1
EXHIBIT 99.3
CONVERTIBLE DEBENTURE ESCROW AGREEMENT
THIS AGREEMENT is made as of the 31st day of January, 1997 by
and between CRITICARE SYSTEMS, INC., with its principal office at 00000
Xxxxxxxxxx xxxxxx, Xxxxxxxx, XX 00000 (hereinafter the "Company"), PARESCO,
INC., with its principal office at 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, XX 00000
(hereinafter the "Purchaser") and XXXXXXX X. XXXXXXXXX, P.C., 00 Xxxxxxxx, 00xx
Xx., Xxx Xxxx, XX 00000 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Purchaser will be purchasing Debentures (the
"Securities") from the Company at a purchase price as set forth in a Convertible
Debenture Purchase Agreement (the "Subscription Agreement") signed by the
Company and Purchaser; and
WHEREAS, it is intended that the purchase of Securities be
consummated in accordance with the requirements set forth by Regulation D
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company has requested that the Escrow Agent hold
the funds of Purchaser in escrow until the Escrow Agent has received the
Securities. The Escrow Agent will then immediately wire transfer or otherwise
deliver at the Company's discretion immediately available funds to the Company's
account and arrange for delivery of the Securities to Purchaser as per the
Purchaser's instructions.
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1 The parties hereby agree to establish an escrow account
with the Escrow Agent whereby the Escrow Agent shall hold the funds for the
purchase of the Securities.
1.2 Upon Escrow Agent's receipt of funds into its attorney
trustee account, it shall notify the Company, or the Company's designated
attorney or agent, of the amount of funds it has received into its account.
1.3 The Company, upon receipt of said notice and acceptance of
Convertible Debenture Purchase Agreement, as evidenced by the Company's
execution thereof, shall deliver to the Escrow Agent the Securities being
purchased. Escrow Agent shall then communicate with the Company to confirm the
validity of its issuance.
1.4 Once Escrow Agent confirms the validity of the issuance of
the Securities, he shall immediately wire that amount of funds necessary to
purchase the Securities per the written instructions of the Company. The Company
will furnish Escrow Agent with a "Net Letter" to Escrow Agent directing payment
of legal fees and fees of placement agent, with the balance payable to the
Company. Once the funds have been received per the Company's instructions, the
Escrow Agent shall then arrange to have the Securities delivered as per
instructions from the Purchaser.
1.5 This Agreement may be altered or amended only with the
consent of all of the parties hereto. Should the Company or Purchaser attempt to
change this Agreement in a manner which, in the Escrow Agent's discretion, shall
be undesirable, the Escrow Agent may resign as Escrow Agent by notifying the
Company
2
and the Purchaser in writing. In the case of the Escrow Agent's resignation or
removal pursuant to the foregoing, its only duty, until receipt of notice from
the Company and the Purchaser or its agent that a successor escrow agent shall
have been appointed, shall be to hold and preserve the funds. Upon receipt by
the Escrow Agent of said notice from the Company and the Purchaser of the
appointment of a successor escrow agent, the name of a successor escrow account
and a direction to transfer the funds, the Escrow Agent shall promptly
thereafter transfer all of the funds held in escrow to said successor escrow
agent. Immediately after said transfer, the Escrow Agent shall furnish the
Company and the Purchaser with proof of such transfer. The Escrow Agent is
authorized to disregard any notices, requests, instructions or demands received
by it from the Company or the Purchaser after notice of resignation or removal
shall have been given, unless the same shall be the aforementioned notice from
the Company and the Purchaser to transfer the funds to a successor escrow agent
or to return same to the respective parties.
1.6 The Escrow Agent shall be reimbursed by the Company and
the Purchaser for any reasonable expenses incurred in the event there is a
conflict between the parties and the Escrow Agent shall deem it necessary to
retain counsel.
1.7 The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith in accordance with the advice of the Escrow
Agent's counsel; and in no event shall the Escrow Agent be liable or responsible
except for the Escrow Agent's own gross negligence or willful misconduct.
1.8 The Company and the Purchaser warrant to and agree with
the Escrow Agent that, unless otherwise expressly set forth in this Agreement:
(i) there is no security interest in the Securities
or any part thereof;
(ii) no financing statement under the Uniform
Commercial Code is on file in any jurisdiction
claiming a security interest or in describing
(whether specifically or generally) the Securities or
any part thereof; and
(iii) the Escrow Agent shall have no responsibility
at any time to ascertain whether or not any security
interest exists in the Securities or any part thereof
or to file any financing statement under the Uniform
Commercial Code with respect to the Securities or any
part thereof.
1.9 The Escrow Agent has no liability hereunder to either
party other than to hold the funds and to deliver them under the terms hereof.
Each party hereto agrees to indemnify and hold harmless the Escrow Agent from
and with respect to any suits, claims, actions or liabilities arising in any way
out of this transaction including the obligation to defend any legal action
brought which in any way arises out of or is related to this Escrow.
ARTICLE 2
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.
2.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
2
3
(i) Criticare Systems, Inc.
00000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Von Der Ruhr
(fax) (000) 000-0000
copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxxxx XxxXxxxxx Xxxxxx & Xxxxxxxxxx, S.C.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing;
(b) if to the Purchaser, to
Paresco, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
copy to:
Xxxxxxx X. Xxxxxxxxx, P.C.
00 Xxxxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
2.3 This Agreement shall be binding upon and shall inure to
the benefit of the permitted successors and assigns of the parties hereto.
2.4 This Agreement is the final expression of, and contains
the entire Agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
2.5 Whenever required by the context of this Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
2.6 The Company acknowledges and confirms that it is not being
represented in a legal capacity by Xxxxxxx X. Xxxxxxxxx, P.C. and it has had the
opportunity to consult with its own legal advisors prior to the signing of this
Agreement.
2.7 The parties hereto expressly agree that this Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Any action to enforce, existing out of,
or relating in any way to, any provisions of this Agreement shall be brought
through the American Arbitration Association at the designated locale of New
York, New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 31st day of January, 1997.
3
CRITICARE SYSTEMS, INC.
By /s/ Xxxxxxx X. Von der Ruhr
-----------------------------
Officer - President
PURCHASER:
PARESCO, INC.
By /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Officer - Director of Operations
XXXXXXX X. XXXXXXXXX, P.C.,
ESCROW AGENT
By /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxxx
