferees, so long as any such
transferee is either a trust, partnership or
other entity solely for such Unitron
Shareholder's benefit or such Shareholder's
spouse, parent and/or descendant, and so long
as such Shareholder obtains and furnishes to
Sabratek, prior to any such transfer, a
writing signed by the proposed transferee
expressly acknowledging that such transferee
shall be bound by the terms of this Agreement
and that such Unitron Shares and Unitron
Options are subject to the provisions of this
Agreement with respect to the Call Option and
the Put Option; or
(ii) Enter into any voting trust, shareholder
agreement or other understanding with any
person with respect to the Unitron Shares or
Unitron Options, except with Sabratek;
provided, that this paragraph shall not affect
the right of a Unitron Shareholder to vote for
the election of directors or to exercise other
customary rights of a shareholder with respect
to Unitron prior to the Closing.
5
<PAGE> 10
Any purported transfer or other action in violation of the foregoing
restrictions shall be null and void. Unitron shall not register on its books any
transfer or other disposition of Unitron Shares or Unitron Options other than in
accordance with the terms of this Agreement.
(b) Legend. All certificates representing Unitron
Shares held by the Unitron Shareholders, and any
certificates for Unitron Shares issued on or after
the Effective Date in accordance with the terms of
this Agreement (including Unitron Shares issued
upon exercise of Unitron Options), shall contain or
be amended to contain substantially the following
legend, which shall bind Unitron, the Unitron
Shareholders and any persons asserting any interest
in the certificates and the Unitron Shares they
represent:
The shares represented by this certificate and this certificate are
subject to the terms of a certain Option Agreement dated January 22,
1999 (the "Option Agreement"), by and among the holder of the shares
represented by this certificate, Unitron Medical Communications, Inc.
("Unitron"), certain other shareholders of Unitron and Sabratek
Corporation, a copy of which Option Agreement is on file at the
principal office of Unitron. Neither this certificate nor the shares
evidenced hereby nor any portion thereof or any interest therein may be
offered, pledged, hypothecated, sold, gifted or otherwise transferred
in violation of said Option Agreement, and any such purported transfer
shall be null, void and of no effect. The shares represented by this
certificate are subject to a Call Option and a Put Option granted under
said Option Agreement.
1.7 Documents Evidencing Unitron Shares. Each of the
Unitron Shareholders upon entering into this Agreement
shall deliver or cause to be delivered (and Unitron will
so comply with such instructions) to a third party
escrow agent who is mutually acceptable to Sabratek and
Unitron a certificate or certificates evidencing all
Unitron Shares held by such Unitron Shareholder,
together with a stock power or stock powers for such
certificate(s), duly endorsed in blank for transfer.
Promptly following the execution of this Agreement, the
parties to this Agreement shall enter into an escrow
agreement in the form of Exhibit A attached hereto with
the mutually selected escrow agent (the "Certificates
Escrow Agreement"), and Unitron and Sabratek shall
equally share the fees and expenses of such escrow
agent. Upon receipt of any subsequently issued Unitron
Shares (including Unitron Shares issued upon exercise of
Unitron Options), each of the Unitron Shareholders shall
deliver or cause to be delivered to such escrow agent a
certificate or certificates evidencing all such Unitron
Shares (and Unitron shall so deliver any such
certificates), together with a
6
<PAGE> 11
stock power or stock powers for such certificate(s),
duly endorsed in blank for transfer.
1.8 Unitron Options.
(a) At the sole and absolute discretion of
Sabratek, each Unitron Option shall be (i)
terminated upon the Closing in exchange for the
consideration specified in Article 2 or (ii)
converted into an option to purchase Sabratek Stock
as provided in this Section; provided that such
conversion election may only be made by Sabratek
with respect to any Unitron Option upon the consent
of the respective Unitron Option holder (the
"Conversion Election").
(b) At the Closing, each then outstanding Unitron
Option as to which the Conversion Election has been
validly exercised by Sabratek shall be converted
into an option (a "Sabratek Replacement Option") to
acquire the number of shares of Sabratek Stock
which the holder of such Unitron Option would have
been entitled to receive at the Closing had such
holder exercised such Unitron Option in full
immediately prior to the Closing. The exercise
price per share of the Sabratek Replacement Option
shall equal the aggregate exercise price of such
Unitron Option divided by the number of shares of
Sabratek Stock issuable upon exercise of the
Sabratek Replacement Option issued in lieu thereof.
Each Sabratek Replacement Option which is granted
to a person who becomes subsequent to the Closing
Date an employee of Sabratek shall vest in full and
be exercisable upon but not before the first
anniversary of the Closing contingent upon the
continued employment of the holder until such
vesting date and shall be exercisable until the
five year anniversary of the Closing; provided,
however, in the event the employment of such a
holder is terminated by Sabratek prior to such one
year anniversary without cause, the Sabratek
Replacement Option of such holder shall immediately
vest and be exercisable for a period of one month
following such termination of employment. Each
Sabratek Replacement Option which is granted to a
person who does not become subsequent to the
Closing Date an employee of Sabratek shall be fully
vested and immediately exercisable on the Closing
Date.
7
<PAGE> 12
(c) As soon as practicable following the Closing,
Sabratek shall deliver to each holder of a Unitron
Option for which the Conversion Election has been
duly made by Sabratek an option agreement
evidencing the Sabratek Replacement Option issued
in lieu thereof. Such option agreement shall be in
the customary form of, and contain the customary
terms in, the option agreement currently used by
Sabratek under its primary employee stock option
plan, except as may otherwise be expressly
contemplated by this Agreement, and any Sabratek
Replacement Option shall be subject to such plan.
(d) Sabratek shall take all corporate action
necessary to reserve for issuance a sufficient
number of shares of Sabratek Stock for delivery on
exercise of all Sabratek Replacement Options issued
pursuant to this Section. As soon as reasonably
practicable after the Closing (but in any event
prior to the exercise of any Sabratek Replacement
Option), Sabratek shall file a registration
statement on Form S-8 (or any successor or other
appropriate form) with respect to the shares of
Sabratek Stock subject to the Sabratek Replacement
Options and shall use reasonable best efforts to
maintain the effectiveness of such registration
statement or registration statements for so long as
the Sabratek Replacement Options remain
outstanding.
ARTICLE 2
DETERMINATION AND PAYMENT OF PURCHASE PRICE
2.1 Purchase Price for Unitron Shares and Unitron Options.
(a) The purchase price (the "Share Purchase
Price") to be paid by Sabratek for all of the
Unitron Shares purchased pursuant to the Call
Option or the Put Option, as the case may be, shall
be an amount equal to (i) the Fixed Value of
Unitron (as defined below) plus the aggregate
exercise price of the unexercised portions of all
Unitron Options outstanding immediately prior to
the Closing, divided by (ii) the number of shares
of Unitron capital stock which are issued and
outstanding at the Closing, plus the number of
shares of Unitron capital stock which are issuable
upon the exercise of options, warrants or other
rights, plus the number of shares of Unitron
capital stock which are issuable upon the
8
<PAGE> 13
conversion or exchange of other securities, plus
the number of any other equity securities or stock
appreciation or other rights (such quotient being
referred to herein as the "Fully Diluted Price Per
Share"), multiplied by (iii) the number of Unitron
Shares which are purchased by Sabratek at the
Closing, subject to Section 7.1. Each of the
Unitron Shareholders shall be entitled to his or
her proportionate share of the Share Purchase Price
based on the number of Unitron Shares being sold by
such Unitron Shareholder, subject to Section 7.1.
(b) The purchase price (the "Option Purchase
Price") to be paid by Sabratek for each of the
Unitron Options (other than any Unitron Option for
which a Conversion Election has been duly made)
shall equal (i) the Fully Diluted Price Per Share,
less (ii) the exercise price per share of such
Unitron Option, multiplied by (iii) the number of
Unitron Shares obtainable upon exercise of such
Unitron Option immediately prior to the Closing in
accordance with the terms of such Unitron Option
(determined on a holder by holder basis), subject
to Section 7.1. If any option is not in-the-money
at the Closing (that is, the Fully Diluted Price
Per Share is equal to or less than the exercise
price per share of such option), then such option
shall be terminated at the Closing for no
consideration.
(c) The "Fixed Value of Unitron" shall be an
amount equal to (i) $14,800,000 less (ii) the
amount (if any) by which the total of all legal
costs and expenses paid to or payable by Unitron to
Shumaker, Loop & Kendrick LLP from at any time
prior to the date of this Agreement through and
including the Closing in connection with this
transaction and any matters relating hereto (the
"Final Legal Expenses") exceed $125,000.
(d) The aggregate Share Purchase Price and Option
Purchase Price (less any offset or escrow expressly
contemplated by this Agreement) is referred to
herein as the "Purchase Price."
(e) The Purchase Price payable to each of the
Unitron Shareholders is subject to reduction for
the amount of any Damages (as hereinafter defined)
incurred or reasonably expected to be incurred by
Sabratek or Unitron (if any) proximately caused by
any material inaccuracy in any of the
representations and warranties of Unitron contained
in Section 6.2 (the "Damages
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<PAGE> 14
Offset"), as determined in accordance with Section
7.1 and as allocated among the Unitron Shareholders
in accordance with Section 7.1, but such offset
against the Purchase Price shall be subject to a
one-time deductible to be borne by Sabratek equal
to $250,000.
(f) Notwithstanding the foregoing, the Purchase
Price otherwise payable to Frasca at the Closing
shall be reduced by an amount equal to the lesser
of (x) $2 million less the amount of any Damages
Offset pursuant to Section 7.1 made prior to or at
the Closing against the Purchase Price otherwise
payable to Frasca at the Closing and (y) $1
million, which amount shall be placed into escrow
and shall be dealt with by Frasca and Sabratek in
accordance with Section 7.2 of this Agreement and
Exhibit B attached hereto (the "Frasca Closing
Escrow"). If only Sabratek Stock is issued in
payment of the Purchase Price, the "amount" placed
into escrow as provided above shall be such number
of shares of Sabratek Stock (rounded up to the next
whole number of shares) as are equal in value to
such amount to be placed into escrow, with such
shares being valued at the Sabratek Average Closing
Price. If Sabratek Stock and cash is issued in
payment of the Purchase Price, the "amount" placed
into escrow as provided above shall consist of to
the extent possible shares of Sabratek Stock (that
is, if the Sabratek Stock portion of the Purchase
Price to be paid to Frasca is not of sufficient
value to satisfy the escrow obligation described
above, all of such Sabratek Stock and then cash
shall be placed in escrow), with such shares being
valued at the Sabratek Average Closing Price. The
Frasca Closing Escrow shall be governed by the
escrow agreement attached as Exhibit C hereto, and
the escrow agent with respect to the Frasca Closing
Escrow shall be mutually agreeable to Sabratek and
Frasca.
2.2 Payment of Purchase Price.
(a) Full Payment at Closing. The Purchase Price
shall be payable in full at the Closing, except as
otherwise expressly provided in this Agreement. At
the sole and absolute discretion of Sabratek, the
Purchase Price may be paid (x) in cash (or other
immediately available funds), (y) in that number of
shares of Sabratek Stock as are equal in value (as
contemplated by Section 2.2(c) below) to the
Purchase Price or (z) in cash and Sabratek Stock
(in such proportion as Sabratek in its sole
discretion may
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<PAGE> 15
determine) as are equal in value (as contemplated
by Section 2.2(c) below) to the Purchase Price;
provided, that if the per share price of Sabratek
Stock (as defined below) on the Sabratek Principal
Market (as defined below) is less than $10.00 per
share at the close of trading on any of the days in
the ten Trading Day (as defined below) period
ending on and including the third Trading Day prior
to Closing, the Unitron Representative Shareholders
shall have the option of requiring Sabratek to pay
the Purchase Price in cash or other immediately
available funds; provided further, that Sabratek
shall not be required to issue fractional shares of
Sabratek Stock to any of the Unitron Shareholders
and, at its option, may pay cash in lieu of issuing
a fractional share of Sabratek Stock to any Unitron
Shareholder otherwise entitled to receive such
fractional share. Notwithstanding the foregoing, in
the event Sabratek fails to deliver the Sabratek
Closing Representation (as hereinafter defined) in
accordance with the provisions of Section 3.4, then
the entire amount of the Purchase Price shall be
payable in cash or other immediately available
funds.
(b) Sabratek Stock. For purposes of this
Agreement, the term "Sabratek Stock" means shares
of voting common stock of Sabratek which as of the
Closing: (i) constitute duly authorized, validly
issued, fully paid and non-assessable shares of
Sabratek's sole class of voting common stock; (ii)
have been listed for trading on the principal
securities exchange or other market on which the
common stock of Sabratek is then traded (which is
currently the Nasdaq National Market) (the
"Sabratek Principal Market"); and (iii) are covered
by the terms of the Registration Agreement.
(c) Value of Sabratek Stock. For purposes of
determining the number of shares of Sabratek Stock
(if any) to be issued to the Unitron Shareholders
in payment of the Purchase Price, the value of each
share of Sabratek Stock as of the Closing shall
equal the greater of (i) the average of the per
share closing prices of a share of Sabratek Stock
on the Sabratek Principal Market, as reported in
The Wall Street Journal (Midwest edition), during
the 10 Trading Day (as defined below) period ending
on and including the third Trading Day prior to the
Closing Date (the "Sabratek Average Closing Price")
and (ii) $26.00 (the "Floor Price"). As used
herein, the term "Trading Day" means any day on
which the Sabratek Principal Market is open for
business. At the sole and absolute discretion of
Sabratek, the value of each share of Sabratek Stock
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<PAGE> 16
shall be equal to the Sabratek Average Closing
Price in lieu of the Floor Price as contemplated by
this subsection, and the rights of the Unitron
Shareholders specified under subsection (d) below
shall be null and void in such event and the
Unitron Shareholders will not be entitled to any
such rights.
(d) Right to Additional Sabratek Stock.
(i) If Sabratek Stock comprises all or part
of the Purchase Price and if the Sabratek
Average Closing Price is less than $26.00,
then Sabratek shall pay to the Unitron
Shareholders an amount equal to the Aggregate
Stock Price Differential (as hereinafter
defined) if and as provided in this
subsection. Each Unitron Shareholder shall be
entitled to a pro rata portion of the
Aggregate Stock Price Differential in
accordance with the respective amount of the
Purchase Price such Unitron Shareholder
received at the Closing; provided that (i) any
holder of a Unitron Option who received a
Sabratek Replacement Option at the Closing
shall be deemed to have received a portion of
the Purchase Price that would have been paid
for the respective underlying Unitron Option
had a Sabratek Replacement Option not been
issued therefor and (ii) the amount if any
amount placed into the Frasca Closing Escrow
shall be deemed to have been part of the
Purchase Price paid to Frasca at the Closing.
The Aggregate Stock Price Differential shall
be paid by Sabratek in Sabratek Stock on the
fifth Trading Day after the Last Trading Day
(as hereinafter defined), with each share of
Sabratek Stock having a value equal to the 6
Month Anniversary Average Closing Price (as
hereinafter defined), except that cash shall
be paid in lieu of any fractional share. This
right of the Unitron Shareholders to the
Aggregate Stock Price Differential is and
shall be of no effect and is and shall be
inoperative unless the per share closing price
of a share of Sabratek Stock on the Sabratek
Principal Market, as reported in The Wall
Street Journal (Midwest edition), does not
equal or exceed $26.00 on any 10 or more
Trading Days in the period beginning on the
Trading Day next following the Closing Date
and ending on the last Trading Day in the 6
month period immediately following the Closing
Date (the last Trading Day of such period, the
"Last Trading
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<PAGE> 17
Day"). In the event of the Asset Acquisition
Alternative (as hereinafter defined), Unitron
in lieu of the Unitron Shareholders shall have
a right if any to the Aggregate Stock Price
Differential.
(ii) "Aggregate Stock Price Differential"
means (i) $26.00 less (ii) the 6 Month
Anniversary Average Closing Price multiplied
by (iii) the number of shares of Sabratek
Stock issued at the Closing. "6 Month
Anniversary Average Closing Price" means the
average of the per share closing prices of a
share of Sabratek Stock on the Sabratek
Principal Market, as reported in The Wall
Street Journal (Midwest edition), during the
consecutive 10 Trading Days (as defined below)
ending on the Last Trading Day.
(iii) The right if any of a Unitron Shareholder
to a portion of the Aggregate Stock Price
Differential shall not be sold, assigned,
pledged, gifted, conveyed, transferred or
otherwise disposed of (a "Transfer") by any
Unitron Shareholder, except by will or the
laws of descent and distribution. Any Transfer
in violation of this subsection shall be null
and void.
ARTICLE 3
CLOSING OF PURCHASE AND SALE OF SHARES
3.1 Closing. The Closing of the purchase and sale of
the Unitron Shares and the termination or conversion of
the Unitron Options pursuant to the exercise of the Call
Option or the Put Option, as the case may be, under this
Agreement shall take place on the Closing Date. The
Closing will be held at 10:00 a.m. local time on the
Closing Date at Kirkland & Ellis, 200 East Randolph
Drive, Chicago, Illinois or at such other time and place
as is mutually agreed to by Sabratek and Unitron.
3.2 Delivery of Certificates and Payment for Shares. At
the Closing, Sabratek will deliver to the Unitron
Shareholders the Purchase Price for the Unitron Shares
and the Unitron Options (other than any Unitron Option
for which a Conversion Election has been duly made) in
accordance with the terms of Article 2 hereof, subject
to the terms and conditions of this Agreement. The
Unitron Shareholders will deliver or cause to be
delivered certificates representing all of the Unitron
Shares to
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<PAGE> 18
be sold, duly endorsed or accompanied by stock powers
executed and in form sufficient to vest title thereto
fully in Sabratek, to the extent not theretofore
delivered to the escrow agent under the Certificates
Escrow Agreement, free and clear of all liens, claims
and encumbrances, and any option, warrant or other
agreement representing Unitron Options (together with a
letter of termination thereof by the respective option
holder) and Sabratek and the Unitron Representative
Shareholders shall jointly direct the escrow agent under
the Certificates Escrow Agreement to deliver the
contents of such escrow at the Closing to Sabratek
(which shall be free and clear of all liens, claims and
encumbrances), against delivery by Sabratek of the
applicable consideration to be paid with respect to such
Unitron Shares and Unitron Options. 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. If Unitron or any Unitron Shareholder so fails or
refuses to deliver (or so fails to cause) the
certificates for his or her Unitron Shares or any
option, warrant or other agreement representing Unitron
Options (together with a letter of termination thereof
by the respective holder), as required under the terms
of this Agreement, then: (a) Sabratek shall deposit such
Unitron Shareholder's proportionate share of the
Purchase Price and/or other consideration with an escrow
agent reasonably acceptable to the Unitron
Representative Shareholders; (b) such escrow agent shall
hold the same against delivery by the Unitron
Shareholder of his or her duly endorsed certificates for
the Unitron Shares or option, warrant or other agreement
representing Unitron Options (together with a letter of
termination thereof by the respective holder), with all
fees and other expenses of the escrow agent chargeable
to such Unitron Shareholder; and (c) Unitron shall
adjust its transfer books to reflect the transfer of
such Unitron Shareholder's Unitron Shares to Sabratek.
Each of the Unitron Shareholders hereby appoints the
Unitron Representative Shareholders as his or her
attorney-in- fact to execute and deliver all such
documents and instruments as may be needed to convey the
Unitron Shareholder's Unitron Shares to Sabratek
pursuant to this Agreement if the Unitron Shareholder is
not present at the Closing. This power of attorney is
coupled with an interest and does not terminate on the
Unitron Shareholder's disability or death, and shall
continue in effect through the later of: (a) if this
Agreement terminates in accordance with Section 8.1 in
its entirety prior to Closing, the day immediately after
this Agreement terminates; or (b) if the Call Option or
the Put Option, as the case may be, is exercised, the
90th day following the Closing Date.
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<PAGE> 19
3.3 Election to Acquire Unitron Assets.
(a) At the sole and absolute discretion of
Sabratek, Sabratek may elect to acquire from
Unitron all of its assets (the "Asset Acquisition
Alternative") in lieu of acquiring the Unitron
Shares and the Unitron Options pursuant to exercise
of the Call Option or the Put Option, and Unitron
shall sell, transfer, convey and deliver to
Sabratek such assets, for an amount to be paid to
Unitron (and not to the Unitron Shareholders) equal
to (the "Asset Acquisition Purchase Price"):
(i) the Purchase Price; plus
(ii) an amount equal to the liabilities and obligations of Unitron not
assumed by Sabratek as expressly contemplated by this Section
(including any liabilities or obligations with respect to any contract,
agreement or commitment by and between Unitron and Sabratek or
otherwise); plus
(iii) an amount equal to the Unitron Cash Asset Sale Tax Liability if
the Sabratek Average Closing Price is equal to or more than $26.00 and
if Sabratek uses other than only Sabratek Stock as consideration in the
Asset Acquisition Alternative; and plus
(iv) an amount equal to the Differential Tax Liability if the Sabratek
Average Closing Price Stock is less than $26.00 and Sabratek uses other
than only Sabratek Stock as consideration in the Asset Acquisition
Alternative (except for cash in lieu of fractional shares);
"Unitron Cash Asset Sale Tax Liability" means an amount equal
to the sum of: (i) any and all Federal, state and foreign income taxes imposed
on Unitron with regard to the sale of the assets of Unitron to Sabratek and any
assumption of Unitron liabilities by Sabratek as contemplated by the Asset
Acquisition Alternative, net of utilization of any net operating loss
carryforward or any other available tax offsets or credits; and (ii) plus any
and all Federal, state and foreign income taxes that would be imposed on Unitron
as a result of the payment by Sabratek of the Unitron Cash Asset Sale Tax
Liability.
"Differential Tax Liability" means an amount equal to the
excess of: (i) any and all Federal, state and foreign income taxes imposed on
Unitron with regard to the sale of the assets of Unitron to Sabratek and any
assumption of Unitron liabilities by Sabratek pursuant to the Asset Acquisition
Alternative, net of utilization of any net operating loss carryforward or any
other available tax offsets or credits (as such amount is estimated as of the
Closing in good faith by Sabratek and the Unitron Representative Shareholders),
over (ii) any and all Federal, state and foreign income taxes that would have
been imposed on Unitron with regard to the sale of the
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<PAGE> 20
assets of Unitron to Sabratek and any assumption of Unitron liabilities by
Sabratek pursuant to the Asset Acquisition Alternative had such asset sale
occurred on the Effective Date, net of utilization of any net operating loss
carryforward or any other available tax offsets or credits; plus any income
taxes imposed on Unitron as a result of the payment by Sabratek of the
Differential Tax Liability. Unitron and its auditors will (i) make available to
Sabratek and to the Unitron Representative Shareholders and their respective
agents, attorneys and accountants upon reasonable advance notice all records and
work papers necessary to calculate the Differential Tax Liability and (ii) allow
Sabratek and the Unitron Representative Shareholders and their respective
agents, attorneys and accountants upon reasonable advance notice to interview
any Unitron personnel or independent auditor personnel in connection with the
calculation of the Differential Tax Liability. If Sabratek and the Unitron
Representative Shareholders agree upon the Differential Tax Liability, such
amount will be conclusive and binding upon all parties.
(b) Sabratek shall make the Asset Acquisition
Alternative by so specifying in the Call Exercise
Notice in the event the Call Option is exercised
or, in the event the Put Option is exercised, by
delivery of written notice to Unitron within 5
business days of receipt by Sabratek of the Put
Exercise Notice.
(c) At the sole and absolute discretion of
Sabratek, the Asset Acquisition Purchase Price may
be paid (x) in cash (or other immediately available
funds), (y) in that number of shares of Sabratek
Stock as are equal in value to the Asset
Acquisition Purchase Price or (z) in cash and
Sabratek Stock (in such proportion as Sabratek in
its sole discretion may determine) as are equal in
value (as contemplated by Section 2.2(c) above) to
the Asset Acquisition Purchase Price; provided,
that if the per share price of Sabratek Stock on
the Sabratek Principal Market is less than $10.00
per share at the close of trading on any of the
days in the ten Trading Day period ending on and
including the third Trading Day prior to Closing,
the Unitron Representative Shareholders shall have
the option of requiring Sabratek to pay the Asset
Acquisition Purchase Price in cash or other
immediately available funds; provided further, that
Sabratek shall not be required to issue fractional
shares of Sabratek Stock and, at its option, may
pay cash in lieu of issuing a fractional share of
Sabratek Stock. For purposes of the foregoing,
Sabratek Stock shall be valued at the price
specified in Section 2.2(c). Notwithstanding the
foregoing, in the event Sabratek fails to deliver
the Sabratek Closing Representation in accordance
with the provisions of Section 3.4, then the entire
amount of the Asset
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<PAGE> 21
Acquisition Purchase Price shall be payable in cash
or other immediately available funds.
(d) In the event Sabratek makes the Asset
Acquisition Alternative, at the Closing:
(i) Unitron will execute, acknowledge (if appropriate) and deliver to
Sabratek assignments (including intellectual property transfer
documents) and bills of sale in a form reasonably satisfactory to
Sabratek and such other instruments of sale, transfer, conveyance and
assignment as Sabratek and its counsel reasonably may request;
(ii) Sabratek will execute, acknowledge (if appropriate) and deliver to
Unitron an assumption (in a form reasonably satisfactory to the Unitron
Representative Shareholders) of the Unitron Liabilities, except that in
the sole and absolute discretion of Sabratek, Sabratek may elect to not
assume any Unitron Liabilities and to instead pay to Unitron the amount
thereof as contemplated by subsection (a) above; and
(iii) Sabratek will deliver to Unitron the Asset Acquisition Purchase
Price.
"Unitron Liabilities" means all liabilities and obligations of
Unitron (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), other than (i) any liabilities
or obligations of Unitron if and to the extent such relate to acts, omissions,
events or circumstances which occur on or before the Effective Date, except to
the extent such are disclosed in the Unitron disclosure schedule or in the
Balance Sheet, (ii) any liabilities or obligations of Unitron if and to the
extent that such liability or obligation arises from or relates to a breach of
any of the representations and warranties of Unitron in this Agreement or in any
agreement described specifically in the recitals to this Agreement and (iii) any
and all Federal, state and foreign income taxes imposed on Unitron with regard
to the sale of the assets of Unitron to Sabratek and any assumption of Unitron
liabilities by Sabratek as contemplated by the Asset Acquisition Alternative.
Sabratek shall pay to Unitron an amount equal to the Special
Unitron Tax Liability if the Sabratek Average Closing Price is equal to or more
than $26.00 and if Sabratek uses only Sabratek Stock as consideration in the
Asset Acquisition Alternative, but only if the Special Unitron Tax Liability is
actually incurred by Unitron, except that such payment obligation of Sabratek
shall be null and void if Unitron fails to timely liquidate after the Closing as
contemplated by the Code (as hereinafter defined), if the capitalization UK
Agreement to the extent such relates to US Ventures (as defined therein) is not
performed as specified therein or if Unitron fails to take any action or omits
to take any action after the Closing that causes the Special Unitron Tax
Liability to be incurred by Unitron. "Special Unitron Tax Liability" means an
amount equal to the sum of: (i) any and all Federal, state and foreign income
taxes imposed on
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Unitron with regard to the sale of the assets of Unitron to Sabratek and any
assumption of Unitron liabilities by Sabratek as contemplated by the Asset
Acquisition Alternative, net of utilization of any net operating loss
carryforward or any other available tax offsets or credits; and (ii) plus any
and all Federal, state and foreign income taxes that would be imposed on Unitron
as a result of the payment by Sabratek of the Unitron Cash Asset Sale Tax
Liability.
With respect to any financial indebtedness of Unitron assumed
by Sabratek as provided above, Sabratek shall use its reasonable best efforts to
either (i) cause Unitron to be fully and forever released in a writing
reasonably satisfactory to Unitron from such indebtedness or (ii) fully satisfy
and discharge such indebtedness and provide Unitron with evidence thereof
satisfactory to Unitron before the two month anniversary of the Closing Date.
(e) Except as otherwise provided in this
Agreement, at the Closing Sabratek shall offer
employment to all of the employees of Unitron on
terms substantially similar to those in effect for
each such respective employee, and neither Unitron
nor any Unitron Shareholder shall take any action
(or assist or encourage others in the taking of any
action) which would discourage any such Unitron
employee from accepting Sabratek's offer of
employment.
(f) The parties intend that the offset, escrow,
indemnity and other obligations and rights of
Sabratek, Unitron and the Unitron Shareholders
under this Agreement be fully applicable and
retained by Sabratek, Unitron and the Unitron
Shareholders in the event of the Asset Acquisition
Alternative, and such provisions shall be
accordingly interpreted and construed.
Consequently, among other things the Asset
Acquisition Purchase Price shall be subject to
reduction for any Damages Offset and shall be
reduced by any consideration paid into the Frasca
Closing Escrow as contemplated by this Agreement.
(g) If the consent or approval of any third party
is required for the assignment or transfer of any
agreement, contract, lease, license, permit or the
like to Sabratek hereunder as a result of the Asset
Acquisition Alternative and such consent or
approval has not been obtained prior to the
Closing, then Unitron shall continue to use its
reasonable best efforts (prior to the time Unitron
is liquidated) to obtain such consent or approval
following the Closing (but any such consent shall
not be a condition to the Closing) and, unless and
until such consent or approval has been obtained,
the parties shall work together to develop and
implement a legal and feasible arrangement under
which Sabratek will obtain
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<PAGE> 23
the benefits of, and be responsible for the
performance of, all of the obligations of Unitron
under, the agreement, contract, lease or license in
question.
(h) Unitron and Sabratek shall equally share any
transfer and other similar taxes payable in
connection with the transfer to Sabratek of the
Unitron assets acquired by Sabratek upon the Asset
Acquisition Alternative; this provision does not
relate to any income or other tax related to the
sale of Unitron assets to Sabratek.
(i) Unitron shall with due speed liquidate and
dissolve, and Unitron shall accomplish such
liquidation and dissolution and any distribution of
any of the Asset Acquisition Purchase Price to its
equity holders only in accordance with applicable
law.
(j) The consummation of the Asset Acquisition
Alternative is also referred to herein as the
"Closing" and the date thereof as the "Closing
Date." Sabratek may transfer its rights under this
Agreement to acquire the assets of Unitron and to
assume certain liabilities of Unitron to a
wholly-owned subsidiary of Sabratek, and such
wholly-owned subsidiary shall acquire the assets of
Unitron and assume the liabilities of Unitron to be
assumed at the Closing for the Asset Acquisition
Purchase Price as contemplated by this Agreement.
3.4 Sabratek Closing Representation. At the Closing,
if Sabratek Stock comprises all or any part of the
Purchase Price (or, in case of the Asset Acquisition
Alternative, if Sabratek Stock comprises the Asset
Acquisition Purchase Price), then Sabratek shall deliver
to Unitron (on behalf of the Unitron Shareholders) a
written statement, signed on behalf of Sabratek by the
Chief Financial Officer or the President of Sabratek and
dated as of the Closing Date (the "Sabratek Closing
Representation"), representing and warranting to the
Unitron Shareholders that: (i) there have been no
material adverse changes in Sabratek's financial
condition, results of operations, assets, liabilities,
business or prospects since the date of Sabratek's then
most recent periodic report (10-K, 10-Q or 8-K) filed
with the SEC; and (ii) that the Registration Agreement
is in full force and effect. Notwithstanding anything to
the contrary contained herein, delivery of the Sabratek
Closing Representation shall not be deemed to be a
condition to Closing, but the Closing shall proceed with
the Purchase
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Price or the Asset Acquisition Purchase Price, as the
case may be, being payable only in cash or other
immediately available funds.
3.5 Final Legal Statements. At least 3 business days
prior to the Closing, Unitron shall cause to be
delivered to Sabratek a good faith estimate (which shall
be itemized by date and type of work performed) of the
Final Legal Expenses of Unitron, and at the Closing
Unitron shall cause to be delivered a similar final
legal bill which covers all such legal expenses through
the Closing.
3.6 Notices and Consents. Unitron will give any
notices to third parties, and Unitron will use its
reasonable best efforts to obtain any third party
consents, that Sabratek reasonably may request in
connection with the consummation of the transactions
contemplated by this Agreement. Each of the parties will
give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations,
consents and approvals of governments and governmental
agencies in connection with the matters referred to in
Section 6.2(d) and Section 6.3(d).
3.7 Time. Time is of the essence of the provisions of
this Agreement relating to (a) the Closing Date for the
sale and purchase of the Unitron Shares and the Unitron
Options (or the consummation of the Asset Acquisition
Alternative) in strict accordance with the time periods
set forth in this Agreement; and (b) the payment of the
Purchase Price or the Asset Acquisition Purchase Price,
as the case may be, as and when due in accordance with
the provisions of this Agreement.
3.8 General; Assistance. In case at any time after the
Closing any further action is necessary or desirable to
carry out the purposes of this Agreement, to facilitate
the operation and conduct of the business of Unitron and
to protect the intellectual property of Unitron, Frasca
and each of the other parties to this Agreement will
take such further action (including the execution and
delivery of such further instruments and documents) as
any other party reasonably may request, all at the sole
cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor
under Section 7.2).
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ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Conduct of Unitron Business. From and after the
Effective Date, Unitron shall continue to carry on its
business only in the usual, regular and ordinary course
of business, as heretofore conducted, and by way of
amplification and not limitation, Unitron will not,
without the prior written consent of Sabratek or as
otherwise contemplated by this Agreement or the Software
License Agreement, dated July 1, 1997 by and between
Unitron and Sabratek (the "License Agreement"):
(a) Declare or pay any dividend, or make any other
distribution with respect to its stock, to its
shareholders, whether in cash, stock or other
property, or redeem, purchase or otherwise acquire
any Unitron common stock or other Unitron capital
stock.
(b) Pre-pay or discharge any indebtedness or other
obligations owing by Unitron to a Related Party (as
hereafter defined) or any third-party lender other
than the current portion of any principal payments
and interest due (other than to a Related Party) in
accordance with the terms of such indebtedness.
(c) Issue any common stock or other capital stock
or any options, warrants or other rights to
subscribe for or purchase Unitron common stock or
any other Unitron capital stock or any securities
convertible into or exchangeable for any capital
stock of Unitron or any stock appreciation right or
equity linked security, except for the issuance of
capital stock upon the exercise of the Unitron
Options listed on the disclosure schedule
corresponding to Section 6.2(e)(ii).
(d) Effect a reclassification, recapitalization,
spin-off, split-up, exchange of shares,
readjustment or other similar change in or to any
Unitron capital stock or otherwise reorganize or
recapitalize.
(e) Amend or otherwise change its Amended and
Restated Articles of Incorporation as in effect on
the Effective Date.
(f) Amend or otherwise change its Bylaws as in
effect on the Effective Date.
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(g) Enter into any new, or modify any existing,
employment agreement (including with any chief
executive officer of Unitron engaged or proposed to
be engaged pursuant to Section 4.4) or grant any
increase in the compensation payable or to become
payable to officers or salaried employees not in
accordance with past custom and practice, grant any
stock options (including to any chief executive
officer of Unitron engaged or proposed to be
engaged pursuant to Section 4.4) or, except as
required by law or contemplated by this Agreement,
adopt or make any change in any bonus, insurance,
pension, or other employee benefit plan, agreement
or arrangement made to, for or with any of such
officers or employees.
(h) hire or terminate the employment of any chief
executive officer or president of Unitron.
(i) Borrow or agree to borrow any amount of funds,
or directly or indirectly guarantee or agree to
guarantee any obligations of others, except for
trade debt incurred in the ordinary course of
business and in accordance with past custom and
practice and except for any borrowing made under
the Sabratek Credit Facility as contemplated by
Section 4.9.
(j) Enter into or amend any material distribution,
marketing, license or similar agreement, contract
or commitment related to any Unitron product,
service or technology.
(k) Enter into any agreement, contract, commitment
or other transaction with a Related Party or amend
or otherwise extend the term of any existing
agreement with a Related Party.
(l) Place on any of its assets or properties any
mortgage, pledge, lien, charge, or other
encumbrance except for purchase money security
interests granted to the seller of any equipment
purchased by Unitron in the ordinary course of
business consistent with past custom and practice
or as otherwise permitted hereunder.
(m) Merge, consolidate with, purchase
substantially all or any substantial part of the
assets of, or otherwise acquire any interest in,
any partnership, corporation, association or other
business organization or division thereof.
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(n) Sell, lease, license, sublicense or otherwise
dispose of any material intellectual property asset
or any material part of its tangible or intangible
assets.
(o) Commit any act or fail to commit any act which
will cause a breach of any material agreement,
contract or commitment and which will have a
material adverse effect, in the aggregate, on
Unitron's business, financial condition, assets,
liabilities, properties or earnings.
(p) Enter into any contract or agreement the term
of which is greater than one year or which requires
one or more payments that in the aggregate exceed
$50,000, but excluding any such contract or
agreement which has been approved by the Unitron
Board.
(q) Make, or make any commitment for, any capital
expenditures exceeding $50,000 for any single
capital improvement, but excluding any such
contract or agreement which has been approved by
the Unitron Board.
(r) Enter into or change the terms of any joint
venture, whether operational or developmental.
(s) Enter into any commitment or agreement to do
any of the things prohibited by this Section 4.1.
In addition, Unitron will not, without the prior written consent of the
Unitron Representative Shareholders, take any of the actions described above in
this Section, other than any of the actions described under the following
clauses: (g); (h); (i) and (l) if the referenced actions relate to borrowings
under the Sabratek Credit Facility; (j) and (n) if the referenced actions are
approved by the Unitron Board; and clause (s) with respect to each exception
described in this sentence. In addition, the prior written consent of the
Unitron Representative Shareholders shall not be required with respect to the
grant of any Unitron employee stock option approved by the Unitron Board. Any
consent of the Unitron Representative Shareholders required by this paragraph
shall not be unreasonable withheld or delayed.
4.2 Financial Information; Access. From and after the
Effective Date, Unitron shall: (a) deliver to each of
the members of the Unitron Board and to the Unitron
Representative Shareholders copies of all internally
prepared monthly and quarterly financial statements as
soon as available but in any event within 30 days after
the end of each such period, as well as its year-end
financial statements as soon as available but in any
event
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within 60 days after the end of each such period (the
Sabratek representative on the Unitron Board shall be
entitled to disclose any such financial statements to
any Sabratek director or officer and to any Sabratek
agent or representative); and (b) give Sabratek and the
Unitron Representative Shareholders (except that this
right of the Unitron Representative Shareholders shall
not change or remove in any respect the restrictions on
Frasca contained in the Frasca Separation Agreement) and
their respective authorized representatives full access
to any and all premises, properties, contracts,
commitments, books, records, tax returns and supporting
schedules or other documentation, and other information
pertaining to Unitron's business as Sabratek or the
Unitron Representative Shareholders may from time to
time reasonably request; provided, that such access
shall not unduly disrupt Unitron's normal business
activities. Sabratek shall have the right to conduct
such additional due diligence investigations of
Unitron's financial condition and affairs, and the
information set forth on the Unitron disclosure
schedules, as it may deem necessary and advisable to
determine whether the conditions to Closing set forth in
Section 5.1 hereof have been satisfied and to determine
if there exists any breach of any representation or
warranty of Unitron or any Unitron Shareholder, and the
Unitron Representative Shareholders shall have a similar
right with respect to any claim by Sabratek that a
condition to Closing is not satisfied or that there is a
breach of a Unitron representation or warranty. If this
Agreement is terminated prior to Closing, Sabratek and
its representatives will, upon written request therefor,
return to Unitron all financial statements, documents
and records (including all copies made thereof) obtained
from Unitron at any time in connection with the
transactions contemplated hereby.
4.3 Unitron Shareholder Solicitation. As soon as
practicable following the Effective Date, Unitron shall
request (the "Shareholder Request") that each holder of
any capital stock or other equity interest or equity
related interest of Unitron (i) enter into this
Agreement and the Certificates Escrow Agreement, (ii)
execute and deliver to Sabratek a Regulation D
Questionnaire the substance of which is set forth in
Exhibit D (a "Regulation D Questionnaire") and (iii)
execute and deliver to Sabratek a Release Agreement in
favor of Unitron, Sabratek and certain Unitron agents
the substance of which is set forth in Exhibit E (a
"Release Agreement"), and Unitron shall use its
commercially reasonable efforts to cause the Necessary
Shareholder Parties to enter into this Agreement and the
Certificates Escrow Agreement and to execute and deliver
to Sabratek a Regulation D Questionnaire and a Release
Agreement prior to February 26, 1999. The Shareholder
Request shall be accompanied by (x) a letter
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<PAGE> 29
from and signed by Frasca, Sponaugle and Overby stating
that the transactions contemplated by this Agreement are
believed to be in the best interests of Unitron and the
Unitron Shareholders, recommending without reservation
that the shareholders of Unitron enter into this
Agreement and the Certificates Escrow Agreement and make
the deliveries specified in this Section, as well as (y)
all other appropriate and required disclosure documents
and information. A holder of a Unitron equity interest
or equity related interest shall become a party to this
Agreement and be entitled to rights contemplated hereby
only upon such holder delivering to Sabratek a duly
executed copy of this Agreement, the Certificates Escrow
Agreement, a Regulation D Questionnaire and a Release
Agreement. Notwithstanding the foregoing, Unitron shall
not request or otherwise solicit more than 35 holders of
Unitron equity interests that are not accredited (as
defined under Regulation D under the Securities Act) to
become a party to this Agreement and Unitron shall cause
the above described solicitation to be conducted in
accordance with applicable law. This Agreement
notwithstanding, Sabratek shall not be required to issue
any security as contemplated by this Agreement to more
than 35 such non-accredited investors.
4.4 Engagement of Unitron CEO. Unitron has and shall
continue to diligently search for a chief executive
officer, and Unitron shall use its reasonable best
efforts to hire a chief executive officer as soon as
reasonably possible after the Effective Date. The chief
executive officer shall report to the Unitron Board and
shall have full power and authority to manage the
business of Unitron, subject to the terms of this
Agreement. Any employment agreement to be entered into
by the new Unitron chief executive officer shall contain
an acknowledgment of such person of the restrictions on
Unitron contained in this Article 4.
4.5 Audit of Unitron Financial Statements. At the
election of Sabratek, the December 31, 1998 financial
statements and/or any other financial statements of
Unitron shall be audited by an independent accounting
firm selected by Sabratek, at the sole cost and expense
of Sabratek if Sabratek so demands such an audit, and
Unitron shall promptly cooperate in such audit. Unitron
shall grant such selected accountant access to its
books, records and employees and otherwise as customary
in connection with a year-end financial statement
audit.
4.6 Sabratek Reports. From and after the Effective
Date, Sabratek will promptly deliver to each of the
Unitron Shareholders (at the address of
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such Shareholder on the books and records of Unitron,
which address list shall be promptly provided by Unitron
to Sabratek upon request) copies of all materials
provided generally to its shareholders, and to each
Unitron Shareholder. Upon written request therefor,
Sabratek will also provide to any Unitron Shareholder
who so requests, on an individual basis, copies of all
other documents filed by Sabratek with the SEC.
4.7 Covenants by Unitron Affiliates With Respect to
Sabratek Stock.
(a) Post-Closing Transfer Restriction. Each
Affiliate (as hereinafter defined) of Unitron
hereby expressly agrees that, if Sabratek elects to
issue Sabratek Stock in payment of the Purchase
Price upon exercise of the Call Option or the Put
Option and if Sabratek obtains from KPMG Peat
Marwick LLP ("KPMG") or another nationally
recognized independent public accounting firm a
letter which states that Sabratek can account for
the acquisition of Unitron as a
pooling-of-interests transaction (as described
below), such Affiliate will not sell, transfer or
otherwise dispose of any shares of Sabratek Stock
owned by such Affiliate during the period beginning
30 days prior to the Closing and ending at such
time as financial statements that include at least
30 days of combined operations of Sabratek and
Unitron after the Closing Date shall have been
publicly reported by Sabratek. The foregoing
restriction on transfers by Affiliates of Unitron
shall be in addition to, and not in lieu of, any
securities law restrictions or any restrictions set
forth in the Registration Agreement. "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 such
particular person whether through the ownership of
voting securities, contract or otherwise.
(b) Exception to Restriction. The restriction set
forth in subsection (a) above shall not apply to a
sale, transfer or other disposition of Sabratek
Stock by an Affiliate of Unitron if, prior to such
disposition, such Affiliate delivers to Sabratek
the written opinion of a nationally recognized
independent public accounting firm to the effect
that: (i) the disposition contemplated by such
Affiliate will not cause the acquisition of Unitron
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
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Rules"); or (ii) the disposition contemplated by
such Affiliate will not affect Sabratek's treatment
of the acquisition of Unitron because the SEC
Pooling Rules do not permit pooling-of-interest
accounting.
4.8 HSR Filing. If then applicable to the acquisition
of Unitron or its assets, Unitron and Sabratek shall
cooperate and shall expeditiously file with the Federal
Trade Commission and the Department of Justice all
documents required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"),
and required to obtain early termination of the
pre-merger notification waiting period in accordance
with the regulations issued pursuant to the HSR Act.
4.9 Additional Unitron Financing. In the event that
Unitron needs additional working capital, Unitron shall
seek to obtain such financing pursuant to the Standby
Senior Credit Facility and Security Agreement dated
October 16, 1998 by and between Unitron and Sabratek
(the "Sabratek Credit Facility"). Sabratek shall extend
financing to Unitron under the Sabratek Credit Facility
as requested by Unitron from time to time to cover the
ordinary and customary working capital needs of Unitron,
including trade payables and payroll, as ordinary and
customary are determined by the chief executive officer
of Unitron in good faith, subject to the approval of
Sabratek, which approval shall not be unreasonably
withheld; provided that Sabratek shall have no
obligation to extend such financing to Unitron under the
Sabratek Credit Facility until such time as Unitron has
made all filings and has taken all other actions
requested by Sabratek pursuant to Section 4.2 of the
Sabratek Credit Facility and has duly signed the
promissory note related thereto with respect to all
advances made under such Facility prior to the date of
this Agreement. In the event that additional working
capital or other financing is obtained by Unitron other
than from Sabratek, Unitron shall not obtain such
financing from anyone who would be adverse to Sabratek's
competitive position in the market.
4.10 Public and Other Statements. Sabratek, Unitron and
each of the Unitron Shareholders hereby agrees to speak
only highly of the other parties to this Agreement,
except as may be expressly contemplated by this
Agreement or as may be necessary or appropriate to
comply with applicable law (including any securities
laws and any reporting requirements thereunder) or court
order or in connection with any arbitration or
accounting dispute pursuant to this Agreement.
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4.11 Unitron Legal Opinion. Upon the execution of this
Agreement, Unitron shall cause Johnson, Blakely, Pope,
Bokor, Ruppel & Burns, P.A. ("Johnson, Blakely") to
deliver to Sabratek opinions as to the matters set forth
in Exhibit F attached hereto, addressed to Sabratek and
dated as of the date hereof, subject to customary
qualifications and limitations.
4.12 Sabratek Legal Opinion. Upon the execution of this
Agreement, Sabratek shall cause Kirkland & Ellis to
deliver to Unitron opinions as to the matters set forth
in Exhibit G attached hereto, addressed to Unitron and
dated as of the date hereof, subject to customary
qualifications and limitations.
4.13 Unitron Special Meeting. Unitron shall duly hold a
special meeting of the shareholders of Unitron (the
"Unitron Special Meeting") as soon as possible (but in
any event prior to February 26, 1999) and at such
Special Meeting this Agreement and the transactions
contemplated hereby shall be submitted for the adoption
and approval of the shareholders of Unitron. The Unitron
Board shall recommend that the Unitron stockholders
adopt and approve this Agreement and the transactions
contemplated hereby. Such approval may also be obtained
by Unitron pursuant to (i) a duly adopted written
consent of Unitron shareholders by the above specified
date or (ii) in any other manner permissible under
applicable law and in accordance with the bylaws and
charter of Unitron.
4.14 Waiver of Known Breaches. Unitron hereby waives
any breach, default or other noncompliance by Sabratek
that is known to Unitron and/or Frasca as of the
Effective Date with respect to any of the current
agreements between Unitron and Sabratek. Sabratek hereby
waives any breach, default or other noncompliance by
Unitron or Frasca that is known to Sabratek with respect
to any of the current agreements between Unitron and
Sabratek (including Section 4.2 of the Sabratek Credit
Facility immediately upon but only upon the compliance
with such Section by Unitron).
4.15 Unitron Source Code. From and after the Effective
Date, Unitron, Sabratek and the Unitron Representative
Shareholders agree that the Unitron operating software
code (and all updates thereto), including the associated
source codes and technical documentation related
thereto, shall be maintained in the secured computer
room at the principal business facility of Unitron (a
duplicate version of which shall be maintained at the
existing Unitron bank vault and in the fire proof safe
at the law firm of
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Johnson, Blakely) until the Closing Date, except as may
otherwise be approved by such parties.
4.16 Transactions in Sabratek Stock by Unitron
Shareholders. Each Unitron Shareholder agrees to not
buy, sell or otherwise trade Sabratek Stock prior to the
public announcement of this transaction by Sabratek,
except upon the prior written consent of Sabratek.
4.17 Release of Sponaugle. At the Closing, Sabratek
shall execute and deliver to Sponaugle a general release
in form and substance similar to that given by Sabratek
to Frasca in the Separation Agreement recited at the
beginning of this Agreement.
4.18 Buyout of Non-Accredited Investors. Overby and
Sponaugle hereby covenant and agree to acquire prior to
the Unitron Special Meeting (or the delivery of an
equivalent written consent of Unitron shareholders to
Unitron) the equity interests of a number of Unitron
equity holders that are not accredited (as defined under
Regulation D under the Securities Act) such that not
more than 35 Unitron equity holders that are not so
accredited exist at the time of the Unitron Special
Meeting (or the delivery of an equivalent written
consent of Unitron shareholders to Unitron) and the
Closing.
4.19 Covenants Concerning Continuity of Business
Enterprise. If Sabratek elects the Asset Acquisition
Alternative and uses Sabratek Stock as consideration
pursuant to this Agreement, Sabratek represents and
warrants that it currently intends to continue at least
one significant historic business line of Unitron, or
use at least a significant portion of its historic
business assets in a business, in each case within the
meaning of Treasury Regulations Section 1.368-1(d). No
party hereto shall take any action, or cause any action
to be taken, prior to the Closing that would cause
Unitron to fail to have at least one significant
historic business line and at least a significant
portion of its historic business assets in a business,
all within the meaning of Treasury Regulations Section
1.368-1(d)(4)(ii). If Sabratek elects the Asset
Acquisition Alternative and uses Sabratek Stock as
consideration pursuant to this Agreement, the parties
hereto shall use their reasonable commercial efforts,
which shall not include the requirement to pay any
additional consideration or incur
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any additional liability or expense, to cause the Asset
Acquisition Alternative to qualify as a tax deferred
reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
4.20 Sexual Harassment Policy. Promptly following
the Effective Date, the Unitron Board shall approve
and implement a customary sexual harassment policy.
ARTICLE 5.
CONDITIONS TO CLOSING
Subsequent to the Call Exercise Notice or the Put Exercise Notice, each
of the parties will use his or its 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 (including
satisfaction, but not waiver, of the closing conditions set forth below).
5.1 Conditions to Obligation of Sabratek. The
obligation of Sabratek to purchase the Unitron Shares
and the Unitron Options upon exercise of the Call Option
or the Put Option, as the case may be, or the Unitron
assets in the case of the Asset Acquisition Alternative,
shall be subject to the satisfaction of each of the
following conditions at or before the Closing (unless
waived by Sabratek):
(a) Representations and Warranties of Unitron
Shareholders. The representations and warranties of
the Unitron Shareholders set forth in Section 6.1
shall be true and correct in all material respects
on and as of the Closing Date as though such
representations and warranties had been made on and
as of the Closing Date.
(b) Operational Representations and Covenants.
Unitron shall have complied in all material
respects with the covenants of Unitron set forth in
this Agreement. The representations and warranties
of Unitron set forth in Section 6.2 shall be true
and correct in all material respects on and as of
the Effective Date; provided that this closing
condition shall lapse 60 days after the Unitron
Representative Shareholders notify Sabratek in
writing that the Necessary Shareholder Parties have
become a party to this Agreement in accordance with
the terms of this Agreement, unless Sabratek shall
have on or prior to such date notified Unitron in
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writing that Sabratek believes that such closing
condition is not satisfied (which notice shall
specify in reasonable detail the basis of Sabratek
for such claim). The following shall apply in such
event:
(i) Upon actual receipt of such notice, the
Unitron Representative Shareholders shall have
10 days to dispute such claim by giving
written notice to Sabratek specifying in
reasonable detail the basis for the dispute.
If, within the 10 day period referred to
above, the Unitron Representative Shareholders
give a dispute notice to Sabratek, Sabratek
and the Unitron Representative Shareholders
shall undertake to obtain as promptly as
practicable a final resolution of the dispute.
If Sabratek and the Unitron Representative
Shareholders are unable to resolve such
dispute within 10 days after the delivery to
Sabratek of the dispute notice, then Sabratek
and the Unitron Representative Shareholders
shall submit such dispute to arbitration in
accordance with Section 9.1 of this Agreement
and this Section 5.1(b). The determination of
the arbitrator as to such dispute shall be
final and binding for all purposes of this
Agreement.
(ii) If such arbitrator determines that (i)
this closing condition is not satisfied, then
Sabratek may terminate this Agreement or (ii)
this closing condition is satisfied, then this
closing condition shall lapse and be of no
force or effect.
(c) Performance of this Agreement. Unitron and the
Unitron Shareholders shall have performed and
complied in all material respects with all other
covenants and agreements required by this Agreement
to be performed or complied with by them prior to
or on the Closing Date.
(d) Limited Solicitation. There shall not have
been solicited by Unitron more than 35 Unitron
equity holders that are not accredited (as defined
under Regulation D under the Securities Act) to
become a party to this Agreement.
(e) Consents, Regulatory Filings and Approvals.
All consents, approvals, licenses and permits, the
granting or transfer of which
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are necessary for the consummation of the
transactions contemplated hereby and for the
operation of Unitron's business by Sabratek
following the Closing, shall have been obtained or
transferred, as applicable. All applicable waiting
periods and any extensions thereof under the HSR
Act shall have expired or otherwise been
terminated.
(f) Litigation, Injunctions. No order of any court
or administrative agency shall be in effect which
restrains or prohibits the transactions
contemplated hereby or which would limit or affect
in any material respect Sabratek's ownership or
control of Unitron, and there shall not have been
threatened, nor shall there be pending, any action
or proceeding by or before any court or
governmental agency or other regulatory or
administrative agency or commission challenging any
of the transactions contemplated by this Agreement.
(g) Assignments. Unitron shall have executed and
delivered to Sabratek all such assignments and
other instruments of sale, transfer, conveyance and
assignment of the assets of Unitron.
(h) Closing Certificate. The chief executive
officer of Unitron (or the most senior officer of
Unitron in the event there is no chief executive
officer) shall have delivered to Sabratek a
certificate to the effect that each of the
conditions specified above is satisfied in all
respects.
5.2 Conditions to Obligations of Unitron and the
Unitron Shareholders. The obligation of each of the
Unitron Shareholders to sell their Unitron Shares and
Unitron Options upon exercise of the Call Option or the
Put Option or the obligation of Unitron to transfer its
assets to Sabratek in the case of the Asset Acquisition
Alternative shall be subject to the satisfaction of each
of the following conditions on or before the Closing
(unless waived in writing by a Unitron Shareholder or,
in the case of the Asset Acquisition Alternative, by
Unitron):
(a) Representations and Warranties. The
representations and warranties of Sabratek
contained in this Agreement shall be true and
correct in all material respects on and as of the
Closing Date as though such representations and
warranties had been made on and as of the Closing
Date.
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(b) Performance of this Agreement. Sabratek shall
have performed and complied in all material
respects with all covenants, conditions and
agreements required by this Agreement to be
performed or complied with by it prior to or on the
Closing Date.
(c) Consents, Regulatory Filings and Approvals.
All consents, approvals, licenses and permits, the
granting or transfer of which are necessary for the
consummation of the transactions contemplated
hereby, shall have been obtained or transferred, as
applicable. All applicable waiting periods and any
extensions thereof under the HSR Act shall have
expired or otherwise been terminated.
(d) Litigation, Injunctions. No order of any
court or administrative agency shall be in effect
which restrains or prohibits the transactions
contemplated hereby, and there shall not have been
threatened, nor shall there be pending, any action
or proceeding by or before any court or
governmental agency or other regulatory or
administrative agency or commission challenging any
of the transactions contemplated by this Agreement.
(e) Closing Certificate. The president or chief
financial officer of Sabratek shall have delivered
to Unitron and to the Unitron Representative
Shareholders a certificate to the effect that each
of the conditions specified above is satisfied in
all respects.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Unitron
Shareholders. Each of the Unitron Shareholders hereby
individually, for himself only and not for any of the
other Unitron Shareholders, represents and warrants to
Sabratek that the following statements are true and
complete as of the Effective Date and will be correct
and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the
date of this Agreement throughout this Section):
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(a) Execution, Delivery and Validity. Such Unitron
Shareholder has full capacity, power and authority
to make, execute, deliver, perform and consummate
this Agreement and the other documents and
instruments required or contemplated by this
Agreement (including the Release Agreement and the
Certificates Escrow Agreement). This Agreement, the
Release Agreement and the Certificates Escrow
Agreement have been duly executed and delivered by
such Unitron Shareholder and constitute legal,
valid and binding obligations of such Shareholder,
enforceable against such Shareholder in accordance
with their respective terms.
(b) Ownership of Shares. Such Unitron Shareholder
is the lawful record and beneficial owner of that
number of Unitron Shares which is set forth
opposite such Shareholder's name on the disclosure
schedule corresponding to this Section 6.1(b) and
that number of Unitron Options which is set forth
opposite such Shareholder's name on the disclosure
schedule corresponding to Section 6.2(e)(ii). Such
Unitron Shareholder owns no other equity interest
in Unitron other than as is set forth opposite the
name of such Shareholder on such schedules. Such
Unitron Shareholder is in possession of
certificates evidencing his ownership of the
Unitron Shares owned by him (or has delivered to
Unitron a duly executed lost certificate affidavit
which complies with the requirements of the Unitron
bylaws), all of which are fully paid and
non-assessable, and of option or other agreements
representing the Unitron Options owned by him. Such
Unitron Shareholder has good title to the Unitron
Shares (including Unitron Shares issued upon
exercise of Unitron Options) and Unitron Options
owned by him, with no restrictions on voting rights
and the other incidents of record and beneficial
ownership, and the absolute right to sell and
transfer such free and clear of all claims, liens,
pledges, security interests, restrictions or
encumbrances of any nature whatsoever. Except as
set forth on the disclosure schedule corresponding
to this Section 6.1(b), there are no voting trusts,
shareholder agreements or other understandings
between such Unitron Shareholder and any other
person or entity with respect to the voting of or
any other matters with respect to the Unitron
Shares or Unitron Options owned by such Unitron
Shareholder. Upon consummation of the purchase and
sale of the Unitron Shares and Unitron Options
pursuant to this Agreement, such Unitron
Shareholder will convey to Sabratek good and
marketable title to the Unitron Shares
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(including Unitron Shares issued upon exercise of
Unitron Options) and Unitron Options, owned by such
Shareholder, free and clear of all claims, liens,
pledges, security interests, restrictions or
encumbrances of any nature whatsoever.
(c) Investment Representations.
(i) Each Unitron Shareholder has received and
reviewed a copy of this Agreement, the Release
Agreement, the Certificates Escrow Agreement
and the Sabratek offering memorandum relating
to this Agreement and the other terms and
conditions of the transactions contemplated
thereby (such offering memorandum and all
exhibits and schedules referred to therein or
attached thereto, together with any amendments
or supplements thereto, being referred to as
the "Memorandum"), including information
regarding Sabratek, and has received or had
access to any other information he deems
necessary or appropriate to evaluate the
merits and risks of his potential investment
in the Put Option and his potential investment
in Sabratek Stock. Each Unitron Shareholder
acknowledges that (A) Sabratek has made
available to him and his purchaser
representative, if any, the opportunity to
obtain additional information to verify the
accuracy of the information contained in the
Memorandum and to evaluate the merits and
risks of the investments contemplated by this
Agreement; (B) he and his purchaser
representative, if any, have had the
opportunity to ask questions of and receive
answers from the officers of Sabratek, or a
person or persons acting on behalf of
Sabratek, concerning the terms and conditions
of the offering, the Put Option, the
acquisition of the Unitron equity by Sabratek,
the Asset Acquisition Alternative, the
Sabratek Stock and the information contained
in the Memorandum, have received fully
satisfactory answers to such questions, and
have had the opportunity to inspect and copy
all material documents relating to the
offering; and (C) no time limits have been
placed on him or his purchaser representative,
if any, on consideration of the execution and
delivery of this Agreement, the Release
Agreement, the Certificates Escrow Agreement
and the potential offering of Sabratek Stock
relating thereto.
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(ii) Each Unitron Shareholder, alone or in
connection with his purchaser representative,
if any, has such knowledge and experience in
financial and business matters to enable him
to utilize the information made available to
him to evaluate the risks and merits of his
potential investment in the Put Option and his
potential investment in the Sabratek Stock
(together, the "Securities"), whether
occurring upon exercise of the Call Option or
the Put Option or otherwise, and to make an
informed decision with respect thereto. Each
Unitron Shareholder is an "accredited
investor" except as any Unitron Shareholder
may indicate on its Regulation D Questionnaire
delivered to Sabratek. Each Unitron
Shareholder who is a natural person is at
least 21 years of age.
(iii) Each Unitron Shareholder understands that
the Securities he may acquire upon the
acquisition contemplated by this Agreement
will not have been registered under the
Securities Act, any state statute governing
securities regulation, or other applicable
securities laws, rules and regulations, in
reliance upon exemptions therefrom. Such
reliance is in part predicated upon the truth
and accuracy of the representations of the
Unitron Shareholders contained herein. The
Memorandum has not been reviewed, approved or
disapproved by the SEC or any other federal or
state agency, nor has any agency passed upon
the Memorandum's accuracy or adequacy or the
merits or value of the Securities or the
Purchase Price for the Unitron Shares. Each
Unitron Shareholder understands that the
Unitron Shares and the Put Option which are
owned by him must be held until the Closing of
the acquisition contemplated by this Agreement
or the termination of this Agreement, that his
Unitron Shares and the Put Option may not be
sold or otherwise transferred by him in any
manner, and that this Agreement requires him
to surrender his certificates representing
Unitron Shares to Unitron pending Closing of
the acquisition contemplated by this Agreement
or termination of this Agreement.
(iv) The Securities are being acquired solely
for each
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<PAGE> 41
Unitron Shareholder's own account for
investment and not for the account of any
other person and not with a view to
distribution, assignment or resale to others,
and no other person has a direct or indirect
beneficial interest in the Securities. Each
Unitron Shareholder acknowledges that he is
not participating, directly or indirectly, in
a distribution of the Securities or in the
underwriting of any such distribution or
transfer, and he will not act in any way that
would constitute him to be an underwriter,
within the meaning of the Securities Act.
(v) Each Unitron Shareholder acknowledges
that he has not been solicited to acquire the
Securities by means of general advertising or
general solicitation.
(vi) Each Unitron Shareholder represents that
no guarantees or representations have been
made to him or his purchaser representative,
if any, regarding the tax treatment of any
part of the offering or of any of the
transactions described in the Memorandum.
(d) Securities Law Acknowledgment. Sabratek has
not publicly announced the transactions
contemplated by this Agreement. Each Unitron
Shareholder acknowledges that it is subject to
federal and state securities law restrictions with
respect to the Sabratek Stock until such time as
Sabratek publicly announces the transactions
contemplated by this Agreement.
6.2 Representations and Warranties of Unitron. Unitron
hereby represents and warrants to Sabratek that the
following statements are true and complete as of the
Effective Date, except as set forth in the disclosure
schedule delivered by Unitron to Sabratek on the date
hereof and initialed by Unitron and Sabratek. The
representations and warranties given by Unitron in this
Section 6.2 are certified by Frasca in his capacity as
the chief executive officer of Unitron, but not
individually.
(a) Organization and Existence of Unitron. Unitron
is duly organized and validly existing under the
laws of the laws of the State of Florida, with all
requisite power and authority to own all of its
properties and assets and to carry on its business
as it is now
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<PAGE> 42
being conducted. Unitron is duly qualified to do
business and is in good standing in all
jurisdictions where the nature of its business
makes such qualification necessary, except where
the failure to be so qualified would not have a
material adverse effect on Unitron. Unitron does
not own, directly or indirectly, any capital stock
of any other corporation or any equity, profit
sharing, participation or other interest in any
corporation, limited liability company,
partnership, joint venture or other entity, except
as set forth in the disclosure schedule with
respect to this Section.
(b) Execution, Delivery and Validity. Unitron has
full right, power and authority to make, execute,
deliver, perform and consummate this Agreement and
the other documents and instruments required or
contemplated by this Agreement. The execution,
delivery and performance of this Agreement and all
other agreements and instruments contemplated
hereby to which Unitron is a party have been duly
authorized and approved by the Unitron Board. This
Agreement and all other agreements and instruments
contemplated hereby to which Unitron is a party
have been duly and validly executed and delivered
by Unitron, and each constitutes the legal, valid
and binding obligations of Unitron, enforceable
against Unitron in accordance with its terms.
(c) Non-Contravention. The execution, delivery and
performance of this Agreement and the consummation
of the transactions contemplated hereby or
compliance with or fulfillment of the terms and
provisions hereof or of any other agreement or
instrument contemplated hereby, do not and will
not: (i) conflict with or result in a breach of any
of the provisions of the Amended and Restated
Articles of Incorporation or By-Laws of Unitron or
any agreement among the Unitron Shareholders and
Unitron with respect to the Unitron Shares or the
Unitron Options; (ii) contravene in any material
respect any law, rule or regulation or any order,
writ, award, judgment, decree or other
determination which affects or binds any of Unitron
or any of its properties; or (iii) except as set
forth on the disclosure schedule corresponding to
this Section, conflict with, result in a breach of,
constitute a default under, or give rise to a right
of acceleration, termination or the imposition of
penalties under any material contract, deed of
trust, mortgage, trust, lease, governmental or
other license, permit or other authorization,
contract, agreement, note or any other
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<PAGE> 43
agreement, instrument or restriction to which
Unitron is a party or by which any of its
properties may be affected or bound.
(d) Consents. Except as set forth on the
disclosure schedule corresponding to this Section,
no material authorization, consent, approval,
permit or license of, or filing or registration
with, any governmental or public body or authority,
any lender or lessor or any other person is
required to authorize, or is required in connection
with, the execution, delivery and performance by
Unitron of this Agreement or the agreements
contemplated hereby.
(e) Capitalization of Unitron
(i) As of the Effective Date, the authorized
capital stock of Unitron consisted of 800,000
shares of Class A Common Stock, $0.01 par
value, of which 221,202 shares are issued and
outstanding, and 200,000 shares of Class B
Common Stock, $0.01 par value, of which
179,480 shares are issued and outstanding. The
Class A Common Stock and Class B Common Stock
are identical except for voting rights. All of
the issued and outstanding shares of Unitron
Class A Common Stock and Class B Common Stock
have been duly authorized and are validly
issued, fully paid and non-assessable. Set
forth on the disclosure schedule corresponding
to this Section is a true and correct list of
each of the holders of capital stock of
Unitron, the number of shares of capital stock
of each such holder and the class of capital
stock of each such holder.
(ii) Set forth on the disclosure schedule
corresponding to this Section is a true,
complete and correct list of all options,
warrants and equity appreciation and other
equity linked rights of Unitron, which
constitute, as of the Effective Date, all of
the issued and outstanding options, warrants,
purchase rights, subscription rights,
conversion rights, exchange rights, equity
appreciation, or other equity linked rights or
other contracts or commitments that could
require Unitron to issue, sell or otherwise
cause to become outstanding any additional
capital stock or that relate in any way to
Unitron capital stock. Unitron has delivered
to Sabratek true and complete copies of the
Unitron Options and the equity appreciation
and other equity linked rights of
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<PAGE> 44
Unitron listed on the disclosure schedule
corresponding to this Section (which list
includes the number of shares subject thereto
and the exercise price thereof and indicates
whether such option is an incentive stock
option qualified under the Code).
(iii) No shares of Unitron capital stock have
been issued in violation of any preemptive
rights or anti-dilution right, and no shares
of Unitron capital stock have been issued in
violation in any material respect of any
federal or state securities laws.
(f) Corporate Records. Unitron has delivered to
Sabratek true and complete copies of Unitron's
Amended and Restated Articles of Incorporation and
Bylaws as in effect on the Effective Date. The
minute books of Unitron, which have been made
available to Sabratek, contain the minutes of all
meetings of, and consents to all actions taken
without meetings by, the Unitron Board (and any
committee thereof) and the shareholders of Unitron
since the formation of Unitron.
(g) Financial Statements. Unitron has furnished
to Sabratek its December 31, 1997 and November 30,
1998 financial statements, which financial
statements are unaudited (collectively, the
"Financial Statements"). The Financial Statements
accurately reflect the books and accounts of
Unitron and fairly present the financial position
of Unitron as of the dates given and the results of
operations of Unitron for the periods indicated.
(h) Undisclosed Liabilities. Except as set forth
on the November 30, 1998 balance sheet included in
the Financial Statements (the "Balance Sheet"), or
as set forth on the disclosure schedule
corresponding to this Section, Unitron has no
liabilities or obligations of any type, nature or
description, known or unknown, asserted or
unasserted, direct or indirect, absolute or
contingent, other than those which have been
incurred in the ordinary course of business since
the date of the Balance Sheet (none of which
ordinary course liabilities or obligations is a
liability resulting from breach of contract, breach
of warranty (other than an ordinary course
warranty), fraud or other tort, infringement or
lawsuit).
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<PAGE> 45
(i) Absence of Certain Changes. Except as set
forth on the disclosure schedule corresponding to
this Section, since July 30, 1998 (the "Balance
Sheet Date") there has not been: (i) any
transaction not in the ordinary course of Unitron's
business; (ii) any material adverse change in the
assets, liabilities (whether absolute, accrued,
contingent or otherwise), business or prospects of
Unitron taken as a whole; (iii) any mortgage,
pledge or subjection to lien, charge, or
encumbrance of any kind, except liens for taxes not
due, of any of Unitron's properties or assets; (iv)
any amendment, modification or termination of any
material lease, contract or agreement to which
Unitron is a party; (v) any increase in, or
commitment to increase, the compensation payable or
to become payable to any officer, director,
employee or agent of Unitron, or any bonus payment
or similar arrangement made to or with any of such
officers, directors, employees or agents, other
than routine increases made in the ordinary course
of business; (vi) any incurrence or assumption of
any liability, except for liabilities incurred in
the ordinary course of business and consistent with
past practices; (vii) any alteration in the manner
of keeping the books, accounts or records of
Unitron, or in the accounting practices therein
reflected; or (viii) any sale or transfer of any
Unitron's assets or any cancellation of any debts
or claims other than in the ordinary course of
business.
(j) Related Party Transactions. Except as
otherwise set forth on the disclosure schedule
corresponding to this Section, since July 1, 1997,
Unitron has not been a party to any material
transaction (other than employee compensation and
other ordinary incidents of employment) with a
person who was, at the time, a Related Party, and
Unitron currently has no contractual obligations to
any Related Party. "Related Party" means any
present or former officer or director of Unitron,
any present or former holder of 5% or more of the
issued and outstanding common stock of Unitron, or
any other person who, to the knowledge of Unitron,
at the time relevant to the determination, is or
was a spouse, child, parent or sibling of any of
the aforementioned persons or is or was a trust or
similar entity for the benefit of any of the
foregoing persons. Except as set forth on the
disclosure schedule corresponding to this Section,
no material property or interest in any material
property which is used in the operations of Unitron
or any Intellectual Property of Unitron is owned by
or leased or licensed by or to any Related Party.
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<PAGE> 46
(k) Litigation. Except as set forth on the
disclosure schedule corresponding to this Section,
there are no material actions, suits, claims,
audits, investigations, or proceedings (judicial,
administrative or arbitration) pending or, to the
knowledge of Unitron, threatened, or any facts
known to Unitron which could given rise to any
material actions, suits, claims, investigations or
proceedings, against Unitron, whether at law or in
equity and whether civil or criminal in nature,
before or by any federal, state, municipal or other
court, arbitrator, governmental department,
commission, agency or instrumentality, domestic or
foreign. Nor are there any judgments, decrees or
orders of any such court, arbitrator, governmental
department, commission, agency or instrumentality
outstanding against Unitron (i) which have, or
could reasonably be expected to have, a material
adverse effect on the assets, liabilities or
prospects of the business of Unitron, or (ii) which
seek specifically to prohibit, restrict or delay
consummation of the transactions contemplated
hereby or fulfillment of any of the conditions of
this Agreement.
(l) Compliance with Laws. Unitron, its property
and assets, and Unitron's use of the real property
on which its business is currently conducted are in
compliance in all material respects with all
applicable statutes, laws, ordinances, rules,
regulations, subdivision and plat restrictions,
requirements and orders of governments and
governmental bodies (federal, state, local or
foreign), and Unitron has received no notice
asserting any non-compliance with any of the
foregoing. Unitron has complied in all material
respects with all administrative and judicial
judgments, orders or decrees (federal, state, local
or foreign) to which it is currently subject.
(m) Permits and Other Regulatory Matters. The
disclosure schedule corresponding to this Section
sets forth all material U.S. (and to the knowledge
of Unitron, foreign) regulatory permits, licenses
and other governmental authorizations and approvals
necessary to the ownership or operation of
Unitron's properties and the conduct of Unitron's
business as the business is currently operated
(collectively, "Permits"), all of which that are
material and significant have been duly obtained
and are in full force and effect. Unitron has made
available to Sabratek true and complete copies of
all such Permits. To the knowledge of Unitron,
Unitron is in compliance in all material respects
with the terms and
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<PAGE> 47
conditions of such Permits, and Unitron has
received no notice asserting any non-compliance
with any of the foregoing. There are no proceedings
pending or, to the knowledge of Unitron, threatened
seeking to revoke, cancel or suspend, or to
materially adversely modify, any Permits.
(n) Taxes. Unitron has delivered to Sabratek
copies of all original and amended federal, state,
local and foreign income tax returns and
information returns filed by Unitron for the three
fiscal years ended December 31, 1997, 1996 and
1995. Except as specifically set forth in the
Financial Statements or on the disclosure schedule
corresponding to this Section: (i) Unitron has duly
and timely filed or caused to be filed all tax
returns and information returns required to be
filed by it or for which it may be held
responsible; (ii) all such tax returns are true and
accurate in all material respects; (iii) Unitron
has paid all taxes due and payable and any
deficiencies or assessment notices which have been
received by it; (iv) no income, information,
business or occupation, or franchise tax returns of
Unitron have been audited by the taxing
authorities; (v) there are no agreements, waivers
or other arrangements providing for an extension of
time with respect to the filing of any tax returns
of Unitron or the payment by, or the assessment
against, Unitron of any taxes, assessments or other
governmental charges, duties, penalties, interest
or fines (such governmental charges, duties,
penalties, interest and fines being collectively
referred to as "Other Charges"); and (vi) there are
no suits, actions, claims, investigations,
inquiries or other proceedings pending or to the
knowledge of Unitron threatened against Unitron in
respect of taxes, assessments or Other Charges, or
any matters under discussion with any governmental
authority relating to taxes, assessments or Other
Charges, or any claims or additional taxes,
assessments or Other Charges asserted by any such
authority. Unitron is not obligated under any
severance contract or other agreement to make any
payments that will be non-deductible under Section
280G of the Code or any corresponding provision of
applicable state, local or foreign income tax law.
(o) Contracts and Leases. All manufacturing,
marketing, distribution, sales, service, license,
provider, consulting, employment and severance
agreements to which Unitron is a party, all
confidentiality or non-competition agreements to
which Unitron is a party either for the benefit of
Unitron or for the benefit of a
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<PAGE> 48
third party, all contracts with any Related Party
(or any affiliate of a Related Party), all
agreements related to the Unitron Intellectual
Property, and all material real and personal
property leases and other material contracts,
agreements, licenses, franchises, commitments and
other similar agreements to which Unitron is a
party or by which any of its assets are bound
(collectively, the "Contracts") are set forth on
the disclosure schedule corresponding to this
Section. Unitron has delivered or made available to
Sabratek a correct and complete copy of (or a
written description of the significant terms of)
each of the Contracts, as amended to date. Except
as otherwise set forth on the disclosure schedule
corresponding to this Section:
(i) The Contracts are valid and binding
obligations of the parties thereto and are in
full force and effect, enforceable in
accordance with their respective terms (except
for any provision of any such contract which
is not material);
(ii) Unitron has performed all material
obligations required to be performed by it
under the Contracts on or prior to the
Effective Date;
(iii) neither Unitron nor, to the knowledge of
Unitron, any other party to any Contract is in
default thereunder (as to payments due or
otherwise) nor has any event occurred which,
with notice or the passage of time or both,
could constitute a default thereunder;
(iv) Unitron has not released or waived any
material right under any Contract.
(p) Intellectual Property.
(i) The disclosure schedule corresponding to
this Section contains a complete and accurate
list of all patented and registered
Intellectual Property (as hereafter defined)
used by Unitron and all pending patent
applications and applications for the
registration of other Intellectual Property
owned by Unitron, as well as (A) all trade
names and all unregistered trademarks owned by
Unitron; (B) all material computer software
owned or used by Unitron other
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than commercially available software with a
license fee of less than $1,000; and (C) all
licenses granted by Unitron to any third
party, and all licenses granted by any third
party to Unitron, with respect to Intellectual
Property. Unitron has delivered or made
available to Sabratek true and complete copies
of all documents embodying any licenses of
Intellectual Property to which Unitron is a
party, either as licensee or licensor.
(ii) Except as set forth on the disclosure
schedule corresponding to this Section: (A)
Unitron owns and has good and marketable title
to, or has a valid and enforceable written
license to use, all Intellectual Property used
in its business; (B) no proceedings are
pending or, to the knowledge of Unitron,
threatened against Unitron by any third party
contesting the validity, enforceability, use
or ownership of any Intellectual Property
owned or used by Unitron in its operations;
(C) no proceedings are pending or, to the
knowledge of Unitron, threatened against
Unitron by any third party alleging any
infringement or misappropriation by Unitron of
any Intellectual Property rights of any third
party; and (D) Unitron is not aware of any
infringement or misappropriation by any third
party of any Intellectual Property rights of
Unitron.
(iii) For purposes of this Agreement,
"Intellectual Property" means: (A) all
inventions (whether or not patentable and
whether or not reduced to practice), all
improvements thereto and all patents, patent
applications and patent disclosures, together
with all reissues, continuations,
continuations-in-art, revisions, extensions
and reexaminations thereof; (B) all
trademarks, service marks, trade dress, logos,
Internet domain names, trade names and
corporate names, and all translations,
adaptations, derivations and combinations
thereof and including all goodwill associated
therewith, and all applications, registrations
and renewals in connection therewith; (C) all
copyrights and copyrightable works and
registrations, applications and renewals in
connection therewith; (D) all trade secrets
and confidential information (including ideas,
research and development, technical data,
know-how, formulae, compositions,
manufacturing and
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production processes and techniques, designs,
drawings, specifications, financial and
accounting data, customer and supplier lists,
pricing and costs information and business
marketing plans and proposals; and (E)
computer software (including operating
software, data, databases and documentation);
provided that Intellectual Property shall not
include any third party off-the-shelf
software.
(q) Title to Assets. Except as set forth on the
disclosure schedule corresponding to this Section,
all of material tangible assets and properties of
Unitron are located at Unitron's principal place of
business in Clearwater, Florida. Except as
otherwise disclosed on the disclosure schedule
corresponding to this Section, Unitron owns and has
good and marketable title to all of its material
properties and assets, free and clear of all liens,
claims, encumbrances, equities, security interests,
charges and restrictions, except for liens, if any,
for taxes not due and for any liens and the like in
favor of Sabratek. Except as set forth on the
disclosure schedule corresponding to this Section,
no currently effective financing statement under
the Uniform Commercial Code with respect to any of
the properties and assets of Unitron has been filed
in any jurisdiction, and neither Unitron, nor
anyone on its behalf, has signed any financing
statement or security agreement authorizing anyone
to file any financing statement, lien or other
encumbrance against any assets or properties of
Unitron.
(r) Insurance. The disclosure schedule
corresponding to this Section lists all material
insurance policies maintained by Unitron, each of
which is in full force and effect and enforceable
in accordance with its terms.
(s) Labor and Employment.
(i) Since January 1, 1994, Unitron has not
experienced any material interference with or
impairment of the business of Unitron by
labor. Unitron is not experiencing union
organization efforts or negotiations, or
requests for negotiations, for any
representation or any labor contract relating
to the employees of Unitron. There are no
severance obligations of Unitron other than as
set forth on the disclosure schedule
corresponding to this Section.
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<PAGE> 51
(ii) Except as set forth on the disclosure
schedule corresponding to this Section,
Unitron has no: (A) contracts with labor
organizations or other collective bargaining
agreements; (B) contracts with any of its
officers, directors or other employees; (C)
contracts with independent contractors or
consultants; (D) "employee benefit plans" as
defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"); (E) "employee welfare
benefit plans" as defined in Section 3(1) of
ERISA that provide medical, health, life
insurance or other welfare-type benefits for
current or future retirees or former employees
of Unitron or their spouses or dependents
(other than in accordance with Part 6 of
Subtitle B of Title I of ERISA and Code
Section 4980B ("COBRA"); (F) other profit
sharing, deferred compensation, bonus, stock
option, stock purchase, welfare, vacation,
holiday, sick pay, or other plans or
arrangements for the benefit of employees
maintained or contributed to by Unitron; (G)
employee regulations or handbooks which relate
in any way to the employees of Unitron; or (H)
former employees of Unitron or their spouses
or dependents currently receiving or entitled
to receive medical, life insurance or other
welfare-type benefits pursuant to COBRA.
(iii) Unitron has complied in all material
respects with all applicable laws, rules and
regulations relating to the employment of
labor, including those relating to
nondiscrimination, wages, hours, collective
bargaining and the payment and withholding of
taxes and other sums as required by
appropriate governmental authorities. Unitron
has complied in all material respects with all
applicable laws, rules and regulations
relating to employee benefits, including
ERISA, and with the requirements of COBRA.
Except as set forth on the disclosure schedule
corresponding to this Section, no unfair labor
practice complaint is pending against Unitron
before the National Labor Relations Board or
any state or local agency, nor has any charge
of discrimination been filed against Unitron
with the Equal Employment Opportunity
Commission or any similar state or local
agency at any time during the three-year
period preceding the Effective Date.
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(iv) A true, complete and correct list as of
the Effective Date of all employees and
officers of Unitron and their compensation is
set forth on the disclosure schedule
corresponding to this Section.
(t) Environment, Health and Safety. Except as
otherwise set forth on the disclosure schedule
corresponding to this Section, Unitron has complied
in all material respects with, and is in compliance
in all material respects with, any and all
Environmental Laws (as hereafter defined), and no
claim, action, suit, demand, proceeding (including
administrative proceeding), or notice of violation
has been filed or commenced against Unitron
alleging any failure to comply with any
Environmental Laws or alleging any actual or
potential liability thereunder. In addition, and
without limiting the generality of the foregoing,
except as set forth on the disclosure schedule
corresponding to this Section and except that this
representation and warranty is qualified by
materiality:
(i) There are no facts, events,
circumstances, activities, practices,
incidents, actions, plans or conditions
related to past or present operations
conducted by Unitron on or off the properties,
facilities or premises on which it has
conducted or operated business that could form
the basis for any claim, action, demand, suit,
proceeding (including administrative
proceeding), hearing, notice of violation or
liability under the Comprehensive
Environmental Response, Compensation and
Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the
Federal Water Pollution Control Act of 1974,
the Toxic Substances Control Act of 1976, the
Refuse Act of 1989, the Emergency Planning and
Community Right-to-Know Act of 1986, each as
amended, or any other law (or rule or
regulation thereunder) of any federal, state,
local or foreign government (or agency
thereof) (including common law), concerning
release or threatened release of any Hazardous
Substance (as hereafter defined), pollution,
protection of worker health and safety or
protection of the environment (collectively,
"Environmental Laws").
(ii) Unitron has not generated, treated,
stored, handled, transported or disposed of
any substance, arranged for the
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<PAGE> 53
disposal of any substance or owned or operated
any property or facility in any manner which
could form the basis for any present or future
claim, suit, hearing, proceeding (including
administrative proceeding), demand or action
(under the common law or pursuant to any
statute) seeking cleanup of or compensation
for damage to any site, location or body of
water (surface or subsurface) or compensation
for illness or personal injury.
(iii) Unitron has not (A) taken any action or
failed to act in any manner that could form
the basis for any claim or liability under the
Occupational Safety and Health Act, as
amended, or any other law (or rule or
regulation thereunder) of any federal, state,
local or foreign government (or agency
thereof) (including common law) concerning
worker health and safety or (B) exposed any
employee to any substance or condition which
could form the basis for any present or future
claim, suit, hearing, proceeding (including
administrative proceeding), demand or action
(under the common law or pursuant to statute)
seeking compensation for property damage or
illness or personal injury.
(iv) Unitron has obtained and has complied in
all material respects with, and is in
compliance in all material respects with, all
the terms and conditions of all permits,
licenses and other authorizations which are
required under, and has complied in all
material respects with all other limitations,
restrictions, conditions, standards,
prohibitions, requirements, obligations,
schedules and timetables which are contained
in, all Environmental Laws, including rules,
codes, plans, orders, decrees, judgments,
injunctions, and regulations thereunder,
including laws relating to emissions,
discharges, releases or threatened releases of
pollutants, contaminants, chemical or
industrial, hazardous or toxic materials or
wastes into ambient air, surface water, ground
water or lands or otherwise relating to the
manufacture, processing, distribution, use,
treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemical
or industrial, hazardous or toxic materials or
wastes.
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<PAGE> 54
(v) No real property owned, operated or used
by Unitron contains any underground storage
tanks, materials or equipment containing
asbestos or polychlorinated biphenyls, or
landfills, surface impoundments or waste
disposal areas.
(vi) Unitron has not, either expressly or by
operation of law, assumed or undertaken any
liability, including, without limitation, any
obligation for corrective or remedial action,
of any other person or entity with respect to
any Environmental Laws.
(vii) On and prior to the Effective Date,
Unitron has not buried, stored, spilled,
leaked, discharged, emitted, released, placed
or located any Hazardous Substance on any real
property owned, operated or used by Unitron.
As used herein, "Hazardous Substance" means
any hazardous or toxic substance, material or
waste which is regulated by any local
governmental authority, the State of Florida
or the United States Government. The term
"Hazardous Substance" includes, without
limitation: (A) any material or substance
which is listed or defined as a "hazardous
waste," "extremely hazardous waste,"
"restricted hazardous waste," "hazardous
substance" or "toxic substance" under any
municipal, state or federal law, code or other
regulation; (B) petroleum; (C) asbestos; (D)
polychlorinated biphenyl; (E) any material or
substance which is designated as a "hazardous
substance" pursuant to Section 311 of the
Federal Water Pollution Control Act, as
amended; (F) any material or substance which
is defined as "hazardous waste" pursuant to
Section 1004 of the Federal Resource
Conservation and Recovery Act, as amended; (G)
any material or substance which is defined as
a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental
Response, Compensation and Liability Act, as
amended; (H) any material or substance which
is defined as a toxic substance in the Toxic
Substances Control Act, as amended; or (I) any
substance which contaminates soil or ground
water and causes degradation of the soil
and/or water to the extent that remediation
efforts are needed to restore the soil or
water to its natural state.
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(u) Brokers. Unitron has not incurred any
obligation for any finder's, broker's or agent's
fee in connection with the transactions
contemplated by this Agreement.
(v) Continuity of Business Enterprise. Unitron
operates at least one significant historic business
line, or owns at least a significant portion of its
historic business assets, in each case within the
meaning of Treasury Regulations Section 1.368-1(d).
(w) Disclaimer of Other Representations and
Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, UNITRON MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY,
IN RESPECT TO UNITRON OR ANY OF ITS ASSETS,
LIABILITIES OR OPERATIONS, INCLUDING WITHOUT
LIMITATION WITH RESPECT TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
6.3 Representations and Warranties of Sabratek.
Sabratek hereby represents and warrants to Unitron and
the Unitron Shareholders that the following statements
are true and complete as of the Effective Date:
(a) Organization and Existence of Sabratek.
Sabratek is duly organized and validly existing
under the laws of the State of Delaware, with all
requisite power and authority to own all of its
properties and assets and to carry on its business
as it is now being conducted. Sabratek is duly
qualified to do business and is in good standing in
all jurisdictions where the nature of its business
makes such qualification necessary.
(b) Execution, Delivery and Validity. Sabratek has
full right, power and authority to make, execute,
deliver, perform and consummate this Agreement and
the other documents and instruments required or
contemplated by this Agreement. As of the Closing,
the execution, delivery and performance of this
Agreement and all other agreements and instruments
contemplated
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hereby to which Sabratek is a party will have been
duly authorized and approved by the Board of
Directors of Sabratek. This Agreement and all other
agreements and instruments contemplated hereby to
which Sabratek is a party have been duly and
validly executed and delivered by Sabratek, and
each constitutes the legal, valid and binding
obligations of Sabratek, enforceable against
Sabratek in accordance with its terms.
(c) Non-Contravention. The execution, delivery
and performance of this Agreement and the
consummation of the transactions contemplated
hereby or compliance with or fulfillment of the
terms and provisions hereof or of any other
agreement or instrument contemplated hereby, do not
and will not: (i) conflict with or result in a
breach of any of the provisions of the Certificate
of Incorporation or By-Laws of Sabratek; (ii)
contravene any law, rule or regulation or any
order, writ, award, judgment, decree or other
determination which affects or binds Sabratek or
any of its properties; or (iii) conflict with,
result in a breach of, constitute a default under,
or give rise to a right of acceleration,
termination or the imposition of penalties under
any material contract, deed of trust, mortgage,
trust, lease, governmental or other license, permit
or other authorization, contract, agreement, note
or any other agreement, instrument or restriction
to which Sabratek is a party or by which any of its
properties may be affected or bound.
(d) Consents. Except as set forth on the
disclosure schedule corresponding to this Section,
no authorization, consent, approval, permit or
license of, or filing or registration with, any
governmental or public body or authority, any
lender or lessor or any other person is required to
authorize, or is required in connection with, the
execution, delivery and performance of this
Agreement or the agreements contemplated hereby by
Sabratek.
(e) SEC Reports and Financial Statements.
(i) Sabratek has filed with the SEC all
forms, reports, schedules, statements and
other documents required to be filed by it
since December 31, 1997 under the Exchange Act
and the Securities Act (as such documents have
been amended since the time of their filing,
collectively, the "Sabratek SEC Documents").
As of their respective dates or, if amended,
as of the date of the last such amendment, the
Sabratek SEC Documents, including, without
limitation, any financial statements and
schedules included
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therein (i) did not contain any untrue
statement of a material fact or omit to state
a material fact required to be stated therein
or necessary in order to make the statements
therein, in light of the circumstances under
which they were made, not misleading and (ii)
complied in all material respects with the
applicable requirements of the Exchange Act
and the Securities Act, as the case may be,
and the applicable rules and regulations of
the SEC thereunder.
(ii) Each of the financial statements included
in the Sabratek SEC Documents complies in all
material respects with applicable accounting
requirements and with the published rules and
regulations of the SEC with respect thereto,
has been prepared in accordance with GAAP
applied on a consistent basis during the
periods involved (except as may be indicated
in the notes thereto) and fairly presents in
all material respects the consolidated
financial position and the consolidated
results of operations and cash flows (and
changes in financial position, if any) of
Sabratek and its consolidated subsidiaries as
at the dates thereof or for the periods
presented therein (subject, in the case of
unaudited interim financial statements, to
normal year end adjustments and lack of
footnote disclosures).
(f) Absence of Certain Changes. Except as
disclosed in the Sabratek SEC Documents, since
January 1, 1998, Sabratek and its subsidiaries
have conducted their respective businesses and
operations in the ordinary course of business
consistent with past practice. Except as
disclosed in the Sabratek SEC Documents, since
January 1, 1998, there has not occurred: (i)
any events, changes or effects (including the
incurrence of any liabilities of any nature,
whether or not accrued, contingent or
otherwise) having or, which would be
reasonably likely to have, in the aggregate, a
material adverse effect on Sabratek and its
subsidiaries taken as a whole; (ii) any
declaration, setting aside or payment of any
distribution (whether in cash, shares or
property) with respect to the equity interests
of Sabratek or of any of its subsidiaries,
other than any regular quarterly cash
dividends or dividends paid by wholly-owned
subsidiaries; or (iii) any change by Sabratek
or any of its subsidiaries in accounting
principles or methods, except for any such
change required by reason of a change in GAAP.
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(g) No Undisclosed Liabilities. Except (i) to the
extent disclosed in the Sabratek SEC Documents and
(ii) for liabilities and obligations incurred in
the ordinary course of business consistent with
past practice, since September 30, 1998, neither
Sabratek nor any of its subsidiaries has incurred
any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise,
that have, or would be reasonably likely to have,
individually or in the aggregate, a material
adverse effect on Sabratek and its subsidiaries
taken as a whole.
(h) Litigation. There is no suit, claim, action,
proceeding, review or investigation pending or, to
the knowledge of Sabratek, threatened against or
affecting, Sabratek or any of its subsidiaries
which, individually or in the aggregate, is
reasonably likely to have a material adverse effect
on Sabratek and its subsidiaries taken as a whole,
or would, or would be reasonably likely to,
materially impair the ability of Sabratek to
consummate the transactions contemplated by this
Agreement.
(i) Compliance with Law. Sabratek and its
subsidiaries have complied with all 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 Sabratek and its
subsidiaries taken as a whole.
(j) No Default. The business of Sabratek and each
of its subsidiaries is not being conducted in
default or violation of any term, condition or
provision of (i) its respective certificate of
incorporation or bylaws or similar organizational
documents, or (ii) agreements to which Sabratek and
its subsidiaries are parties, excluding from the
foregoing clause (ii) defaults or violations that
would not have a material adverse effect on
Sabratek and its subsidiaries taken as a whole and
would not, or would not be
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reasonably likely to, materially impair the ability
of Sabratek to consummate transactions contemplated
by this Agreement.
(k) Certain Securities Matters.
(i) Sabratek represents and warrants that (A)
the Call Option and the Unitron Shares it will
acquire upon exercise thereof are being
acquired by Sabratek for its own account and
not with a view to, or for offer or sale in
connection with, any distribution thereof, and
it is not participating and does not have a
participation in any such distribution or the
underwriting of any such distribution; (B)
Sabratek has sufficient knowledge and
experience in financial and business matters
and is fully capable of evaluating the merits
and risks of purchasing the Call Option and
the Unitron Shares; and (C) Sabratek has not
been solicited to acquire the Call Option or
the Unitron Shares by means of general
advertising or general solicitation.
(ii) Sabratek has been furnished with
information about and allowed access to
Unitron's business, books, records, files, and
properties and has had the opportunity to
investigate Unitron's business and assets and
to ask questions of and receive answers from
Unitron sufficient to satisfy Sabratek that
Unitron's business is reasonably as described
by Unitron.
(iii) Sabratek understands that (A) the Call
Option and the Unitron Shares are not
registered under any applicable federal or
state securities law in reliance upon certain
exemptions thereunder, (B) the Call Option and
the Unitron Shares may not be sold,
transferred or otherwise disposed of without
registration under the Securities Act and
compliance with applicable state securities
laws or the availability of an exemption
therefrom; and (C) in the absence of
registration under the Securities Act and
compliance with applicable state securities
laws or an exemption therefrom, the Unitron
Shares must be held indefinitely. Sabratek
acknowledges that the reliance of the Unitron
Shareholders upon such exemption from
registration is predicated upon the foregoing
representations.
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(iv) Sabratek has filed all reports and
statements, together with any amendments
required to be made with respect thereto, that
it was required to file with the SEC, any
state securities authorities, and the Sabratek
Principal Market. As of their respective
dates, each of such reports and documents, as
amended, including the financial statements,
exhibits and schedules thereto, complied in
all material respects with the relevant
statutes, rules and regulations enforced or
promulgated by the regulatory authority with
which they were filed, and did not contain any
untrue statement of a material fact or omit to
state any material fact required to be stated
therein or necessary in order to make the
statements therein, in light of the
circumstances under which they were made, not
misleading.
(l) Brokers. Sabratek has not incurred any
obligation for any finder's, broker's or agent's
fee in connection with the transactions
contemplated by this Agreement.
(m) Market Manipulation. Sabratek has not,
directly or indirectly, taken any action designed
to cause or to result in, or that has constituted
or which might reasonably be expected to
constitute, the stabilization or manipulation of
the price of Sabratek Stock to facilitate the sale
or resale of Sabratek Stock, in any case in
violation of any federal or state securities laws.
(n) Acknowledgment of Unitron Disclaimer. SABRATEK
ACKNOWLEDGES THAT UNITRON HAS EXPRESSLY DISCLAIMED
ANY REPRESENTATIONS AND WARRANTIES NOT SPECIFICALLY
SET FORTH IN THIS AGREEMENT AND THAT THE PURCHASE
OF THE UNITRON INTELLECTUAL PROPERTY AS
CONTEMPLATED BY THIS AGREEMENT IS ON AN "AS-IS,
WHERE-IS" BASIS, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF UNITRON EXPRESSLY SET FORTH IN THIS
AGREEMENT.
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ARTICLE 7
PURCHASE PRICE OFFSET; INDEMNIFICATION
Prior to the Closing as expressly contemplated by this Agreement, the
Purchase Price may be reduced as provided in Section 7.1 and Article 2. After
the Closing, the parties to this Agreement shall be entitled to indemnification
as provided in Section 7.2. For purposes of this Article 7 and Section 2.1(e),
the parties acknowledge and agree that Damages (as hereinafter defined) incurred
or reasonably expected to be incurred by Unitron shall be Damages incurred by
Sabratek, provided that a Sabratek breach of this Agreement or any other
agreement contemplated hereby that causes Unitron to incur any Damages shall not
be Damages incurred by Unitron for this purpose of this sentence.
7.1 Purchase Price Offset: Determination of Damages
Offset.
(a) At any time (or from time to time) after the
Effective Date and on or prior to June 1, 1999,
Sabratek may give written notice (a "Claim Notice")
to the Unitron Representative Shareholders that
Sabratek claims (a "Claim") a Damages Offset.
Notwithstanding anything in this Agreement to the
contrary, the actual Damages Offset made against
the Purchase Price shall not exceed $4 million as a
result of any such Claims (the "Ceiling Amount").
After the Damages Offset made against the Purchase
Price equals the Ceiling Amount, Sabratek shall
have no right to (i) any further Damages Offset
against the Purchase Price or (ii) any post-Closing
indemnification as provided in Section 7.2 for the
breach of Unitron representations and warranties
except as expressly provided in this Agreement. The
Claim Notice shall set forth in reasonable detail
(i) the nature of the Claim and (ii) if
ascertainable, the amount of the Claim (hereinafter
referred to as the "Claim Amount"). Upon actual
receipt of a Claim Notice, the Unitron
Representative Shareholders shall have 5 days to
dispute some or all of the Claim (and, if set forth
in the Claim Notice, some or all of the Claim
Amount) by giving written notice to Sabratek
specifying in reasonable detail the basis for the
dispute (a "Dispute Notice"). Upon the expiration
of such 5 day period, any portion of the Claim
(and, if set forth in the Claim Notice, the Claim
Amount) not disputed in a Dispute Notice so given
shall be deemed approved by the Unitron
Representative Shareholders. If, within the 5 day
period referred to above, the Unitron
Representative Shareholders gives a Dispute Notice
to Sabratek, Sabratek and the Unitron
Representative Shareholders shall
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undertake to obtain as promptly as practicable a
final resolution of the dispute specified therein.
If Sabratek and the Unitron Representative
Shareholders are unable to resolve such dispute
within 5 days after the delivery to Sabratek of the
Dispute Notice, then Sabratek and the Unitron
Representative Shareholders shall submit such
dispute to arbitration in accordance with Section
9.1 of the Agreement. Sabratek and the Unitron
Representative Shareholders agree that such
arbitration shall be completed and a final
arbitration decision rendered within 35 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 35 day
period. The foregoing notwithstanding, with respect
to any Claim related to a claim of a third party
which is not determinable as contemplated by
subsection (c) below, the respective arbitration
decision shall relate only to the Damages
reasonable expected to be incurred by Sabratek (if
any) with respect to such third party claim as
contemplated by subsection (c) below.
(b) The Purchase Price otherwise payable to Frasca
shall be reduced by an amount equal to one-half of
any Damages Offset determined in accordance with
this Section and the Purchase Price otherwise
payable to the holders of Unitron Shares and
Unitron Options other than Frasca shall be reduced
on a pro rata basis in accordance with the
respective amounts of the Purchase Price such
holders would otherwise have received by an amount
equal to one-half of any Damages Offset determined
in accordance with this Section, and such amount
shall be deemed, at the Closing, to be a Damages
Offset.
(c) Notwithstanding the foregoing, if any Claim
asserted by Sabratek under this Section relates to
any claim which is asserted or threatened by a
person other than a party to this Agreement or a
successor or assign of a party to this Agreement,
the amount of which claim is not determinable prior
to the Closing, then the Purchase Price shall be
reduced by an amount equal the Damages reasonably
expected to be incurred by Sabratek (if any) with
respect to such third party claim as determined by
arbitration (which amount shall be deemed to be a
Damages Offset), as contemplated by the last
sentence of subsection (a) above (the "Third Party
Claim Holdback"). The Third Party Claim Holdback
will be deposited with a third party escrow agent
mutually
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acceptable to Sabratek and the Unitron
Representative Shareholders and will be governed by
an escrow agreement mutually acceptable to Sabratek
and the Unitron Representative Shareholders (which
agreement shall provide for the release of such
escrow or any portion thereof upon the joint
written direction of Sabratek and the Unitron
Representative Shareholders or the written
direction of the respective arbitrator), it being
understood that such escrow agreement shall be
substantially identical to the escrow agreement
attached hereto as Exhibit C. After the Closing,
when the amount of Damages (if any) incurred by
Sabratek from any such third party claim has been
finally determined by arbitration: (i) Sabratek
shall be entitled to such amount out of the Third
Party Claim Holdback to the extent of the Third
Party Claim Holdback (together with the pro rata
portion of the proceeds of the investment thereof
as of such date attributable thereto) and (ii) if
at such time, after giving effect to clause (i),
the amount of the Third Party Claim Holdback
exceeds the aggregate amount of Damages then
reasonably expected to be incurred by Sabratek
relating to any third party claims then outstanding
as determined by the arbitrator, Frasca and the
other Unitron Shareholders shall be entitled to
such excess (together with the pro rata portion of
the proceeds of the investment thereof as of such
date attributable thereto) in accordance with the
terms of this Agreement; provided that any portion
thereof to which Frasca is entitled shall be
deposited into the Frasca Closing Escrow, subject
to an aggregate ceiling of $1 million less the
value of the consideration deposited into the
Frasca Closing Escrow at the Closing (and Frasca
and Sabratek shall so direct such escrow agent).
(d) "Unitron Representative Shareholder" initially
means Frasca, Sponaugle and Overby, who shall serve
together in such capacity. The Unitron
Representative Shareholder shall act upon the
written direction of a majority of the individuals
then serving in such capacity. In the event any of
such individuals serving as a Unitron
Representative Shareholder ceases for any reason to
act in such capacity, Chuck Hall shall then replace
such individual in such capacity. If Chuck Hall is
not willing to serve in the capacity of a Unitron
Representative Shareholder or if subsequent to the
commencement of the service of Chuck Hall in such
capacity, Chuck Hall or any other Unitron
Representative Shareholder ceases for any reason to
act in such capacity, Dwight Fawcett shall then
serve in the capacity of a Unitron Representative
Shareholder.
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The Unitron Shareholders shall promptly elect such
number of Unitron Representative Shareholders such
that 3 individuals are serving in such capacity if
and after the above succession rules are exhausted.
The individuals serving as the Unitron
Representative Shareholders shall not be entitled
to any remuneration. Upon any change in or
succession pursuant to the foregoing, the then
acting or successor Unitron Representative
Shareholders shall immediately notify Sabratek of
such change or succession (including the names of
all of the individuals then serving as the Unitron
Representative Shareholders). The Unitron
Representative Shareholders are 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 accounting
dispute), the Unitron Representative Shareholders
shall have complete discretion provided the Unitron
Representative Shareholders act in good faith.
Without limiting the generality of the foregoing,
the Unitron Representative Shareholders 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, at the expense of the Unitron
Shareholders on a pro rata basis.
7.2. Indemnification.
(a) Expiration and Survival. From and after the
Closing, the parties shall be indemnified as
provided in this Section 7.2. The representations
and warranties of the Unitron Shareholders set
forth in Section 6.1 (collectively, the
"Shareholder Representations") shall survive the
Closing and continue in full force and effect
forever thereafter (subject to any applicable
statute of limitations). The representations and
warranties of Sabratek set forth in Section 6.3 and
in the Sabratek Closing Representation
(collectively, the "Sabratek Representations")
shall survive the Closing and continue in full
force and effect for a period of six months
thereafter. The representations and warranties of
Unitron set forth in Section 6.2 (collectively, the
"Unitron Representations") shall not survive the
Closing but shall continue in full force and effect
for a period of six months thereafter for the
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purpose of the indemnifications obligations of
Frasca as expressly provided in this Agreement,
except as otherwise expressly provided in this
Agreement.
(b) Obligations of the Parties. From and after the
Closing, each of the Unitron Shareholders shall
individually indemnify, defend and hold Sabratek
and its successors and permitted assigns, and its
directors, officers, employees and agents, and the
heirs, executors and personal representatives of
each of the foregoing (each a "Sabratek Indemnitee"
and collectively the "Sabratek Indemnitees"),
harmless from and against any claims, obligations,
liabilities, losses, expenses or other costs
(including, without limitation, reasonable
attorneys' fees and expenses) (collectively,
"Damages") incurred by any Sabratek Indemnitee and
proximately caused by any material inaccuracy in
any of the Shareholder Representations given by
such Unitron Shareholder or the breach of any
covenant or agreement of such Unitron Shareholder
contained in this Agreement or, in the case of the
Asset Acquisition Alternative, any liability or
obligation which is not assumed by Sabratek as
provided in Section 3.3 (including any liability or
obligation that becomes a liability or obligation
of Sabratek (or its designated transferee) by
operation of law, bulk sale statute or otherwise).
From and after the Closing, Frasca shall
individually indemnify, defend and hold the
Sabratek Indemnitees harmless (to the extent and
only to the extent of amounts available from the
Frasca Closing Escrow in accordance with the terms
of Exhibit B attached hereto) from and against any
Damages incurred by any Sabratek Indemnitee and
proximately caused by any material inaccuracy in
any of the Unitron Representations or the breach of
any covenant or agreement of Unitron contained in
this Agreement, subject to the limitations
expressly set forth in this Agreement. Nothing in
this Agreement shall limit Sabratek from seeking
indemnification for Damages from Frasca with
respect to a breach of a Unitron Representation as
provided above which is: (i) related to any Damages
Offset or arising from the breach pursuant to which
a Damages Offset was made, except that Sabratek
Damages shall not be double counted and the
arbitration of any Claim under Section 7.1 shall
continue to be final and binding; and (ii) newly
discovered by Sabratek after the Closing in that
Sabratek through reasonable diligence could not
have discovered the existence or the extent of such
Damages prior to the Closing. From and after the
Closing, Sabratek shall indemnify, defend and
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hold each of the Unitron Shareholders and the
heirs, executors and personal representatives of
each of the Unitron Shareholders (each a "Unitron
Shareholder Indemnitee" and collectively the
"Unitron Shareholder Indemnitees") harmless from
and against any Damages incurred by any of the
Unitron Shareholders and proximately caused by any
material inaccuracy in any of the representations
and warranties of Sabratek contained in Section 6.3
or the breach of any covenant or agreement of
Sabratek contained in this Agreement. A claim by a
Sabratek Indemnitee or a Unitron Shareholder
Indemnitee for indemnification under this Article 7
shall be ineffective unless such person delivers a
written claim for indemnification within the
survival period specified in Section 7.2 as
applicable to the representation or warranty that
is the subject of such claim.
(c) Claim for Indemnification. If a party has
reasonable grounds to believe that it may incur or
suffer any Damages, such party shall promptly
provide written notice (a "Notice of Claim") of the
intention of such party to seek indemnification to
the potential indemnifying party of the intention
of such indemnified party to seek indemnification,
the specific basis of the claim for indemnification
and the amount for which indemnification is sought
(the "Indemnification Amount"), if known. The
relevant parties shall thereafter attempt to
resolve any disputes with respect to either the
right to indemnification or the Indemnification
Amount in accordance with the applicable provisions
of this Agreement. If any action at law or suit in
equity is instituted by a third party with respect
to which any party intends to claim any liability
or expense as Damages under Section 7.2(a), such
party shall promptly notify the indemnifying party
in writing of such action or suit.
(d) Limitations on Frasca Indemnification
Obligation. Notwithstanding anything to the
contrary contained herein, the Sabratek Indemnitees
shall only be entitled to indemnification against
Frasca pursuant to Section 7.2 with respect to any
Unitron Representations once the aggregate amount
otherwise so payable to the Sabratek Indemnitees
pursuant to or as a result of such Section exceeds
a total amount equal to (i) $250,000 less (ii) the
amount of the deductible specified in Section
2.1(e) incurred by Sabratek prior to the Closing,
and such amount shall be a one-time deductible to
be borne by Sabratek. Notwithstanding the
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foregoing, the time limitations related to
indemnification claims, the deductible amount and
the other indemnification restrictions specified
above in this Section 7.2 shall not apply with
respect to any fraudulent or intentional
misrepresentation. The Sabratek Indemnitees shall
be entitled to satisfy any indemnification
obligations of Frasca from the Frasca Closing
Escrow to the extent of the amounts available from
the Frasca Closing Escrow in accordance with the
terms of Exhibit B attached hereto.
7.3 Third Party Claims. The indemnifying party shall
have the right to conduct and control, at its expense
and through counsel of its own choosing, the defense of
any third party claim, action or suit, but the
indemnified party may, at its election, participate in
the defense of any such claim, action or suit at its
sole cost and expense; provided, that if (i) the
indemnifying party and the indemnified party mutually
agree or (ii) the named parties to such claim, action or
suit (including any impleaded parties) include both the
indemnifying party and the indemnified party and
representation of both parties by the same counsel would
be inappropriate due to actual or potential differing
interests between them, then the indemnified party may
defend, through counsel of its own choosing, such claim,
action or suit and (so long as it gives the indemnifying
party at least 15 days prior notice of the terms of the
proposed settlement thereof) settle such claim, action
or suit, and recover from the indemnifying party the
amount of such settlement or of any judgment and the
costs and expenses of such defense. In the event that
the indemnifying party is not diligently conducting the
defense of any such third party claim, the indemnified
party shall then be entitled to conduct and control, at
its expense and through counsel of its own choosing, the
defense of such third party claim, but the indemnifying
party may, at its election, participate in the defense
of any such claim, action or suit at its sole cost and
expense. Neither the indemnifying party nor the
indemnified party shall compromise or settle any third
party claim, action or suit without the prior written
consent of the other party, which consent will not be
unreasonably withheld or delayed.
7.4 Exclusivity. Except to the extent such limitation
is prohibited by applicable laws and such prohibition is
not waivable, the remedies provided in this Agreement
shall be exclusive of any other rights or remedies
available to one party against another party with
respect to this Agreement. To the maximum extent
permitted by applicable laws, each of parties waives the
benefit of any such prohibition.
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ARTICLE 8
TERMINATION
8.1 Right to Terminate.
(a) Termination by Agreement. This Agreement may
be terminated at any time prior to the Closing upon
the mutual written agreement of Sabratek and
Unitron.
(b) Termination by Unitron. Unitron shall have the
right to terminate this Agreement at any time prior
to the Closing upon written notice given to
Sabratek upon the occurrence of any one or more of
the following events:
(i) The material breach of any of the
representations, warranties, covenants or
agreements of Sabratek contained in this
Agreement and the failure by Sabratek to take
adequate initial steps to remedy such breach
within 30 days after written notice of breach
is given by Unitron to Sabratek and to have
remedied such breach within 60 days after the
delivery of such written notice; or
(ii) An assignment by Sabratek for the benefit
of its creditors or the admission by Sabratek
in writing of its inability to pay its debts
generally as they become due; the entry of an
order, judgment or decree adjudicating
Sabratek bankrupt or insolvent; the entry of
any order for relief with respect to Sabratek
under the Federal Bankruptcy Code; the filing
of a petition or application by Sabratek to
any tribunal for the appointment of a
custodian, trustee, receiver or liquidator of
Sabratek; the commencement by Sabratek of any
proceeding (other than a proceeding for the
voluntary liquidation and dissolution of a
subsidiary) relating to Sabratek under any
bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction; or the
filing of any such petition or application, or
the commencement of any such proceeding,
against Sabratek which (a) Sabratek by any act
indicates its approval thereof, consent
thereto or acquiescence therein or (b) is not
dismissed within 60 days; or
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(iii) The Sabratek Stock is not listed for
trading on any one of the Nasdaq National
Market, the New York Stock Exchange or the
American Stock Exchange; or
(iv) Sabratek's independent certified public
accounting firm issues any report on annual
audited financial statements for Sabratek
which is qualified with a "going concern"
statement.
(c) Termination by Sabratek. Sabratek shall
have the right to terminate this Agreement at
any time prior to the Closing upon written
notice given to Unitron upon the occurrence of
any one or more of the following events:
(i) The material breach of any of the
covenants of Unitron set forth in this
Agreement, other than any such breach
initiated or caused directly or indirectly by
Sabratek (including through the Sabratek
representative on the Unitron Board), and the
failure by Unitron to take adequate initial
steps to remedy such material breach within 30
days after written notice of breach is given
by Sabratek to Unitron and to have remedied
such breach within 60 days after the delivery
of such written notice; or
(ii) The material breach of any of the
representations, warranties, covenants or
agreements of the Unitron Shareholders
(considered in the aggregate) contained in
this Agreement and the failure by such Unitron
Shareholders to take adequate initial steps to
remedy such material breach within 30 days
after written notice of breach is given by
Sabratek to Unitron (copies of which notice
shall be given simultaneously by Sabratek to
the Unitron Representative Shareholders) and
to have remedied such breach within 60 days
after the delivery of such written notice; or
(iii) Shareholders of Unitron holding 92.5% or
more in interest of the fully diluted equity
of Unitron shall not have become a party to
this Agreement in accordance with the terms of
this Agreement on or prior to February 26,
1999; or
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(iv) The shareholders of Unitron do not duly
adopt and approve of this Agreement and the
transactions contemplated by this Agreement at
the Unitron Special Meeting (or deliver to
Unitron an equivalent written consent of
Unitron shareholders to Unitron) on or prior
to February 26, 1999; or
(v) More than 5% of the shareholders of
Unitron exercise dissenters rights with
respect to the Asset Acquisition Alternative
contemplated by this Agreement; or
(vi) Frasca revokes his Separation Agreement
in accordance with its terms; or
(vii) The failure of the Sabratek board to
approve this Agreement and the transactions
contemplated hereby, except that this
termination right shall lapse and be of no
force or effect on Tuesday, January 26, 1999
at 5:00 p.m. Central Time if Sabratek has not
prior to such time notified Unitron that its
board of directors has decided not to approve
this Agreement and the transactions
contemplated hereby.
8.2 Effect of Termination. Except as expressly provided
herein, neither party shall be bound to the other after
the expiration or termination of this Agreement.
Expiration or termination of this Agreement in
accordance with its terms will in no way affect or
impair any rights, obligations or liabilities existing,
accruing or arising under this Agreement prior to such
termination, or any rights, obligations or liabilities
accruing or arising under any other agreements between
the parties, including, without limitation, any
liabilities for actual damages arising out of a material
breach of this Agreement, prior to the date of such
expiration or termination.
ARTICLE 9
GENERAL PROVISIONS
9.1 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 best efforts to attempt
to resolve any
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