<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 1999
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 552,926 $15,136,349 $4,208
$.01 par value
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(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 19, 1999.
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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 21, 1999
PROSPECTUS
552,926 SHARES
SABRATEK CORPORATION
COMMON STOCK
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This prospectus relates to the offer and sale of up to 552,926 shares
of our common stock from time to time by the selling stockholders, former
shareholders of Unitron Medical Communications, Inc., d/b/a MOON Communications,
a Florida corporation. The selling stockholders, who were former shareholders of
Unitron, acquired the 552,926 shares of common stock being offered by means of
this prospectus in a transaction in which Sabratek acquired approximately 99% of
the issued and outstanding capital stock of Unitron under the terms of an option
agreement, dated as of January 22, 1999, by and among Sabratek, Unitron and
those Unitron shareholders who executed the option agreement. The purchase price
was determined by a formula contained in the option agreement.
Under the terms of the option agreement and a separate escrow
agreement, we delivered (i) 532,195 shares of our common stock to the former
Unitron shareholders, and (ii) 10,731 shares of our common stock to Michael T.
Cronin of Johnson Blakely Pope Bokor Ruppel & Burns, P.A. 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 Unitron breached any of its
representation and warranties contained in the option agreement. While the
shares are held in escrow, Ralph V. Frasca has 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
until the escrow period ends. If Sabratek is entitled to an indemnification
payment and the cash generated through previous sales of shares in escrow is
insufficient to make the indemnification payment, Sabratek is entitled to such
number of shares of Sabratek common stock having a value equal to such
indemnification payment or Sabratek and Frasca may jointly direct the escrow
agent to sell a sufficient number of the escrow shares to generate the necessary
cash, together with the pro rata portion of the proceeds of any investment of
the escrow shares through the date of the indemnification payment. See "PLAN OF
DISTRIBUTION," "USE OF PROCEEDS," and "SELLING STOCKHOLDERS." As part of the
<PAGE> 3
transaction, we also agreed to register the resale of the 552,926 shares of
common stock by the selling stockholders on a shelf registration statement.
Sabratek has registered an additional 10,000 shares of our common stock which we
may issue to people from which we acquire Unitron capital stock in the future,
as more fully described below. Any person who acquires shares of our common
stock which can be resold by means of this prospectus after the effective date
of the registration statement of which this prospectus forms a part will be
added to the list of selling stockholders contained in this prospectus by means
of a prospectus supplement. See "Selling Stockholders."
Sabratek may attempt to acquire shares of Unitron's capital stock it
did not acquire through the exercise of its option on terms substantially
similar to those contained in the option agreement. Sabratek anticipates that it
will be required to issue less than 10,000 additional shares of its common stock
to acquire all of the Unitron capital stock it does not already own and intends
to register the resale of any additional shares of its common stock which it
issues in such acquisitions.
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 the 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 JULY __, 1999
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION.................................................. iii
RISK FACTORS......................................................................... 1
SELLING STOCKHOLDERS................................................................. 10
USE OF PROCEEDS...................................................................... 28
PLAN OF DISTRIBUTION................................................................. 28
LEGAL MATTERS........................................................................ 29
EXPERTS ............................................................................. 29
RECENT DEVELOPMENTS.................................................................. 29
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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;
g. our current report on Form 8-K, dated July 1, 1999 and filed
with the SEC on July 16, 1999 and any later filed amendments;
h. our current report on Form 8-K, dated July 9, 1999 and filed
with the SEC on July 21, 1999; and
i. 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.
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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
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:
o the products may require and fail to receive regulatory
clearance or approval,
o the products may be difficult or uneconomical to manufacture
or market,
o the proprietary rights of third parties may preclude us from
marketing these products,
o scientific developments or technological advancements may
produce more desirable or technologically advanced products,
o our competitors may market superior or more cost-effective
products and may do so on a more timely basis,
o errors and malfunctions may be found in products after their
commercial introduction and may not be corrected in a timely
manner, and
o 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.
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.
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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 position 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.
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.
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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.
o 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 for our MediVIEW software
system for use with the 3030 Stationary Pump. We believe that 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.
o 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
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.
o 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
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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.
o 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.
o THE FDA COULD DETERMINE THAT OUR MANUFACTURING PRACTICES ARE
SEVERELY INADEQUATE AND, AS A RESULT, ORDER SUSPENSION OF OUR
FACILITIES; THIS 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.
o 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:
o refuse to clear pending 510(k) Submissions until specified
conditions are met,
o withdraw previously cleared 510(k) Submissions,
o require notification to users regarding newly found
unreasonable risks,
o request repair, refund or replacement of faulty devices,
o shut down facilities,
o require corrective advertisements, recalls or marketing
suspension,
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o impose civil penalties, and
o 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.
o 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 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
-6-
<PAGE> 12
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:
o regulatory or legislative changes pertaining to health
care,
o product liability exposure,
o dependence on future product development,
o pending litigation, and
o acquisitions of companies or product lines and
integration of these companies or product lines into our
operations.
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,
-7-
<PAGE> 13
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:
o maintenance of existing relationships and/or the
establishment of new relationships with international
distributors;
o fluctuations in exchange rates of the U.S. dollar
against foreign currencies;
o 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;
o 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,
-8-
<PAGE> 14
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 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.
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:
o demand for our products and new product introductions,
o demand for products distributed by our competitors,
o our efforts regarding transitions to new or enhanced
products,
o the timing of orders and shipments,
o the mix of sales between products,
o competition, including pricing pressures,
o the timing of regulatory filings and approvals,
o the timing of reimbursement from third-party payors, and
o 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:
o announcements of technological or medical innovations,
o the introduction of new commercial products by our
competitors,
-9-
<PAGE> 15
o disputes concerning patents or proprietary rights,
o positive or negative regulatory action, o changes in
regulatory or medical reimbursement policies, and
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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
The shares of our common being offered by means of this prospectus were
originally issued to the selling stockholders on July 1, 1999 as consideration
for our purchase of approximately 99% of the capital stock of Unitron Medical
Communications, Inc., doing business as MOON Communications, a Florida
corporation. Sabratek acquired the capital stock of Unitron through the exercise
of an option to purchase the securities granted under an
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<PAGE> 16
option agreement dated January 22, 1999 by and among Sabratek, Unitron and
certain of the shareholders of Unitron. The purchase price was determined by a
formula contained in the option agreement.
Under the terms of the option agreement and a separate escrow
agreement, 532,195 shares of our common stock were delivered directly to the
former Unitron shareholders and 10,731 shares of our common stock were delivered
in escrow to Michael T. Cronin of Johnson Blakely Pope Bokor Ruppel & Burns,
P.A., who is acting as escrow agent under the escrow agreement. The purpose of
the escrow is to secure payment of any amounts to which we may be entitled in
the event it is determined that Unitron has breached any of its representations
and warranties contained in the option agreement.
Sabratek has registered an additional 10,000 shares of our common stock
which we may issue to people from which we acquire Unitron capital stock in the
future, as more fully described below. Any person who acquires shares of our
common stock which can be resold by means of this prospectus after the effective
date of the registration statement of which this prospectus forms a part will be
added to the list of selling stockholders contained in this prospectus by means
of a prospectus supplement.
Sabratek may attempt to acquire shares of Unitron's capital stock it
did not acquire through the exercise of its option on terms substantially
similar to those contained in the Option Agreement. Sabratek anticipates that it
will be required to issue less than 10,000 additional shares of its common stock
to acquire all of the Unitron capital stock it does not already own.
Ralph Frasca, the former President of Unitron, will have the right to
vote the shares held in escrow as well as cause the escrow agent to sell all or
any portion of such shares during the terms of the escrow, but will not be
entitled to receive any proceeds from the sale of any such shares until the
escrow period ends on January 1, 2000. The indemnification provisions contained
in the option agreement provide that Sabratek's right to receive an
indemnification payment shall not exceed $4 million. In addition, Sabratek is
not entitled to indemnification payments until its damages as a result of one or
more breaches of Unitron's representations and warranties equals or exceeds
$250,000, the amount of the one-time deductible to be paid by Sabratek in the
event we assert our indemnification rights. If Sabratek is entitled to an
indemnification payment and the cash generated through previous sales of shares
in escrow is insufficient to make the indemnification payment, Sabratek is
entitled to such number of shares of Sabratek common stock having a value equal
to such indemnification payment or Sabratek and Frasca may jointly direct the
escrow agent to sell a sufficient number of the escrow shares to generate the
necessary cash, together with the pro rata portion of the proceeds of any
investment of the escrow shares through the date of the indemnification payment.
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
Frasca, or in the scenario described above, by joint direction from Frasca and
Sabratek.
Prior to Sabratek's acquisition of Unitron, the companies were
associated through several agreements. In July, 1997, Unitron granted Sabratek a
fifteen-year technology license for use of Unitron's continuous, real-time
patient monitoring and reporting software for which Sabratek paid Unitron $7
million. In January, 1998, Sabratek acquired rights to access Unitron's customer
database. In addition, Sabratek provided consulting services to Unitron under a
Marketing and Clinical Support Agreement, dated as of January 1, 1998. Further,
in October, 1998, Sabratek entered into a Standby Senior Credit Facility with
Unitron whereby Sabratek may lend up to $10 million to Unitron.
In connection with the transaction, Sabratek, Unitron and Frasca
entered into a separation agreement dated January 22, 1999, whereby Frasca
tendered his written resignation from each of his positions as director, officer
and employee of Unitron. His resignation as an employee of Unitron became
effective the date Unitron shareholders holding at least 92.50% of the fully
diluted equity of Unitron agreed to become parties to the option agreement. In
exchange for Frasca's resignation and other related obligations under the
separation agreement, the separation agreement required Unitron to pay Frasca a
salary of 175,000 in equal bi-monthly installments from January 22, 1999 through
July 23, 1999, as well as a single lump-sum payment of $262,500. Further, under
the terms of the separation agreement, Frasca agreed to release each of Sabratek
and Unitron, and each of Sabratek and Unitron
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<PAGE> 17
agreed to release Frasca from any and all claims arising in connection with
Frasca's employment with Unitron and the option agreement. The separation
agreement requires Frasca (a) to maintain the confidentiality of Unitron's
proprietary information, (b) to assign to Unitron all of his right, title and
interest in and to all inventions, developments, innovations and improvements
created by Frasca during his employment with Unitron, and (c) to refrain from
competing with Unitron for a period of 3 years after his employment with Unitron
ends.
Under the terms of an employment agreement between Unitron and H. Jay
Hill, the Chief Executive of our Unitron subsidiary, Hill will receive a minimum
annual salary of $175,000 as compensation. In addition, Hill is entitled to
receive an annual bonus, which shall not be less than (a) 35% of his salary if
he achieves 80% of specified performance objectives, (b) 45% of his salary if he
achieves 100% of specified performance objectives, or (c) less than 55% of his
salary if he achieves 120% of specified performance objectives. Mr. Hill 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 Unitron, Mr. Hill'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. Hill's
compensation, title or duties, he shall be entitled to (a) all salary, bonuses,
and benefits earned but not yet paid to Mr. Hill, (b) all salary, bonuses and
benefits as if his employment had been terminated by Unitron without cause, and
(c) an amount equal to the amount of taxes incurred by Mr. Hill as a result of
these payments. Components of salary and benefits owed to Mr. Hill in the event
of termination of his employment without cause include: (a) Mr. Hill'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 Unitron's health plan for a period of one year. In
addition to provisions relating to Mr. Hill's duties and compensation, the
employment agreement requires Mr. Hill to maintain the confidentiality of
Unitron's proprietary information and refrain from competing with Unitron during
his employment with Unitron and for a period of one year thereafter.
For purposes of Mr. Hill'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 Unitron, provided, however, that the acquisition
of shares of voting securities of Unitron by Sabratek shall
not constitute a change in control; or
(b) Approval by stockholders of Unitron of (A) a merger or
consolidation of Unitron 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 Unitron 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
-12-
<PAGE> 18
of Unitron, provided, however, that the merger of Unitron with
Sabratek or the acquisition by Sabratek of all or
substantially all of the assets of Unitron shall not
constitute a change in control.
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 Unitron, or (b) any corporation that, immediately before the
acquisition, is owned directly or indirectly by the stockholders of Unitron in
the same proportion as their ownership of stock of Unitron immediately before
the acquisition.
The following table sets forth information about the beneficial
ownership of the selling stockholders as of July 9, 1999 as to:
o the number of shares of common stock that are beneficially held by
each of the selling stockholders,
o the maximum number of shares that may be offered by the selling
stockholders by means of this prospectus, and
o 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
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Amir A. Noorani, M.D. and
Farida Noorani, Husband and
Wife, As Tenants By The
Entireties 340 340 0 *
Anne L. Fawcett 15,364 1,304 14,060 *
Anthony C. Kiggins and
Leanne Kiggins, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Aron Schlau 681 681 0 *
Arthur R. Carlson 340 340 0 *
Arthur R. Polin, M.D. 141 141 0 *
Betsy Musselman 113 113 0 *
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Bill Hagen 420 420 0 *
Blair E. Witherington 681 681 0 *
Bradley D. Wilson 1,362 1,362 0 *
Bruce J. Levine, D.P.M. 1,135 1,135 0 *
Carl W. Johnson 340 340 0 *
Carlos J. Bayron, M.D. 2,270 2,270 0 *
Catherine L. Gnage 681 681 0 *
Charles Cavaliere, M.D. 567 567 0 *
Charles E. Cavaliere and Lisa
D. Cavaliere As Joint Tenants
with Right of Survivorship
and Not as Tenants in
Common 227 227 0 *
Charles K. Stewart 693,325 (2) 5,676 687,649 5.23%
Charles R. Hall 7,657 7,657 0 *
Christopher B. George 1,362 1,362 0 *
Christopher B. George, M.D. 227 227 0 *
Cititrust International, Inc.,
as Trustee of Moontrust dated
2/22/99 94,449 94,449 0 *
Clifton J. Bailey and Bonnie
C. Bailey, Husband And
Wife, as Tenants By The
Entireties 681 681 0 *
Colbassani Family Settlement
Dated January 6, 1997 681 681 0 *
Craig H. Cassady 340 340 0 *
</TABLE>
-14-
<PAGE> 20
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Cynthia A. Perry 3,973 3,973 0 *
Cynthia J. Hamilton 681 681 0 *
Dale G. Bramlet and
Kathleen A. Bramlet,
Husband And Wife, As
Tenants By The Entireties 681 681 0 *
Dana M. Deupree and
America E. Deupree,
Husband and Wife, as
Tenants by the Entireties 681 681 0 *
Daniel E. Straus 12,714 12,714 0 *
Daniel P. Szarowicz 1,135 1,135 0 *
David Columbus, D.O. 567 567 0 *
David E. Hartenbach 340 340 0 *
David James O'Neil 681 681 0 *
David L. Cosper and Mary
M. Cosper, Husband and
Wife, as Tenants by the
Entireties 136 136 0 *
David L. Cosper IRA 45 45 0 *
David McDonald 681 681 0 *
David Rothberg and Debra J.
Rothberg, husband and wife,
as Tenants By The Entireties 681 681 0 *
Denis P. Christenson and
Judith A. Christenson,
husband and wife, as Tenants
by the Entireties 681 681 0 *
Dennis Caputo and Karina J.
Caputo, Husband and Wife,
as Tenants by the Entireties 227 227 0 *
</TABLE>
-15-
<PAGE> 21
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Dennis O. Boyle 681 681 0 *
Dickie J. Rumore, as Trustee
of Paragon Music Center,
Inc. Profit Sharing Plan 1,362 1,362 0 *
Donald N. Fawcett 1,135 1,135 0 *
Donald N. Fawcett 169 169 0 *
Donald R. Schmidt and Diane
B. Schmidt, husband and
wife, as Tenants by the
Entireties 2,270 2,270 0 *
Doug Eiland 113 113 0 *
Douglas Kenny 1,135 1,135 0 *
Douglas L. Flaute 1,362 1,362 0 *
Dwight P. Fawcett 2,970 1,304 1,666 *
Dwight W. Fawcett 20,895 7,657 13,238 *
E. Michael Szarowicz, Jr. 1,135 1,135 0 *
Edward M. Presutti and
Mary C. Presutti 21,319 21,319 0 *
Efren L. Baltazar and
Emerlinda Z. Baltazar,
Husband And Wife, As
Tenants By The Entireties 3,681 681 3,000 *
Elaine S. Scott 56 56 0 *
Elia Caputo and Mary Lou
Caputo, Husband and Wife,
as Tenants by the Entireties 227 227 0 *
</TABLE>
-16-
<PAGE> 22
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Eliseo Caputo and Josephine
Rose Caputo, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Elizabeth I. Okulski 1,135 1,135 0 *
Ellen Hartenbach 113 113 0 *
Emory L. Mayfield and
Catherine D. Mayfield,
Husband and Wife, as
Tenants by the Entireties 1,362 1,362 0 *
Eric S. Berke, as Trustee,
u/a/d 1/11/95, Eric S. Berke,
Donor f/b/o Eric S. Berke 5,086 4,086 1,000 *
F. Eugene Schmitt 3,026 3,026 0 *
F.E. Schmitt, Trustee 423 423 0 *
F.E. Schmitt, Trustee of F.
Eugene Schmitt Declaration
of Trust U/A Dated 7/23/90 2,838 2,838 0 *
Fanourios Ferderigos 2,043 2,043 0 *
Farida Spratley 340 340 0 *
First Southwest Co. f/b/o
G&T Tina Holloway
#44462410 181 181 0 *
Frank B. Lane, M.D., P.A.
Def. Contrib. Pension Plan
u/a/d 7/1/96 1,135 1,135 0 *
Frank J. Seidl and Sylvia F.
Seidl, husband and wife, as
Tenants by the Entireties 1,362 1,362 0 *
Frank Veltri 340 340 0 *
</TABLE>
-17-
<PAGE> 23
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Fred Hauber, as Trustee of
The Hauber Family Limited
Partnership II 2,270 2,270 0 *
Frederick R. Reed, Jr. 891 681 210 *
Gabriel G. Sanchez, M.D. 757 757 0 *
George K. Hawkins, Jr. 681 681 0 *
Grubbs Construction
Company 2,043 2,043 0 *
Gulfcoast Gastroenterology
Consultants, Inc. 2,270 2,270 0 *
Guy N. Perenich, as Trustee
f/b/o Brian Caufield 283 283 0 *
Guy N. Perenich, as Trustee
f/b/o Mark H. Pernich 567 567 0 *
H. Jay Hill 16,451 16,451 0 *
H. Kenneth McAlpin, Trustee
u/a DTD 06/29/94 2,270 2,270 0 *
H. Mikel Hopkins, D.D.S.
and Rebecca S. Hopkins,
husband and wife, as Tenants
by the Entireties 2,270 2,270 0 *
Hamill Family Limited
Partnership 1,702 1,702 0 *
Harry Kolodner and Ellen J.
Kolodner, Tenants in
Common 1,362 1,362 0 *
Hauber Family Limited
Partnership II, a Delaware
Limited Partnership 340 340 0 *
Hayden P. Allen, D.D.S. 340 340 0 *
</TABLE>
-18-
<PAGE> 24
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Helen P. Hall, as Trustee for
Julie Anna Hall, under the
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, as Trustee for
Peter Charles Hall under the
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Emily Persson Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Eric Charles Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Marguerite Lacey Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Megan Knobloch Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Nicholas Graff Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Helen P. Hall, Trustee for
Timothy Persson Hall under
Illinois Uniform Gift to
Minor's Act 113 113 0 *
Hugh A. Rutledge, M.D.,
P.A. 1,135 1,135 0 *
</TABLE>
-19-
<PAGE> 25
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Infectious Disease Physicians
Group Profit Sharing Plan
and Trust 2,270 2,270 0 *
Int-Med, Inc. Profit Sharing
Plan u/a/d 8/7/91 340 340 0 *
James P. Fischer, as Trustee
for Arthur R. Polin,
M.D.P.A. Profit Sharing
Plan 340 340 0 *
James W. Adkins 113 113 0 *
Jane F. Dearborn 4,274 1,304 2,970 *
Jesse A. Kane 113 113 0 *
Jimmy Dye 227 227 0 *
Joe M. Ricci and Janet A.
Ricci, As Joint Tenants With
Rights of Survivorship 681 681 0 *
John E. Traeger 13,145 2,608 10,537 *
John E. Traeger Trust No. 1 5,676 5,676 0 *
John E. Traeger, Trustee 846 846 0 *
John Fraser 227 227 0 *
John P. Mahoney 2,043 2,043 0 *
John R. Van Wingen and
Marcia S. Van Wingen,
husband and wife, as Tenants
by the Entireties 8,340 340 8,000 *
Joseph L. Camps 681 681 0 *
Julio Lautersztain, M.D. 908 908 0 *
</TABLE>
-20-
<PAGE> 26
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Karen Giordano 45 45 0 *
Katherine C. Stewart 681 681 0 *
Ken Cashin 681 681 0 *
Kevin C. O'Loughlin 567 567 0 *
Kirshna Ravi, M.D. 1,419 1,419 0 *
Kurt Burkhardt 45 45 0 *
Kurt O. Renz and Dale
Haynes-Renz, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Kurt Renz 565 565 0 *
Lane Equities, Ltd., a Florida
limited partnership 1,135 1,135 0 *
Lester C. Ordiway 340 340 0 *
LINC Capital, Inc. 1,131 1,131 0 *
Louis C. Saeger, M.D.,
Trustee for NW Pain
Specialists Profit Sharing
Plan dated 1/1/92 FBO Louis
Saeger, MD 681 681 0 *
Louis M. Palermo, M.D. 249 249 0 *
Marc J. Mallis 10,216 10,216 0 *
Marcelle D. Stamatiou and
Vassilis Stamatiou, as
Tenants In common 10,216 10,216 0 *
Mario Garcia and Hillary
Grant-Garcia, Husband and
Wife, as Tenants by the
Entireties 249 249 0 *
Mark Christenson, Scott
Christenson and Eric
Christenson, as Joint Tenants
with rights of survivorship
and not as Tenants in
Common 681 681 0 *
</TABLE>
-21-
<PAGE> 27
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Mark D. Torke 227 227 0 *
Mark Torke 340 340 0 *
Marta Sweeney 5,903 5,903 0 *
Mary M. Cosper IRA 45 45 0 *
Max H. Ingram, Jr. and
Sandra J. Ingram, Husband
and Wife, as Tenants by the
Entireties 681 681 0 *
Medical Assoc. of Pinellas,
401K DTD 06/26/96 FBO
Jerry Drucker 340 340 0 *
Michael A. Barody 681 681 0 *
Michael B. Wilhoit and
Patricia D. Wilhoit, Husband
and Wife, as Tenants by the
Entireties 340 340 0 *
Michael Lee Rothberg and
Helen M. Rothberg, husband
and wife, as Tenants by the
Entireties 681 681 0 *
Michael W. Konomos 227 227 0 *
Mitchell J. Lockler and
Karen Lockler, Husband and
Wife, as Tenants by the
Entirety 681 681 0 *
MLPF&S Cust FPO Trevor
G. Smith IRA FBO Trevor
G. Smith Account 2,724 2,724 0 *
</TABLE>
-22-
<PAGE> 28
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Muralidhar K. Acharya,
M.D. 1,419 1,419 0 *
Neil G. McTague and
Patricia S. McTague,
Husband and Wife, as
Tenants by the Entireties 1,862 1,362 500 *
Norbert H. Hartenbach, Jr.
and Suzanne E. Hartenbach,
Husband and Wife, As
Tenants by the Entireties 340 340 0 *
Norman S. Abbott, M.D. 2,270 2,270 0 *
Northgate Enterprises, Ltd. 6,353 6,353 0 *
Patricia D. Graf 1,248 1,248 0 *
Patricia Jackson 22 22 0 *
Paul A. Raveling and
Deborah L. Raveling, as
Co-Trustees u/a/d August 27,
1992 227 227 0 *
Paul J. Pudela 113 113 0 *
Peter O. Knight IV Trustee 423 423 0 *
Peter O. Knight IV, as
Trustee of the Peter O.
Knight Revocable Living
Trust u/a/d March 17, 1992 2,838 2,838 0 *
Peter T. DiNapoli 1,362 1,362 0 *
Prudential Securities, Inc.
C/F THT-R03857
AC#AGV-R10692 2,270 2,270 0 *
Raleigh W. Rollins, M.D. 340 340 0 *
Ralph V. Frasca, Jr. 10,731(3) 10,731 0 *
</TABLE>
-23-
<PAGE> 29
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Ralph V. Frasca, Jr. and
Gloria C. Frasca, Husband
and Wife, as Tenants by the
Entireties 113,966 (4) 113,966 0 *
Ray U. Stoll 10,681 681 10,000 *
Raymond S. Waters, M.D.
and Candice S. Waters,
Husband and Wife, as
Tenants by the Entireties 681 681 0 *
Richard Chiarelli and
Meredith Chiarelli, as
Tenants in Common 1,500 340 1,160 *
Richard D. Chiarelli 113 113 0 *
Richard J. Melker 1,316 1,316 0 *
Robert E. Bushee 113 113 0 *
Robert C. Bowden 1,362 1,362 0 *
Robert C. Frey and Debra D.
Frey, As Joint Tenants With
Rights of Survivorship 1,762 1,362 400 *
Robert C. Thornberry, M.D. 681 681 0 *
Robert Edward Smith, Sr. 227 227 0 *
Robert J. Nowlin 55,676 5,676 50,000 *
Robert K. Winter 45 45 0 *
Robert M. Tomich 2,838 2,838 0 *
</TABLE>
-24-
<PAGE> 30
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Robert P. George and Marie
George Revocable Trust
u/a/d April 8, 1997 with full
powers 141 141 0 *
Robin F. Kippenberger 1,560 1,560 0 *
Roger Elliot 681 681 0 *
Roger Lynn Overby 34,333 30,833 3,500 *
Ronald L. Sock 681 681 0 *
Ronda J. Michaud 681 681 0 *
Salvatore DeLellis, as
Successor Trustee, With Full
Powers 1,532 1,532 0 *
Sandra J. Tracey 413 113 300 *
Satish Patel and Sneh Lata
Patel, Husband and Wife, as
Tenants by the Entireties 681 681 0 *
Scott Bowman 2,270 2,270 0 *
Shelly Kolseth 227 227 0 *
SouthTrust Asset
Management Company of
Florida, as Trustee For Janet
Ruppel Trust 681 681 0 *
Stephen C. Anderson, M.D.
and Kathleen M. Anderson,
as Joint Trustees of the
Anderson Joint Trust u/a/d
3/13/96 681 681 0 *
Stephen M. Roberts 227 227 0 *
Steve Michurski 2,270 2,270 0 *
Susan P. Dragon 783 283 500 *
</TABLE>
-25-
<PAGE> 31
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Tallahassee Pulmonary Clinic
Profit Sharing Plan f/b/o
Clifton J. Bailey 681 681 0 *
Ted J. Sugarman and Jeffery
C. Sugarman, as Co-Trustees
under Item III of the Will of
Ted Schlanger, deceased,
with full powers to sell,
convey, invest, assign, pledge
or otherwise encumber 1,362 1,362 0 *
Thomas A. Okulski 1,135 1,135 0 *
Thomas A. Ricci and Joe M.
Ricci, As Joint Tenants With
Rights of Survivorship 227 227 0 *
Thomas E. Carson & Susan
K. Carson, Husband and
wife, Ten Ent 2,270 2,270 0 *
Thomas E. Pollock 113 113 0 *
Thomas G. Sherman and
Silma Sherman, husband and
wife, as Tenants by the
Entireties 2,270 2,270 0 *
Thomas K. Richardson 681 681 0 *
Thomas L. Ratchford 9,681 681 9,000 *
Thomas L. Williams III 681 681 0 *
Thomas V. Broslawsky 340 340 0 *
Thor Bendickson 1,096 1,096 0 *
Tim C. Burkhardt and Lori
C. Burkhardt, Joint Tenants
with Right of Survivorship 227 227 0 *
Torrence L. Hunt 1,362 1,362 0 *
Trevor G. Smith, Trustee of
the Trevor G. Smith Trust
u/a/d 9/8/69, With Full
Power to Sell, Assign,
Convey, Pledge, Encumber
and Satisfy Any and All
Liens 681 681 0 *
</TABLE>
-26-
<PAGE> 32
<TABLE>
<CAPTION>
Shares
Shares Beneficially Number of Beneficially Owned
Owned Prior to the Shares Offered After the Offering
Selling Stockholder Offering(1) Hereby Number Percentage
- ------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
University of Florida
Research Foundation, Inc. 3,973 3,973 0 *
Victor L. Dragon and Eileen
G. Dragon, Husband and
Wife, as Tenants by the
Entireties 1,135 1,135 0 *
Victor L. Dragon, M.D. 198 198 0 *
W. Paul Sawyer, M.D. 340 340 0 *
West Florida Medical
Investments Corp. 681 681 0 *
West Florida Medical
Investments Corp., a Florida
Corporation 1,362 1,362 0 *
William D. Long 340 340 0 *
William E. Price 1,816 1,816 0 *
William J. Clark 11 11 0 *
William J. Richards, Jr.,
M.D. 567 567 0 *
William L. Taldone 681 681 0 *
William N. Hartenbach,
M.D. and Karin R.
Hartenbach, Husband and
wife, as Tenants by the
Entities 7,946 7,946 0 *
William P. Perry and Cynthia
M. Perry, Husband and
Wife, as Tenants by the
Entireties 340 340 0 *
William P. Perry, as Trustee
of The William P. Perry
Trust u/a/d March 12, 1997,
With Full Powers 340 340 0 *
William W. Atkinson, M.D. 340 340 0 *
</TABLE>
* Less than 1% of the issued and outstanding shares of Sabratek's common stock.
-27-
<PAGE> 33
(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 prior to
receiving the shares of our common stock issued to them in
connection with the merger
(2) Includes 297,593 shares of Sabratek common stock held of
record by Mr. Stewart, 215,732 shares of Sabratek common stock
held of record by the Charle's K. Stewart Money Purchase Plan,
and 180,000 shares of Sabratek common stock held of record by
the Stewart Family Children's Trust.
(3) Shares held of record by Michael T. Cronin of Johnson Blakely
Pope Bokor Ruppel & Burns, P.A., as escrow agent.
(4) Does not include 10,731 shares of Sabratek common stock held of
record by Michael T. Cronin of Johnson Blakely Pope Bokor
Ruppel & Burns, P.A., as escrow agent.
-28-
<PAGE> 34
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 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 shares of Sabratek common stock or 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,including donees and pledgees selling shares
received from any named selling stockholder after the date of this prospectus.
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 552,926 shares of our common
stock held by the selling stockholders.
The selling stockholders may offer the shares from time to time in
one or more types of transactions (which may include block transactions) the
open market, on the Nasdaq National Market, in privately negotiated
transactions, through put or call options transactions relating to the shares,
through short sales of shares 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 costs, expenses and fees incident to
the registration, offering and sale of the shares to the
<PAGE> 35
public other than commissions or discounts of underwriters, broker-dealers or
agents. We have agreed to indemnify each selling stockholder against certain
liabilities, including certain liabilities under the Securities Act. The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising 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
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.
Upon our being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed by us, if required pursuant to Rule 424(b) under the
Securities Act, disclosing:
(a) the name of each such selling stockholder and of the participating
broker-dealer(s);
(b) the number of shares involved;
(c) the price at which such shares were sold;
(d) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
(e) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
(f) other facts material to the transaction.
In addition, upon our being notified by a selling stockholder that a
donee or pledgee intends to sell more than 500 shares, a supplement to this
prospectus will be filed.
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 June 29, 1999, Sabratek consummated a transaction in which a
newly-formed, wholly-owned subsidiary of Sabratek merged with and into Strategic
Reimbursement Services, Inc., an Illinois corporation. As a result of the
merger, Strategic Reimbursement Services became a wholly-owned subsidiary of
Sabratek. Strategic Reimbursement Services provides consulting services to
healthcare providers. Under the terms of a merger agreement dated as of June 29,
1999, Sabratek paid the shareholders of Strategic Reimbursement Services an
aggregate purchase price of 1,636,359 shares of our common stock.
-29-
<PAGE> 36
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.
-30-
<PAGE> 37
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 this 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.
-31-
<PAGE> 38
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........................................$ 4,208
Printing expenses...........................................$ 2,500
Legal fees and expenses.....................................$10,000
Accounting fees and expenses................................$ 5,000
Miscellaneous expenses .....................................$ 3,292
-------
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 such
II-1
<PAGE> 39
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 the 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
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of the issue.
II-2
<PAGE> 40
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>
Articles of Incorporation, Rights Agreement Certificate
3.1 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 January 22, 1999, by and
between Sabratek Corporation and certain holders of the
securities of Unitron Medical Communications, Inc. .......................... *****
4.6 Registration Rights Agreement, dated as of August 29, 1997,
by and between Sabratek Corporation and the former shareholders of
GDS Technology, 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....................................... +
</TABLE>
II-3
<PAGE> 41
<TABLE>
<S> <C> <C>
10.27 Lease of Real Property located at 5601 West Howard,
Niles, Illinois, dated as of May 31, 1994......................................... +
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
</TABLE>
II-4
<PAGE> 42
<TABLE>
<CAPTION>
<S> <C> <C>
10.50 Stock Purchase Agreement, dated as of May 19, 1999,
between Sabratek Corporation and Ralin Medical, Inc. ............................ *
10.51 Agreement of Merger, dated as of June 29, 1999, by and
among Sabratek Corporation, SBTK I Acquisition
Corporation, a wholly-owned subsidiary of
Sabratek and Strategic Reimbursement Services, Inc................................ **
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 between Strategic Reimbursement Services, Inc. and
Robert C. Gienko.................................................................. *****
10.56 Employment Agreement between Strategic Reimbursement
Services, Inc. and Steve Fagerman................................................. *****
10.57 Employment Agreement between Strategic Reimbursement
Services, Inc. and Kenneth Janowski............................................... *****
10.58 Employment Agreement between Strategic Reimbursement
Services, Inc. and Mark Pugh...................................................... *****
10.59 Memorandum of Understanding, dated as of March 2, 1999, and
Supplement, dated July 5, 1999, between Sabratek
Corporation and EGS Securities Corp............................................... *****
10.60 Option Agreement, dated as of August 29, 1997, by and between
Sabratek Corporation and GDS Technology, Inc...................................... ******
10.61 Employment Agreement between Unitron Medical Communications, Inc., d/b/a
Moon Communications and H. Jay Hill...............................................
10.62 Separation Agreement by and among Ralph V. Frasca, Unitron Medical
Communications, Inc. and Sabratek Corporation.....................................
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 hereto) .......................
</TABLE>
II-5
<PAGE> 43
<TABLE>
<S> <C>
+ Incorporated by reference to Sabratek's Registration Statement
on Form S-1, declared effective by the 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 and 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.
***** Incorporated by reference to Sabratek's Registration Statement
on Form S-3 and filed with the SEC on July 19, 1999.
****** Incorporated by reference to Sabratek's current report on Form
8-K dated July 9, 1999 and filed with the SEC on July 21,
1999.
</TABLE>
II-6
<PAGE> 44
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.
II-7
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Sabratek
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Skokie, State of Illinois, on July 21,1999.
SABRATEK CORPORATION
By: /s/ K. Shan Padda
-----------------------------------
K. Shan Padda
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints K. Shan Padda and Stephen L.
Holden, and each of them, his true and lawful attorney-in-fact and agents, each
with full power of substitution and resubstitution for such person and in his
name, place and stead, in any and all capacities, to sign any amendments to this
registration statement, and to sign any registration statement for the same
offering covered by this Registration Statements including post-effective
amendments, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming the each of said such attorneys-in-fact and agents or
his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on this
twenty-first 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
- ------------------------------- Officer, Vice President of International
Doron C. Levitas Operations and Secretary
/s/ Francis V. Cook, M.D. Director
- -------------------------------
Francis V. Cook, M.D.
/s/ Mark Lampert Director
- -------------------------------
Mark Lampert
/s/ William D. Lautman Director
- -------------------------------
William D. Lautman
/s/ William H. Lomicka Director
- -------------------------------
William H. Lomicka
/s/ Marvin Samson Director
- -------------------------------
Marvin Samson
/s/ L. Peter Smith Director
- -------------------------------
L. Peter Smith
/s/ Edson W. Spencer, Jr. Director
- -------------------------------
Edson W. Spencer, Jr.
</TABLE>
<PAGE> 46
SABRATEK CORPORATION
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
5.1 Opinion of Ross & Hardies
10.61 Hill Employment Agreement
10.62 Frasca Separation Agreement
23.1 Consent of KPMG LLP
23.2 Consent of Ross & Hardies (included in Exhibit 5.1)
<PAGE> 47
=======================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SABRATEK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
=======================================
<PAGE> 1
EXHIBIT 5.1
[ROSS & HARDIES LETTERHEAD]
July 21, 1999
Sabratek Corporation
8111 North St. Louis Avenue
Skokie, Illinois 60076
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement") being filed by Sabratek Corporation, a Delaware corporation, (the
"Company") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the offer and sale of up
to 552,926 shares of Common Stock, $0.01 par value per share (the "Common
Stock") of the Company by the former shareholders of Unitron Medical
Communications, Inc., d/b/a MOON Communications, which was acquired by the
Company.
Each term used herein that is defined in the Registration Statement and
not otherwise defined herein shall have the meaning specified in the
Registration Statement.
We are familiar with the proceedings to date with respect to the
proposed offering of the Common Stock and have examined such records, documents
and questions of law, and satisfied ourselves as to such matters of procedure,
law and fact, as we have considered relevant and necessary as a basis for the
opinion expressed in this letter. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to originals of all documents submitted to us as
certified copies or photocopies and the authenticity of the originals of such
documents.
Based on the foregoing, and subject to the qualifications set forth
hereinafter, we are of the opinion that the Common Stock has been duly
authorized and, when issued and sold in accordance with the Registration
Statement, will be legally issued, fully paid and nonassessable shares of Common
Stock of the Company.
This opinion is limited to the matters set forth herein. No opinion may
be inferred or implied beyond the matters expressly contained herein.
<PAGE> 2
Sabratek Corporation
July 21, 1999
Page 13
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement and the related Prospectus, and to the
filing of this opinion as an Exhibit to the Registration Statement.
Very truly yours,
ROSS & HARDIES
By:/s/ David S. Guin
-------------------------------
A Partner
<PAGE> 1
EXHIBIT 10.61
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
as of January 26, 1999, by and between Unitron Medical Communications, Inc.,
d/b/a MOON Communications, Inc., a Florida corporation, with its principal
office located at 17757 US 19 North, Suite 600, Clearwater, Florida 33764-6559
(together with its successors and assigns permitted under this Agreement,
"MOON"), and H. Jay Hill ("Employee").
WITNESSETH:
WHEREAS, MOON has determined that it is in the best interests of MOON
and its stockholders to employ Employee and to set forth in this Agreement the
obligations and duties of both MOON and Employee; and
WHEREAS, MOON wishes to assure itself of the services of Employee for
the period hereinafter provided, and Employee is willing to be employed by MOON
for said period, upon the terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, MOON and Employee (individually a "Party" and
together the "Parties" ) agree as follows:
<PAGE> 2
1. DEFINITIONS.
(a) "BENEFICIARY" shall mean the person or persons named by Employee
pursuant to Section 11 below or, in the event that no such person is named who
survives Employee, his estate.
(b) "BOARD" shall mean the Board of Directors of MOON.
(c) "CAUSE" shall mean:
(i) Employee being found guilty of a felony or an act of fraud
or embezzlement, in each case related to MOON or its business;
(ii) any repeated and demonstrated failure by Employee to
discharge faithfully the responsibilities of his position that the Board in good
faith determines is extremely detrimental to the current and future interests of
MOON; or
(iii) a material breach by Employee of any provision of this
Agreement.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "CHANGE IN CONTROL" shall mean the occurrence of any of the
following events:
(i) Consummation of the acquisition by any person (as such term
is defined in Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) of beneficial ownership (within the meaning of Rule
l3d-3 promulgated under the 1934 Act) of 40 percent or more of the combined
voting power of the then outstanding voting securities of MOON, provided,
however, that the acquisition of shares of the voting securities of MOON by
Sabratek Corporation, a Delaware corporation ("Sabratek"), shall not constitute
a Change in Control hereunder; or
2
<PAGE> 3
(ii) Approval by stockholders of MOON of (A) a merger or
consolidation of MOON, as the case may be, if the stockholders immediately
before such merger or consolidation do not, as a result of such 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 such merger or consolidation in substantially the same proportion as their
ownership of the combined voting power of the voting securities of MOON
outstanding immediately before such 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 MOON, provided, however, that the
merger of MOON with Sabratek or the acquisition by Sabratek of all or
substantially all of the assets of MOON shall not constitute a Change in Control
hereunder.
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 (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained for
employees of MOON, or (ii) any corporation that, immediately prior to such
acquisition, is owned directly or indirectly by the stockholders of MOON in the
same proportion as their ownership of stock of MOON immediately prior to such
acquisition.
(f) "COMMITTEE" shall mean the Compensation Committee of the Board.
(g) "DISABILITY" shall mean the illness or other mental or physical
disability of Employee, as determined under the long-term disability plan of
MOON covering Employee, or if no such plan exists, Employee's failure (i) to
perform substantially his material duties under this Agreement for a period of
three consecutive months, or for an aggregate of 135 days during any 12-
3
<PAGE> 4
month period, and (ii) to return to the performance of his duties within 30 days
after receiving written notice of termination.
(h) "SALARY" shall mean the annual salary provided for in Section 3
below, as adjusted from time to time.
(i) "TERM OF EMPLOYMENT" OR "TERM" shall mean the period specified in
Section 2(b) below.
(j) "YEAR" shall mean the calendar year, which is the fiscal year of
MOON.
2. EMPLOYMENT TERM, POSITIONS AND DUTIES.
(a) EMPLOYMENT OF EMPLOYEE. MOON hereby agrees to employ Employee, and
Employee hereby accepts employment with MOON, in the positions and with the
duties and responsibilities set forth below and upon such other terms and
conditions as are hereinafter stated.
(b) TERM OF EMPLOYMENT. The Term of Employment shall commence on the
date hereof and shall terminate on January 25, 2000; provided, however, that
unless either Party gives one month's written notice to the other that the Term
shall not continue past January 25, 2000 or any subsequent 12-month period for
which the Term has previously been extended, the Term shall thereafter
automatically extend for an additional 12-month period, unless the Term is
sooner terminated as provided in Section 7 below.
(c) TITLES AND DUTIES.
(i) Until the date of termination of his employment hereunder,
Employee shall be employed as Chief Executive Officer, reporting to the Board.
In his capacity as Chief Executive Officer, Employee shall have the customary
powers, responsibilities and authorities of a Chief Executive Officer of
corporations of the size, type and nature of MOON.
4
<PAGE> 5
(d) TIME AND EFFORT.
(i) Employee agrees to devote his full business time to the
affairs of MOON in order to carry out his duties and responsibilities under this
Agreement.
(ii) Notwithstanding the foregoing, nothing shall preclude
Employee from (A) serving on the boards of a reasonable number of trade
associations, charitable organizations and/or businesses not in competition with
MOON or Sabratek, (B) engaging in charitable activities and community affairs,
and (C) managing his personal investments and affairs; provided, however, that,
such activities do not materially interfere with the proper performance of his
duties and responsibilities specified in Section 2 (c).
3. SALARY.
Employee shall receive from MOON a Salary, payable in accordance with
the regular payroll practices of MOON, in a minimum amount of $175,000 on an
annualized basis. During the Term the Board shall review his Salary no less
often than once each Year, commencing January 1, 2000. On the basis of any such
review, the Board may in its sole discretion increase Employee's Salary
accordingly. The term "Salary" as used in this Agreement shall refer to his
Salary at any time as so adjusted.
4. BONUSES.
(a) ANNUAL BONUS. Employee shall be eligible to receive an annual
bonus for each Year or portion thereof during the Term, which bonus shall not be
(i) less than 35% of his Salary if he achieves 80% of specified performance
objectives, (ii) less than 45% of his Salary if he achieves 100% of specified
performance objectives, or (iii) less than 55% of his Salary if he achieves 120%
5
<PAGE> 6
of specified performance objectives for any Year. The performance objectives
shall be determined and approved at the beginning of each Year by the Board and
agreed to by Employee.
(b) SPECIAL BONUS. Employee shall be eligible to receive additional
bonuses during the Term. The Board shall determine, in its discretion, the
occasion for payment, and the amount, of any such bonus.
5. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.
During the Term, Employee shall be entitled to prompt reimbursement by
MOON for all reasonable out-of-pocket expenses incurred by him in performing
services under this Agreement, upon his submission of such accounts and records
as may be reasonably required by MOON.
6. EMPLOYEE BENEFIT PLANS.
During the Term, Employee shall be entitled to all benefits
specifically established for him, and to participate in all employee benefit
plans and programs made available to MOON's senior executives or to its
employees generally, as such plans or programs may be in effect from time to
time, including, without limitation, pension and other retirement plans,
profit-sharing plans, savings and similar plans, group life insurance,
accidental death and dismemberment insurance, travel accident insurance,
hospitalization insurance, surgical insurance, major and excess major medical
insurance, dental insurance, short-term and long-term disability insurance, sick
leave (including salary continuation arrangements), holidays, vacation and any
other employee benefit plans or programs that may be sponsored by MOON from time
to time, including plans that supplement the above-listed types of plans,
whether funded or unfunded.
6
<PAGE> 7
7. TERMINATION OF EMPLOYMENT.
(a) VOLUNTARY TERMINATION AND TERMINATION BY MUTUAL AGREEMENT.
Employee may terminate his employment voluntarily at any time. If he does so,
his entitlement hereunder shall be the same as if MOON had terminated his
employment for Cause. The Parties may terminate this Agreement by mutual
agreement at any time. If they do so, Employee's entitlement shall be as the
Parties mutually agree.
(b) GENERAL. Notwithstanding anything to the contrary herein, in the
event of termination of Employee's employment under this Agreement, he or his
Beneficiary, as the case may be, shall be entitled to receive (in addition to
payments and benefits under, and except as specifically provided in, subsections
(c) through (h) below, as applicable):
(i) his Salary through the date of termination;
(ii) any unused vacation from prior years according to MOON's
vacation policy;
(iii) any deferred compensation payable under any deferred
compensation plan of MOON;
(iv) any annual or special bonus awarded, but not yet paid to
him;
(v) any other compensation or benefits that have vested through
the date of termination or to which he may then be entitled in accordance with
the applicable terms and conditions of each grant, award or plan;
(vi) reimbursement in accordance with Section 5 above of any
business expenses incurred by Employee through the date of termination but not
yet paid to him; and
(vii) any other compensation or benefits, including without
limitation, benefits under equity grants and employee benefits under plans
described in Section 6 above, that have vested
7
<PAGE> 8
through the date of termination or to which he may then be entitled in
accordance with the applicable terms and conditions of each grant, award or
plan.
(c) TERMINATION DUE TO DEATH. In the event that Employee's employment
is terminated due to his death, his Beneficiary shall be entitled, in addition
to the compensation and benefits specified in Section 7(b), to:
(i) Employee's Salary, at the rate in effect immediately before
such termination, payable through the end of the month in which the proceeds of
his life insurance under MOON's group plan are paid; and
(ii) a prorated annual bonus for the Year in which his death
occurs.
(d) TERMINATION DUE TO DISABILITY. In the event of Disability, MOON or
Employee may terminate Employee's employment. If Employee's employment is
terminated due to Disability, he shall be entitled, in addition to the
compensation and benefits specified in Section 7(b), to a prorated annual bonus
for the Year in which his termination for Disability occurs.
(e) TERMINATION BY MOON FOR CAUSE. MOON may terminate Employee's
employment hereunder for Cause only upon written notice to Employee not less
than 45 days prior to any intended termination date, which notice shall specify
the grounds for such termination in reasonable detail. Upon receipt of such
notice, Employee (and his counsel) shall have the right for 30 days to present
to the Board his position regarding any dispute relating to the existence of
such Cause. Unless rescinded by the Board, termination shall be effective on the
date specified in the original notice.
In the event that Employee's employment is terminated for Cause, he
shall be entitled only to the compensation and benefits specified in Section
7(b).
8
<PAGE> 9
(f) TERMINATION WITHOUT CAUSE.
(i) Termination without Cause shall mean: (A) termination of
Employee's employment by MOON and shall include any reason for termination other
than (i) due to death, Disability or Cause, (ii) by Employee voluntarily, or
(iii) by mutual agreement of Employee and MOON; or (B) MOON changes the primary
employment location of Employee to a place that is outside the Tampa Bay
metropolitan area. MOON shall provide Employee ten days' prior written notice of
termination by it without Cause.
(ii) In the event of termination by MOON of Employee's employment
without Cause, he shall be entitled, in addition to the compensation and
benefits specified in Section 7(b), to:
(A) his Salary, at the rate in effect immediately before
such termination, for a period of twelve months following the date of
termination, such salary to be paid on MOON's normal payroll schedule; and
(B) a prorated annual bonus for the year in which
terminated, such bonus to be paid at the same time annual bonuses are regularly
paid by MOON; and
(C) continued coverage under the health program maintained
by MOON for a period of twelve months; and
(D) notwithstanding anything in this Section 7(f) to the
contrary, MOON shall have no further obligation to make any salary or bonus
payments for any period following the first date on which Employee takes any
action which would fall within the definition of "Restrictive Covenant" as
provided in Section 9(a) hereof, whether or not such action occurs within the
Restrictive Period (as defined in Section 9(a) hereof).
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<PAGE> 10
(g) VOLUNTARY TERMINATION BY EMPLOYEE. Employee shall have the right,
upon 30 days' prior written notice, voluntarily to terminate his employment. If
he exercises this right, his employment shall cease and the Term shall terminate
as of the date stated in such notice, and he shall be entitled to receive
compensation and benefits as if MOON had terminated his employment for Cause, as
provided in Section 7(e).
(h) NOTICE THAT THE EMPLOYMENT TERM SHALL NOT RENEW. In the event that
either Party notifies the other that the Employment Term shall not renew
pursuant to the terms of Section 2(b) above, Employee shall continue to render
services to MOON through the end of the Term as in effect on the date of
delivery of such notice, unless: (A) the non-renewal decision was made by MOON,
in which case, the Board or Employee may elect to treat the notice as a
termination without Cause of Employee's employment; or (B) the non-renewal
decision was made by Employee, in which case, the Board may elect to treat the
notice as a voluntary termination of employment by Employee.
(i) CHANGE IN CONTROL. Notwithstanding anything to the contrary in
this Section 7, if, within twelve months following a Change in Control (A)
Employee's employment is terminated for any reason other than Cause, death or
Disability, or (B) there is a material adverse change in Employee's
compensation, title or duties specified herein, he shall be entitled to the
compensation and benefits provided in Sections 7(b) and 7(f)(ii), including, but
not limited to, any other compensation or benefits under equity grants and
awards described in Section 6 above, that have vested through the date of
termination or to which he may then be entitled in accordance with the
applicable terms and conditions of each grant, award or plan, provided that the
period during which Employee shall continue receiving his salary and coverage
under the health program maintained by
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<PAGE> 11
MOON pursuant to Sections 7(f)(ii)(A) and (C) hereof shall increase from twelve
months to twenty-four months.
8. CONFIDENTIALITY AND LOYALTY.
(a) GENERAL.
(i) Employee hereby acknowledges that as a result of his
employment with MOON he has produced and had access to, and may hereafter
produce and have access to, material, records, data, trade secrets, inventions
and information not generally available to the public (collectively,
"Confidential Information") regarding MOON and that any such Confidential
Information is the exclusive property of MOON.
(ii) Accordingly, Employee hereby agrees that, during and
subsequent to the Term, he shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter becomes
lawfully available from public sources, or such disclosure is authorized in
writing by MOON, required by a law or any competent administrative agency or
judicial authority, or otherwise as reasonably necessary or appropriate in
connection with performance by Employee of his duties hereunder.
(b) RETURN OF DOCUMENTS. All records, files, documents and other
materials or copies thereof relating to MOON's business that Employee prepares
or uses shall be and remain the sole property of MOON and shall not be removed
from MOON's premises without its written consent. Upon termination of Employee's
employment with MOON for any reason, he shall promptly deliver to MOON all such
items that are then in his possession or control.
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<PAGE> 12
(c) DUTY OF LOYALTY. Employee hereby agrees to abide by MOON's
reasonable policies, as in effect from time to time, respecting avoidance of
interests conflicting with those of MOON.
(d) REMEDIES AND SANCTIONS. In the event that Employee is found to be
in violation of Section 8(a), (b) or (c), MOON shall be entitled to relief as
provided in Section 10 below.
9. NONCOMPETITION/NONSOLICITATION.
(a) RESTRICTIVE COVENANT. Employee hereby agrees that, except with the
express prior written consent of MOON or Sabratek, as the case may be, for a
period of one year after termination of his employment with MOON for any reason
(the "Restrictive Period"), he will not directly or indirectly compete with the
business of MOON or Sabratek as conducted on the date of such termination,
including, but not by way of limitation, by (i) directly or indirectly owning,
managing, operating, controlling, financing, (ii) directly or indirectly serving
as an employee, officer or director of or consultant to, or (iii) soliciting or
inducing, or attempting to solicit or induce, any employee or agent of MOON or
Sabratek to terminate employment with MOON or Sabratek and become employed by,
any person, firm, partnership, corporation, trust or other entity that owns or
operates an entity that is engaged in the same or similar business as MOON or
Sabratek as conducted on the date of such termination (the "Restrictive
Covenant").
If Employee violates the Restrictive Covenant and MOON brings legal
action for injunctive or other relief, MOON shall not, as a result of the time
involved in obtaining such relief, be deprived of the benefit of the full period
of the Restrictive Covenant. Accordingly, the Restrictive Covenant shall be
deemed to endure for the period specified in this Section 9(a), computed from
the date the relief is granted but reduced by the time between the period when
the Restrictive Period began to run and the date of the first violation of the
Restrictive Covenant by Employee.
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<PAGE> 13
(b) EXCEPTIONS. Notwithstanding anything to the contrary in Section
9(a), the Restrictive Covenant shall not:
(i) apply if MOON terminates Employee's employment without
Cause, as provided in Section 7(f) above; or
(ii) prohibit Employee from owning directly or indirectly capital
stock or similar securities which do not represent more than five percent of the
outstanding capital stock of any business similar to that of MOON as conducted
on the date of such termination.
(c) REMEDIES AND SANCTIONS. In the event that Employee is found to be
in violation of Section 9(a) above, MOON shall be entitled to relief as provided
in Section 10 below.
10. REMEDIES/SANCTIONS.
Employee hereby acknowledges that the restrictions contained in
Sections 8 (a), (b) and (c) and 9(a) above are reasonable and necessary for the
protection of the legitimate business interests of MOON, for which monetary
damages alone may not provide an adequate remedy, that any violation of these
restrictions would cause substantial injury to MOON and such interests, that
MOON would not have entered into this Agreement without receiving the additional
consideration offered by Employee in binding himself to these restrictions and
that such restrictions were a material inducement to MOON to enter into this
Agreement.
In the event of any violation or threatened violation of these
restrictions, MOON (a) shall be relieved of any further obligations under the
Agreement, (b) shall be entitled to monetary damages resulting from such
violation, and (c) in addition to and not in limitation of, any other rights,
remedies or damages available to MOON under this Agreement or otherwise at law
or in equity, shall be entitled to preliminary and permanent injunctive relief
to prevent or restrain any such
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<PAGE> 14
violation by Employee and any and all persons directly or indirectly acting for
or with him, as the case may be.
11. BENEFICIARIES/REFERENCES.
Employee shall be entitled to select (and change, to the extent
permitted under any applicable law) a Beneficiary or Beneficiaries to receive
any compensation or benefit payable under this Agreement following his death by
giving MOON written notice thereof. In the event of Employee's death, or of a
judicial determination of his incompetence, reference in this Agreement to
Employee shall be deemed to refer, as appropriate, to his Beneficiary, estate or
other legal representative.
12. WITHHOLDING TAXES.
All payments to Employee or his Beneficiary under this Agreement shall
be subject to withholding on account of federal, state and local taxes as
required by law.
13. INDEMNIFICATION AND LIABILITY INSURANCE.
Nothing herein is intended to limit MOON's indemnification of Employee,
and MOON shall indemnify him to the fullest extent permitted by applicable law
consistent with MOON's Certificate of Incorporation and By-Laws as in effect at
the beginning of the Term, with respect to any action or failure to act on his
part while he is an officer, director or employee of MOON. MOON shall cause
Employee to be covered at all times by directors' and officers' liability
insurance on terms no less favorable than the directors' and officers' liability
insurance maintained by MOON in effect on the date hereof in terms of coverage
and amounts. MOON shall continue to indemnify Employee as provided above and
maintain such liability insurance coverage for him after the Term for any claims
that may be made against him with respect to his service as a director or
officer of MOON.
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<PAGE> 15
14. EFFECT OF AGREEMENT ON OTHER BENEFITS.
The existence of this Agreement shall not prohibit or restrict
Employee's entitlement to participate fully in compensation, employee benefit
and other plans of MOON in which senior executives are eligible to participate.
15. PARACHUTES.
(a) APPLICATION. If all, or any portion, of the payments provided
under this Agreement, and/or any other payments and benefits that Employee
receives or is entitled to receive from MOON, including, but not limited to,
amounts generated from the exercise and sale of options granted to Employee,
constitutes an excess "parachute payment" within the meaning of Section 280G(b)
of the Code, whether or not under an existing plan, arrangement or other
agreement (each such parachute payment, a "Parachute Payment") and will result
in the imposition on Employee of an excise tax under Section 4999 of the Code,
then, in addition to any other benefits to which Employee is entitled under this
Agreement, MOON shall pay him an amount in cash equal to the sum of the excise
taxes payable by him by reason of receiving such Parachute Payments, plus the
amount necessary to put him in the same after-tax position (taking into account
any and all applicable federal, state and local excise, income or other taxes at
the highest possible applicable rates on such Parachute Payments (including
without limitation any payments under this Section 15) as if no excise taxes had
been imposed with respect to Parachute Payments (the "Parachute Gross-up").
(b) COMPUTATION. The amount of any payment under this Section 15 shall
be computed by MOON's certified public accounting firm in consultation with
legal counsel acceptable to Employee. Employee and MOON shall provide the
accounting firm with all information that it
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<PAGE> 16
reasonably deems necessary in order to compute the Parachute Gross-up. The cost
and expenses of the accounting firm retained to perform the computations shall
be borne by MOON.
(c) PAYMENT. In any event, MOON shall pay to Employee, or pay on his
behalf, the Parachute Gross-up as computed by the accounting firm by the time
any taxes payable by him as a result of the Parachute Payments become due.
In the event that the Internal Revenue Service ("IRS") determines that
the amount of excise taxes thereon initially paid was insufficient to discharge
Employee's excise tax liability, MOON shall make additional payments to him as
may be necessary to reimburse him for discharging the full liability.
16. ASSIGNABILITY; BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of Employee) and
assigns.
17. REPRESENTATIONS.
The Parties respectively represent and warrant that each is fully
authorized and empowered to enter into this Agreement and that the performance
of its or his obligations, as the case may be, under this Agreement will not
violate any agreement between such Party and any other person, firm or
organization. MOON represents and warrants that this Agreement has been duly
authorized by all necessary corporate action and is valid, binding and
enforceable in accordance with its terms.
18. ENTIRE AGREEMENT.
Except to the extent otherwise provided herein, this Agreement contains
the entire understanding and agreement between the Parties concerning the
subject matter hereof and supersedes any prior agreements, whether written or
oral, between the Parties concerning the subject
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<PAGE> 17
matter hereof, between MOON and Employee, provided that the execution of this
Agreement shall not adversely affect (i) any award previously made to Employee
under any compensation plan maintained by MOON, or (ii) any statements regarding
the vesting of options or other benefits in such prior agreements. Payments and
benefits provided under this Agreement are in lieu of any payments or other
benefits under any severance program or policy of MOON to which Employee would
otherwise be entitled.
19. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by both Employee and an authorized officer of
MOON. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Party to be charged with the waiver. No delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
20. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
21. SURVIVAL.
The respective rights and obligations of the Parties under this
Agreement shall survive any termination of Employee's employment with MOON.
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<PAGE> 18
22. GOVERNING LAW/JURISDICTION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Florida, without reference to principles of conflict
of laws.
23. ARBITRATION.
Any dispute or controversy other than a dispute or controversy arising
under Sections 8 or 10 hereof (actions regarding which may be brought in any
court (i) having situs within Pinellas County, Florida and (ii) having
jurisdiction over the dispute or controversy) arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators sitting in a location selected by Employee
within thirty (30) miles from the main office of MOON, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that the Executive shall be entitled to seek specific performance of
his right to be paid through the date of termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
24. LEGAL FEES.
All reasonable expenses and legal fees paid or incurred by Employee
pursuant to any bona fide dispute or question of interpretation relating to this
Agreement, including all such expenses and fees, if any, incurred in contesting
any termination of this Agreement by MOON or in seeking to obtain or enforce any
right or benefit provided by this Agreement, shall be paid or reimbursed by
MOON, provided, however, that if this Agreement is terminated for Cause or if
this Agreement is terminated voluntarily by Employee other than due to a breach
of this Agreement by MOON,
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<PAGE> 19
MOON shall be obligated to pay any of Employee's expenses and legal fees arising
therefrom only if Employee is successful on the merits pursuant to a legal
judgment, arbitration or settlement.
25. NOTICES.
Any notice given to either Party shall be in writing and shall be
deemed to have been given when delivered either personally, by fax, by overnight
delivery service (such as Federal Express) or sent by certified or registered
mail postage prepaid, return receipt requested, duly addressed to the Party
concerned at the address indicated below or to such changed address as the Party
may subsequently give notice of:
If to MOON or the Board:
MOON Communications, Inc.
17757 US 19 North
Suite 600
Clearwater, Florida 33764-6559
Attention: Patricia D. Graf, Corporate Secretary
PHONE: (727) 524-7800
FAX: (727) 524-1475
If to Employee:
MOON Communications, Inc.
17757 US 19 North
Suite 600
Clearwater, Florida 33764-6559
Attention: Chief Executive Officer
PHONE: (727) 524-7800
FAX: (727) 524-1475
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<PAGE> 20
and
H. Jay Hill
2910 Philippe Parkway
Safety Harbor, Florida 34695
26. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
27. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have Agreement as of the date first
written above.
UNITRON MEDICAL COMMUNICATIONS,
INC., d/b/a MOON COMMUNICATIONS, INC.
By: /s/ Patricia D. Graf
---------------------------------
Patricia D. Graf
Its: Corporate Secretary
/s/ H. Jay Hill
-------------------------------------
H. Jay Hill
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<PAGE> 1
the Termination Date in employee pension, welfare or other benefit plans and
programs of or sponsored by Unitron, except as expressly provided in this
Agreement. The Frasca Release is a general release and the parties intend and
agree that it shall be interpreted, construed and enforced as such.
(b) Frasca acknowledges that he has (i) been given twenty-one days
to review this Agreement (or hereby waives such period or the remaining portion
of such period), (ii) has carefully read and fully understands all of the
provisions of this Agreement, (iii) knowingly and voluntarily agrees to all of
the terms set forth in this Agreement, (iv) knowingly and voluntarily agrees to
be legally bound by this Agreement, (v) has been advised and encouraged in
writing to consult with an attorney prior to signing this Agreement, (vi) has
consulted with an attorney and (vii) understands that this Agreement, including
the Frasca Release, shall not become effective and enforceable until the eighth
day following the Effective Date, and that at any time prior to such date, he
may revoke this Agreement.
The foregoing notwithstanding, the Frasca Release and this Section 1
shall be of no effect and shall be null and void if and upon the termination of
the Option Agreement in accordance with Section 8.1 thereof (that is, if the
closing of the transactions contemplated by the Option Agreement fails to occur
as contemplated by the Option Agreement).
2. Release of Frasca.
(a) Sabratek General Release of Frasca. Sabratek, including on
behalf of its successors and assigns, hereby fully, finally and forever releases
and discharges Frasca and his heirs, executors, administrators and assigns, from
any and all claims, demands, liens, agreements, contracts, covenants,
undertakings, understandings, representations, rights or obligations of any
kind, actions, suits, debts, costs, actions, suits, expenses, damages,
judgments, orders and liabilities of whatever kind or nature, in law or in
equity, by statute or otherwise, whether now known or unknown, vested or
contingent, suspected or unsuspected and whether or not concealed or hidden,
which have existed or may have existed, or which do exist, but excluding (i) the
rights of Sabratek under this Agreement and (ii) the rights of Sabratek under
the Option Agreement and the other agreements specifically listed in the Option
Agreement as being entered into in connection therewith (the "Sabratek
Release"). The Sabratek Release is a general release and the parties intend and
agree that it shall be interpreted, construed and enforced as such. The Sabratek
Release shall be of no effect and shall be null and void if Frasca revokes this
Agreement as contemplated by Section 1(b). The foregoing notwithstanding, the
Sabratek Release and this Section 2 shall be of no effect and shall be null and
void if and upon the termination of the Option Agreement in accordance with
Section 8.1 thereof (that is, if the closing of the transactions contemplated by
the Option Agreement fails to occur as contemplated by the Option Agreement).
(b) Unitron General Release of Frasca. Unitron, including on
behalf of its successors and assigns, hereby fully, finally and forever releases
and discharges Frasca and his heirs, executors, administrators and assigns, from
any and all claims, demands, liens, agreements,
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<PAGE> 2
contracts, covenants, undertakings, understandings, representations, rights or
obligations of any kind, actions, suits, debts, costs, actions, suits, expenses,
damages, judgments, orders and liabilities of whatever kind or nature, in law or
in equity, by statute or otherwise, whether now known or unknown, vested or
contingent, suspected or unsuspected and whether or not concealed or hidden,
which have existed or may have existed, or which do exist, but excluding (i)
with respect to any matter related to a breach of the representations and
warranties of Unitron in the Option Agreement to which Frasca had actual
knowledge at the time the representations and warranties were made, (ii) the
rights of Unitron under this Agreement and (iii) the rights of Unitron under the
Option Agreement and the other agreements specifically listed in the Option
Agreement as being entered into in connection therewith (the "Unitron Release").
The Unitron Release is a general release and the parties intend and agree that
it shall be interpreted, construed and enforced as such. The Unitron Release
shall be of no effect and shall be null and void if Frasca revokes this
Agreement as contemplated by Section 1(b). The foregoing notwithstanding, the
Unitron Release and this Section 2 shall be of no effect and shall be null and
void if and upon the termination of the Option Agreement in accordance with
Section 8.1 thereof (that is, if the closing of the transactions contemplated by
the Option Agreement fails to occur as contemplated by the Option Agreement).
3. Confidential Information. Frasca acknowledges that the
information, observations and data relating to the businesses of Unitron which
Frasca has obtained as the director or an employee, officer or shareholder of
Unitron (including without limitation, the Work Product as defined below) are
the property of Unitron. Frasca agrees that he shall not use for his own
purposes or disclose to any third party any of such information, observations or
data without the prior written consent of the Board of Directors of Unitron (the
"Unitron Board") unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a direct or
indirect result of a wrongful act or breach of obligation of confidentiality.
Frasca shall deliver to Unitron on the Termination Date or at any other time
Unitron may request, all memoranda, notes, plans, records, reports, computer
tapes, printouts and software and other documentation (and copies thereof)
relating to the businesses of Unitron which Frasca may then possess or have
under his control.
4. Inventions and Patents. Frasca acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, databases, computer software, copyrightable works and all similar or
related information (whether patentable or not) which relate to the actual or
anticipated business, research and development or existing or known future
products or services of Unitron and which are or were conceived, developed or
made by him (alone or jointly with others) during the period of his relationship
with Unitron (the "Work Product") belong to Unitron. Frasca acknowledges and
agrees that all copyrightable Work Product was created in his capacity as an
employee of Unitron and within the scope of his employment by Unitron and thus
constitutes a "work made for hire" under the Copyright Act of 1976, as amended.
Frasca hereby assigns to Unitron all right, title and interest in and to all
Work Product, and agrees that he shall: (i) promptly disclose such Work Product
upon the Termination Date to Unitron; and (ii) perform all actions reasonably
requested by Unitron to establish and confirm its ownership thereof (including,
without limitation, executing assignments, powers of attorney and other
instruments).
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<PAGE> 3
5. Non-Competition.
(a) Frasca shall not, for a period of three years following the
Effective Date (the "Non-Competition Period"), directly or indirectly, own any
interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any business with respect to any business competing
with any of the businesses conducted or as of the date of this Agreement
proposed to be conducted by Unitron, within any geographical area in the United
States or anywhere in the world; provided, that nothing herein shall prohibit
Frasca from (i) being a passive owner of not more than 2% of the outstanding
stock of any class of a corporation which is publicly traded, so long as Frasca
does not have any active participation in the business of such corporation; (ii)
being an active consultant or employee to the United Kingdom company which
Sabratek and Unitron and certain other parties contemplate will market in the
future the Unitron intellectual property in the United Kingdom pursuant to a
license (the terms related to which are set forth in a term sheet referenced in
the recitals to the Option Agreement) as may be requested in writing by such
United Kingdom company; (iii) reselling diagnostic telecommunications hardware
to physicians; or (iv) rendering any services in any manner or capacity to any
third party with respect to selling or promoting the Unitron intellectual
property or any of the products or services of Unitron if and to the extent
approved in writing by Sabratek. Nothing in this Agreement shall be construed to
prohibit Frasca from serving as an employee and/or consultant of Citizens
Energy, Citizens Medical or Kennedy Resources in and of itself.
(b) During the Non-Competition Period and thereafter, Frasca shall
not (i) solicit any employee of Unitron to leave his or her employment with
Unitron or in any way interfere with the employment relationship between Unitron
and any of its employees or (ii) solicit any supplier, licensee, licensor,
franchisee or other business relation of Unitron to cease doing business with it
or in any way interfere with the respective relationship between Unitron and any
such person or business relation. Until the 1 year anniversary of the
consummation of the transactions contemplated by the Option Agreement, Frasca
shall not hire any person who is an employee of Unitron on the Effective Date,
the Termination Date or the date of the consummation of the transactions
contemplated by the Option Agreement. Subsequent to such 1 year anniversary,
subject to the first sentence of this subsection, Frasca may hire any person who
was an employee of Unitron on any of such dates but only if Frasca first obtains
from such person a non-competition agreement which shall be effective for no
less than 1 year and which shall contain non-compete provisions that are
substantially similar to the provisions applicable to Frasca contained in
Section 5(a) of this Agreement.
(c) During the Non-Competition Period and thereafter, Frasca shall
not disparage or make any negative statements or communications about Unitron or
Sabratek, any employee or director of Unitron or Sabratek or any person which is
at such time an affiliate of Unitron or Sabratek or commit any other act or
omission disparaging the reputation of Unitron or Sabratek or any person which
is at such time an affiliate of Unitron or Sabratek, except as may be expressly
contemplated by this Agreement, the Option Agreement or as may be necessary or
appropriate to
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<PAGE> 4
comply with applicable law or court order or in any arbitration. During the
Non-Competition Period and thereafter, Sabratek and Unitron shall not disparage
or make any negative statements or communications about Frasca or commit any
other act or omission disparaging the reputation of Frasca, except as may be
expressly contemplated by this Agreement, the Option Agreement or as may be
necessary or appropriate to comply with applicable law (including any securities
laws and any reporting requirements thereunder) or court order or in any
arbitration. Sabratek and Unitron on the one hand and Frasca on the other hand
hereby agree to speak only highly of each other, except as may be expressly
contemplated by this Agreement, the Option Agreement or as may be necessary or
appropriate to comply with applicable law (including any securities laws and any
reporting requirements thereunder) or court order or in any arbitration. Frasca
represents and warrants to Sabratek and Unitron that he has complied with this
covenant as written above since November 27, 1998. Frasca shall not (i)
participate directly or indirectly in or try to influence the management of Moon
Communications International, Ltd. ("Moon UK"), (ii) serve on the
board/governing body or the like of Moon UK or US-UK Ventures, Inc. (or such
other entity formed by Unitron to hold its equity interest in Moon UK), (iii)
have any contact with (and shall not communicate with) any current or known
prospective customers of Moon UK regarding or relating to Moon UK or (iv) have
any contact with (and shall not communicate with) any current or known
prospective employees of Moon UK; provided that Frasca may serve as a consultant
for Moon UK if so requested by Moon UK and in connection with performing any
requested responsibilities Frasca shall be limited by these restrictions except
as expressly contemplated in writing in the consulting agreement with Frasca.
(d) The Parties hereto agree that Unitron would suffer irreparable
harm from a breach by Frasca of any of the covenants or agreements contained
herein. In the event of a breach by Frasca or a breach threatened by Frasca of
any of the provisions of this Agreement, Unitron or its successors or assigns
may, in addition to all other rights and remedies existing in its favor, apply
to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (including the extension of the Non-Competition Period by a
period equal to the length of the violation of this Section). In the event of a
breach or violation by Frasca of any of the provisions of this Section, the
Non-Competition Period shall be tolled until such breach or violation has been
duly cured. Frasca agrees that these restrictions are reasonable.
(e) If, at the time of enforcement of any of the provisions of
this Section, a court holds that the restrictions stated therein are
unreasonable under the circumstances then existing, the Parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
(f) Frasca acknowledges and agrees that the provisions set forth
in this Section: (i) are necessary for the reasonable and proper protection of
Sabratek's and Unitron's legitimate business interests (including but not
limited to Confidential Information and Work Product); and (ii) do not preclude
Frasca from earning a livelihood nor impose unreasonable limitations on his
ability to earn a living.
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(g) Frasca agrees that the covenants made in this Section shall be
construed as an agreement independent of any other provision of this Agreement
and shall survive any order of a court of competent jurisdiction terminating any
other provision of this Agreement.
6. Limitations on Employment. Frasca shall serve as an employee
of Unitron from the date of this Agreement through the Termination Date (the
"Employment Period"), subject to the limitations set forth in this Section.
During the Employment Period and thereafter, (i) Frasca shall not participate
directly or indirectly in or try to influence the management of Unitron, (ii)
Frasca shall have no signing authority with respect to Unitron, (iii) Frasca
shall have no contact with (and shall not communicate with) any current or known
prospective customers of Unitron (other than on a social basis) until after the
3 month anniversary of the Effective Date except with the prior written consent
of Sabratek, which consent shall not be unreasonably withheld, (iv) Frasca shall
have no contact with (and shall not communicate with) any current or known
prospective customers of Unitron (other than on a social basis) with respect to
the business of Unitron or Sabratek, (v) Frasca shall have no contact with (and
shall not communicate with) any current or known prospective employees of
Unitron (other than on a social basis) and (vi) Frasca shall not be present on
the grounds and facilities of Unitron at any time, except upon the prior written
consent of Sabratek, except as may be initiated by the CEO of Unitron or
Sabratek.
7. Consideration.
(a) In consideration of the services to be rendered by Frasca as
an employee of Unitron, Unitron shall pay to Frasca a salary of $175,000 per
annum in equal bi-monthly installments, according to the normal payroll policies
of Unitron, subject to customary payroll deductions and withholdings, from the
date of this Agreement through July 23, 1999 (the "Employment Payment"). In the
event that the Option Agreement is terminated in accordance with Section 8.1
thereof (that is, if the closing of the transactions contemplated by the Option
Agreement fails to occur as contemplated by the Option Agreement), then Frasca
shall have a right to receive the bi-monthly installments described above from
July 24, 1999 until the termination of the Option Agreement in accordance with
its terms, which aggregate amount shall be paid in cash to Frasca within 10
business days after such termination of the Option Agreement.
(b) In consideration of the Frasca Release, the non-competition
and other covenants set forth in this Agreement, and in addition to the payments
to be received by Frasca under the Option Agreement, Unitron shall make a single
lump sum payment to Frasca in the amount of $262,500, subject to any customary
payroll deductions and withholdings required by law, in cash or by wire transfer
payable on (but only on) the Termination Date (the "Severance Payment").
(c) Unitron shall provide at its expense health insurance to
Frasca and his dependents until July 23, 1999 as and to the extent health
insurance is provided to Frasca and his dependents by Unitron on the Effective
Date. Subsequent to July 23, 1999, Unitron shall be responsible for the
provision of health care continuation coverage as required pursuant to COBRA to
the extent and while Frasca is so eligible.
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(d) Unitron shall allow Frasca to have full use of the Jeep
Cherokee automobile currently provided to him by Unitron and Unitron shall
continue to make the lease payments and the related car insurance payments with
respect to such automobile until July 23, 1999. Frasca agrees to assume on July
23, 1999 the lease on such automobile and to make all payments required by the
lease after such date. If Frasca fails to assume such lease or if such lease
cannot be assumed by Frasca by its terms, he shall then immediately deliver such
automobile to Unitron if such lease cannot be assumed. Frasca shall indemnify,
defend and hold each of Sabratek and Unitron and their respective successors and
permitted assigns, and their respective directors, officers, employees and
agents, and the heirs, executors and personal representatives of each of the
foregoing harmless from and against any claims, obligations, liabilities,
losses, expenses or other costs (including, without limitation, reasonable
attorneys' fees and expenses) incurred by any such indemnitee and arising out of
the use of such automobile by Frasca.
(e) Frasca shall be entitled to retain possession of and is hereby
given ownership by Unitron of the Aptiva 2000 computer previously furnished to
him by Unitron; provided that Unitron shall immediately purge all Unitron
related data and Unitron source code from such computer. Frasca represents and
warrants to Unitron and Sabratek that he does not currently possess or retain
any Unitron related data or source code on such computer. If at any time Frasca
comes into possession of Unitron related data or source code, Frasca agrees to
promptly notify Unitron and, at the request of Unitron, to return the same to
Unitron.
(f) Unitron shall reimburse Frasca in an amount not in excess of
$8,000 for the actual and reasonable business expenses incurred by Frasca on
behalf of Unitron prior to the Effective Date, and Frasca will or has supplied
Unitron with correct and accurate receipts and other documents reasonably
supporting such expenses.
8. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Unitron and Sabratek and their respective
affiliates, successors and assigns. Frasca may not transfer or otherwise assign
his rights or obligations under this Agreement, except that Frasca may assign
for estate planning purposes his rights to the payments to which he is entitled
hereunder, and Frasca shall be deemed for all purposes of this Agreement to have
received any such payments. Unitron and Sabratek may assign or transfer their
rights hereunder. If Sabratek elects to acquire the assets of Unitron pursuant
to the Option Agreement, then this Agreement and the rights and obligations of
Unitron hereunder shall be automatically assigned to Sabratek and become the
rights of Sabratek upon the consummation of such transaction. Any assignment of
the obligations of Unitron or Sabratek under this Agreement shall not relieve or
release Unitron or Sabratek as the case may be with respect to such assigned
obligations.
9. Frasca's Representations. Frasca represents and warrants to
Unitron and Sabratek that (i) his execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which he is a party or by which he is bound, (ii) he is not a party to or bound
by any employment agreement, noncompete agreement or confidentiality agreement
with any other
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person or entity that would conflict with this Agreement, other than the 1994
Employment Agreement; (iii) upon the execution and delivery of this Agreement by
Unitron and Sabratek, this Agreement shall be the valid and binding obligation
of his, enforceable in accordance with its terms; and (iv) he has returned to
Unitron all company-provided credit cards, access cards, keys, computer
equipment, cell-phones, fax machines and other equipment, files, documents,
software, except as expressly contemplated by this Agreement. Frasca
acknowledges that Severance Payment and the Employment payment would not have
been made without the Frasca Release.
10. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Florida, without giving effect to any choice of
law or conflict of law rules or provisions that would cause the application of
the laws of any jurisdiction other than the State of Florida.
11. Severability. Whenever possible each provision and term of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement; provided that if a court having competent jurisdiction shall find
that the covenant contained in Section 5 hereof is not reasonable, such court
shall have the power to reduce the duration and/or geographic area and/or scope
of such covenant, and the covenant shall be enforceable in this reduced form.
12. No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
13. Modification of Waiver. No amendment, modification or waiver
of this Agreement shall be binding or effective for any purpose unless it is
made in a writing signed by the party against who enforcement of such amendment,
modification or waiver is sought. No course of dealing between the parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of Sabratek, Unitron
or Frasca in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by Sabratek,
Unitron or Frasca of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on any other
occasion.
14. Notice. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given in person, by
telegram or facsimile (receipt verified), or sent by registered or certified
mail (postage prepaid, return receipt requested), and shall be deemed to have
been duly given if so given, to Sabratek, Unitron and Frasca as provided in the
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Option Agreement (or to such other address as any party may have furnished to
the other in writing, except that changes of address shall only be effective
upon receipt).
15. Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
16. Counterparts. This Agreement may be executed in counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same instrument. A
facsimile copy of this Agreement and any signatures hereon shall be considered
as originals for all purposes.
17. Incorporation by Reference. No terms and conditions of any
other agreement between the parties to this Agreement shall be incorporated by
reference into this Agreement unless expressly incorporated by reference into
this Agreement or referenced in this Agreement.
* * * *
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
UNITRON MEDICAL COMMUNICATIONS,
INC.
By: /s/ Ralph V. Frasca
-------------------------------
Its: President / C.E.O.
-------------------------------
SABRATEK CORPORATION
By: /s/ Stephen L. Holden
-------------------------------
Its: President
-------------------------------
/s/ Ralph V. Frasca
-----------------------------------
RALPH V. FRASCA
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EXHIBIT 23.1
CONSENT OF KPMG LLP
The Board of Directors
Sabratek Corporation:
We consent to incorporation by reference in this 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
