<PAGE> 1
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Criticare Systems, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
Not Applicable
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
Not Applicable
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not Applicable
- --------------------------------------------------------------------------------
(5) Total fee paid:
Not Applicable
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
Not Applicable
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Not Applicable
- --------------------------------------------------------------------------------
(3) Filing Party:
Not Applicable
- --------------------------------------------------------------------------------
(4) Date Filed:
Not Applicable
- --------------------------------------------------------------------------------
<PAGE> 2
CRITICARE SYSTEMS, INC.
20925 CROSSROADS CIRCLE
WAUKESHA, WISCONSIN 53186
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Criticare Systems, Inc., will be
held at the Company's executive offices, 20925 Crossroads Circle, Waukesha,
Wisconsin, on Friday, November 1, 1996 at 3:30 p.m. for the following purposes:
1. To elect three (3) directors.
2. To ratify the appointment of Deloitte & Touche LLP, independent
certified public accountants, as auditors of the Company for its fiscal year
ending June 30, 1997.
3. To transact any other business as may properly come before the
meeting and any adjournment or adjournments thereof.
The transfer books of the Company will not be closed for the Annual
Meeting. Stockholders of record at the close of business on September 20, 1996
are entitled to receive notice of, and to vote at, the meeting.
All stockholders are cordially invited to attend the meeting in person,
if possible. Stockholders who are unable to be present in person are requested
to execute and promptly return the accompanying proxy in the enclosed envelope.
The proxy is being solicited by the Board of Directors of the Company. Your
attendance at the meeting, whether in person or by proxy, is important to
ensure a quorum. If you return the proxy, you still may vote your shares in
person by giving written notice (by subsequent proxy or otherwise) to the
Secretary of the Company at any time prior to its vote at the Annual Meeting.
By Order of the Board of Directors
N.C. Joseph Lai, Secretary
Waukesha, Wisconsin
October 1, 1996
<PAGE> 3
CRITICARE SYSTEMS, INC.
20925 CROSSROADS CIRCLE
PROXY STATEMENT FOR 1996 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
of Proxies by the Board of Directors of Criticare Systems, Inc. (the
"Company"), to be voted at the Annual Meeting of Stockholders to be held at the
Company's executive offices, 20925 Crossroads Circle, Waukesha, Wisconsin, at
3:30 p.m. on Friday, November 1, 1996, and at any adjournments thereof, for the
purposes set forth in the accompanying Notice of Meeting. The mailing of this
Proxy Statement and accompanying form of Proxy is being made on or about
October 1, 1996.
GENERAL INFORMATION
The Board of Directors knows of no business which will be presented to
the meeting other than the matters referred to in the accompanying Notice of
Meeting. However, if any other matters are properly presented to the meeting,
it is intended that the persons named in the Proxy will vote on such matters in
accordance with their judgment. If the enclosed form of proxy is executed and
returned, it nevertheless may be revoked at any time before it has been voted
by a later dated Proxy or a vote in person at the Annual Meeting. Shares
represented by properly executed proxies received on behalf of the Company will
be voted at the Annual Meeting (unless revoked prior to their vote) in the
manner specified therein. If no instructions are specified in a signed Proxy
returned to the Company, the shares represented thereby will be voted (1) in
FAVOR of the election as a director of the Company of the nominee listed in the
enclosed Proxy and (2) in FAVOR of the ratification of Deloitte & Touche LLP as
independent accountants for the 1997 fiscal year.
Only holders of the common stock of the Company (the "Common Stock")
whose names appear of record on the books of the Company at the close of
business on September 20, 1996 are entitled to vote at the Annual Meeting. On
that date, the only outstanding shares of capital stock of the Company were
7,128,272 shares of Common Stock. Each share of Common Stock is entitled to
one vote on each matter to be presented at the meeting. THE AFFIRMATIVE VOTE
OF A MAJORITY OF THE SHARES OF COMMON STOCK REPRESENTED AND ENTITLED TO VOTE AT
THE MEETING IS REQUIRED FOR APPROVAL OF PROPOSAL ONE AND PROPOSAL TWO. AN
ABSTENTION VOTE OR BROKER NON-VOTE WILL BE COUNTED IN DETERMINING THE NUMBER OF
SHARES REPRESENTED AT THE MEETING AND IS, ACCORDINGLY, EQUIVALENT TO A VOTE
AGAINST PROPOSAL ONE AND PROPOSAL TWO. PROXIES THAT ARE NOT VOTED WILL BE OF
NO EFFECT.
PROPOSAL NO. 1: ELECTION OF DIRECTOR
Pursuant to the authority contained in the By-Laws of the Company, the
Board of Directors has established the number of directors of the Company at
seven. The Company's By-Laws provide that the Board of Directors will be
divided into three classes as nearly equal in number as possible, with the
term of one class expiring each year. The terms of three directors expire at
the Annual Meeting. Accordingly, the Board of Directors has nominated for
reelection as a director Gerhard J. Von der Ruhr and N.C. Joseph Lai, Ph.D.,
each to serve a term of three years, until the 1999 Annual Meeting of
Stockholders, and Karsten Houm to serve a term of one year, until the 1997
Annual Meeting of Stockholders. There are currently three vacancies on the
Board of Directors. The Company is not considering adding any new directors to
fill such vacancies at this time. Proxies cannot be voted for more than one
candidate for director.
As indicated below, the persons nominated by the Board of Directors are
incumbent directors. The Company anticipates that the nominees will be
candidates when the election is held. However, if for any reason any nominee
is not a candidate at that time, proxies will be voted for any substitute
nominee designated by the incumbent directors (except where a Proxy withholds
authority with respect to the election of a director).
The Board of Directors held three meetings during the Company's fiscal
year ended June 30, 1996. All of the incumbent directors attended at least 75%
of the total meetings of the Board of Directors and committees of the Board of
Directors upon which they serve, except that Mr. Lai attended only two-thirds
of such meetings.
<PAGE> 4
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF GERHARD J. VON DER RUHR, N.C. JOSEPH LAI, PH.D. AND KARSTEN HOUM AS
DIRECTORS OF THE COMPANY.
COMMITTEES
The Company has both Audit and Compensation Committees of directors.
The members of the Board's Audit Committee are Milton Datsopoulos and Karsten
Houm. The Audit Committee met one time during the fiscal year ended June 30,
1996. The responsibilities of the Audit Committee, in addition to such other
duties specified by the Board of Directors, include the following: (1)
recommendation to the Board of Directors of independent accountants for the
Company; (2) review of the timing, scope and results of the independent
accountants' audit examination and related fees; (3) review of periodic
comments and recommendations by the independent accountants and of the
Company's response thereto; and (4) review of the scope and adequacy of
internal accounting controls and internal auditing activities.
The Board's Compensation Committee is comprised of Milton Datsopoulos
and Karsten Houm. The responsibilities of the Compensation Committee are to
make recommendations to the Board of Directors with respect to compensation for
the executive officers of the Company and to oversee the Company's stock option
plans. The Compensation Committee met two times in the fiscal year ended June
30, 1996.
NOMINEES FOR ELECTION AS DIRECTORS
Gerhard J. Von Der Ruhr
Age: 55; Elected Director: 1984; Present Term Ends: 1996 Annual Meeting
Mr. Von der Ruhr is a founder of the Company and has served as Chairman of its
Board and President since the Company's inception in October 1984.
N.C. Joseph Lai, Ph.D.
Age: 54; Elected Director: 1984; Present Term Ends: 1996 Annual Meeting
Dr. Lai is a co-founder of the Company and served as Vice Chairman of its Board
and as an officer since the Company's inception in 1984.
Karsten Houm
Age: 50; Elected Director: 1985; Present Term Ends: 1996 Annual Meeting
Mr. Houm has served as President of Unitor, a Norwegian shipping company, since
September 1985.
OTHER DIRECTOR
Milton Datsopoulos
Age: 56; Elected Director: 1986; Present Term Ends: 1998 Annual Meeting
Mr. Datsopoulos has been a partner in the law firm of Datsopoulos, MacDonald &
Lind in Missoula, Montana since 1974. Mr. Datsopoulos is a director of Montana
Naturals Int'l, Inc., a manufacturer of natural food products and nutritional
supplements.
2
<PAGE> 5
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Title Age
---- ----- ---
<S> <C> <C>
Gerhard J. Von der Ruhr Chairman of the Board, President and 55
Treasurer
N.C. Joseph Lai Senior Vice President, Vice Chairman 54
of the Board, Secretary
Stephen D. Okland Vice President-Alternate Care 54
Richard J. Osowski Senior Vice President-Finance 59
Assistant Secretary
Herschel Q. Peddicord Senior Vice President-Sales, Marketing 46
and Engineering
Michael T. Larsen Vice President-Quality Control/ 37
Quality Assurance
Kenneth F. Wineman Vice President - 50
Latin American Sales
Drew M. Diaz Vice President - 33
European Sales
</TABLE>
The terms of office and past business experiences of Mr. Von der Ruhr
and Dr. Lai are described above.
Mr. Okland served the Compa ny as a sales consultant from January
through December 1985. In January 1986, Mr. Okland was appointed Director of
Sales and in May 1988 he was appointed Vice President.
Mr. Osowski served as Controller of the Company from October 1985 until
October 1987, as Vice President-Finance from October 1987 until May 1995 and as
Senior Vice President-Finance and Assistant Secretary since May 1995.
Mr. Peddicord joined the Company on March 30, 1995. Prior to joining
the Company, he was Vice President of Sales and Marketing from 1991 to 1995 for
Biotronic, Inc., a manufacturer of cardiac pacemakers. From 1989 to 1991 Mr.
Peddicord was National Sales Manager of Criticare Systems, Inc.
Mr. Larsen served as Project Engineer from August 1985 until he was
appointed Manager of Engineering in September 1987. He was most recently
promoted to Vice President-Quality Control/Quality Assurance effective
September l, 1990.
Mr. Wineman has served the Company as Zone Manager for Latin America
sales since joining the Company in July 1991. Prior to joining the Company,
Mr. Wineman was engaged as a private consultant to medical and electronic
manufacturing companies and also served as Operations Manager of Critikon
Corporation, a manufacturer of medical monitoring equipment.
Mr. Diaz has served the Company as Regional Sales Manager for the
Middle East and Western Europe since joining the Company in January 1991.
Prior to joining the Company, Mr. Diaz was employed as a Regional Sales Manager
for Pfizer Implant Technologies from 1988 to 1991.
3
<PAGE> 6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
on Form 3, 4, and 5. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Forms 3, 4
and 5 they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during fiscal 1996 all section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to all
compensation, including stock options granted and all cash bonuses and accrued
deferred compensation, incurred by the Company during the three fiscal years
ended June 30, 1996 to or on behalf of the Chief Executive Officer and the four
most highly paid senior executive officers other than the CEO. The persons
listed below are sometimes referred to herein as the "named executive
officers."
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------------------------------------ ---------------
Awards:
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($)(1) Compensation($)(2) Options/SARs(#) Compensation($)
- ------------------ --- --------- ----------- ------------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerhard J. Von der Ruhr, 1996 138,300 -- 957 -- 53,876(3)
Chairman of the Board, 1995 132,600 -- 957 -- 51,266
President (CEO), 1994 141,732 28,240 635 -- 45,982
Treasurer
Stephen D. Okland, 1996 284,775 -- 6,000 10,000 3,427(4)
Vice President--Alternate 1995 258,627 -- 6,000 -- 2,724
Care 1994 237,357 -- 6,000 3,500 4,007
Richard J. Osowski, 1996 107,502 -- 957 10,000 19,268(5)
Senior Vice President-- 1995 95,004 -- 957 -- 18,739
Finance, Assistant Secretary 1994 95,004 28,090 957 90,000 16,253
N.C. Joseph Lai, 1996 123,174 -- 1,763 -- 26,299(6)
Senior Vice President, 1995 80,000 -- 1,763 -- 1,432
Vice Chairman of 1994 109,585 -- 1,763 -- 22,357
the Board, Secretary
Herschel Q. Peddicord, 1996 195,274 -- -- -- 2,083(7)
Senior Vice President- 1995 8,301 -- -- 50,000 --
Sales, Marketing
and Engineering
</TABLE>
- -----------------------
(1) Bonus earned upon achievement of performance objectives. See
"Compensation Committee Report."
(2) The amounts represent automobile allowance payments.
4
<PAGE> 7
(3) Represents $50,876 of premiums paid by the Company on two life insurance
policies, the proceeds of which are payable to Mr. Von der Ruhr's
beneficiary, and $3,000 of Company contributions to the 401(k) plan on
behalf of Mr. Von der Ruhr.
(4) Represents $427 of premiums paid by the Company on a life insurance
policy, the proceeds of which are payable to the beneficiary of Mr.
Okland, and $3,000 of Company contributions to the 401(k) plan on behalf
of Mr. Okland.
(5) Represents $17,009 of premiums paid by the Company on a life insurance
policy, the proceeds of which are payable to the beneficiary of Mr.
Osowski, and $2,259 of Company contributions to the 401(k) plan on behalf
of Mr. Osowski.
(6) Represents $24,190 of premiums paid by the Company on a life insurance
policy, the proceeds of which are payable to the beneficiary of Mr. Lai,
and $2,109 of Company contributions to the 401(k) plan on behalf of Mr.
Lai.
(7) Represents contributions by the Company to the 401(k) plan on behalf of
Mr. Peddicord.
Mr. Von der Ruhr has an employment agreement with the Company for
successive one-year periods ending March 31 unless prior notice of termination
is given. The agreement is terminable by the Company before expiration without
further obligation if such termination is for cause. If such termination is
without cause, the Company is obliged to continue his salary for the remaining
term of the employment agreement. Mr. Osowski has an employment agreement with
the Company which provides that if he is terminated without cause (as defined in
the agreement), the Company will continue his base salary and certain benefits
for a period of one year and will continue to provide group health insurance
until he reaches age 65.
Directors of the Company are reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board of Directors. In January 1994,
non-employee directors were issued options to purchase 15,000 shares of common
stock at an exercise price of $1.875 per share, market price on the grant date.
The options became exercisable on January 1, 1995 and expire on January 12,
1999. In May 1995, non-employee directors were issued options to purchase
50,000 shares of Common Stock at an exercise price of $2.0625 per share, the
market price on the date of grant. The options become exercisable on May 15,
1996, 1997 and 1998 and expire on May 15, 2000. Directors receive no cash
directors' fees.
5
<PAGE> 8
STOCK OPTIONS
On December 5, 1992 the Company adopted two new nonqualified stock
option plans, the Employee Stock Option Plan and the Non-Employee Stock Option
Plan (collectively, the "New Plans"). Pursuant to the adoption of the New
Plans, no new stock options can be granted under the stock option plans (the
"Old Plans") which existed prior to the approval of the New Plans. The New
Plans provide for the grant to key employees and outside directors and
consultants of the Company of options covering shares of Common Stock. The New
Plans are administered by the Board of Directors which has discretion to
increase the number of shares covered by the Plans, select optionees, designate
the number of shares to be covered by each option, establish vesting schedules,
specify the amount and type of consideration to be paid to the Company on
exercise, and to specify certain other terms of the options. The exercise price
of options granted under the New Plans must be at least 85% of the fair market
value of the Common Stock on the date of grant.
The Company has reserved 1,020,000 shares of Common Stock for issuance
under the Employee Stock Option Plan and 200,000 shares of Common Stock for
issuance under the Non-Employee Stock Option Plan, in each case subject to
adjustment for certain dilutive events. At the end of fiscal 1995, options to
purchase 797,150 shares were outstanding under the New Plans and options to
purchase 243,750 shares were outstanding under the Old Plans. During fiscal
1996, options were granted to purchase 246,000 shares of Common Stock under the
New Plans at an average per share exercise price of $2.82 (all options were
granted at the market price on the grant dates). In addition, during fiscal
1996, 73,300 shares of Common Stock at an average per share exercise price of
$2.25 were cancelled under the New Plans and 50,280 shares of Common Stock at
an average per share exercise price of $2.53 were cancelled under the Old Plans
and options to purchase 19,600 shares at an average exercise price per share of
$2.18 were exercised under the New Plans and options to purchase 74,300 shares
at an average exercise price per share of $2.43 were exercised under the Old
Plans. A total of 250,150 shares of Common Stock remain available for future
grants under the New Plans.
The following table shows the fiscal year-end value of unexercised
options held by the named executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-the-Money
Options at Fiscal Year End(#) Options at Fiscal Year End($)
-------------------------------- --------------------------------
Number of Shares
Name Acquired on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerhard J. Von der Ruhr -- -- -- -- -- --
N.C. Joseph Lai -- -- -- -- -- --
Stephen D. Okland -- -- 23,500 10,000 19,813 8,750
Richard J. Osowski -- -- 110,000 40,000 123,750 50,000
Herschel Q. Peddicord -- -- 10,000 40,000 13,125 52,500
</TABLE>
Effective April 1, 1991, the Company adopted a 401(k) plan, which covers
substantially all employees who have completed one year of employment. Under
the plan, eligible employees can contribute up to 15% of pre-tax compensation
for investment in a trust under the plan. Company contributions to the plan are
discretionary and determined annually by the Board of Directors. Employee
contributions, within certain limitations, are considered tax deferred under the
provisions of section 401(k) of the Internal Revenue Code. Withdrawals of tax
deferred amounts may be made upon termination of employment or earlier in the
event of certain defined hardship situations. The Company's contributions for
the 1994, 1995 and 1996 fiscal years were approximately $42,000, $40,000 and
$61,000, respectively. Contributions made or accrued for named executive
officers are included under cash compensation in the Summary Compensation Table.
6
<PAGE> 9
Other than the 401(k) plan, the Company does not maintain any pension,
profit sharing, retirement or similar plans. The Company does provide group
health, dental, long-term disability and life insurance benefits to its
full-time employees, including its named executive officers.
COMPENSATION COMMITTEE REPORT
The objectives of the Company's compensation program are to attract and
retain the best available executives, to motivate these executives to achieve
the Company's business goals and to recognize individual contributions as well
as overall business results. To achieve these objectives, the Company reviews
its compensation program on a regular basis and attempts to tie a portion of
each executive's potential compensation to Company performance.
The key elements of the Company's executive compensation program consist
of fixed compensation, in the form of base salary, and variable compensation,
which is more directly tied to Company performance, in the form of annual
incentive compensation and long-term compensation through stock option awards.
In determining each element of compensation to be awarded to an executive
officer, the Compensation Committee considers the executive's overall benefit
package as well as the executive's responsibilities and experience. The
Compensation Committee also considers the competitive marketplace for executive
talent, including, to the extent possible, a comparison to compensation packages
for executives with similar levels of experience and responsibility at other
companies. In determining the compensation package for Mr. Von der Ruhr, the
Company's Chairman of the Board, President and Treasurer, the Compensation
Committee took into consideration both the compensation packages of chief
executive officers of companies the Compensation Committee deemed comparable to
the Company and the Compensation Committee's assessment of Mr. Von der Ruhr's
individual performance and the Company's overall performance.
The Compensation Committee reviewed the proposed 1996 salary and bonuses
for the executive officers at the Compensation Committee meeting on November 6,
1995. The Compensation Committee believed the proposed salary levels were in
line with or below the salary levels of executives in comparable positions of
responsibility. In an effort to tie a substantial portion of an executive's
compensation to Company performance, the Committee approved an incentive
compensation program in which all of the executive officers, other than Mr.
Okland and Mr. Peddicord, are eligible to participate. The program provides for
a percentage of the Company's pre-tax income, over a specified target, to be
allocated to a bonus pool. Mr. Okland and Mr. Peddicord receive commission
based on the sales performance of their division.
Because of his substantial stock holdings, Mr. Von der Ruhr is not
eligible to participate in the stock option plan. He is eligible for the
incentive program described above, however. In fixing the stock option grants,
the Committee considered the current stock holdings of each eligible officer,
their responsibilities and historical and anticipated future contributions to
the Company's performance. The Committee believes that selective grants of
stock options, along with the performance-based cash compensation described
above, promote a commonality of interest between the Company's officers and its
stockholders. This commonality of interest was enhanced by tying the
exercisability of certain of the options to significant increases in the
Company's stock price.
The Compensation Committee is of the opinion that the compensation
levels for the named executive officers are reasonable when compared to similar
positions of responsibility and scope in similar industries and that an
appropriate amount of total compensation is based on the performance of the
Company, and therefore provides sufficient incentive for these individuals to
attain improved results in the future.
COMPENSATION COMMITTEE
Milton Datsopoulos
Karsten Houm
7
<PAGE> 10
STOCK PERFORMANCE
The following table tracks the value of $100 invested on July 1, 1991 in
Criticare Systems, Inc. Common Stock compared to the change in the S&P 500 Index
and the NASDAQ Index. The chart shows that $100 invested five years ago in
Criticare Systems, Inc. common stock was worth $60.00 at June 30, 1996 compared
to $180.68 for the S&P 500 and $249.00 for the NASDAQ Index:
<TABLE>
<CAPTION>
CRITICARE SYSTEMS, INC.
STOCK PERFORMANCE COMPARED TO THE
S&P 500 AND THE NASDAQ INDEX
S&P 500 NASDAQ CSI
------- ------ ---
<S> <C> <C> <C>
July 1, 1991 $100.00 $100.00 $100.00
June 30, 1992 $109.96 $122.63 $ 57.78
June 30, 1993 $121.38 $147.91 $ 40.00
June 30, 1994 $119.70 $148.34 $ 34.45
June 30, 1995 $146.77 $196.14 $ 41.67
June 30, 1996 $180.68 $249.00 $ 60.00
</TABLE>
The following graph presents, for a five-year period, the cumulative
total shareholder return of the Company, the Standard & Poor's 500 Index and the
NASDAQ Index. Cumulative total shareholder return is defined as share price
appreciation assuming reinvestment of dividends.
[PERFORMANCE GRAPH]
8
<PAGE> 11
SECURITY OWNERSHIP
The following table sets forth information with respect to beneficial
ownership of the Common Stock of the Company by (a) each person known to the
Company to own beneficially more than 5% of the Company's Common Stock, (b) each
director of the Company, (c) each named executive officer, and (d) all directors
and executive officers as a group:
<TABLE>
<CAPTION>
Name and Address of Number of
Beneficial Owner(1) Shares Owned Percent
------------------- ------------ -------
<S> <C> <C>
Gerhard J. Von der Ruhr 555,075(2) 7.8%(2)
N.C. Joseph Lai 767,290(3) 10.8%(3)
Karsten Houm 57,065(4) *
Stephen D. Okland 23,500(5) *
Richard J. Osowski 146,250(6) 2.0%
Milton Datsopoulos 31,000(7) *
Herschel Q. Peddicord 10,000(8) *
All directors and executive officers
(10 Persons) 1,671,430(9) 22.6%
--------- ----
</TABLE>
- --------------------------
* Less than 1%
(1) Unless otherwise indicated, the address of the beneficial owner is 20925
Crossroads Circle, Waukesha, WI 53186; the address of Mr. Houm is Mastemyr
N-140, Kolbotn, Norway; and the address of Mr. Datsopoulos is Central
Square Building, 201 West Main, Missoula, Montana 59802.
(2) Includes 410,000 shares owned of record by Ursula Von der Ruhr, Mr. Von
der Ruhr's wife, and 1,175 shares owned of record by Mark Von der Ruhr,
Mr. Von der Ruhr's son.
(3) Includes 216,000 shares owned of record by Helen Lai, Dr. Lai's wife and
188,000 shares in the aggregate owned of record by Dr. Lai's sons
Christopher Lai and Thomas Lai.
(4) Includes 41,000 shares which Mr. Houm has a right to acquire under
currently exercisable options.
(5) Includes 23,500 shares Mr. Okland has a right to acquire under currently
exercisable options.
(6) Includes 110,000 shares Mr. Osowski has a right to acquire under
currently exercisable options.
(7) Includes 31,000 shares which Mr. Datsopolous has a right to acquire under
currently exercisable options.
(8) Includes 10,000 shares Mr. Peddicord has a right to acquire under
currently exercisable options.
(9) Includes 271,500 shares of Common Stock the members of the group have a
right to acquire under options outstanding as of June 30, 1996.
9
<PAGE> 12
CERTAIN TRANSACTIONS
On August 1, 1995, the Company, through its wholly-owned subsidiary
Criticare Biomedical, Inc., purchased from Marquette Venture Partners II, L.P.
and MVP II Affiliates Fund, L.P. (collectively, "Sellers"), two entities which
are not affiliated with the Company, 1,000,000 shares of the Series A Preferred
Stock and 1,200,000 shares of the Series B Preferred Stock of Immtech and a
promissory note payable by Immtech in the principal amount of $50,000. In
consideration of the Immtech stock and note, the Company issued to the Sellers
333,154 shares of the Company's Common Stock and Criticare Biomedical issued a
subordinated promissory note, secured solely by the Immtech stock and note, in
the principal amount of $1,240,000. The principal balance of the note is
payable by Criticare Biomedical on the earlier of (a) December 2002; (b) the
closing date of an initial public offering of the stock of Immtech or any sale
of the Immtech stock by Criticare Biomedical; or (c) the Company purchasing any
additional Immtech stock. The note bears interest at 7% per annum. No interest
is payable during the first 12 months of the note and thereafter Criticare
Biomedical is required to pay interest quarterly in arrears. The Company also
entered into a registration rights agreement with Sellers pursuant to which the
Company will register the 333,154 shares of Common Stock issued to Sellers for
sale to the public subject to a monthly sales volume limitation equal to the
greater of (a) 1% of the Company's outstanding Common Stock or (b) the average
weekly trading volume in the Company's Common Stock for the four-week period
prior to the sale. The Company currently owns 2,335,082 shares of the common
stock of Immtech International, Inc. ("Immtech"), representing approximately
34.5% of Immtech's issued and outstanding common stock. Gerhard J. Von der Ruhr
and N.C. Joseph Lai, executive officers and directors of the Company, are
directors of Immtech and respectively own 5.1% and 3.8% of Immtech's outstanding
stock on a fully diluted basis. Immtech is a development-stage company involved
in the research and development of products in the fields of biochemistry and
immunology. As part of its original investment, the Company acquired exclusive
rights to one of the products Immtech is developing--a proprietary device to
remove immune complexes from a patient's blood. However, it is unlikely that
Immtech will be able to market any of its products in the foreseeable future.
The Company believes the terms of the Immtech transaction, taken as a whole,
were no more or less favorable to the Company than would have been available
from an unrelated third-party. Immtech currently has outstanding promissory
notes in the principal amount of $89,777 and $10,173 payable to the Company.
The $89,777 note bears interest at the rate of 8 1/2% per annum and is payable
on December 31, 1997. The $10,173 note, representing accrued interest from a
prior issuance of notes, does not bear interest and is due upon the realization
of certain of Immtech's receivables. In addition, since September 1995, the
Company has advanced Immtech funds to support the operations of the Company.
Immtech has agreed to pay the Company interest (at the prime rate) on all funds
advanced. As of June 30, 1996, Immtech had borrowed $503,000.
The Company leases automobiles from U&G Leasing, which is owned by Mr.
Von der Ruhr and his wife, and from JHL Leasing, which is owned by Dr. Lai and
his wife, and paid $39,252 and $23,016, respectively, to those entities during
the fiscal year ended June 30, 1996. The Company believes these arrangements
are on terms no less favorable to the Company than would be available from an
unrelated third party.
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP as
independent certified public accountants to examine the financial statements of
the Company and its consolidated subsidiaries for the fiscal year ending June
30, 1997. Unless otherwise directed, the Proxy will be voted in favor of the
ratification of such appointment.
Although this appointment is not required to be submitted to a vote of
stockholders, the Board believes it appropriate as a matter of policy to request
that the stockholders ratify the appointment. If stockholder ratification is
not received, the Board will reconsider the appointment.
Deloitte & Touche LLP (and its predecessor Deloitte Haskins + Sells) has
served as auditors for the Company since its formation in 1984. A
representative of Deloitte & Touche LLP is expected to be present at the Annual
Meeting and will be provided an opportunity to make a statement if he or she
desires and will be available to respond to appropriate questions.
PROPOSALS FOR 1997 ANNUAL MEETING
Any stockholder who desires to submit a proposal for the 1997 Proxy
Statement and Annual Meeting should submit the proposal in writing to Gerhard J.
Von der Ruhr, Chairman of the Board, Criticare Systems, Inc.,
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20925 Crossroads Circle, Waukesha, Wisconsin 53186. The Company must receive a
proposal by June 3, 1997 in order to consider it for inclusion in the 1997 Proxy
Statement.
EXPENSES OF SOLICITATION
The cost of this solicitation of Proxies will be paid by the Company.
It is anticipated that the Proxies will be solicited only by mail, except that
solicitation personally or by telephone may also be made by the Company's
regular employees who will receive no additional compensation for their services
in connection with the solicitation. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials and the annual report to beneficial owners of stock held
by such persons. The Company will reimburse such parties for their expenses in
so doing.
ANNUAL REPORT
A copy of the 1996 Annual Report of the Company accompanies this Proxy
Statement. A copy of the Company's Annual Report on Form 10-K for fiscal year
1996 will be provided without charge on written request of any stockholder whose
Proxy is being solicited by the Board of Directors. The written request should
be directed to Corporate Secretary, Criticare Systems, Inc., 20925 Crossroads
Circle, Waukesha, Wisconsin 53186.
INCORPORATION OF DOCUMENTS BY REFERENCE
This Proxy Statement incorporates by reference the financial statements,
supplemental financial information and management's discussion and analysis of
financial condition and results of operations regarding the Company included in
the Company's Annual Report for the fiscal year ended June 30, 1996, and the
Company's Annual Report on Form 10-K for the year ended June 30, 1996, copies of
which are being delivered to each stockholder with this Proxy Statement.
Any statement contained in a document incorporated by reference in this
Proxy Statement will be deemed to be modified or superseded for purposes of this
Proxy Statement to the extent that a statement contained in this Proxy Statement
modifies or supersedes such statement. Any statement so modified or superseded
will not be deemed, except as modified or superseded, to constitute a part of
this Proxy Statement
By Order of the Board of Directors
N.C. Joseph Lai, Secretary
Waukesha, Wisconsin
October 1, 1996
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CRITICARE SYSTEMS, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
20925 Crossroads Circle
Waukesha, Wisconsin 53186 The undersigned hereby appoints Gerhard J. Von der Ruhr, and Richard J.
Osowski, or either of them, as Proxies, each with full power of substitution for
himself, and hereby authorizes them to represent and to vote, as designated
below, all of the shares of common stock of Criticare Systems, Inc., held of
record by the undersigned on September 20, 1996, and which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on
November 1, 1996 and any or all adjournments thereof, with like effect as if the
undersigned were personally present and voting.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Gerhard J. Von der Ruhr, N.C. Joseph Lai, Ph.D., Karsten Houm
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.)
_____________________________________________________________________________________________________________
2. TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF
THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1997 [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
(continued on reverse side)
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<S><C>
Properly executed Proxies received by the Company will be voted in the manner directed herein by the undersigned stockholder. If
no direction is made, this Proxy will be voted FOR the election of the nominees listed for director and FOR Proposal 2. If other
matters properly come before the meeting, this Proxy will be voted in accordance with the best judgment of the Proxies appointed.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement furnished
therewith dated October 1, 1996.
Please sign exactly as name appears below. When
shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
DATED________________________________, 1996
___________________________________________
Signature
___________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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