EMPLOYMENT AGREEMENT


     THIS  EMPLOYMENT  AGREEMENT  (the  "Agreement")  is  made  this  1st day of
October,  1998,  by  and between CRITICARE SYSTEMS, INC., a Delaware corporation
(the  "Company"),  and  GLORIA  NAJERA  ("Employee").

                                    RECITALS

     A.     Employee  is  currently  employed  by  the  Company  as  its  Vice
President-Operations.

     B.     The  Company  desires  to  make  certain agreements with Employee in
order to induce Employee to remain in such employ and in exchange for Employee's
covenants  herein.

     C.     The  parties  desire  to evidence their agreement as to the terms of
the  Company's  employment  of  Employee.

                                    AGREEMENT

     In  consideration  of  the  mutual  covenants contained herein, the parties
hereby  agree  as  follows:

     1.     Employment.  The Company hereby continues its employment of Employee
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as  the  Company's  Vice  President-Operations, and Employee hereby accepts such
employment,  subject  to  the  provisions  of  this  Agreement.

     2.     Duties  and  Authority.  Employee shall be employed as the Company's
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Vice President-Operations.  Employee shall have such duties and authority as are
customary  for the Vice President-Operations of a publicly-held corporation with
similar  operations,  including  without  limitation,  such  specific management
duties  and  authority as the Company's Board of Directors may from time to time
reasonably  assign  Employee  consistent  with  the  foregoing  and  the  other
provisions  of  this  Agreement.  Employee  agrees to devote his entire business
time,  energy  and  skills  to  such employment.  However, it is understood that
Employee  shall  not  be required to devote more than an average of 50 hours per
calendar  week  to  such employment.  At all times, Employee shall be subject to
the  direction  of  the  Company's  Board  of  Directors  and  its  President.

<PAGE>
     3.     Compensation  and  Benefits.  Employee  shall  be  entitled  to  the
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following  compensation  and  benefits  for  services  rendered  to the Company:

          (a)     Base  Salary.  Employee  shall  receive  an annual base salary
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payable  in  equal installments not less frequently than monthly, which shall be
established  annually  (but  which  shall  not be reduced to less than the prior
year's  annual  salary  without  Employee's  written  consent)  ("Base Salary").

          (b)     Bonus  Plan.  Employee  shall  be  eligible to receive a bonus
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annually,  based  on  Employee's and the Company's financial performance, in the
discretion  of  the  Board  of  Directors.

          (c)     Expense  Reimbursements.  The Company shall reimburse Employee
                  -----------------------
for  actual out-of-pocket costs incurred for reasonable business expenses, other
than automobile expenses (which are covered in Section 3(d) ) in accordance with
the  policies  and  procedures  of  the  Company  in  effect  from time to time.

          (d)     Automobile Allowance.  Employee shall receive a Company car or
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car  allowance  subject  to  Company  policies  in effect from time to time with
respect  to  reimbursement  for  personal  use.

          (e)     Vacations.  Employee  shall  be  entitled to paid vacations of
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not  more  than  four weeks each calendar year, which may be taken in Employee's
discretion;  provided,  however,  that  such  vacation  shall  not  unreasonably
interfere  with  the  Company's  needs at such time.  Unused vacation time for a
calendar  year  shall  not  be  carried  over  from  one  year  to  the  next.

          (f)     Health Insurance.  Employee shall be entitled to family health
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insurance  coverage  under  the  Company's group plan on a premium-sharing basis
then  in  effect.

          (g)     Disability  Insurance.  Employee  shall  be  entitled  to
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participate  in  the Company's group disability insurance in effect from time to
time.

          (h)     Severance  Pay.
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               (i)     This  Agreement  may  be terminated by the Company at any
time  for  "Cause,"  and in such event Employee shall not be entitled to receive
any  further  compensation.  For  purposes  of  this Agreement, the term "Cause"
shall  mean  acts  of  fraud,  repeated  material  misconduct,  or  intentional

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<PAGE>
dishonesty  by Employee in the course of Employee's employment with the Company,
or  the  commission  of  a  felony.

               (ii)     In  the  event  that  Employee  voluntarily  terminates
Employee's  employment by the Company, Employee shall not be entitled to receive
any  further compensation; provided, however, that if such voluntary termination
occurs  at  any time after Employee has completed three (3) months of employment
by  the  Company  after  the  occurrence  of a Change in Control (as hereinafter
defined), Employee shall be entitled to receive severance benefits consisting of
Employee's  Base  Salary plus the amount which the Company pays for group health
insurance  benefits with respect to such Employee for a period of six (6) months
after  the  date  of  such  termination.

               (iii)     Notwithstanding  anything  to  the  contrary  herein,
Employee's employment hereunder may be terminated by the Company without "Cause"
at  any  time prior to a "Change in Control" (has hereinafter defined), however,
in  such event, Company shall pay Employee as severance benefits Employee's Base
Salary (has hereinafter defined) plus the amount that the Company pays for group
health and disability insurance with respect to such employee for a period equal
to  the period following the date upon which Employee's employment is terminated
until Employee secures alternative employment, up to a maximum of six (6) months
after the date of such termination.  Employee agrees to utilize her best efforts
to  obtain  such  replacement  employment.

               (iv)     In the event that Employee's employment is terminated by
the  Company at any time after a Change in Control by the Company without Cause,
Company shall pay Employee as severance benefits Employee's Base Salary plus the
amount  that  the  Company  pays for group health insurance with respect to such
employee  for  a  period  equal  to  the  portion  of the "Severance Period" (as
hereinafter  defined)  remaining  after  the  date  of termination of Employee's
employment  but not less than six (6) months.  The term "Severance Period" shall
mean  12  months  after  a  Change  in  Control.

               The  term  "Change  in  Control" shall mean a sale, assignment or
exchange of more than 51% of the voting stock outstanding immediately after such
sale  or  the sale, assignment or exchange of substantially all of the assets of
the  Company.  The  date of a Change in Control shall mean the date upon which a
sale  is  closed, or in a series of transactions, the date upon which beneficial
ownership  of  the voting stock or assets is transferred.  A termination without
Cause  shall be deemed to have occurred if within the Severance Period, Company,
without  Employee's  consent,  materially  reduces  Employee's

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<PAGE>
responsibilities, reduces Employee's salary or requires Employee to relocate  or
transfer to a site further than  30  miles  from  Employee's  current  place  of
employment.

               All  amounts  payable to Employee under this paragraph 3 shall be
paid  in normal payroll installments on normal payroll dates less all applicable
withholding.  Except  as  otherwise  provided  in  this  paragraph  3, as of the
effective  date  of  termination, all obligations of the Company to pay Employee
compensation shall terminate and the Company shall have no further obligation to
Employee  after  the  date  of  termination.

          (i)     Upon  termination  of employment for any reason, Employee will
deliver  to  the  Company  all  data, records and information, including without
limitation,  all  documents, correspondence, files, notebooks, reports, computer
programs,  software,  manuals, customer lists, customer information, samples and
all  other  materials  and  copies  thereof  relating  to the Company's business
(collectively,  "Confidential  Information") which Employee may possess or which
are  under  his  control.

     4.     Confidentiality.  Employee covenants that he shall at all times keep
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confidential the Company's financial statements and other financial information,
except  to the extent (a) disclosure of financial information (but not financial
statements)  is incidental to the performance of his duties for the Company, (b)
disclosure  is  required  by  applicable  law,  or  (c)  the  Company's Board of
Directors  authorizes  disclosure.

     5.     Other  Company  Employees.  For  a  period of one year from the date
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Employee's  employment by the Company terminates, Employee shall not (a) solicit
another  Company employee to leave the Company's employ and work for Employee or
another  person  or  entity, or (b) participate in the hiring of another Company
employee  by  another  person  or  entity  away  from  the  Company.

     6.     Notices.  Any notice, request, approval, consent, demand, permission
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or  other  communication  required  or  permitted  by  this  Agreement  shall be
effective  only  if it is in a writing signed by the party giving same and shall
be  deemed to have been sent, given and received only either (a) when personally
received  by  the  intended recipient, or (b) three days after depositing in the
United

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<PAGE>
States Mail, registered or certified mail, return receipt requested, with first-
class  postage  prepaid,  addressed  as  follows:

          If  to  Employee:

          Gloria  Najera
          1307  S.  93rd  Street
          West  Allis,  WI  53214

          If  to  the  Company:

          Criticare  Systems,  Inc.
          20925  Crossroads  Circle
          Waukesha,  WI  53186
          Attn:  President

or  to  such  other  address  as  the  intended  recipient  may have theretofore
specified  by  notice  given  to  the  sender  as  provided  in  this  section.

     7.     Assignability.  This  Agreement  requires  the  personal services of
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Employee,  and Employee's rights or obligations hereunder may not be assigned or
delegated  except as set forth in this Agreement.  In the event of a sale of the
stock  of  the  Company,  or consolidation or merger of the Company with or into
another  company  or  entity,  or the sale of all or any substantial part of the
assets  of the Company to another corporation, entity or individual, the Company
may assign this Agreement to any successor in interest and upon such assignment,
Company  shall have no further liability hereunder and the successor in interest
shall be subject to all obligations and be entitled to enforce all rights of the
Company  under  this  Agreement.  Subject to the foregoing, this Agreement shall
bind and inure to the benefit of the parties and their respective successors and
assigns.

     8.     Other  Agreements.  This  Agreement  contains  the  entire agreement
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between  the Company and Employee with respect to the subject matter hereof, and
merges  and  supersedes  all  prior  agreements,  understandings or negotiations
whatsoever  with  respect  to  the  subject  matter  hereof.

     9.     Amendments  and  Waivers.  No  amendment  of  this  Agreement or any
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waiver  of any of its provisions shall be effective unless expressly stated in a
writing  signed  by  both  parties.  No delay or omission in the exercise of any
right,  power  or  remedy  under  or for this Agreement shall impair such right,
power  or  remedy  or  be  construed as a waiver of any breach.  Any waiver of a
breach  of  any  provision of this Agreement shall not be treated as a waiver of
any other provision

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<PAGE>
of this Agreement or of any subsequent breach of the same or any other provision
of  this  Agreement.

     10.     Severability.  If  any  provision  of  this Agreement shall be held
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illegal, invalid or otherwise unenforceable under controlling law, the remaining
provisions of this Agreement shall not be affected thereby but shall continue in
effect.

     11.     Governing  Law.  This  Agreement shall be governed by and construed
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and  enforced  in  accordance  with  the  laws  of  the  State  of  Wisconsin.

                              CRITICARE  SYSTEMS,  INC.

                              BY  /s/  Gerhard  J.  Von  der  Ruhr
                                  --------------------------------
                                     Its  President
                                          ---------

                              EMPLOYEE:

                              /s/  Gloria  Najera
                              -------------------
                              Gloria  Najera

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