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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1999
REGISTRATION NO. 333-83181
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SABRATEK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3700639
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
8111 NORTH ST. LOUIS AVENUE, SKOKIE, ILLINOIS 60076
(847) 720-2400
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
K. SHAN PADDA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SABRATEK CORPORATION
8111 NORTH ST. LOUIS AVENUE, SKOKIE, ILLINOIS 60076
(847) 720-2400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
SCOTT HODES, ESQ.
DAVID S. GUIN, ESQ.
ROSS & HARDIES
150 NORTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60601
(312) 558-1000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each Class of Amount to be Registered Proposed Maximum Amount of Registration
Securities to be Aggregate Offering Fee
Registered Price (1)
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<S> <C> <C> <C>
Common Stock 603,500 $14,013,270 $3,896
$.01 par value
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</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating
the registration fee, based on the average of the high and low trading
prices for the common stock as reported by the NASDAQ National Market
on July 13, 1999.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY STATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SUBJECT TO COMPLETION - DATED JULY 22, 1999
PROSPECTUS
603,500 SHARES
SABRATEK CORPORATION
COMMON STOCK
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This prospectus relates to the offer and sale of up to 603,500 shares
of our common stock from time to time by the selling stockholders, former
shareholders of Strategic Reimbursement Services, Inc., an Illinois corporation,
("SRS") and EGS Securities Corp. ("EGS"). The selling stockholders who were
former shareholders of SRS acquired the 600,000 shares of common stock being
offered by means of this prospectus in a transaction in which a newly-formed
wholly-owned subsidiary of Sabratek was merged with and into SRS. As a result of
the transaction, SRS became a wholly-owned subsidiary of Sabratek and Sabratek
paid the former SRS shareholders an aggregate of 1,636,359 shares of our common
stock. EGS provided us with assistance in structuring the acquisition in
exchange for which we agreed to pay EGS 3,500 shares of our common stock.
Under the terms of the merger agreement and a separate escrow
agreement, we delivered (i) 1,472,723 shares of our common stock to the former
SRS shareholders, and (ii) 163,636 shares of our common stock to U.S. Bank Trust
National Association as escrow agent. The purpose of the escrow is to secure any
payments to which Sabratek may be entitled in the event it is determined that
SRS breached any of its representation and warranties contained in the merger
agreement. While the shares are held in escrow, the selling stockholders have
the right to direct the sale of, and to vote, the shares, but not to receive any
of the proceeds of a sale of, or to receive any dividends or distributions
issued on, the shares held in escrow. The escrow agent has authority to sell
shares of stock held in escrow without instructions from the selling
stockholders if, and only if, the sales are necessary to satisfy any claim we
may make for indemnification. See "PLAN OF DISTRIBUTION," "USE OF PROCEEDS," and
"SELLING STOCKHOLDERS." Sabratek accounted for the merger using the pooling of
interests method of accounting. As part of the merger, we also agreed to
register the resale of the 1,636,359 shares of common stock by the selling
stockholders on two separate Shelf Registration Statements. This prospectus
forms a part of the first of these Shelf Registration Statements and relates to
the resale of up to 603,500 shares of our common stock. The second of these
Shelf Registration Statements, which will register the resale for the remaining
1,036,359 shares of common stock must be filed on or before _________ __, 1999.
Sabratek has delivered to EGS all 3,500 shares of our common stock to which EGS
was entitled for providing us the services described above.
Sabratek will not receive any of the proceeds for the sale of the
common stock offered by means of this prospectus unless it receives a payment
from the escrow to satisfy an indemnification claim. To the extent that Sabratek
does receive any proceeds from the sale of the common stock offered by means of
this prospectus, we will use such proceeds for working capital and other general
corporate purposes. See "USE OF PROCEEDS" and "SELLING STOCKHOLDERS." The shares
are quoted on the Nasdaq National Market under the symbol "SBTK".
The shares offered by this prospectus involve a high degree of risk.
See "RISK FACTORS" beginning on Page 1.
THE DATE OF THIS PROSPECTUS IS ___________, 1999
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TABLE OF CONTENTS
<TABLE>
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Page
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WHERE YOU CAN FIND MORE INFORMATION....................................................................... ii
RISK FACTORS.............................................................................................. 1
SELLING STOCKHOLDERS...................................................................................... 11
USE OF PROCEEDS........................................................................................... 14
PLAN OF DISTRIBUTION...................................................................................... 15
LEGAL MATTERS............................................................................................. 16
EXPERTS................................................................................................... 16
RECENT DEVELOPMENTS....................................................................................... 16
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.,
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov. You may also reach us on our Internet web
site at http://www.sabratek.com.
The SEC allows us to incorporate by reference the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings (File No.
1-11831) we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
a. our annual report on Form 10-K for the fiscal year ended December
31, 1998;
b. our quarterly report on Form 10-Q, for the fiscal quarter ended
March 31, 1999;
c. our current report on Form 8-K, dated May 19, 1999 and filed with
the SEC on May 25, 1999;
d. our current report on Form 8-K, dated June 1, 1999 and filed with
the SEC on June 16, 1999 and any later filed amendments;
e. our current report on Form 8-K, dated June 7, 1999 and filed with
the SEC on June 16,1999;
f. our current report on Form 8-K, dated June 29, 1999 and filed
with the SEC on July 14, 1999 and any later filed amendments;
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g. our current report on Form 8-K, dated July 1, 1999 and filed with
the SEC on July 16, 1999; and
h. the description of our capital stock contained in our
registration statement on Form 8-A, declared effective by the SEC
on June 21, 1996; and any amendments or reports filed for the
purpose of updating that description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Sabratek Corporation
8111 North St. Louis Avenue
Skokie, Illinois 60076
847-720-2400
ATTENTION: VICE PRESIDENT OF FINANCE
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide information other than the
information provided in this prospectus. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus is accurate as of any date other than
the date on the front of this document.
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RISK FACTORS
In addition to the other information in this prospectus, the risk
factors shown below should be considered carefully by potential purchasers of
the shares being offered by this prospectus.
FORWARD-LOOKING STATEMENTS MAY GIVE RISE TO EXPECTATIONS THAT ARE NOT
FULFILLED.
We have made forward-looking statements in this prospectus (and in
certain documents that we incorporate by reference in this prospectus) which may
be affected by risks and uncertainties. We may also make written forward-
looking statements in our periodic reports to the SEC, in our press releases and
other written materials and in oral statements made by our officers, directors
or employees to third parties. Statements that are not historical facts,
including statements about our beliefs and expectations, are forward-looking
statements. These statements are based on the beliefs and assumptions of our
management and on information currently available to us. Forward-looking
statements include statements preceded by, followed by or that include the words
"believes", "expects", "anticipates", "intends", "plans", "estimates",
"designed" or similar expressions.
Because we are unable to control or predict many factors that will
determine our future performance including financial results, forward-looking
statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions. Our future results may differ materially from
those expressed in the forward-looking statements contained in this prospectus
and in the information incorporated by reference in this prospectus. See "WHERE
YOU CAN FIND MORE INFORMATION." We caution you that a number of important
factors could cause actual results to differ materially from those contained in
any forward-looking statement. See other Risk Factors in this section.
Sabratek's management believes these forward-looking statements are
reasonable. However, because these statements are based on current expectations,
you should not place undue reliance on these forward-looking statements, which
are based on current expectations. Forward-looking statements speak only as of
the date they are made, and we undertake no obligation to update publicly any of
them in light of new information or future events.
WE MAY BE UNSUCCESSFUL AT DEVELOPING OR ACQUIRING AND INTRODUCING NEW
OR ENHANCED PRODUCTS, WHICH MAY RESULT IN A REDUCTION IN OUR REVENUE.
Our financial position and results of operations are dependent on our
ability to satisfy the increasingly sophisticated needs of our customers by
developing or acquiring and introducing new products, enhanced versions of
existing products and new complementary products. There can be no assurance that
Sabratek will be able to develop or acquire new or enhanced products. In
addition, our success in developing or acquiring and introducing new or enhanced
products may be affected by a variety of risks, which include, but may not be
limited to, the following:
- the products may require and fail to receive regulatory
clearance or approval,
- the products may be difficult or uneconomical to
manufacture or market,
- the proprietary rights of third parties may preclude us
from marketing these products,
- scientific developments or technological advancements may
produce more desirable or technologically advanced
products,
- our competitors may market superior or more
cost-effective products and may do so on a more timely
basis,
- errors and malfunctions may be found in products after
their commercial introduction and may not be corrected in
a timely manner, and
- customers may not accept or use the products.
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If Sabratek is unable to develop or acquire new or enhanced products
and successfully bring them to market, it could have a material adverse effect
on our financial position and results of operations.
WE MAY BE UNABLE TO CONTINUE TO COMPETE WITH OTHER COMPANIES IN OUR
INDUSTRY THAT HAVE FINANCIAL OR OTHER ADVANTAGES.
The medical products industry is characterized by intense competition.
Large competitors, including Abbott Laboratories, Alaris Medical, Inc., Baxter
International Inc., I-Flow Corp., McGaw, Inc., an indirect subsidiary of B.
Braun Melsungen AG and SIMS Deltec, Inc., a subsidiary of Smiths Industries,
PLC, among others, have significant market shares and installed bases of
products in the infusion pump and related disposable supplies industry. Many of
these competitors have substantially greater capital resources, research and
development staffs, regulatory experience, sales and marketing capabilities,
manufacturing facilities and broader product offerings than us. Moreover, we
expect that these competitors will continue to compete aggressively by offering
volume discounts based on "bundled" purchases of a broader range of medical
equipment and supplies, a tactic that we can currently only pursue on a more
limited basis. There can be no assurance that this competition will not
adversely affect our results of operations or our ability to maintain or
increase sales and market share. Currently, we derive substantially all of our
revenues from the sale of our multi-therapy infusion pumps and related
disposable supplies. Further, we expect that revenues from these products will
continue to account for a significant portion of our revenues in the future.
Therefore, if substantially increased competition or technological changes
create a decline in the demand for our infusion pumps and related disposable
supplies, we would experience materially adverse consequences in our financial
position and results of operations.
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OUR LONG-TERM STRATEGY MAY BE UNATTAINABLE OR WE MAY BE UNABLE TO
SUCCESSFULLY INTEGRATE COMPANIES OR PRODUCT LINES THAT WE ACQUIRE.
While we have historically focused on the manufacture and distribution
of infusion pumps and related medical devices, our long-term strategy is to
create a virtual hospital room that can be accessed by healthcare providers
through the Internet and telecommunication ports. Eventually, it is our goal to
make our primary products, infusion pumps and related disposable supplies, a
crucial but complimentary element in our business of providing a broad spectrum
of services and products. Because our strategy is visionary and unprecedented
for us, there can be no assurance that we will be able to successfully implement
it.
There can also be no assurance that medical professionals will support
or prescribe implementation of a virtual hospital room or that if they do
support a virtual hospital room, they will direct their patients to select our
products and services. There can be no assurance that third party payors will
provide reimbursements for the products and services of our virtual hospital
room to the extent that we will be able to provide those products and services
on a profitable basis. Moreover, there can be no assurance that we will be able
to create or infiltrate a customer base which accepts and purchases the products
and services that would be included in a virtual hospital room.
In addition, part of our strategy includes aggressive expansion of our
operations by acquisition of entities or product lines that contribute to our
ability to create a virtual hospital room. We may use cash from our reserves to
acquire entities or product lines. If we use cash for acquisitions, we could
deplete our liquidity and cash reserves, which could have a material, adverse
effect on our financial position. Furthermore, there can be no assurance that
we will be able to successfully integrate new entities or product lines into our
operations or that we will be able to realize positive financial results from
this integration.
If we are unable to attain our long-term strategy or to successfully
integrate companies or product lines, it could have a material adverse effect on
our financial position and results of operations.
WE ARE INVOLVED IN LITIGATION WHICH MAY CAUSE SABRATEK TO PAY
SUBSTANTIAL DAMAGES AND ATTORNEYS FEES AND COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR FINANCIAL POSITION AND RESULTS OF OPERATIONS.
Sabratek is involved in litigation with SIMS Deltec concerning patent
infringement, trade secret misappropriate, unfair competition and interference
with SIMS Deltec's customers.
In addition, Sabratek was served with a complaint on January 27, 1999
alleging that Sabratek and seven of its current and former officers violated
Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 20(a)
promulgated under the Securities Exchange Act of 1934. On June 7, 1999, we were
served with an amended complaint which expanded allegations that Sabratek
withheld material information about Sabratek's future prospects and engaged in
improper accounting practices. The amended complaint also added three officers
and one director as additional defendants.
Sabratek will incur substantial attorneys' fees in these litigation
matters and if these matters are ultimately determined in a manner adverse to
Sabratek, we could be liable for substantial damage awards which could have a
material adverse effect on our financial condition and results of operations.
WE ARE DEPENDENT ON OBTAINING APPROVALS FROM GOVERNMENT REGULATORS.
INTRODUCTION: OVERVIEW OF REGULATORY REQUIREMENTS.
The FDA, and in some cases, state and foreign authorities regulate the
clinical testing, development, manufacture, packaging, labeling, distribution
and promotion of the medical devices and supplies that we market.
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Federal regulations enforced by the FDA classifies medical devices
intended for human use into three categories, Classes I, II and III, on the
basis of the controls deemed necessary by the FDA to reasonably assure their
safety and effectiveness. Class I devices are required to comply with general
controls regarding such matters as labeling, premarket notification and
adherence to current good manufacturing practice requirements. Class II devices
are required to comply with general and special controls regarding such matters
as performance standards, postmarket surveillance, patient registries, and FDA
guidelines. Generally, Class III devices are those which must receive premarket
approval from the FDA to ensure their safety and effectiveness. Examples of
Class III devices include life-sustaining, life-supporting and implantable
devices, or new devices which have not been found substantially equivalent to
legally marketed devices. Electronic infusion devices and disposable tubing
sets, which we assemble and distribute, are classified by the FDA as Class II
medical devices.
If a new Class II medical device is substantially equivalent to a
medical device already legally marketed in the United States, and the marketed
device did not require Class III premarket approval, the FDA requirements may be
satisfied through a procedure known as a "510(k) Submission," in which the
applicant provides product information supporting its claim of substantial
equivalency. "Substantial equivalence" means that a device has the same intended
use and the same technological characteristics as the legally marketed device,
or the same intended use and different technological characteristics, provided
that it can be demonstrated that the device is as safe and effective as the
legally marketed device, and does not raise different questions regarding safety
and effectiveness.
Commercial distribution of a device for which a 510(k) Submission is
required can begin only after the FDA issues an order finding the device to be
substantially equivalent to a legally marketed device. The FDA has recently been
requiring a more rigorous demonstration of substantial equivalence than in the
past. This may include a requirement for clinical testing of the device. The FDA
may determine that a proposed device is not substantially equivalent to a
legally marketed device, in which case a "premarket approval" will be required.
Alternatively, the FDA may require additional information before a substantial
equivalence determination can be made, in which case data from safety and
effectiveness tests, including clinical tests, may be required.
The process for preparing and obtaining FDA approval of a premarket
approval is generally much more elaborate, time-consuming and expensive than the
process of preparing and obtaining FDA clearance of a 510(k) Submission. A
premarket approval would require us, among other things, to conduct pre-clinical
and clinical trials to demonstrate the safety and effectiveness of the proposed
device. Therefore, a determination that we are not substantially equivalent or a
request for additional information could significantly delay the market
introduction of new products that fall into this category.
- THE FDA COULD DETERMINE THAT WE MUST SUBMIT A NEW 510(K) FOR
THE MEDIVIEW SOFTWARE, WHICH COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.
We received 510(k) clearance to begin marketing our 3030
Stationary Pump in the United States in May, 1992. We received 510(k) clearance
for our disposable tubing sets for use with the 3030 Stationary Pump in March,
1995. In July, 1994, the FDA cleared the 510(k) Submission for our 6060
Ambulatory Pump and disposable tubing sets for use with our 6060 Ambulatory
Pump. In June, 1996, we received 510(k) clearance forthat our original 510(k)
clearance for our 6060 Ambulatory Pump covers the use of 6060 Ambulatory Pump
in conjunction with the MediVIEW software system. However, there can be no
assurance that the FDA would agree with our determination. If in the future the
FDA concluded that the MediVIEW software system for use with the 6060
Ambulatory Pump required a new 510(k) Submission, the FDA could prohibit us
from marketing the MediVIEW software system for this use until we file a new
510(k) Submission and obtain clearance from the FDA. The FDA could also take
regulatory action against us for any prior distribution of the MediVIEW
software system with the 6060 Ambulatory Pump.
- THE FDA COULD DETERMINE THAT WE MUST SUBMIT A NEW 510(K) FOR
THE PUMPMASTER, WHICH COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS.
The PumpMaster is a hardware and software system designed to
perform diagnostic tests on our infusion pumps. We have determined that the
PumpMaster does not qualify for regulation as a medical device. However, there
can be no assurance that the FDA will agree with our determination in this
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regard. If the FDA were to determine that the PumpMaster is a medical device, it
could suspend our commercial distribution of the PumpMaster until a 510(k)
Submission covering the PumpMaster has been filed and cleared by the FDA and
other medical device regulatory requirements have been met. The FDA could also
take regulatory action against us based on our prior distribution of the
uncleared product.
- THE FDA COULD DETERMINE THAT WE MUST SUBMIT A NEW 510(K) FOR
ANY AND ALL ENHANCEMENTS WE HAVE MADE, OR MAKE, TO OUR
PRODUCTS.
A new 510(k) Submission must be filed when, among other
things, there is a major change or modification in the intended use of the
device, or a change or modification, including product enhancements, to a
legally marketed device that could significantly affect its safety or
effectiveness. A device manufacturer is responsible for making the initial
determination as to whether a proposed change to a cleared device or to its
intended use necessitates the filing of a new 510(k) Submission.
We have made some enhancements to our currently marketed
products without filing 510(k) Submissions. There can be no assurance that the
FDA would agree with our determinations that these enhancements do not require a
510(k) Submission and would not require 510(k) clearance before further
distribution. Likewise, if we determine that any modifications that we may make
to our cleared devices in the future do not require a new 510(k) Submission,
there can be no assurance that the FDA would agree with our determinations and
would not require a new 510(k) Submission for any future modifications made to a
cleared device.
If the FDA requires us to file a new 510(k) Submission for any
modification to the device, we may be prohibited from marketing the device as
modified until it obtains clearance from the FDA. There can be no assurance that
we will obtain 510(k) clearance on a timely basis, if at all, for any device
modification for which we file a future 510(k) Submission. If 510(k) clearance
is granted, there can be no assurance that it will not contain significant
limitations in the form of warnings, precautions or contraindications with
respect to conditions of use.
- THERE CAN BE NO ASSURANCE THAT WE WILL RECEIVE FDA CLEARANCE
FOR ANY NEW PRODUCTS WE MANUFACTURE.
We intend to develop new products in the future. Our new
products, including new applications for existing products, may qualify as
devices that require FDA 510(k) clearance or premarket approval. There can be no
assurance that any required 510(k) clearance or premarket approval of any of our
future products or new applications will be forthcoming in a timely manner, if
at all, or that the FDA's clearance or premarket approval of future products or
new applications will not contain significant limitations in the form of
warnings, precautions or contraindications with respect to conditions of use.
If in the future the FDA concludes that current, modified or new products
marketed by us require that the products be relabeled, require previously
unobtained 510(k) clearance, require new drug approval, or require other
regulatory approval, the FDA could prohibit us from manufacturing and/or
distributing these products until we make the necessary submissions and obtain
any required clearances or approvals. The FDA could also take regulatory action
against us for the marketing of these products before obtaining these clearances
or approvals.
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- THE FDA COULD DETERMINE THAT OUR MANUFACTURING PRACTICES ARE
SEVERELY INADEQUATE AND, As A RESULT, ORDER SUSPENSION OF OUR
FACILITIES; SUCH A DETERMINATION WOULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR RESULTS OF OPERATIONS.
Device manufacturers are required to register their
establishments and list their devices with the FDA, and are subject to periodic
inspections by the FDA and state agencies. Devices must be manufactured in
compliance with current good manufacturing practices under the Quality System
Regulation. We believe that our manufacturing and quality assurance procedures
substantially conform to the requirements of the Quality System Regulation.
However, there can be no assurance that the FDA would concur with our
determination in this regard or that we will be able to maintain substantial
compliance with the Quality System Regulation.
In addition, the Medical Device Reporting regulation obligates
us to inform the FDA whenever information reasonably suggests that one of our
devices may have caused or contributed to a death or serious injury, or that one
of our devices has malfunctioned and, if the malfunction were to recur, the
device would be likely to cause or contribute to a death or serious injury.
There can be no assurance that the FDA would agree with our determinations as to
whether particular incidents meet the threshold for Medical Device Reporting.
- WE MAY FAIL TO COMPLY WITH LABELING AND PACKAGING
REQUIREMENTS.
Labeling and packaging activities are regulated by the FDA and
may be regulated by the Federal Trade Commission. The FDA actively enforces
statutes and regulations prohibiting marketing of products for unapproved or
uncleared uses.
If, as a result of FDA inspections, Medical Device Reporting
reports or information derived from any other source, the FDA believes we are
not in compliance with the applicable statutory law or regulations, the FDA can:
- refuse to clear pending 510(k) Submissions until
specified conditions are met,
- withdraw previously cleared 510(k) Submissions,
- require notification to users regarding newly found
unreasonable risks,
- request repair, refund or replacement of faulty
devices,
- shut down facilities,
- require corrective advertisements, recalls or
marketing suspension,
- impose civil penalties, and
- institute legal proceedings to detain or seize
products, enjoin future violations, or seek criminal
penalties against us, our officers or employees.
Civil penalties for violations may be assessed by the FDA instead of or
in addition to instituting legal action. Civil penalties may range up to $15,000
per violation, and a maximum of $1,000,000 per proceeding. Civil penalties may
not be imposed for good manufacturing practice violations, unless the violations
involve a significant or knowing departure from federal regulations or a risk to
public health. The FDA provides manufacturers with an opportunity to be heard
before the assessment of civil penalties. If civil penalties are assessed,
judicial review is available.
- WE MAY BE UNABLE TO FULLY COMPLY WITH INTERNATIONAL
REGULATORY REQUIREMENTS.
We export, or intend to export, our 510(k)-cleared products to
Europe, Japan and other foreign countries. Exports of products that have market
clearance from the FDA in the United States do not require FDA authorization
for export. However, foreign countries often require, among other things, an
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FDA Certificate to Foreign Government verifying that the product complies with
specified requirements. To obtain a Certificate to Foreign Government, Sabratek
must certify to the FDA that these foreign requirements have been met. The FDA
may refuse to issue a Certificate to Foreign Government if significant
outstanding good manufacturing practice violations exist.
International sales of medical devices are regulated by each
country in which the products are sold. The regulatory review process varies
from country to country. Many countries also impose product standards, packaging
and labeling requirements, and import restrictions on devices. In addition, each
country has its own tariff regulations, duties and tax requirements. We plan to
use our distributors to assist us in obtaining any necessary foreign
governmental and regulatory approvals. We have received approval to market our
products in Japan as well as in the European community, and we currently sell
our products in Japan and the European community. However, there can be no
assurance that we will be able to obtain all necessary approvals in the future.
WE MAY NOT BE ABLE TO OBTAIN FDA CLEARANCE TO RESUME DISTRIBUTION OF
OUR ROCAP HEPARIN PRE-FILLED FLUSH SYRINGE PRODUCT LINE, WHICH COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.
On November 24, 1998, we announced that we had suspended distribution
of our Rocap pre-filled flush syringe product line. We also announced that we
would submit new 510(k) applications to the FDA for the Rocap pre-filled flush
syringe products and that new management was in place at Rocap for both
operations and regulatory affairs. We then submitted the new 510(k)
applications.
On May 28, 1999, we received FDA clearance of our 510(k) Submission
covering our pre-filled saline flush syringe products. Currently, we are
awaiting 510(k) clearance on our pre-filled heparin flush syringe products. We
will not be able to resume distribution of our heparin flush syringe products
until 510(k) Submissions are cleared. We can give no assurances as to when the
FDA clearance of our pre-filled heparin flush syringe products will be obtained.
In the event that there are substantial delays in obtaining, or we are unable to
obtain, the required FDA clearances and approvals, we could incur a material
write down of assets and our future profitability could be materially affected.
WE MAY NOT RECEIVE THE FULL BENEFITS OF OUR INTELLECTUAL PROPERTY
PROTECTIONS.
There can be no assurance that the common law, statutory and
contractual rights on which we rely to protect our intellectual property and
confidential and proprietary information will provide us with meaningful
protection. Third parties may independently develop products, techniques or
information which are substantially equivalent to the products, including
software products and/or the software components of other products, techniques
and information which we consider proprietary. Disputes regarding our
intellectual property could force us into expensive and protracted litigation or
costly agreements with third parties. An adverse determination in a judicial or
administrative proceeding or failure to reach an agreement with a third party
regarding intellectual property rights could prevent us from manufacturing and
selling products or could otherwise limit our use of our intellectual property
rights, which could have a material adverse effect on our financial position
and results of operations.
OUR CURRENT CASH RESERVES COULD BECOME INADEQUATE FOR OUR NEEDS AND WE
MAY NOT BE ABLE TO SECURE ADDITIONAL CAPITAL.
The adequacy of our current cash reserves will depend on the cash flow
generated from our operations, which could be affected by all of the Risk
Factors contained in this registration statement, as well as by the purposes for
which these cash reserves are used. In particular, the adequacy of our cash
reserves could be adversely influenced by:
- regulatory or legislative changes pertaining to health
care,
- product liability exposure,
- dependence on future product development,
- pending litigation, and
- acquisitions of companies or product lines and
integration of these companies or product lines into our
operations.
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<PAGE> 12
If current cash reserves become inadequate, we may need to seek
additional funds through bank facilities, or public or private debt or equity
offerings. There can be no assurance that we will be able to obtain additional
capital on favorable terms, or at all, if and when it becomes necessary. The
terms on which Sabratek obtains any necessary capital in the future could have
an adverse impact on the rights of holders of our common stock. In addition, if
we were unable to raise additional capital if and when necessary, we may be
unable to successfully complete our business strategy.
A SIGNIFICANT PORTION OF OUR REVENUES ARE DEPENDENT ON OUR CUSTOMERS'
ABILITY TO OBTAIN THIRD-PARTY REIMBURSEMENT FOR THE COST OF ACQUIRING
AND USING OUR PRODUCTS OR SERVICES.
Our products are generally purchased by health care providers and
patients, who then seek reimbursement from various government and private
third-party payors, including Medicare, Medicaid and managed care organizations.
Government and private third-party payors increasingly attempt to contain health
care costs by limiting both the extent of coverage and the reimbursement rate
for new diagnostic and therapeutic products and services. The Health Care
Financing Administration of the United States Department of Health and Human
Services ("HCFA"), which administers Medicare, and most private insurance
companies do not provide reimbursement for services that they determine to be
experimental in nature or that are not considered "reasonable and necessary" for
diagnosis or treatment. Many private insurers are influenced by HCFA actions in
making their own coverage decisions on new products or services. There can be no
assurance that third-party reimbursement for the use of our products or services
will continue to be available to our customers, that third-party reimbursement
will be available for new products or services we may introduce or that the rate
of any reimbursement will be adequate. Disapproval of, or limitations in,
coverage by HCFA or other third-party payors could materially and adversely
affect market acceptance of our products or services, financial position and
results of operations.
IF IT IS EVER DETERMINED THAT ONE OF OUR PRODUCTS OR SERVICES CAUSED
INJURY, WE COULD INCUR SUBSTANTIAL LIABILITIES.
Manufacturers of medical devices face the possibility of substantial
liability for damages in the event that the use of their products results in
adverse effects to a patient. As a manufacturer of medical devices, we maintain
product liability insurance, but there can be no assurance that liability claims
will not exceed the limits of our coverage or that our insurance will continue
to be available on commercially reasonable terms or at all. Furthermore, we do
not maintain insurance that would provide coverage for any costs or losses
resulting from any required recall of our products due to alleged defects,
whether instituted by a regulatory agency or by us. Product liability claims
that exceed our policy limits or the costs associated with any product recall
could have a material adverse effect on our financial position and results of
operations.
In addition, as providers of consulting and utilization review
services, we maintain liability and errors and omissions insurance, but there
can be no assurance that liability claims, if any, will not exceed the limits of
our coverage or that our insurance will continue to be available on commercially
reasonable terms or at all.
As providers of consulting and utilization review services, we incur
risks of liability arising out of the services we provide. A determination that
any damage including personal injury or commercial damage resulted from use of
our services could require us to pay substantial monetary awards or damages,
which could have a material adverse effect on our financial position.
WE RISK BUSINESS DECLINES DUE TO OUR INTERNATIONAL OPERATIONS.
During the year ended December 31, 1998, we derived approximately 4% of
our revenues from international sales, resulting in exposure to risks which
include, but may not be limited to, the following:
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<PAGE> 13
- maintenance of existing relationships and/or the
establishment of new relationships with international
distributors;
- fluctuations in exchange rates of the U.S. dollar against
foreign currencies;
- economic or political instability and domestic and
foreign governmental regulations, including export
license requirements, trade restrictions, changes in
tariffs, regulatory approval for marketing products or
similar factors;
- uncertain or limited protection of our intellectual
property rights under the laws of foreign countries may
not protect our intellectual property rights to the same
extent as do the laws of the United States.
Unfavorable changes in any of these factors could reduce the demand
for, or the profitability of, our products and services in foreign markets. This
reduction could have a material adverse effect on our financial position and
results of operation.
WE DEPEND ON KEY EXECUTIVES. A LOSS OF THESE EXECUTIVES AND PERSONNEL
COULD NEGATIVELY IMPACT OUR OPERATIONS.
We are highly dependent on the members of our management team, in
particular, our Chief Executive Officer. The loss of one or more of our
management team could have a material adverse effect on us. In addition, we
believe that our future success will depend in large part on our ability to
attract and retain highly skilled managerial personnel, particularly as we
expand our activities. We face significant competition for such personnel, and
there can be no assurance that we will be successful in hiring or retaining the
personnel we require for continued growth, if any. The failure to hire and
retain such personnel could have a material adverse effect on our financial
position and results of operations.
OFFICERS AND DIRECTORS MAY CONTROL CORPORATE ACTIONS DUE TO THEIR
COMBINED OWNERSHIP OF SHARES OF SABRATEK STOCK.
As of April 16, 1999, all officers and directors of Sabratek as a group
beneficially owned approximately 19% of the outstanding shares of Sabratek
common stock. Because of the combined voting power of the officers and
directors, these individuals acting as a group may be able to influence
Sabratek's affairs and business, including any determination with respect to a
change in control of Sabratek, future issuances of common stock or other
securities, declaration of dividends on Sabratek common stock and the election
of directors. Such influence could have the effect of delaying, deferring or
preventing a change in control of Sabratek which could deprive Sabratek's
stockholders of the opportunity to sell their shares of common stock at prices
higher than prevailing market prices.
OUR ISSUANCE OF A LARGE VOLUME OF SHARES OF OUR COMMON STOCK COULD
RESULT IN A DEPRESSION OF OUR STOCK PRICE.
Since June 1, 1999, we have issued approximately 3,347,000 shares of
our common stock to acquire LifeWatch, Inc., a subsidiary of Ralin Medical,
Inc., Strategic Reimbursement Services, Inc., Unitron Medical Communications,
Inc. and GDS Technology, Inc. In connection with these acquisitions, we entered
into agreements with the recipients of our common stock which obligate Sabratek
to file registration statements which will allow the recipients to resell their
approximately 3,347,000 shares. We will file registration statements relating to
the resale of approximately 2,311,000 shares of common stock in July, 1999 and a
registration statement relating to the resale of the remaining shares no later
than December 1, 1999. The filing of the registration statements allows the
recipients to sell the shares when and if they determine it is appropriate.
Sabratek cannot predict the timing or amount of any sale which may be
made under these registration statements. Even if no sales occur, the mere
issuance and registration for resale of approximately 3,347,000 shares of our
common stock, which is approximately 25% of our outstanding common stock as of
July 14, 1999, could have the effect of depressing the market price of our
common stock. Moreover, the simultaneous offering for public sale of a
significant number of the approximately 3,347,000 shares would likely have the
effect of depressing the market price of our common stock.
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<PAGE> 14
OUR FINANCIAL RESULTS AND STOCK PRICE MAY BE AFFECTED BY QUARTERLY
FLUCTUATIONS.
Our quarterly revenues and operating results have varied significantly
in the past and may continue to do so in the future. Future revenues and
operating results may also fluctuate significantly from quarter to quarter and
will depend upon, among other factors:
- demand for our products and new product introductions,
- demand for products distributed by our competitors,
- our efforts regarding transitions to new or enhanced
products,
- the timing of orders and shipments,
- the mix of sales between products,
- competition, including pricing pressures,
- the timing of regulatory filings and approvals,
- the timing of reimbursement from third-party payors, and
- the timing of research and development expenditures.
OUR STOCK PRICE MAY EXPERIENCE VOLATILITY.
The securities markets have, from time to time, experienced extreme
price and volume fluctuations which often have been unrelated to the operating
performance of particular companies. The market prices of the common stock of
many publicly-held companies that provide medical devices and services have been
in the past, and are expected to be, volatile. In addition to factors such as
interest rates and economic conditions which affect stock prices generally,
some, but not all, of the factors which could result in fluctuations in our
stock price include:
- announcements of technological or medical innovations,
- the introduction of new commercial products by our
competitors, o disputes concerning patents or proprietary
rights,
- positive or negative regulatory action,
- changes in regulatory or medical reimbursement policies,
and
- period-to-period fluctuations in the financial results of
the Company.
ANTI-TAKEOVER PROTECTIONS MAY MAKE IT DIFFICULT FOR A THIRD PARTY TO
ACQUIRE SABRATEK.
Sabratek's Certificate of Incorporation and Bylaws contain general
requirements which pre-condition a third- party's ability to acquire a
controlling interest in Sabratek. These requirements and pre-conditions could
limit the price that potential acquirors might be willing to pay in the future
for shares of Sabratek common stock. These provisions are explained below.
- Sabratek's Certificate of Incorporation provides that the
Board of Directors may determine and set rights, preferences,
privileges and restrictions, including voting rights, of
unissued shares of Sabratek's preferred stock and that the
shares of preferred stock may be issued without any further
vote or action by Sabratek's stockholders. The rights of the
holders of common stock will be subject to, and may be
adversely affected by, the rights of the holders of any
preferred stock that may be created and issued in the future.
In addition, stockholders do not have the right to cumulative
voting in the election of directors.
- Sabratek's Bylaws provide for a staggered board so that only
one-third of the total number of directors are replaced or
re-elected each year. The Bylaws also require the affirmative
vote of two-thirds of the Company's issued and outstanding
voting stock to remove a director. Therefore, potential
acquirors of Sabratek may face delays in replacing the
existing directors.
-10-
<PAGE> 15
- Sabratek currently has approximately $85,000,000 in notes
outstanding. These notes, and the indenture which governs
them, provide that in some circumstances involving a change in
control, each holder of these notes may require Sabratek to
repurchase all or a portion of the holder's notes. This
repurchase obligation could discourage a third party from
attempting to acquire control of the Company.
- In August, 1998, Sabratek designated the relative rights and
preferences of a new Class of Series B Preferred Stock and
adopted a Shareholder Rights Plan. Sabratek's Board of
Directors declared a dividend of one right for each share of
Sabratek's common stock outstanding on September 4, 1998. Each
right gives the holder the opportunity to purchase one
one-hundredth of one share of Sabratek's new authorized Series
B Preferred Stock at a price of $150 (as adjusted from time to
time) upon the occurrences of a change of control of Sabratek.
The Rights Plan and the accompanying rights could have the
effect of delaying the ability of a potential acquiror from
acquiring control of Sabratek.
- Sabratek's Bylaws authorize Sabratek's Board to establish a
record date with respect to stockholders entitled to vote on
corporate matters by means of a written consent. This Bylaw
provision has the effect of allowing Sabratek's Board to react
to any unexpected stockholder actions and could slow the pace
of a potential acquisition.
- Sabratek's senior executive officers may be entitled to
substantial change in control payments. These payments could
have the effect of discouraging a potential acquiror from
acquiring control of Sabratek.
SELLING STOCKHOLDERS
1,636,359 of the shares of common stock offered by means of this
prospectus were originally issued under an agreement of merger, dated as of June
29, 1999, whereby our wholly-owned subsidiary, SBTK I, merged with and into SRS.
As a result of the merger, SRS became a wholly-owned subsidiary of Sabratek. As
part of the merger and as consideration for all of the issued and outstanding
shares of SRS' common stock, Sabratek issued a total of 1,636,359 shares of our
common stock to SRS' former shareholders. Sabratek accounted for the merger
using the pooling of interests method of accounting. Under the terms of the
merger agreement and a separate escrow agreement, 1,472,273 shares of our common
stock were delivered directly to the former SRS shareholders and 163,636 shares
of our common stock were delivered in escrow to U.S. Bank Trust National
Association which is acting as escrow agent under the escrow agreement. The
purpose of the escrow is to secure payment of any amounts to which we may be
entitled in the event it is determined that SRS has breached any of its
representations and warranties contained in the merger agreement. The former SRS
shareholders will have the right to vote the shares held in escrow as well as to
cause the escrow agent to sell all or any portion of the shares during the term
of the escrow but will not be entitled to receive any proceeds from the sale of
the shares until the escrow period ends. It is anticipated that the escrow
period will end on the date of issuance of Sabratek's first independent audit
report which reflects the acquisition of SRS through the merger, which audit
report is expected to be issued in March 2000. In the unlikely event that the
audit reports are not issued before the one year anniversary of the closing of
the merger, the escrow period will end on June 29, 2000.
The indemnification provisions contained in the merger agreement
provide that Sabratek's right to indemnification is limited to the value of the
163,636 shares of our common stock held in the escrow. In addition, Sabratek is
not entitled to indemnification payments until its damages as a result of one or
more breaches of SRS'
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<PAGE> 16
representations and warranties equals or exceeds $250,000, and then, only to the
extent the damages exceed $175,000. If Sabratek is entitled to an
indemnification payment and the cash generated through previous sales of shares
held in escrow is insufficient to make the payment, the escrow agent is required
to sell a sufficient number of the escrow shares to generate the necessary cash.
With this limited exception, the escrow agent has no authority to sell the
shares of our common stock held in the escrow without being directed to do so by
the former SRS shareholders.
In connection with the merger, SRS entered into a three year employment
agreement with Robert C. Gienko in which Gienko agreed to serve as president of
our SRS subsidiary after the consummation of the merger. Under the terms of the
employment agreement, Gienko will receive a minimum annual salary of $250,000 as
compensation. In addition, Gienko is entitled to receive an annual bonus, which
shall not be less than (a) 20% of his salary if he achieves 80% of specified
performance objectives, (b) 30% of his salary if he achieves 100% of specified
performance objectives, or (c) less than 40% of his salary if he achieves 120%
of specified performance objectives. Mr. Gienko is entitled to severance
payments if he is terminated other than for cause. In addition, the employment
agreement provides that if, within 12 months following a change in control of
SRS, Mr. Gienko's employment is terminated for any reason other than cause,
death or disability (as these terms are defined in the employment agreement) or
there is a material adverse change in Mr. Gienko's compensation, title or
duties, he shall be entitled to all salary, bonuses, and benefits earned but not
yet paid to Mr. Gienko and all salary, bonuses and benefits as if his employment
had been terminated by SRS without cause. Components of salary and benefits owed
to Mr. Gienko in the event of termination of his employment without cause
include: (a) Mr. Gienko's then current salary for a period of one year following
the date of termination of the employment agreement; (b) a prorated bonus for
the year in which terminated; and (c) continued coverage under SRS's health plan
for a period of one year. In addition to provisions relating to Mr. Gienko's
duties and compensation, the employment agreement requires Mr. Gienko to
maintain the confidentiality of SRS's proprietary information and refrain from
competing with SRS during his employment with SRS and for a period of twelve
months thereafter.
For purposes of Mr. Gienko's employment agreement, the term
change in control shall mean the occurrence of any of the following events:
(a) Consummation of the acquisition by any person, as such term is
defined in Section 13(d) or 14(d) of the Exchange Act, of
beneficial ownership, within the meaning of Rule l3d-3
promulgated under the Securities Act, of 40 percent or more of
the combined voting power of the then outstanding voting
securities of Sabratek or SRS; or
(b) The individuals who, as of the date hereof, are members of the
board of directors of Sabratek cease for any reason to
constitute a majority of Sabratek's board, unless the
election, or nomination for election by the stockholders of
Sabratek, of any new director or directors was approved by a
vote of a majority of Sabratek's Board, in which case the new
director or directors shall, for purposes of the employment
agreements, be considered as a member or members of Sabratek's
Board as of the date of the employment agreement; or
(c) Approval by stockholders of Sabratek or SRS of (A) a merger or
consolidation of Sabratek or SRS if the stockholders
immediately before the merger or consolidation do not, as a
result of the merger or consolidation, own, directly or
indirectly, more than 60 percent of the combined voting power
of the then outstanding voting securities of the entity
resulting from the merger or consolidation in substantially
the same proportion as their ownership of the combined voting
power of the voting securities of Sabratek or SRS, as
applicable, outstanding immediately before the merger or
consolidation; or (B) a complete liquidation or dissolution,
or an agreement for the sale or other disposition, of all or
substantially all of the assets of Sabratek or SRS.
Notwithstanding the foregoing, a change in control shall not be deemed
to occur (1) solely because 40 percent
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<PAGE> 17
or more of the combined voting power of the then outstanding securities is
acquired by (a) a trustee or other fiduciary holding securities under one or
more employee benefit plans maintained for employees of Sabratek or SRS, or (b)
any corporation that, immediately before the acquisition, is owned directly or
indirectly by the stockholders of Sabratek or SRS in the same proportion as
their ownership of stock of Sabratek or SRS immediately before the acquisition,
or (2) if the employee is, immediately after any above defined change in
control, employed by Sabratek in a comparable role and at a comparable salary.
Also in connection with the merger, SRS entered into three year
employment agreements with Mark Pugh, Kenneth J. Janowski and Steven G.
Fagerman, each of whom is a Vice President of SRS. Under the terms of their
respective employment agreements, each employee will receive a minimum annual
salary of $190,000 and any additional bonuses as determined by SRS' President.
Each employee is entitled to severance payments if he is terminated other than
for cause. In addition, the employment agreement provides that if, within 12
months following a change in control of SRS, any employee's employment is
terminated for any reason other than cause, death or disability (as these terms
are defined in the employment agreement) or there is a material adverse change
in any employee's compensation, title or duties under his respective employment
agreement, he shall be entitled to all salary, bonuses and benefits earned but
not yet paid to the employee, as well as all salary, bonuses and benefits as if
his employment had been terminated by SRS without cause. Components of salary
and benefits owed to any employee in the event of termination of his employment
without cause include: (a) each employee's then current salary for a period of
one year following the date of termination; (b) a prorated annual bonus for the
year in which terminated; and (c) continued coverage under SRS's health plan for
a period of one year. In addition to provisions relating to each employee's
duties and compensation, the employment agreement requires each employee to
maintain the confidentiality of SRS's proprietary information and refrain from
competing with SRS during his employment with SRS and for a period of one year
after his employment with SRS ends.
For purposes of the employment agreements for Messrs. Pugh, Janowski
and Fagerman, the term change in control shall mean the occurrence of any of the
following events:
(a) Consummation of the acquisition by any person, as such term is
defined in Section 13(d) or 14(d) of the Exchange Act, of
beneficial ownership, within the meaning of Rule l3d-3
promulgated under the Securities Act, of 40 percent or more of
the combined voting power of the then outstanding voting
securities of SRS; or
(b) The individuals who, as of the date hereof, are members of
SRS's board of directors of cease for any reason to constitute
a majority of SRS's Board, unless the election, or nomination
for election by the stockholders of SRS, of any new director
or directors was approved by a vote of a majority of SRS's
Board, in which case the new director or directors shall, for
purposes of this Agreement, be considered as a member or
members of SRS's Board; or
(c) Approval by stockholders of SRS of (A) a merger or
consolidation of SRS if the stockholders immediately before
the merger or consolidation do not, as a result of the merger
or consolidation, own, directly or indirectly, more than 60
percent of the combined voting power of the then outstanding
voting securities of the entity resulting from the merger or
consolidation in substantially the same proportion as their
ownership of the combined voting power of the voting
securities of SRS outstanding immediately before the merger or
consolidation; or (B) a complete liquidation or dissolution,
or an agreement for the sale or other disposition, of all or
substantially all of the assets of SRS.
Notwithstanding the foregoing, a change in control shall not be deemed
to occur solely because 40 percent or more of the combined voting power of the
then outstanding securities is acquired by (a) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained for
employees of SRS, or (b) any corporation that, immediately before the
acquisition, is owned directly or indirectly by the stockholders of SRS in the
same proportion as their ownership of stock of SRS immediately before the
acquisition.
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<PAGE> 18
3,500 shares of the common stock offered by means of this prospectus
were originally issued to EGS under a memorandum of understanding dated as of
March 2, 1999 in which EGS agreed to assist us in structuring the acquisition
and a supplement thereto dated as of July 5, 1999. EGS has received all 3,500
shares of our common stock to which it is entitled for the services provided to
Sabratek in our acquisition of SRS.
The following table sets forth information about the beneficial
ownership of the selling stockholders as of July 9, 1999 as to:
- the number of shares of common stock that are beneficially
held by each of the selling stockholders,
- the maximum number of shares that may be offered by the
selling stockholders by means of this prospectus, and
- the number of shares of common stock that can be sold by means
of this prospectus and the percentage of our total outstanding
common stock which the number represents.
We can provide no assurance as to the number of shares that will be
held by the selling stockholders after this offering because the selling
stockholders may offer all or some part of the shares which they hold by means
of this prospectus, and because this offering is not being underwritten on a
firm commitment basis.
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering(2)
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- ------ ----------
<S> <C> <C> <C> <C>
Robert C. Gienko 1,003,454 354,000 649,454 4.90%
Philip Mitchell 242,999 99,000 143,999 *
Mark Pugh 147,272 60,000 87,272 *
Kenneth J. 66,272 27,000 39,272 *
Janowski
Steven G. 147,272 60,000 87,272 *
Fagerman
EGS Securities Corp. 41,000 (3) 3,500 37,500 *
</TABLE>
* Less than 1% of the issued and outstanding shares of Sabratek's common stock.
(1) Sabratek has relied on information provided by the selling stockholders to
determine the number of shares of our common stock, if any, which the
selling stockholders owned before receiving the shares of our common
stock issued to them in connection with the merger.
(2) You should be aware that the registration rights agreement entered into by
and among Sabratek and the former SRS shareholders in connection with the
merger requires us to file an additional shelf registration statement
registering the resale by the Selling Stockholders of the remaining
1,036,359 shares of our common stock received by them in connection with
the merger on or before ____, 1999. Following the filing of the additional
Shelf Registration Statement, each of the selling stockholders may
significantly reduce the number of shares of Sabratek common stock owned by
him as indicated herein.
(3) Does not include 25,000 shares of Sabratek common stock which may be
acquired by EGS Securities Corp. upon the exercise of outstanding options,
43,851 shares of Sabratek common stock held of record by Mr. Lautman,
54,715 shares of common stock which may be acquired by Mr. Lautman upon the
exercise of outstanding options or 58,732 shares of common stock which may
be acquired by Mr. Lautman upon the exercise of outstanding warrants.
William D. Lautman, a director of Sabratek, is also a managing director of
EGS. EGS and Mr. Lautman each disclaim beneficial ownership of any shares
of Sabratek common stock which are owned or may be acquired by the other
party. You should be aware that the 37,500 shares of common stock owned by
EGS after the offering are being registered for resale by means of a
separate prospectus.
USE OF PROCEEDS
Other than the completion and filing of this registration statement, we
will not participate in the sale of the shares offered by means of this
prospectus. In addition because the shares of common stock being offered by
means
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<PAGE> 19
of this prospectus are being sold by the selling stockholders, we will not
directly receive any of the proceeds from the sale of the shares. However, in
the event that there is a determination that we are entitled to any
indemnification payments we may receive cash which was generated from the sale
of a portion of the shares of common stock offered hereby. See "SELLING
STOCKHOLDERS." We cannot, however, predict whether any payment will be made or
the amount of any payment if it is made. To the extent that Sabratek does
receive any amount generated through the sale of shares of common stock offered
by means of this prospectus, we will use the proceeds for working capital and
general corporate purposes.
PLAN OF DISTRIBUTION
The shares offered by means of this prospectus may be sold from time to
time by the selling stockholders. Unless we are entitled to reimbursement for
any damages we incur, we will not receive any proceeds from this offering. See,
"SELLING STOCKHOLDERS" and "USE OF PROCEEDS." We have agreed to register the
resale of 1,636,359 shares of our common stock held by the selling stockholders.
This prospectus relates to the resale of 603,500 of the shares of common stock.
The resale of the remaining shares of common stock will be registered in a
subsequent registration statement which Sabratek is required to file on or
before ______, 1999.
Except for those shares held in escrow, the selling stockholders may
offer the shares from time to time in the open market, on the Nasdaq National
Market, in privately negotiated transactions, or in a combination of these
methods, at market prices that prevail at the time of sale or at privately
negotiated prices. The selling stockholders may sell these shares through one or
more brokers or dealers or directly to purchasers. These broker-dealers may
receive compensation in the form of commissions, discounts or concessions from
the selling stockholders and/or purchasers of the shares for whom those
broker-dealers may act as agent, or to whom they may sell as principal, or both.
Compensation as to a particular broker-dealer may exceed customary commissions.
The selling stockholders and any broker-dealers who act in connection with the
sale of the shares under this prospectus may be deemed to be "underwriters"
within the meaning of the Securities Act. Any commissions they receive and
proceeds of any sale of shares may be deemed to be underwriting discounts and
commissions under the Securities Act. Under Exchange Act rules and regulations,
no distribution participant or its affiliated purchasers (as defined in
Regulation M adopted under the Exchange Act) may simultaneously engage in market
making activities with respect to the shares for a restricted period beginning
on the day proxy solicitation or offering materials are first disseminated to
security holders and ending upon the completion of the distribution, except
under limited circumstances. The selling stockholders, their affiliated
purchasers and any other person participating in the distribution will be
subject to certain provisions of the Exchange Act and related rules and
regulations. These provisions prohibit, except under limited circumstances, the
purchase and sale of any of the shares by the selling stockholders, their
affiliated purchasers and any other person participating in the distribution
during the restricted period described above. These restrictions may affect the
marketability of the shares and the ability of any person or entity to engage in
market making activities with respect to the shares.
Except for those shares held in escrow, from time to time, the selling
stockholders may pledge, hypothecate or grant a security interest in some or all
of the shares of our common stock they own. In the event of a foreclosure or
event of default in connection with those pledges, the shares may be transferred
to the persons to whom the shares were pledged. If such a transfer occurs, the
transferees will be deemed to have the rights of the selling stockholders under
this plan of distribution. At the same time, the selling stockholders will
beneficially own fewer shares. The plan of distribution for the selling
stockholders' shares will otherwise remain unchanged.
We have agreed to pay all of the expenses incident to the registration,
offering and sale of the shares to the public other than commissions or
discounts of underwriters, broker-dealers or agents. We have agreed to indemnify
the selling stockholders against certain liabilities, including certain
liabilities under the Securities Act.
In the event that we file a registration statement under the Securities
Act of an underwritten offering of our common stock, we may restrict the ability
of the selling stockholders to effect a public sale of the shares of common
-15-
<PAGE> 20
stock being offered by means of their prospectuses during the ten business days
before, and the 45-day period beginning on, the effective date of the
registration statement, so long as the selling stockholders are given an
opportunity to participate in the underwritten offering if the only selling
security holder in the offering is Sabratek.
This offering will terminate on the earlier of (a) the date on which all
shares offered by this prospectus have been sold by the selling stockholders or
(b) two years after the effective date of this registration statement.
LEGAL MATTERS
The legality of the shares of our common stock being offered by means of
this prospectus has been passed on for Sabratek by Ross & Hardies, Chicago,
Illinois. A member of this firm owns shares of Sabratek's common stock.
EXPERTS
The financial statements of Sabratek Corporation as of December 31, 1998
and 1997 and for each of the years in the three-year period ended December 31,
1998, have been incorporated by reference herein in reliance upon the report of
KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
RECENT DEVELOPMENTS
On May 28, 1999, Sabratek received FDA clearance of our 510(k) Submission
covering our Rocap division's pre-filled saline flush syringe products. We are
working closely with our customers and suppliers to resume production and
shipments in the shortest possible time frame.
On June 1, 1999, Sabratek purchased all of the issued and outstanding
shares of capital stock of LifeWatch, Inc., a wholly-owned subsidiary of Ralin
Medical, Inc. LifeWatch monitors patients transtelephonically in alternate site
settings on behalf of health care providers and is the market leader in
arrhythmia monitoring. Under the terms of a stock purchase agreement dated as of
May 19, 1999, Sabratek paid Ralin $12,260,000 in cash from its existing cash
reserves and 900,000 shares of our common stock in exchange for all of the
outstanding shares capital stock of LifeWatch.
On June 7, 1999, Sabratek was served with an amended complaint in a
proceeding filed in the United States District Court for the Northern District
of Illinois on January 27, 1999, as a purported class action. The amended
complaint expands the allegations against Sabratek to include allegations that
Sabratek withheld material information about its future prospects and engaged in
improper revenue recognition practices. The amended complaint also expanded the
number of named defendants in the proceeding by adding three additional officers
and one director of Sabratek as defendants. Sabratek is currently required to
file an answer, motion to dismiss or other responsive pleading on or before
July 28, 1999.
On July 1, 1999, Sabratek acquired substantially all of the issued and
outstanding shares of capital stock of Unitron Medical Communications, Inc.,
d/b/a/ MOON Communications. MOON Communications is a healthcare information
services company providing an array of healthcare related services to
physicians, home health agencies, payors and other participants in the
healthcare market through the internet. Under the terms of an option agreement
dated January 22, 1999, Sabratek paid the Unitron shareholders an aggregate
purchase price of 542,926 shares of our common stock in exchange for the shares
of capital stock we acquired. Sabratek is currently attempting to acquire
approximately 10,000 shares of Unitron's capital stock which we did not acquire
on July 1, 1999 on terms identical to those contained in the option agreement.
On July 9, 1999, Sabratek acquired all of the issued and outstanding
capital stock of GDS Technology, Inc. GDS develops, manufactures and markets
advanced point-of-care blood diagnostic tests and instruments. Under the terms
of an option agreement dated August 29, 1997, Sabratek paid the GDS shareholders
an aggregate purchase price of 216,949 shares of our common stock in exchange
for all of the issued and outstanding capital stock of GDS.
-16-
<PAGE> 21
All selling stockholders that effect transactions in the shares of
common stock offered by means of this prospectus are required to deliver a copy
of their prospectus to any purchaser of the shares of common stock at or before
the time a certificate representing the shares of common stock is delivered to
the purchaser.
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We have agreed to bear the expenses of registering the shares for the
selling stockholders under the federal and state securities laws. The following
table sets forth the costs and expenses, other than underwriting discounts and
commissions, payable by us in connection with the sale of common stock being
offered. All amounts are estimated except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee......................................$ 3,896
Printing expenses.........................................$ 2,500
Legal fees and expenses...................................$10,000
Accounting fees and expenses..............................$ 5,000
Miscellaneous expenses ...................................$ 3,604
Total $25,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sabratek's Amended and Restated Certificate of Incorporation provides
for indemnification to the full extent permitted by the laws of the State of
Delaware against and with respect to threatened, pending or completed actions,
suits or proceedings arising from or alleged to arise from, a party's actions or
omissions as a director, officer, employee or agent of Sabratek or of any other
corporation, partnership, joint venture, trust or other enterprise which has
served in such capacity at the request of Sabratek if the acts or omissions
occurred or were or are alleged to have occurred, while said party was a
director or officer of Sabratek; provided, however, Sabratek shall not indemnify
any director or officer in an action against Sabratek unless Sabratek shall have
consented to the action. Generally, under Delaware law, indemnification will
only be available where an officer or director can establish that he/she acted
in good faith and in a manner which was reasonably believed to be in or not
opposed to the best interests of Sabratek.
Section 145 of the Delaware Law provides that a corporation may
indemnify a director, officer, employee or agent made a party to an action by
reason of the fact that the person was a director, officer, employee or agent of
the corporation or was serving at the request of the corporation against
expenses actually incurred by the person in connection with the action if the
person acted in good faith and in a manner such person reasonably believed to be
in, or not opposed to, the best interest of the corporation with respect to any
criminal action, and had no reasonable cause to believe his conduct was
unlawful. Delaware Law does not permit a corporation to eliminate a director's
duty of care, and the provisions of Sabratek's Amended and Restated Certificate
of Incorporation have no effect on the availability of equitable remedies such
as injunction or rescission, based upon a director's breach of the duty of care.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling Sabratek under the
foregoing provisions and agreements, Sabratek has been informed that in the
opinion of the Staff of the Securities and Exchange Commission such
indemnification is against policy as expressed in the Securities Act and is
therefore unenforceable.
Sabratek maintains a director's and officer's liability insurance
policy which indemnifies directors and officers for specified losses arising
from a claim by reason of a wrongful act, as defined, under certain
circumstances where Sabratek does not provide indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Sabratek under the foregoing provisions or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against
II-1
<PAGE> 23
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of Sabratek in the successful defense of
any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, we will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
will be governed by the final adjudication of the issue.
II-2
<PAGE> 24
ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
(a) EXHIBITS NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
Incorporation
Exhibit Page Number by reference
Number Description of Documents (if applicable) (if applicable)
<S> <C> <C> <C>
3.1 Articles of Incorporation, Rights Agreement Certificate
of Designations............................................................... +
3.2 Amended and Restated By-laws.................................................. ++++++++++
4.1 Indenture, dated April 14, 1998 by and between
Sabratek Corporation and LaSalle National Bank, as Trustee.................... ++++++
4.2 Rights Agreement, dated August 20, 1998 by and
between Sabratek Corporation and LaSalle National Bank,
as the Rights Agent........................................................... +++++++
4.3 Registration Rights Agreement, dated as of June 1, 1999,
by and between Sabratek Corporation and Ralin Medical......................... *
4.4 Registration Rights Agreement, dated as of June 29, 1999, by and
between Sabratek Corporation and the former shareholders of
Strategic Reimbursement Services, Inc......................................... **
4.5 Registration Rights Agreement, dated as of July 1, 1999, by and
between Sabratek Corporation and the former shareholders of Unitron
Medical Communications, Inc................................................... ****
5.1 Opinion of Ross & Hardies regarding legality of shares of
common stock.................................................................. #
10.1 Agreement with Americorp Financial, Inc. re: Leasing
Services, dated March 22, 1995................................................ +
10.1.1 Amendment, dated September 16, 1996, to Agreement
with Americorp Financial, Inc................................................. +++
10.2-10.12 Intentionally Omitted
10.13 Pump Contract with Chartwell Home
Therapies, dated November 22, 1993............................................ +
10.14 Sales Agreement with Pharmacy Corporation
of America, dated March 17, 1995.............................................. +
10.15 Sales & Marketing Agreement with Alpha Group,
dated November 6, 1995........................................................ +
10.16-10.25 Intentionally Omitted
10.26 Amended and Restated Stock Option Plan........................................ +
10.27 Lease of Real Property located at 5601 West Howard,
Niles, Illinois, dated as of May 31, 1994..................................... +
</TABLE>
II-3
<PAGE> 25
<TABLE>
<S> <C> <C>
10.27.1 Amendment, dated October 30, 1996, to Lease for
Real Property located at 5601 West Howard,
Niles, Illinois................................................................... +++
10.28 Employment Agreement for K. Shan Padda............................................ ++++++++++
10.29 Intentionally Omitted
10.30 Asset Purchase Agreement, dated February 25, 1997,
by and among Sabratek Corporation; Rocap, Inc. and
Elliott Mandell................................................................... ++
10.31 Employment Agreement for Stephen L. Holden........................................ ++++++++++
10.32 Employment Agreement for Elliott Mandell.......................................... ++++++++++
10.33 Lease Agreement for property located at 11 Sixth
Road, Woburn, Massachusetts, dated February 1, 1997............................... ++++
10.34 Lease Agreement for property located at 5 Constitution
Way, Woburn, Massachusetts, dated June 26, 1995................................... ++++
10.35 Lease Agreement for property located at 1629 Prime
Court, Suite 100, Orlando, Florida, dated March 11, 1997.......................... +++++
10.36 Lease Agreement for property located at 8350 Parkline
Blvd., Orlando Florida, dated June 18, 1998....................................... ++++++++
10.37 Credit Agreement, dated as of April 30, 1999, by
and between Sabratek Corporation as Borrower and LaSalle
National Bank (formerly known as LaSalle Bank NI)
as Lender......................................................................... ++++++
10.38 Long Term Incentive Compensation Plan............................................. +++++++++
10.39 Lease Agreement for property located 8111 North
St. Louis, Skokie, Illinois, dated May 15, 1998................................... +++++++++
10.40 Employment Agreement for Doron C. Levitas......................................... ++++++++++
10.41 Employment Agreement for Scott Skooglund.......................................... ++++++++++
10.42 Employment Agreement for Joseph Moser............................................. ++++++++++
10.43 Employment Agreement for Vincent J. Capponi....................................... ++++++++++
10.44 Employment Agreement for Tuan Bui................................................. ++++++++++
10.45 Employment Agreement for Stephan C. Beal.......................................... ++++++++++
10.46 Employment Agreement for Stephen L. Axel.......................................... ++++++++++
10.47 Intentionally Omitted
10.48 Employment Agreement for Mary Beth Blue........................................... ++++++++++
10.49 Intentionally Omitted
10.50 Stock Purchase Agreement, dated as of May 19, 1999,
between Sabratek Corporation and Ralin Medical, Inc. ............................ *
</TABLE>
II-4
<PAGE> 26
<TABLE>
<S> <C> <C>
10.51 Agreement of Merger, dated as of June 29, 1999, by and among Sabratek Corporation, SBTK I Acquisition
Corporation, a wholly-owned subsidiary of Sabratek and Strategic Reimbursement Services, Inc..................... **
10.52 Research and Development Agreement, dated as of June 30, 1999, by and between Sabratek Corporation
and Systle Corporation........................................................................................... ***
10.53 Memorandum of Understanding, dated as of March 26, 1999, and Supplement, dated as of July 2, 1999,
between Sabratek Corporation and EGS Securities Corp............................................................. ***
10.54 Stock Option Agreement, dated as of January 22, 1999, by and among Sabratek Corporation, Unitron Medical
Communications, Inc. and certain shareholders of Unitron......................................................... ****
10.55 Employment Agreement by and between Strategic Reimbursement Services, Inc. and Robert C. Gienko.................. #
10.56 Employment Agreement by and between Strategic Reimbursement Services, Inc. and Steve Fagerman.................... #
10.57 Employment Agreement by and between Strategic Reimbursement Services, Inc. and Kenneth Janowski.................. #
10.58 Employment Agreement by and between Strategic Reimbursement Services, Inc. and Mark Pugh......................... #
10.59 Memorandum of Understanding, dated as of March 2, 1999, and Supplement, dated as of July 5, 1999, between
Sabratek Corporation and EGS Securities Corp..................................................................... #
23.1 Consent of KPMG LLP..............................................................................................
23.2 Consent of Ross & Hardies (included in Exhibit 5.1).............................................................. #
24 Powers of Attorney (included in the signature page) ............................................................. #
+ Incorporated by reference to Sabratek's Registration Statement on Form S-1, declared effective by the SEC
on June 21, 1996 (File No. 333-3866).............................................................................
++ Incorporated by reference to Sabratek's Current Report on Form 8-K filed with the SEC on March 11, 1997..........
+++ Incorporated by reference to Sabratek's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 filed with the SEC on March 31, 1997....................................................................
++++ Incorporated by reference to Sabratek's Registration Statement on Form S-1, declared effective by the SEC
on April 4, 1997 (File No. 333-23437)............................................................................
+++++ Incorporated by reference to Sabratek's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 filed with the
SEC on May 15, 1997..............................................................................................
++++++ Incorporated by reference to Sabratek's Registration Statement on Form S-3 declared effective by the SEC
on July 14, 1998.................................................................................................
+++++++ Incorporated by reference to Sabratek's Current Report on Form 8-K filed with the SEC on August 25,
1998.............................................................................................................
++++++++ Incorporated by reference to Sabratek's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
filed with the SEC on August 14, 1998............................................................................
+++++++++ Incorporated by reference to Sabratek's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 filed with
the SEC on November 16, 1998.....................................................................................
++++++++++ Incorporated by reference to Sabratek's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 filed with
the SEC on April 9, 1999.........................................................................................
* Incorporated by reference to Sabratek's current report on Form 8-K dated June 1, 1999 and filed with the
SEC on June 16, 1999.............................................................................................
** Incorporated by reference to Sabratek's current report on Form 8-K dated June 29, 1999 and filed with the
SEC on July 14, 1999.............................................................................................
*** Incorporated by reference to Sabratek's Registration Statement on Form S-3 filed with the SEC on July 16, 1999...
**** Incorporated by reference to Sabratek's current report on Form 8-K dated July 1, 1999 and filed with the SEC on
July 16, 1999....................................................................................................
# Originally filed with the Registration Statement on Form S-3 on July 19, 1999.
</TABLE>
II-5
<PAGE> 27
ITEM 17. UNDERTAKINGS
Sabratek hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of Sabratek's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
<PAGE> 28
SIGNATURES
Under the requirements of the Securities Act of 1933, Sabratek has duly
caused this Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Skokie, State of Illinois, on July 22,
1999.
SABRATEK CORPORATION
By: /s/ K. Shan Padda
----------------------------
K. Shan Padda
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 has been signed by the following persons on this twenty-second
day of July, 1999 in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ K. Shan Padda Chairman of the Board and Chief Executive Officer -
- --------------------------- Principal Executive Officer
K. Shan Padda
/s/ Stephen L. Holden President
- ---------------------------
Stephen L. Holden
/s/ John Reilly * Senior Vice President, Chief Financial Officer and
- --------------------------- Treasurer - Principal Financial Officer
John Reilly
/s/ Scott Skooglund * Vice President - Finance and Assistant Secretary -
- --------------------------- Principal Accounting Officer
Scott Skooglund
/s/ Doron C. Levitas * Director, Vice Chairman of the Board, Chief Administrative
- ---------------------------
Doron C. Levitas Officer, Vice President of International
Operations and Secretary
Director
- ---------------------------
Francis V. Cook, M.D.
Director
- ---------------------------
Mark Lampert
</TABLE>
* Signed pursuant to power of attorney
<PAGE> 29
<TABLE>
<S> <C>
/s/ William D. Lautman * Director
- --------------------------
William D. Lautman
/s/ William H. Lomicka * Director
- --------------------------
William H. Lomicka
Director
- --------------------------
Marvin Samson
/s/ L. Peter Smith * Director
- --------------------------
L. Peter Smith
/s/ Edson W. Spencer, Jr. * Director
- --------------------------
Edson W. Spencer, Jr.
</TABLE>
* Signed pursuant to power of attorney
<PAGE> 30
SABRATEK CORPORATION
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
23.1 Consent of KPMG LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG LLP
The Board of Directors
Sabratek Corporation:
We consent to incorporation by reference in the registration statement
on Form S-3 of Sabratek Corporation of our report dated March 12, 1999, relating
to the consolidated balance sheets of Sabratek Corporation as of December 31,
1998 and 1997 and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 1998, which report appears in the December
31, 1998 Annual Report on Form 10-K of Sabratek Corporation and to the reference
to our firm under the heading "Experts" in the Registration Statement.
KPMG LLP
/s/ KPMG LLP
Chicago, Illinois
July 15, 1999
