1
SCHEDULE 14A
(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 (AMENDMENT NO. )
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)
CRITICARE SYSTEMS, INC.
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
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 10, 1995 at 3:30 p.m. for the following purposes:
1. To elect one (1) director.
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, 1996.
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 11, 1995
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 13, 1995
3
CRITICARE SYSTEMS, INC.
20925 CROSSROADS CIRCLE
WAUKESHA, WISCONSIN 53186
PROXY STATEMENT FOR 1995 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 10, 1995, 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 13, 1995.
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 1996 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 11, 1995 are entitled to vote at the Annual Meeting. On that date, the
only outstanding shares of capital stock of the Company were 6,712,218 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 term of one director expires at the Annual
Meeting. Accordingly, the Board of Directors has nominated Milton Datsopoulos
for reelection as a director, to serve a term of three years, until the 1998
Annual Meeting of Stockholders. There are currently three vacancies on the Board
of Directors. The
1
4
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 person nominated by the Board of Directors is an
incumbent director. The Company anticipates that the nominee will be a candidate
when the election is held. However, if for any reason the 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. Milton Datsopoulos attended two meetings of the Board of
Directors in fiscal 1995. All other 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF MILTON DATSOPOULOS AS A DIRECTOR 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.
Prior to February 16, 1995, the members of the Audit Committee were Karsten Houm
and Monroe E. Trout, M.D. Dr. Trout resigned as a director on February 16, 1995.
The Audit Committee met one time during the fiscal year ended June 30, 1995. 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, 1995.
NOMINEE FOR ELECTION AS DIRECTOR
MILTON DATSOPOULOS
Age: 55; Elected Director: 1986; Present Term Ends: 1995 Annual Meeting
Mr. Datsopoulos has been a partner in the law firm of Datsopoulos,
MacDonald & Lind in Missoula, Montana since 1974. Mr. Datsopoulos is also a
director of Montana Naturals Int'l, Inc., a manufacturer of natural food
products and nutritional supplements.
2
5
OTHER DIRECTORS
GERHARD J. VON DER RUHR
Age: 54; 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: 53; 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: 49; Elected Director: 1985; Present Term Ends: 1996 Annual Meeting
Mr. Houm has served as President of Unitor, a Norwegian shipping company,
since September 1985.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
NAME TITLE AGE
- ---------------------- ---------------------------------------------------- ---
Gerhard J. Von der Ruhr Chairman of the Board, President and Treasurer 54
N.C. Joseph Lai Senior Vice President, Vice Chairman of the Board, 53
Secretary
Stephen D. Okland Vice President--Alternate Care 53
Richard J. Osowski Senior Vice President--Finance, Assistant Secretary 58
Hershel Q. Peddicord Senior Vice President--Sales, Marketing and 45
Engineering
Michael T. Larsen Vice President--Quality Control/Quality Assurance 36
The terms of office and past business experiences of Mr. Von der Ruhr and
Dr. Lai are described above.
Mr. Okland served the Company 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 rejoined 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 1, 1990.
3
6
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all section 16(a) forms they file.
Based solely on a 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 1995 all section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
4
7
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, 1995 to or on behalf of the Chief Executive Officer, the two most
highly paid senior executive officers, other than the CEO and an additional
officer who resigned during the fiscal year ended June 30, 1995 but who would
have been included in the table had he been employed during the entire fiscal
year. No other officer had total salary and bonus in excess of $100,000 for the
1995 fiscal year. The persons listed below are sometimes referred to herein as
the "named executive officers."
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------- ---------------------
OTHER AWARDS:
NAME AND ANNUAL SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) OPTIONS/SARS(#) COMPENSATION($)
- -------------------------- ---- --------- ----------- ------------------ --------------------- ---------------
Gerhard J. Von der Ruhr, 1995 132,600 -- 957 -- 51,266(3)
Chairman of the Board, 1994 141,732 28,240 635 -- 45,982
President (CEO), 1993 159,996 -- 570 -- 21,804
Treasurer
Stephen D. Okland, 1995 258,627 -- 6,000 -- 2,724(4)
Vice President-- 1994 237,357 -- 6,000 3,500 4,007
Alternate Care 1993 169,770 -- 6,000 20,000 2,997
Richard J. Osowski, 1995 95,004 -- 957 -- 18,739(5)
Senior Vice President-- 1994 95,004 28,090 957 90,000 16,253
Finance, Assistant 1993 95,004 -- 770 20,000 2,047
Secretary
Michael R. Davis, 1995 115,390(6) -- 6,000 -- 439(7)
Former Vice President-- 1994 111,416 -- 6,409 30,000 408
Hospital Sales 1993 -- -- -- -- --
- ---------------
(1) Bonus earned upon achievement of performance objectives. See "Compensation
Committee Report."
(2) The amounts represent automobile allowance payments.
(3) Represents $49,016 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 $2,250 of Company contributions to the 401(k) plan on
behalf of Mr. Von der Ruhr.
(4) Represents $474 of premiums paid by the Company on a life insurance policy,
the proceeds of which are payable to the beneficiary of Mr. Okland, and
$2,250 of Company contributions to the 401(k) plan on behalf of Mr. Okland.
(5) Represents $16,629 of premiums paid by the Company on a life insurance
policy, the proceeds of which are payable to the beneficiary of Mr. Osowski,
and $2,110 of Company contributions to the 401(k) plan on behalf of Mr.
Osowski.
(6) Mr. Davis resigned in April of 1995. The amount indicated reflects his
actual compensation received prior to his resignation.
(7) Represents premiums paid by the Company on a life insurance policy, the
proceeds of which are payable to the beneficiary of Mr. Davis.
5
8
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.
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 820,000 shares of Common Stock for issuance under
the Employee Stock Option Plan and 100,000 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 1994, options to purchase 618,600
shares were outstanding under the New Plans and options to purchase 254,150
shares were outstanding under the Old Plans. During fiscal 1995, options were
granted to purchase 421,500 shares of Common Stock under the New Plans at an
average per share exercise price of $2.07 (all options were granted at the
market price on the grant dates and none were granted to named executive
officers). In addition, during fiscal 1995, 242,950 shares of Common Stock at an
average per share exercise price of $2.15 were cancelled under the New Plans and
10,400 shares of Common Stock at an average per share exercise price of $2.26
were cancelled under the Old Plans and no options to purchase shares were
exercised. A total of 122,850 shares of Common Stock remain available for future
grants under the New Plans.
6
9
The following table shows the fiscal year-end value of unexercised options
held by the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
NUMBER OF SHARES OPTIONS AT FISCAL YEAR END(#) FISCAL YEAR END($)
ACQUIRED ON VALUE ------------------------------ ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ---------------- -------- ----------- ------------- ----------- -------------
Gerhard J. Von der Ruhr -- -- -- -- -- --
Stephen D. Okland -- -- 15,000 8,500 -- 1,203
Richard J. Osowski -- -- 45,000 95,000 10,313 30,938
Michael R. Davis -- -- -- -- -- --
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 1993, 1994 and 1995 fiscal years were approximately $46,000, $42,000 and
$40,000, respectively. Contributions made or accrued for named executive
officers are included under cash compensation in the Summary Compensation Table.
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
7
10
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 1995 salary and bonuses
for the executive officers at the Compensation Committee meeting on May 15,
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, 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 receives commissions based on the sales performance of
his 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
8
11
STOCK PERFORMANCE
The following table tracks the value of $100 invested on July 1, 1990 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 $60.48 at June 30, 1995 compared
to $152.16 for the S&P 500 and $201.92 for the NASDAQ Index:
CRITICARE SYSTEMS, INC.
STOCK PERFORMANCE COMPARED TO THE
S&P 500 AND THE NASDAQ INDEX
S&P 500 NASDAQ CSI
------- ------- -------
July 1, 1990............................................. $100.00 $100.00 $100.00
June 30, 1991............................................ $103.67 $102.95 $145.16
June 30, 1992............................................ $114.00 $126.24 $ 83.87
June 30, 1993............................................ $125.84 $152.27 $ 58.06
June 30, 1994............................................ $124.09 $152.71 $ 50.01
June 30, 1995............................................ $152.16 $201.92 $ 60.48
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.
Measurement Period
(Fiscal Year Covered) S&P 500 NASDAQ CSI
July 1, 1990 $ 100.00 $ 100.00 $ 100.00
June 30, 1991 $ 103.67 $ 102.95 $ 145.16
June 30, 1992 $ 114.00 $ 126.24 $ 83.87
June 30, 1993 $ 125.84 $ 152.27 $ 58.06
June 30, 1994 $ 124.09 $ 152.71 $ 50.01
June 30, 1995 $ 152.16 $ 201.92 $ 60.48
9
12
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:
NAME AND ADDRESS OF NUMBER OF
BENEFICIAL OWNER(1) SHARES OWNED PERCENT
----------------------------------------------- ------------- -------
Gerhard J. Von der Ruhr 555,075(2) 8.3%(2)
N.C. Joseph Lai 797,290(3) 11.9%(3)
Karsten Houm 41,065(4) *
Stephen D. Okland 15,000(5) *
Richard J. Osowski 81,250(6) 1.2%
Milton Datsopoulos 15,000(7) *
All directors and executive officers 1,562,930(8) %
(7 Persons)
- ---------------
* 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 by Helen Lai, Dr. Lai's wife.
(4) Includes 25,000 shares which Mr. Houm has a right to acquire under currently
exercisable options.
(5) Includes 15,000 shares Mr. Okland has a right to acquire under currently
exercisable options.
(6) Includes 45,000 shares Mr. Osowski has a right to acquire under currently
exercisable options.
(7) Includes 15,000 shares which Mr. Datsopoulos has a right to acquire under
currently exercisable options.
(8) Includes 133,000 shares of Common Stock the members of the group have a
right to acquire under options outstanding as of June 30, 1995.
CERTAIN TRANSACTIONS
On March 12, 1991, the Company entered into a preferred vendor relationship
with American Healthcare Systems (AmHS), a hospital purchasing group. Dr. Trout,
a former director and officer of the Company, is the Chief Executive Officer of
AmHS. In connection with this arrangement, the Company agreed to issue to AmHS
options to purchase shares of the Company's Common Stock. During 1994, the 1991
options were cancelled and the Company and AmHS entered into a revised agreement
pursuant to which the Company issued AmHS options to purchase 100,000 shares of
Common Stock at $2.00 per share, the market price on the date of the grant and
agreed to issue options to purchase up to an additional 50,000 shares in total
in 1995, 1996 and 1997, if certain purchase volumes are reached. The exercise
price of such additional options will be the last sale price reported on the
trading date prior to the grant date. During 1995, since the specified
10
13
purchase volumes were not reached, no options to purchase shares of Common Stock
were granted to AMHS pursuant to this Agreement.
The Company owns a minority interest in Immtech International, Inc.
("Immtech") which it acquired in fiscal 1989 for $500,000. 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 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. Since its
original investment, the Company also advanced additional funds to Immtech in
the total amount of $80,000. The Company has recognized investment losses
equivalent to the original investment in and advances to Immtech.
The Company, through its wholly-owned subsidiary Criticare Biomedical,
Inc., has agreed to purchase 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 pursuant to the terms
of a certain Purchase and Sale Agreement, as amended or to be amended. In
consideration of the Immtech stock and Note, the Company has agreed to issue to
the Sellers 333,154 shares of the Company's Common Stock and Criticare
Biomedical has agreed to issue 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 on the earlier of (a) the seventh anniversary of
the date of the note (anticipated to be on or about October 27, 1995); (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 has
also agreed to enter 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 has agreed to keep such
registration statement effective for a period of two years. 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.
The Company leases automobiles from U&G Leasing, which is owned by Mr. Von
der Ruhr and his wife, and from JH Leasing, which is owned by Dr. Lai and his
wife, and paid $39,252 and $15,441, respectively, to those entities during the
fiscal year ended June 30, 1995. 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, 1996.
Unless otherwise directed, the Proxy will be voted in favor of the ratification
of such appointment.
11
14
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 1996 ANNUAL MEETING
Any stockholder who desires to submit a proposal for the 1996 Proxy
Statement and Annual Meeting should submit the proposal in writing to Gerhard J.
Von der Ruhr, Chairman of the Board, Criticare Systems, Inc., 20925 Crossroads
Circle, Waukesha, Wisconsin 53186. The Company must receive a proposal by June
14, 1996 in order to consider it for inclusion in the 1996 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 1995 Annual Report of the Company accompanies this Proxy
Statement. A copy of the Company's Annual Report on Form 10-K for fiscal year
1995 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, 1995, and the
Company's Annual Report on Form 10-K for the year ended June 30, 1995, copies of
which are being delivered to each stockholder with this Proxy Statement.
12
15
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 13, 1995
13