EXHIBIT B
CRITICARE SYSTEMS, INC.
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made as of October 17,
2000 (the "Agreement Date"), by and between Criticare Systems, Inc., a Delaware
corporation (the "Company") with its principal office at 20925 Crossroads
Circle, Wankesha, WI 53186, and the purchasers set forth on Exhibit A hereto
(individually a "Purchaser" and collectively the "Purchasers").
Purchase and Sale of Common Stock
Purchase and Sale of Common Stock. Each Purchaser, severally and not jointly,
agrees to purchase from the Company, and the Company agrees to issue and sell to
such Purchaser, the number of shares (the "Shares") of Common Stock, $0.04 par
value (the "Common Stock") of the Company set forth on opposite such Purchaser's
name on Exhibit A hereto. The purchase price for one Share of Common Stock (the
"Purchase Price") pursuant to this Agreement shall be $2.25.
Closing Date; Delivery
Closing Date. The completion of the purchase and sale of the Shares will be held
at such place and time agreed upon by the Company and the Purchasers (the
"Closing). The date of the Closing is hereinafter referred to as the "Closing
Date."
Delivery. At the Closing, the Company will deliver to each Purchaser the
certificates evidencing the Shares purchased by such Purchaser as shown on
Exhibit A and an opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach,
S.C., counsel to the Company, in the form of Exhibit B. Such delivery shall be
against payment of the Purchase Price for the Shares by wire transfer of
immediately available funds to the Company's bank account (in accordance with
instructions furnished by the Company).
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
Organization and Standing. The Company is a corporation duly organized and
validly existing under, and by virtue of, the laws of the State of Delaware and
is in good standing as a domestic corporation under the laws of said state, and
has the requisite corporate power and authority to own its properties and to
carry on its business as now being conducted. Other than as disclosed in the SEC
Documents (as defined below), the Company has no subsidiaries or direct or
indirect ownership in any firm, corporation or business which either,
individually or in the aggregate, is material to the business of the Company.
The Company is qualified to do business and is in good standing as a foreign
corporation in every jurisdiction in which its ownership of property or conduct
of business requires it so to be qualified and in which the
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failure to so qualify would have a material adverse effect on the financial
condition or business of the Company and its subsidiaries considered as a whole.
Corporate Power: Authorization. The Company has all requisite legal and
corporate power and authority and has taken all requisite corporate action to
duly authorize, execute and deliver this Agreement, to sell and issue the Shares
and to carry out and perform all of its obligations under and contemplated by
this Agreement. No action of the stockholders of the Company is required to
authorize the consummation of the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by an authorized officer of
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally and as limited by
equitable principles generally.
Issuance and Delivery. The Shares have been duly authorized, and, when issued
and delivered in compliance with this Agreement, will be duly and validly issued
and delivered and will be outstanding, fully paid, nonassessable, except as set
forth in Wisconsin Statutes Section 180.0622(b), as interpreted, and free and
clear of all pledges, liens, encumbrances and will conform to the description
thereof contained in the Registration Statement, as defined in Section 7.1
below, (or incorporated by reference therein). No preemptive rights, or other
rights to subscribe for or purchase, exist with respect to the issuance and sale
of the Shares by the Company pursuant to this Agreement. No stockholder of the
Company has any right (which has not been waived or has not expired by reason of
lapse of time following notification of the Company's intent to file the
Registration Statement) to require the Company to register the sale of any
securities owned by such holder under the Securities Act of 1933, as amended
(the "Securities Act"), in the Registration Statement. No further approval or
authority of the stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares to be sold by the Company as
contemplated herein.
SEC Documents Financial Statements; Subsequent Events. Except as set forth on
Schedule 3.4 hereto, the Company has filed in a timely manner all documents that
the Company was required to file with the Securities and Exchange Commission
("SEC") under Sections 13, 14(a) and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), during the twelve (12) months preceding
the date of this Agreement and all rules and regulations thereunder. Except as
set forth on Schedule 3.4 hereto, as of their respective filing dates, all
documents filed by the Company with the SEC (the "SEC Documents") complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as applicable and all
rules and regulations thereunder. Except as set forth on Schedule 3.4 hereto,
none of the SEC Documents contained, as of their respective dates, any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and such SEC
Documents, when read as a whole, do not contain any untrue statements of a
material fact and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles
consistently applied and fairly present the financial position of the Company
and any subsidiaries at the dates thereof and the results of the Company's
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal adjustments).
Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of
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the Company is required in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
Exempt Transactions. Subject to the accuracy of the Purchasers' representations
and warranties in Section 4 of this Agreement, the offer, sale and issuance of
the Shares in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act and from the registration or qualification requirements of the
laws of any applicable state or United States jurisdiction.
No Material Adverse Change. Except as otherwise disclosed herein, since June 30,
2000, there have not been any changes in the assets, liabilities, financial
condition, business or operations of the Company and its subsidiaries considered
as a whole from that reflected in the Financial Statements except changes in the
ordinary course of business which have not been, either individually or in the
aggregate, materially adverse.
Intellectual Property. The Company to its knowledge owns or possesses adequate
rights to use all patents, patent rights, inventions, trademarks, trade names,
copyrights, licenses, governmental authorizations, trade secrets and know-how
that are used or necessary for the conduct of its business as described in the
SEC Documents; except as described in the SEC Documents, neither the Company nor
any of its subsidiaries has received any notice of, or has any knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent right, invention, trademarks, trade names, copyrights, licenses,
governmental authorizations, trade secret or knowhow that, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company and its subsidiaries considered
as a whole.
Authorized Capital Stock. The authorized capital stock of the Company conforms,
as of the dates for which such information is given, in all material respects to
the statements relating thereto contained in the SEC Documents. The issued and
outstanding shares of capital stock of the Company have been duly authorized,
validly issued and are fully paid and nonassessable; except as set forth or
referred to in the SEC Documents, no warrants, options or other rights to
purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company. All of the above
securities of the Company were issued in compliance with all applicable federal
and state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. No
holder of any security of the Company is entitled to any preemptive or similar
rights to purchase any securities of the Company.
Litigation. There are no actions, suits, proceedings or investigations pending
or, to the best of the Company's knowledge, threatened against the Company or
any of its properties before or by any court or arbitrator or any governmental
body, agency or official in which there is a reasonable likelihood (in the
judgment of the Company) of an adverse decision that (a) would have a material
adverse effect on the Company's properties or assets or the business of the
Company as presently conducted or proposed to be conducted or (b) would impair
the ability of the Company to perform in any material respect its obligations
under this Agreement. The Company is not in default with respect to any
judgment, order or decree of any court or governmental agency or instrumentality
which, individually or in the aggregate, would have a material adverse effect on
the assets, properties or business of the Company and its subsidiaries
considered as a whole.
Preemptive and Registration Rights. There are no preemptive rights, rights of
first refusal, repurchase rights or any other right of the Company or any third
party as to the Shares which have not been satisfied
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or waived, and except as provided in this Agreement, the Company has not granted
or agreed to grant any registration rights that would be applicable to the
registration for resale of the Shares pursuant to the Registration Statement, as
defined in and contemplated by Section 7.1 hereof, to any person or entity which
have not been satisfied or waived.
Compliance With Other Instruments. The business and operations of the Company
have been and are being conducted in accordance with all applicable laws, rules
and regulations of all governmental authorities, except for such violations of
applicable laws, rules and regulations which would not, individually or in the
aggregate, have a material adverse effect on the assets, properties, financial
condition or business of the Company and its subsidiaries considered as a whole.
Neither the execution and delivery of, nor the performance or compliance with,
this Agreement and the transactions contemplated hereby, will, with or without
the giving of notice or the passage of time, (i) result in any breach of, or
constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to, any agreement
or other instrument to which the Company is a party or by which it or any of its
properties, assets or rights is bound or effected, except for such breach or
default or the imposition of any such lien or encumbrance which, either
individually or in the aggregate, would not have a material adverse effect on
the assets, properties, financial condition or business of the Company and its
subsidiaries considered as a whole or (ii) violate the Certificate of
Incorporation or Bylaws of the Company, or any law, rule regulation, judgment,
order or decree. The Company is not in violation of its Certificate of
Incorporation or Bylaws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement,
except for such defaults which would not, individually or in the aggregate, have
a material adverse effect on the assets, properties, financial condition or
business of the Company and its subsidiaries considered as a whole, or subject
to any restriction which would prohibit the Company from entering into or
performing its obligations under the Agreement.
Brokers or Finders. No person, firm or corporation has or will have, as a result
of any act or omission of the Company, any right, interest or valid claim
against the Purchasers for any commission, fee or other compensation as a finder
or broker in connection with the transactions contemplated by this Agreement.
Compliance with Environmental Laws. Except as disclosed in the SEC Documents,
the Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety which would,
individually or in the aggregate, have a material adverse effect on the assets,
properties, financial condition or business of the Company and its subsidiaries
considered as a whole, and, to the best of the Company's knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation. To the best of the Company's knowledge, the Company
does not have any material liability to any governmental authority or other
third party arising under or as a result of any such past or existing statute,
law or regulation.
No Implied Representations. All of the Company's representations and warranties
are contained in this Agreement and no other representations or warranties by
the Company shall be implied.
Contracts. The contracts so described in the SEC Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would, individually or in the
aggregate, not have a material adverse effect on the business, properties or
assets of the Company and its subsidiaries considered as a whole, and neither
the Company nor any of its subsidiaries, nor to the Company's knowledge, any
other party is in breach of or default under any of such contracts.
Properties. The Company has good and marketable title to all the properties and
assets reflected as owned in the financial statements included in the SEC
Documents, subject to no lien, mortgage, pledge, charge
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or encumbrance of any kind except (i) those, if any, reflected in such financial
statements, or (ii) those which are not material in amount and do not adversely
affect the use made and promised to be made of such property by the- Company and
its subsidiaries. The Company and any applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company and the
subsidiaries considered as a whole. Except as disclosed in the SEC Documents,
the Company owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted.
Compliance. The Company has not been advised, and has no reason to believe, that
either it or any of its subsidiaries is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting business; except where failure to be so in compliance would not
materially adversely affect the condition (financial or otherwise), business,
results of operations or prospects of the Company and its subsidiaries
considered as a whole.
Taxes. The Company and its subsidiaries have filed all necessary federal, state
and foreign income and franchise tax returns and have paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened against the Company or its
subsidiaries which could have a material adverse effect on the business,
operations or properties of the Company and its subsidiaries considered as a
whole.
Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchasers hereunder will be, or will
have been, fully paid or provided for by the Company and all laws imposing such
taxes will be or will have been complied with fully.
Investment Company. The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Insurance. Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including,
but not limited to, insurance covering all real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
Contributions. Neither the Company nor any of its subsidiaries has, directly or
indirectly, at any time during the last five years (i) made any unlawful
contribution to any candidate for public office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
Nasdaq Listing. The Company's Common Stock is listed on the Nasdaq National
Market.
Preferred Share Purchase Right. The consummation of the transactions
contemplated by this Agreement will not cause the preferred stock purchase right
made as a dividend to the Company's stockholders on April 24, 1997, or any
similar arrangement or right, to become exercisable by the holders of such
rights or in any way effect the exercisability of such rights.
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Representations, Warranties and Covenants of the Purchasers
Each Purchaser, severally and for itself only, hereby represents and warrants to
the Company as follows: Authorization. (i) The Purchaser has all requisite legal
and corporate or other power and capacity and has taken all requisite corporate
or other action to execute and deliver this Agreement, to purchase the Shares to
be purchased by it and to carry out and perform all of its obligations under
this Agreement; and (ii) this Agreement constitutes the legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally.
Investment Experience. The Purchaser is an "accredited investor" as defined in
Rule 501 (a) under the Securities Act. The Purchaser is aware of the Company's
business affairs and financial condition and has had access to and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Shares. The Purchaser has such business and financial
experience as is required to give it the capacity to protect its own interests
in connection with the purchase of the Shares.
Investment Intent. The Purchaser is purchasing the Shares for its own account as
principal, for investment purposes only, and not with a present view to, or for,
resale, distribution or fractionalization thereof, in whole or in part, within
the meaning of the Securities Act. The Purchaser understands that its
acquisition of the Shares has not been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of the Purchaser's investment intent as expressed herein. The
Purchaser has completed or caused to be completed the Purchaser Questionnaire
attached hereto as Appendix I for use in preparation of the Registration
Statement (as defined below), and the responses provided therein shall be true
and correct as of the Closing Date and will be true and correct as of the
effective date of the Registration Statement. The Purchaser will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares, except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder.
Registration or Exemption Requirements. The Purchaser further acknowledges and
understands that the Shares may not be resold or otherwise transferred except in
a transaction registered under the Securities Act or unless an exemption from
such registration is available. The Purchaser understands that the
certificate(s) evidencing the Shares will be imprinted with a legend in
substantially the form set forth in Section 8.2.
Restriction on Short Sales. The Purchaser represents and warrants to and
covenants with the Company that the Purchaser has not engaged and will not
engage in any short sales of the Company's Common Stock prior to the
effectiveness of the Registration Statement, except to the extent that any such
short sale is fully covered by shares of Common Stock of the Company owned by
such Purchaser other than the Shares.
No Current Ownership. Immediately following the Closing the Purchasers shall not
beneficially own (within the meaning o Rule 13d-3 promulgated under the Exchange
Act), other than the Shares acquired pursuant to and in accordance with the
terms of this Agreement.
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Conditions to Closing of Purchasers
The obligation of each Purchaser to purchase the Shares at the Closing is
subject to the fulfillment as of the Closing Date of the following conditions.
Representations and Warranties. The representations and warranties made by the
Company in Section 3 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on and as of said
date.
Covenants. All covenants, agreements and conditions contained in this Agreement
to be performed by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects.
Compliance Certificate. The President or Chief Financial Officer of the Company
shall have delivered to the Purchasers a certificate, dated as of the Closing
Date, certifying that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled and stating that since June 30, 2000, there shall have been no
material adverse change in the assets, liabilities, financial condition,
business or operations of the Company from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either individually or in the aggregate, materially adverse.
Legal Opinion of Company Counsel. Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, S.C., counsel to the Company, shall have delivered a legal opinion,
addressed to the Purchaser, in the form attached as Exhibit B hereto.
Closing Date. The Closing shall have occurred on or prior to November 18, 2000.
Secretary's Certificate. The Secretary of the Company shall have delivered to
the Purchasers a certificate, dated as of the Closing Date, certifying as to (i)
the authenticity and continuing validity of the Company's Certificate of
Incorporation and Bylaws; (ii) the authenticity of the resolutions authorizing
the transactions contemplated by this Agreement; (iii) the legal existence and
good standing of the Company in Delaware and in each other jurisdiction in which
its failure to be qualified as a foreign corporation would have a material
adverse effect on the financial condition or business of the Company and its
subsidiaries considered as a whole; and (iv) the incumbency of the officers of
the Company.
Board Composition. Immediately prior to the Closing, the Board of Directors of
the Company shall consist of four directors, with the following persons being
duly elected as directors: Karsten Houm (Chairman), Emil H. Soika, Milton
Datsopoulos, and N.C. Joseph Lai. As of Closing, the Board of Directors of the
Company shall be expanded to five directors, with Jeffrey T. Barnes being
elected to fill the vacancy.
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares at the Closing to a
Purchaser is subject to the fulfillment or waiver of the following conditions:
Representations and Warranties. The representations and warranties made by such
Purchaser in Section 4 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on and as of such
date.
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Covenants. All covenants, agreements and conditions contained in this Agreement
to be performed by such Purchaser on or prior to the Closing Date shall have
been performed or complied with in all material respects.
Payment of Purchase Price. The Purchasers shall have tendered the Purchase Price
at the Closing.
Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
Registration Requirements.
The Company shall, subject to receipt of necessary information from the
Purchasers, prepare and file a registration statement with the SEC under the
Securities Act as soon as reasonably practicable after the Closing, but in any
event within 45 days of the Closing, to register the resale of the Shares by the
Purchasers, and the Company shall use its best efforts to secure the
effectiveness of such registration statement as soon as reasonably practicable
thereafter. For purposes hereof, the term "Registration Statement" shall refer
to any and all registration statements filed for the purpose of registering the
Shares, including any prospectus(es) constituting a part thereof and together
with any amendments and supplements thereto.
The Company shall pay all Registration Expenses (as defined below) in connection
with any registration, qualification or compliance hereunder, and the Purchaser
shall pay all Selling Expenses (as defined below) and other expenses that are
not Registration Expenses relating to the Shares resold by the Purchasers.
"Registration Expenses" shall mean all expenses, except for Selling Expenses,
incurred by the Company in complying with the registration provisions herein
described, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration. "Selling Expenses"
shall mean all selling commissions, underwriting fees and stock transfer taxes,
if any, applicable to the Shares.
In the case of the registration effected by the Company pursuant to these
registration provisions, the Company will use its best efforts to: (i) keep such
registration effective until the earlier of (A) the fourth anniversary of the
Closing Date, (B) such date as all of the Shares have been resold or (C) such
time as all of the Shares held by the Purchasers can be sold within a given
three-month period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144(k) (or any similar rule then in effect);
(ii) prepare and file with the SEC such amendments and post-effective amendments
to the Registration Statement as may be necessary to keep the Registration
Statement effective for the applicable period specified in this Section 7.1(c);
(iii) cause the related prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; (iv) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the sellers thereof set
forth in the Registration Statement as so amended or such prospectus as so
supplemented; (v) furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Purchaser from time to time may reasonably request, and the Company hereby
consents to the use of such prospectus or each amendment and supplement thereto
by each of the selling holders of the Shares and the underwriters, if any, in
connection with the offering and sale of the Shares covered by such prospectus
or any amendment or supplement thereto; (vi) cause the Shares to be listed on
each securities exchange and quoted on each quotation service on which similar
securities issued by the
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Company are then listed or quoted and maintain the listing of the Shares; (vii)
provide a transfer agent and registrar for all the Shares registered pursuant to
the Registration Statement and a CUSIP number for all such Shares; (viii)
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC; and (ix) file the documents required of the Company and
otherwise use its best efforts to maintain requisite blue sky clearance in (A)
all jurisdictions in which any of the Shares are originally sold and (B) all
other states specified in writing by a Purchaser, provided as to clause (B),
however, that the Company shall not be required to qualify to do business or
consent to service of process in any state in which it is not now so qualified
or has not so consented.
The Company shall furnish to each Purchaser upon request a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
in order to facilitate the public sale or other disposition of all or any of the
Shares held by such Purchaser.
With a view to making available to the Purchasers the benefits of Rule 144
promulgated under the Securities Act ("Rule 144") and any other rule or
regulation of the SEC that may at any time permit a Purchaser to sell the Shares
to the public without registration or pursuant to a registration on Form S-3,
the Company covenants and agrees to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144, until the
earlier of (A) the fourth anniversary of the effective date of the Registration
Statement, (B) such date as all of the Shares shall have been resold, or (C)
such time as all of the Shares held by the Purchasers can be sold within a given
six-month period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144(k) (or any similar rule then in effect);
(ii) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and Exchange Act; and (iii)
furnish to each Purchaser upon request, as long as such Purchaser owns any
Shares, (A) a written statement by the Company that it has complied with the
reporting requirements of the Securities Act and the Exchange Act, (B) a copy of
the most recent annual or quarterly report of the Company, and (C) such other
information as may be reasonably requested in order to avail a Purchaser of any
rule or regulation of the SEC that permits the selling of any such Shares
without registration or pursuant to such Form S-3.
The Company shall notify each Purchaser, if such Purchaser has registered Shares
in a Registration Statement which remain unsold, and (if requested by such
Purchaser) confirm such notice in writing, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other federal
or state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to the Registration
Statement or related prospectus or for additional information relating to the
Registration Statement, (iii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event which makes any
statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in the
Registration Statement or prospectus so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the prospectus,
it will not contain any untrue statement of a material fact or omit to state any
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and (vi) of the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate.
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The Company may, upon written notice to the Purchasers of (i) the happening of
any event of the kind described in Section 7.1(f)(ii), 7.1(f)(iii), 7.1(f)(iv),
7.1(f)(v) or 7.1(f)(vi) hereof or (ii) that, in the judgment of the Company's
Board of Directors, it is advisable to suspend use of the prospectus for a
discrete period of time due to pending corporate developments, public filings
with the SEC or similar events, discontinue disposition of Shares covered by the
Registration Statement or prospectus until copies of the supplemented or amended
prospectus contemplated by Section 7.1(i) hereof are distributed to the
Purchasers, or until the Purchasers are advised in writing by the Company that
the use of the applicable prospectus may be resumed, and the Purchasers have
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such prospectus. The Company shall not
suspend use of a prospectus or Registration Statement under this Section 7.1 (g)
for more than 45 days at a time and more than twice in any 12-month period. Any
period for which use of a prospectus or Registration Statement is suspended
under this Section 7.1 (g) shall be added to the time for which the Company is
required to maintain the effectiveness of such Registration Statement, including
the prospectus constituting a part thereof, under Section 7.1(c).
The Company shall use every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Shares for sale in any jurisdiction, at the earliest possible moment.
The Company shall, upon the occurrence of any event contemplated by Section
7.1(f)(v) or 7.1(f)(vi) above, prepare a supplement or post-effective amendment
to the Registration Statement or a supplement to the related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Shares being sold
thereunder, such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Indemnification and Contribution.
The Company agrees to indemnify and hold harmless the Purchasers from and
against any losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) to which the Purchasers may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any prospectus (preliminary or
final), as amended on the applicable date thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or arise out of any failure by the Company to fulfill any undertaking included
in the Registration Statement or any prospectus (preliminary or final), as
amended on the applicable date thereof, and the Company will, as incurred,
reimburse the Purchasers for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises out of, or is
based upon (i) an untrue statement or an omission made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Purchaser specifically for use in
preparation of the Registration Statement, or (ii) any untrue statement or the
omission of a material fact in any prospectus that is corrected in any
subsequent prospectus that was delivered to a Purchaser prior to the pertinent
sale or sales by such Purchaser.
Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless
the Company from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which
<PAGE>
-11-
the Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) an untrue statement or an
alleged untrue statement of a material fact made in such Registration Statement
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser specifically for use in preparation of
the Registration Statement, provided, however, that a Purchaser shall not be
liable in any such case for any untrue statement or alleged untrue statement or
the omission or alleged omission that has been corrected, in writing, by such
Purchaser, delivered to the Company before the sale from which such loss
occurred, or (ii) any untrue statement or alleged untrue statement or the
omission or alleged omission in any prospectus that is corrected in any
subsequent prospectus that was delivered to a Purchaser prior to the pertinent
sale or sales by such Purchaser, and such Purchaser, severally and not jointly,
will, as incurred, reimburse the Company for ally legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that each Purchaser's
indemnification obligation shall be limited to the net proceeds received from
its sale of the Shares.
Promptly after receipt by any indemnified person of a notice of a claim or the
beginning of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 7.2, such indemnified person shall
notify the indemnifying person in writing of such claim or of the commencement
of such action, and, subject to the provisions hereinafter stated, in case any
such action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof; provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.
If the indemnification provided for in this Section 7.2 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as the result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
a Purchaser on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Purchasers agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), a Purchaser shall not be required to
contribute any
<PAGE>
-12-
amount in excess of the amount by which the net amount received by such
Purchaser from the sale of the Shares to which such loss relates exceeds the
amount of any damages which such Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11 (f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each
Purchaser's obligations in this subsection (d) to contribute is several in
proportion to its sale of Shares to which such loss relates and not joint.
The obligations of the Company and the Purchasers under this Section 7.2 shall
be in addition to any liability which the Company and the Purchasers may
otherwise have and shall extend, upon the same terms and conditions, to
directors, officers, employees and agents of the Company and the Purchasers and
to each person, if any, who controls the Company or any Purchaser within the
meaning of the Act.
Restrictions on Transferability of Shares; Compliance with Securities Act
Restrictions on Transferability. The Shares shall not be transferable in the
absence of a registration under the Securities Act or an exemption therefrom or
in the absence of compliance with any term of this Agreement.
Restrictive Legend. Each certificate representing the Shares shall bear
substantially the following legends (in addition to any legends required under
applicable securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IS OBTAINED
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. ADDITIONALLY, THE
TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO CERTAIN
RESTRICTIONS SPECIFIED IN THE PURCHASE AGREEMENT DATED OCTOBER 17, 2000
BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF THE
SECURITIES SHALL BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH
RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF THESE SECURITIES WILL HAVE
AGREED TO BE BOUND BY CERTAIN OF THE TERMS OF THE AGREEMENT, INCLUDING
SECTIONS 7.1 AND 8.3 THEREOF. COPIES OF THE PURCHASE AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE REGISTERED HOLDER OF
THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.
Transfer of Shares After Registration. Each Purchaser hereby covenants with the
Company not to make any sale of the Shares except either (i) in accordance with
the Registration Statement, in which case such Purchaser covenants to comply
with the requirement of delivering a current prospectus, or (ii) in accordance
with Rule 144, in which case Purchaser covenants to comply with Rule 144, or
(iii) in accordance with another exemption from the registration requirements of
the Securities Act. The legend set forth in Section 8.2 will be removed from a
certificate representing the Shares following and in connection with any sale of
the Shares pursuant to subsection (i) or (ii) hereof, but not in connection with
any sale of Shares pursuant to subsection (iii) hereof, and also will be removed
at such time that the Shares may be sold under Rule 144(k) without restriction
as to volume and manner of sale.
<PAGE>
-13-
Purchaser Information. Each Purchaser covenants that it will promptly notify the
Company of any changes in the information set forth in the Registration
Statement regarding such Purchaser, under the heading "Selling Stockholders" or
elsewhere, or such Purchaser's "Plan of Distribution."
Miscellaneous
Waivers and Amendments. Neither this Agreement nor any provisions hereof shall
be waived, modified, changed or discharged or terminated except by an instrument
in writing signed by the party against whom any waiver, modification, change,
discharge or termination is sought.
Broker's Fee. Each of the parties hereto hereby represents that, on the basis of
any actions and agreements by it, there are no other brokers or finders entitled
to compensation in connection with the sale of the Shares to the Purchasers.
Governing Law. This Agreement shall be governed in all respects by and construed
in accordance with the laws of the State of Delaware without any regard to
conflicts of laws principles.
Survival. The representations, warranties, covenants and agreements made in this
Agreement shall survive any investigation made by the Company or the Purchasers
and the Closing.
Successors and Assigns. The provisions hereof shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and administrators of
the parties to this Agreement.
Entire Agreement. This Agreement, including all exhibits, schedules and
appendices hereto constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
Notices, etc. All notices and other communications required or permitted under
this Agreement shall be effective upon receipt and shall be in writing and may
be delivered in person, by telecopy, overnight delivery service or registered or
certified United States mail, addressed to the Company or the Purchaser, as the
case may be, at their respective addresses set forth at the beginning of this
Agreement or on Exhibit A, or at such other address as the Company or the
Purchaser shall have furnished to the other party in writing. All notices and
other communications shall be effective upon the earlier of actual receipt
thereof by the person to whom notice is directed or (i) in the case of notices
and communications sent by personal delivery or telecopy, one business day after
such notice or communication arrives at the applicable address or was
successfully sent to the applicable telecopy number, (ii) in the case of notices
and communications sent by overnight delivery service, at noon (local time) on
the second business -day following the day such notice or communication was
sent, and (iii) in the case of notices and communications sent by United States
mail, seven days after such notice or communication shall have been deposited in
the United States mail.
Severability of this Agreement. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
<PAGE>
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Further Assurances. Each party to this Agreement shall do and perform or cause
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
the other party hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
Expenses. The Company and each the Purchaser shall bear its own expenses
incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby.
Currency. All references to "dollars" or "$" in this Agreement shall be deemed
to refer to United States dollars.
(Remainder of page intentionally left blank)
<PAGE>
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The foregoing agreement is hereby executed as of the date first above written.
"COMPANY"
CRITICARE SYSTEMS, INC., a Delaware corporation
By: /s/ Emil H. Soika
Title: President/CEO
"PURCHASERS"
OXFORD BIOSCIENCE PARTNERS III L.P.
By: OBP Management III L.P.
By: /s/ Jeffrey T. Barnes
General Partner
OXFORD BIOSCIENCE PARTNERS (BERMUDA) III
LIMITED PARTNERSHIP
By: OBP Management III (Bermuda) Limited
Partnership
By: /s/ Jeffrey T. Barnes
General Partner
mRNA FUND L.P.
By: mRNA PARTNERS L.P.
By: /s/ Jonathan J. Fleming
General Partner
<PAGE>
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<TABLE>
<CAPTION>
EXHIBIT A
SCHEDULE OF INVESTORS
No. of Shares
of Common
Name and Address Stock Purchase Price
-------------------------------------------------------------------------------------------
<S> <C> <C>
Oxford Bioscience Partners III L.P. 1,547,529 $3,481,940.25
31 St. James Ave., Ste. 905
Boston, MA 02116
Oxford Bioscience Partners (Bermuda) III Limited 220,555 $496,248.75
Partnership
31 St. James Ave., Ste. 905
Boston, MA 02116
mRNA Fund L.P. 18,189 $40,925.25
31 St. James Ave., Ste. 905
Boston, MA 02116
</TABLE>
