UNITED STATES SURGICAL CORP, DEF 14A, 1997-03-18

UNITED STATES SURGICAL CORP
DEF 14A, 1997-03-18
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

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<PAGE> 1

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:

<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>

UNITED STATES SURGICAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.

(1) Title of each class of securities to which transaction applies:

------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

------------------------------------------------------------------------

(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):

------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------

(5) Total fee paid:

------------------------------------------------------------------------

[ ] 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:

------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------

(3) Filing Party:

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(4) Date Filed:

------------------------------------------------------------------------
<PAGE> 2
UNITED STATES SURGICAL CORPORATION
150 GLOVER AVENUE
NORWALK, CONNECTICUT 06856

---------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 1, 1997

---------------

To the Stockholders of
United States Surgical Corporation:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
UNITED STATES SURGICAL CORPORATION (the "Company") will be held at The
Equitable building, 787 Seventh Avenue, New York, New York 10019, on May 1,
1997 at 2:00 P.M. (local time), for the following purposes:

1. To elect a board of twelve directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and qualified;

2. To vote on an amendment to the Company's Outside Directors Stock
Plan increasing the authorized number of shares;

3. To transact such other business as may properly be brought before
the meeting or any adjournments thereof.

The Board of Directors has fixed the close of business on March 3,
1997, as the record date for determination of the stockholders entitled to
notice of and to vote at the Annual Meeting, and only holders of record of the
Company's Common Stock and the Company's Series A Convertible Preferred Stock
(or depositary shares representing interests therein) on said date will be
entitled to receive notice of and to vote at the meeting.

Stockholders are cordially invited to attend the meeting. Whether or
not you plan to attend the meeting, please mark, sign, date and return the
enclosed Proxy. The giving of your Proxy will not affect your right to vote in
person in the event you find it convenient to attend the meeting. You may
revoke the Proxy at any time before the closing of the polls at the meeting.

ATTENDANCE AT THE ANNUAL MEETING WILL BE LIMITED TO STOCKHOLDERS AND
INVITED GUESTS OF THE COMPANY. ADMITTANCE TICKETS WILL BE REQUIRED.

If you are a stockholder and plan to attend, you must request an
admittance ticket by writing to the Office of the Secretary at the address
shown above. If your shares are not registered in your own name, evidence of
your stock ownership, which you can obtain from your bank, stockbroker, etc.,
must accompany your letter. An admittance ticket will be sent to you.

By order of the Board of Directors

PAMELA KOMENDA
Corporate Secretary

March 17, 1997

PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.

<PAGE> 3
(USSC LOGO)

UNITED STATES SURGICAL CORPORATION
150 GLOVER AVENUE
NORWALK, CONNECTICUT 06856
---------------

PROXY STATEMENT

FOR

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1997

March 17, 1997

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of United States Surgical Corporation, a Delaware
corporation (the "Company"), of proxies to be voted at the Annual Meeting of
Stockholders of the Company to be held at The Equitable building, 787 Seventh
Avenue, New York, New York 10019, on May 1, 1997, at 2:00 P.M. (local time), and
at any adjournments thereof, for the purposes set forth in the attached Notice
of Annual Meeting of Stockholders.

When proxies in the enclosed form are returned properly executed, the
shares represented thereby will be voted at the meeting and, where instructions
have been given by the stockholder, will be voted in accordance therewith. If
the stockholder does not otherwise specify, the stockholder's shares will be
voted for the election of the listed nominees and in accordance with the
directors' recommendations on the other subjects listed on the proxy card. If
any other matter is properly presented for action at the meeting, the persons
named in the enclosed form of proxy will vote on such matter in their
discretion. Any proxy may be revoked by the stockholder, either by attending the
meeting and voting in person or by submitting a revocation in writing to the
Company (including a subsequent signed proxy) at any time prior to the closing
of the polls at the meeting.

STOCKHOLDER VOTE REQUIRED

To be elected a director, a nominee must receive the affirmative vote of
a plurality of shares present in person or represented by proxy at the meeting
and entitled to vote in the election of directors. A plurality vote means that
the twelve individuals who receive the largest number of votes cast will be
elected as directors. Withheld votes will not affect the outcome of the election
of directors. For each other matter specified in the Notice of Annual Meeting of
Stockholders, the affirmative vote of a majority of the shares present at the
annual meeting in person or by proxy and entitled to vote on such matter is
required for approval. Abstentions will be considered shares present in person
or by proxy and entitled to vote and will, therefore, have the effect of a vote
against the matter. In instances where brokers are prohibited by the rules of
the New York Stock Exchange from exercising discretionary authority for
beneficial owners who have not returned proxies to the brokers (referred to as
"broker non-votes"), those shares will not be included in the vote totals and
will have no effect on the vote. However, properly returned proxies which
withhold authority to vote for directors, abstain, or reflect a broker non-vote
will be counted for purposes of determining if a quorum is present for the
annual meeting.

The Company's auditors are Deloitte & Touche LLP, 333 Ludlow Street,
Stamford, Connecticut 06904. A representative of Deloitte & Touche LLP will be
present at the meeting, will have an opportunity to make a statement if the
representative desires to do so, and will be available to respond to appropriate
questions.

A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 WILL BE PROVIDED,
WITHOUT CHARGE, TO ANY STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE
DIRECTED TO INVESTOR RELATIONS, UNITED STATES SURGICAL CORPORATION, 150 GLOVER
AVENUE, NORWALK, CT 06856.
<PAGE> 4
OUTSTANDING SHARES, VOTING RIGHTS AND PRINCIPAL STOCKHOLDERS

Holders of record of outstanding shares of the Company's Common Stock,
$.10 par value ("Common Stock"), and of the Company's Series A Convertible
Preferred Stock, $5.00 par value ("Series A Preferred Stock"), represented by
1/50 interest Depositary Shares ("Depositary Shares"), at the close of business
on March 3, 1997, will be entitled to notice of and to vote at the meeting.
Voting rights are vested exclusively in the holders of the Common Stock and the
Series A Preferred Stock. Each share of Common Stock outstanding on the record
date will be entitled to one vote. Each share of Series A Preferred Stock
outstanding on the record date will be entitled to 47.50 votes, equivalent to
.95 of a vote for each Depositary Share held. Shares held as treasury shares by
the Company are not entitled to be voted. At the close of business on December
31, 1996, a total of 63,286,797 shares of Common Stock (not including 8,080,983
shares held as treasury shares) and 8,869,500 Depositary Shares, were
outstanding. The Depositary Shares have been called for redemption by the
Company on April 1, 1997, however, the record date for the meeting precedes the
redemption date, therefore, the Depositary Shares, unless converted by the
holder prior to the record date for the stockholders meeting, will vote as
described above.

The following table sets forth the only persons known to the Company to
be beneficial owners as of December 31, 1996, of more than five percent of the
Company's Common Stock or Series A Preferred Stock.

<TABLE>
<CAPTION>
Voting Securities
-----------------

Name and Address Title Number of Number of Total Number Percent of
of Stockholder of Class Shares Options of Shares Class
- -------------- -------- ------ ------- --------- -----
<S> <C> <C> <C> <C> <C>
Leon C. Hirsch (1) Common 1,720,362 3,477,834 5,198,196 7.79%(2)
150 Glover Avenue
Norwalk, Connecticut 06856

FMR Corp. (3) Common 4,718,509 4,718,509 7.5%
82 Devonshire Street
Boston, Massachusetts 02109

Series A 2,201,800 2,201,800 24.97%
Preferred
(Depository Shares)

Common, assuming 6,816,824 6,816,824 9.5%
conversion of
Depository Shares

Putnam Investments,Inc. (4) Common 5,103,813 5,103,813 8.1%
One Post Office Square
Boston, Massachusetts 02109
</TABLE>
- ----------

(1) Options are exercisable on or become exercisable within 60 days following
December 31, 1996. Excludes shares beneficially owned, and options to purchase
shares held, by his wife, an officer and director of the Company, as to which
shares Mr. Hirsch disclaims beneficial ownership.

(2) Percent of class is based on 63,286,797 shares of Common Stock outstanding
on December 31, 1996, plus 3,477,834 shares subject to options held by Mr.
Hirsch which are exercisable on or become exercisable within 60 days following
such date.

(3) As reported in a Schedule 13G filed with the Securities and Exchange
Commission and based on additional information provided by FMR Corp. Percent of
class is based on 63,286,797 shares of Common Stock outstanding on December 31,
1996, plus, assuming conversion of Depositary Shares, 8,452,634 shares based on
the assumed conversion of 8,869,500 Depositary Shares (.953 shares of Common
Stock for each Depositary Share). Certain subsidiaries and affiliates of FMR
Corp. serve as investment advisers for various investment companies registered
under Section 8 of the Investment Company Act of 1940 and as investment adviser
to certain other funds which are

2
<PAGE> 5
generally offered to limited groups of investors; or as trustee or managing
agent for various private investment accounts (primarily employee benefit
plans). The Company is advised that voting power with respect to shares owned by
various Fidelity funds resides with such funds' board of trustees. Members of
the Edward C. Johnson 3d family and trusts for their benefit, through ownership
of voting common stock in FMR Corp. and a voting agreement with respect to FMR
Corp. voting common stock may be deemed to form a controlling group with respect
to FMR Corp.

(4) As reported in a Schedule 13G filed with the Securities and Exchange
Commission, and on information provided by Putnam Investments, Inc., certain
investment managers affiliated with Putnam Investments, Inc. (together with its
parent corporation, Marsh & McLennan Companies, Inc.) are considered beneficial
owners in the aggregate of 5,103,813 shares of Common Stock held by mutual funds
and other institutional investors which they advise. Percent of class is based
on 63,286,797 shares of Common Stock outstanding on December 31, 1996. The
Company is advised that such shares were acquired for investment purposes by
such investment funds for certain of their advisory clients and that such funds
may share voting and/or investment power with such clients.

SHARE OWNERSHIP OF MANAGEMENT

The following table sets forth certain information regarding the shares
of the Company's Common Stock beneficially owned as of December 31, 1996, except
as otherwise indicated, by all directors, nominees, executive officers
identified in the Summary Compensation Table below, and all executive officers
and directors as a group. No director or officer owns any Series A Preferred
Stock. Except as noted, each person listed has sole voting and investment powers
as to shares beneficially owned by such person.

<TABLE>
<CAPTION>
Number of Shares Percent
of Common Stock of
Name Beneficially Owned Class(1)
- ---- ------------------ --------
<S> <C> <C>
Julie K. Blake 7,000(2) *
John A. Bogardus, Jr. 30,000(2) *
Thomas R. Bremer 249,710(2) *
Thomas D. Guy 204,333(2) *
Leon C. Hirsch 5,198,196(3) 7.79%
Turi Josefsen 1,142,642(2) 1.78%
Douglas L. King 21,000(2) *
William F. May 16,047(2) *
James R. Mellor** 0 *
Barry D. Romeril 5,000+ *
Howard M. Rosenkrantz 194,851(2) *
Marianne Scipione 214,315(2) *
John R. Silber 16,200(2) *
All executive officers and directors as a group
(25 persons) 8,585,353(4) 12.28%
</TABLE>

- ----------
* Ownership of less than one percent.
+ Includes restricted stock award of 4,000 shares on March 1, 1997.
** Elected a director on March 7, 1997.

(1) Percent of class for each person and all executive officers and directors as
a group is based on shares of Common Stock outstanding on December 31, 1996,
plus shares subject to options held by the individual or the group, as
applicable, which are exercisable on or become exercisable within 60 days
following such date.

(2) Includes the following shares which may be acquired on or within 60 days
following December 31, 1996, through the exercise of stock options under Company
sponsored plans: Ms. Blake, 1,000; Mr. Bogardus, 26,000; Mr. Bremer, 234,333;
Mr. Guy, 204,333; Ms. Josefsen, 1,017,000; Mr. King, 19,000; Mr. May, 6,000; Mr.
Rosenkrantz, 194,333; Ms. Scipione, 197,333; and Dr. Silber, 2,000. No voting or
investment power exists with respect to such shares prior to acquisition.

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<PAGE> 6
(3) See Note (1) under "Outstanding Shares, Voting Rights and Principal
Stockholders".

(4) Includes options to purchase 6,608,180 shares exercisable on or within 60
days following December 31, 1996.

PROPOSAL 1: ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)

NOMINEES

The persons named in the accompanying form of proxy intend, except as
otherwise directed, to vote for the election as directors of the twelve nominees
listed below, each for a term expiring at the next Annual Meeting or until his
or her successor is duly elected and qualified. All nominees are now serving as
directors of the Company, and all have informed management that they are willing
to serve as directors of the Company. If any of the nominees should decline or
be unable to act as a director, the persons named as proxies in the form of
proxy will vote in accordance with their best judgment and shall have
discretionary authority to vote for a substitute nominee. The Board of Directors
has fixed its present size at, and for the purposes of this meeting authorized
the election of, twelve directors.

The following table sets forth certain information as to the nominees
for directors of the Company.

<TABLE>
<CAPTION>
SERVING AS
BUSINESS EXPERIENCE DURING LAST DIRECTOR
NAME AGE FIVE YEAR AND OTHER DIRECTORSHIPS SINCE
- ---- --- --------------------------------- -----
<S> <C> <C> <C>
Julie K. Blake (A)(D)(E) 49 1992-1994, Executive Vice President and 1995
Chief Operating Officer, Flavin, Blake & Co., Inc.;
Vice President, J.P. Morgan & Co. Incorporated,
1970-1992.

John A. Bogardus, Jr. 69 Director, Alexander & Alexander Services Inc., 1981
(A)(B)(C)(D) insurance brokerage and financial services
firm, New York, N.Y., from l988 to May 1995;
prior thereto, its Chairman of the Board and
Director since l987; prior thereto, its
Chairman of the Board, Chief Executive
Officer and Director.

Thomas R. Bremer 43 Senior Vice President and General Counsel 1993
since January, 1994; Vice President and
General Counsel since 1989; prior thereto,
General Counsel since 1988.

Leon C. Hirsch (B)(E) 69 Chairman of the Board, and 1964
Chief Executive Officer since July, 1996;
prior thereto, Chairman of the Board,
President and Chief Executive Officer since
1987.

Turi Josefsen (B)(E) 60 Executive Vice President and, since 1977
July, 1994 President, International
Operations; prior thereto, Executive Vice
President and President and CEO, Auto Suture
Companies.

Douglas L. King 55 President and Director, Smyth, 1984
(A)(B)(D) Sanford & Gerard Reinsurance Intermediaries,
Inc., insurance and reinsurance brokers.
Director, Healthplex, Inc., a dental
administration service company, New York, N.Y.
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
William F. May 81 Chairman of the Board, Statue of 1984
(A)(B)(C)(D) Liberty - Ellis Island Foundation, Inc., New York,
N.Y., since 1995, prior thereto, its Chairman and Chief
Executive Officer; Director, Salomon Inc,
New York, N.Y.; Trustee, University of Rochester;
Trustee, American Museum of Natural History;
Director, Lincoln Center; Trustee, Columbia
Presbyterian Hospital; Trustee, Committee for
Economic Development; Member, Advisory Board, Columbia
University, University Genome Center.

James R. Mellor (D)(E) 66 Chairman and Chief Executive Officer, General Dynamics 1997
Corporation, since May 1994, prior thereto,
its President and Chief Executive Officer
from 1993 to 1994, President
and Chief Operating Officer from 1991 to
1993, and Executive Vice President from 1981
to 1990; Director, Bergan Brunswig
Corporation, Computer Sciences Corporation,
and Pinkerton's, Inc.

Barry D. Romeril (A)(C)(E) 53 Executive Vice President and Chief Financial 1996
Officer, Xerox Corporation; Director, Fuji-Xerox,
Japan.

Howard M. Rosenkrantz (E) 53 President and Chief Operating Officer since July, 1996; 1995
prior thereto, Senior Vice President,
Finance and Chief Financial Officer since
1992; prior thereto, Vice President,
Finance; Trustee, Committee for Economic
Development; Trustee, Norwalk Symphony
Orchestra.

Marianne Scipione 50 Vice President, Corporate Communications 1992
since 1981; Member, Board of Trustees, Norwalk
Hospital Association; Director, The Norwalk Community-
Technical College Foundation, Inc.

John R. Silber (A)(C)(E) 70 Chancellor, Boston University since June, 1996; prior 1994
thereto, President, Boston University; Director,
Seragen, Inc. and Mutual of America Institutional
Funds Inc.
</TABLE>

- ----------

(A) Member of Audit Committee. Mr. May is Chair.
(B) Member of Executive Committee. Mr. King is Chair.
(C) Member of Compensation/Option Committee. Dr. Silber is Chair.
(D) Member of Nominating Committee. Mr. Bogardus is Chair.
(E) Member of Transaction and Finance Committee. Ms. Blake is Chair.

Leon C. Hirsch and Turi Josefsen are husband and wife. No other family
relationship exists between any of the directors or between any director and any
officer of the Company. With respect to certain relationships between the
Company and certain of the business entities listed in the above table, see
"Executive Compensation and Transactions--Certain Transactions," below.

MEETINGS AND COMMITTEES

In 1996, the Board of Directors held 7 meetings and committees of the
Board held the following number of meetings: Audit Committee, 4;
Compensation/Option Committee, 6; Nominating Committee, 1, and the Transaction
and Finance Committee, 6. The Executive Committee did not meet in 1996.

5
<PAGE> 8
The Audit Committee's function is to assist the Board in fulfilling its
duties in connection with the internal control, accounting and reporting
practices of the Company and to maintain communication between the Board and the
Company's auditors, including review of the Company's financial statements,
press releases and independent auditors' reports. Its authority includes power
to resolve certain disputes, if any, concerning accounting policies, practices
and changes and internal controls and to retain attorneys, investigators and
others as it deems appropriate to assist it in carrying out its functions. The
Compensation/Option Committee's function is to establish officers' and key
employees' bonus objectives, compensation and bonuses, including performance
standards, and to administer Company sponsored stock and other benefit plans.
The function of the Nominating Committee is to nominate directors and committee
members, subject to Board approval. The Nominating Committee must act
unanimously and will not consider nominees recommended by stockholders. The
Executive Committee's function is to act on important matters occurring during
time periods between scheduled meetings of the Board of Directors. The
Transaction and Finance Committee reviews and makes recommendations to the Board
as to acquisitions, other transactions, and financial plans.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES LISTED ABOVE.

PROPOSAL 2: APPROVAL OF AMENDMENT TO
OUTSIDE DIRECTORS STOCK PLAN
(ITEM 2 ON PROXY CARD)

PROPOSED AMENDMENT TO THE OUTSIDE DIRECTORS STOCK PLAN

The Board of Directors has unanimously approved, and recommends to the
stockholders for their approval, the adoption of an amendment to the Outside
Directors Stock Plan ("ODSP") to increase the number of shares authorized by
100,000. The proposed amendment is described below.

DESCRIPTION OF THE CURRENT OUTSIDE DIRECTORS STOCK PLAN

The ODSP provides for an aggregate maximum of up to 160,000 shares of
Common Stock to be issued under Stock Awards and Option grants to each "Eligible
Director" (a director who is not, and has not been for the preceding 12 months,
an employee of the Company or its subsidiaries, and who is not the beneficial
owner of five percent or more of the outstanding Common Stock.) There are
currently seven Eligible Directors -- Ms. Blake and Messrs. Bogardus, King, May,
Mellor, Romeril and Silber. The Eligible Directors are not eligible for grants
or awards under any other stock, bonus or benefit plan of the Company. See
"EXECUTIVE COMPENSATION AND TRANSACTIONS, Directors Compensation," below.

The ODSP is a formula based plan which, to the extent necessary, is
administered by the Compensation/Option Committee of the Board ("the
Committee"). Selection and eligibility of grantees, date and amount of awards
and grants, and maximum number of shares issuable under the plan are not subject
to the discretion of the Committee or any person, but such numbers are subject
to adjustment by the Committee upon certain events affecting the capitalization
of the Company, e.g. a stock split, stock dividend, merger, recapitalization or
reorganization. Whenever referred to herein, the number of shares of awards or
grants or maximum issuable under the plan mean "as adjusted." Authorized but
previously unissued shares, treasury shares and shares forfeited or not issued
pursuant to Options that lapse or terminate may be issued under the Plan up to
the maximum aggregate limit.

Stock Awards. Eligible Directors, upon the first anniversary of his or
her first election to the Board, receive a one-time Stock Award of 4,000 shares
of Common Stock. The Eligible Director is not obligated to pay any other
consideration to the Company for the Stock Award. For each Stock Award, 25% of
the shares awarded will vest annually, commencing one year from the date of
award ("Vesting Periods"). The unvested Stock Award shares are subject to
forfeiture to the Company if the director ceases to serve on the Board prior to
expiration of the Vesting Periods applicable to the shares, except in the event
of the director's death, permanent disability or termination of service after a
Change of Control, as defined.

No unvested shares may be sold, transferred, pledged or otherwise
disposed of without Committee approval. Vesting will accelerate and all shares
will become unrestricted on the date of the grantee's death or

6
<PAGE> 9
permanent disability. However, the grantee will have full voting rights and
dividend rights with respect to all shares awarded from the date of the Stock
Award.

Option Grants. Eligible Directors are automatically granted an Option to
purchase 4,000 shares of Common Stock upon his or her reelection to the Board by
the stockholders of the Company. The Option price per share for each Option is
the fair market value of a share of Common Stock on the date of grant. No
consideration is paid by the grantee to the Company for the granting of an
Option. Each Option is not transferable except by will or the laws of descent
and distribution, or as otherwise permitted by the Committee, each shall be
exercisable with respect to 50% of the shares covered by it commencing one year
after the date of grant and as to the remaining 50% of the shares commencing two
years from the date of grant, and each shall expire no later than ten years
after the date of grant. However, each Option will provide that it will become
immediately exercisable in full if the optionee ceases to be an Eligible
Director due to his death or permanent disability. Options will vest in the
event of circumstances which result in a Change of Control of the Company, or in
the event of a filing under Section 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") with respect to the Company.

Options may be exercised by payment of the Option price in cash. The Option will
not be exercisable unless the optionee has been in continuous service on the
Board at all times since the grant of the Option. However, in the event of the
death or permanent disability or retirement with the consent of the Board, the
Option may be exercised in full by the optionee or his or her executors,
administrators, heirs or distributees for up to one year after such event.
Further, if an optionee's service on the Board is terminated after a Change in
Control, the Option shall continue to be exercisable as provided in the original
option grant.

Amendment and Termination of Plan. The Board may amend the ODSP at any time.
However, stockholder approval is required for any amendment that would increase
the maximum number of shares of Common Stock as to which Stock Awards and
Options may be granted, increase the number of shares to be subject to each
Stock Award or Option, reduce the Vesting Periods for Stock Awards, reduce the
minimum Option exercise price, extend the period during which Stock Awards or
Options may be granted or Options may be exercised, or change the definition of
an Eligible Director. The plan shall terminate upon the adoption by the Board of
a resolution terminating the plan, or upon the award and vesting or the purchase
of the maximum aggregate number of shares available under the plan.

PURPOSE OF THE OUTSIDE DIRECTORS STOCK PLAN

The Board believes that the ODSP provides an appropriate and competitive means
to compensate the outside directors for the increasingly substantial attention
they devote to the Company's affairs due to the growth of the Company, and to
attract and retain independent directors. The Board believes that the grant of a
limited number of shares to non-employee directors who do not already own a
substantial amount of Common Stock is a useful and desirable means to strengthen
the outside directors' identity of interests with the stockholders and to
complement the cash compensation paid to its outside directors. See "EXECUTIVE
COMPENSATION AND TRANSACTIONS -- Directors Compensation", below.

FEDERAL INCOME TAX CONSEQUENCES

Federal Income Tax Consequences. The rules governing the tax treatment of stock
options are complex, and the following discussion is necessarily a general
discussion of current Federal income tax consequences and does not purport to be
complete. Statutory provisions, and interpretations thereof, are subject to
change.

The participant recognizes no taxable income and the Company receives no
deduction when an Option is granted. Upon exercise of an Option, the participant
recognizes ordinary income and the Company receives a deduction equal to the
difference between the exercise price and the fair market value of the shares on
the date of exercise. The participant recognizes as a capital gain or loss any
subsequent profit or loss realized on the sale or exchange of any shares
disposed of or sold.

STOCKHOLDER VOTE REQUIRED

Approval of the amendment to the Outside Directors Stock Plan will require the
affirmative vote of a majority of the shares of Common Stock present at the
annual meeting in person or by proxy and entitled to vote on such matter.
Abstentions have the effect of a vote against the proposal.

7
<PAGE> 10
MS. BLAKE AND MESSRS. BOGARDUS, KING, MAY, MELLOR, ROMERIL, AND SILBER, AS
ELIGIBLE DIRECTORS, HAVE AN INTEREST IN THE AMENDMENT TO THE OUTSIDE DIRECTORS
STOCK PLAN, IN THAT ADOPTION OF THE AMENDMENT TO THE PLAN WOULD ENTITLE THEM TO
OPTIONS THEREUNDER. THE BOARD BELIEVES ITS ADOPTION IS IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE OUTSIDE DIRECTORS STOCK PLAN.

EXECUTIVE COMPENSATION AND TRANSACTIONS

EXECUTIVE OFFICERS' COMPENSATION

The following table shows compensation paid by the Company and its
subsidiaries for services in all capacities during 1994, 1995 and 1996 to each
of the Chief Executive Officer and the other four most highly compensated
executive officers of the Company.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------
Securities
Name and Underlying All Other
Principal Salary Bonus Options LTIP Payouts Compensation
Position Year ($) ($) (#)(1) ($)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leon C. Hirsch 1996 $1,077,335 $2,646,432 $1,500,000 $234,867 $ 655,196
Chairman and CEO 1995 1,026,016 806,125 0 0 745,578
1994 824,485 322,450 0 0 1,021,596

Turi Josefsen 1996 666,852 271,975 100,000 106,279 23,272
Executive Vice President, and 1995 635,080 431,704 17,000 0 21,170
President, International 1994 573,408 194,267 0 0 30,622
Operations

Howard M. Rosenkrantz 1996 512,111 304,078 50,000 38,496 17,369
President and Chief 1995 368,360 175,000 12,000 0 15,008
Operating Officer 1994 274,560 64,050 50,000 0 21,893

Thomas D. Guy 1996 333,246 156,976 50,000 29,331 15,397
Senior Vice President 1995 317,360 149,500 12,000 0 13,272
Operations 1994 235,291 55,973 50,000 0 19,788

Thomas R. Bremer 1996 323,796 202,251 50,000 27,480 10,771
Senior Vice President and 1995 274,000 127,820 12,000 0 9,249
General Counsel 1994 235,291 55,973 50,000 0 12,533
</TABLE>

- ----------

(1) Although Company sponsored stock plans permit the granting of SAR's, no
SAR's have been granted.

(2) Mr. Guy and Mr. Bremer were not eligible for LTIP awards for the performance
periods ended in 1994 or 1995. Mr. Rosenkrantz was not eligible for an LTIP
award for the performance period ended in 1994.

(3) Represents for Mr. Hirsch accrued bonuses payable pursuant to the terms of
installment option purchase agreements and for all of the named executives the
value of the benefit of premiums on life insurance paid by the Company (for Mr.
Hirsch, $30,355, 1996, $25,152, 1995, $32,190, 1994). The methodology for
computing the value of such premiums was revised in 1994; benefits were not
increased. The computation reflects the present value to the

8
<PAGE> 11
named executives of the premium payments rather than the present value of the
anticipated cash benefit to the executive, resulting in a greater portion of
benefits allocated earlier in the policy term. Mr. Hirsch's installment option
purchase agreement, the principal balance of which was repaid by Mr. Hirsch in
1994, is described on page 16 under the heading "Certain Transactions".

Perquisites and other personal benefits, securities or property did not
exceed the lesser of either $50,000 or 10% of the total of annual salary and
bonus reported for the named executive officers.

OPTIONS

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

Under the Company's stock incentive program, the Compensation/Option
Committee may grant stock options and related stock appreciation rights
("SAR's") to executive officers to purchase shares of the Company's common stock
at prices not less than the fair market value of the stock on the date of grant.
SAR's entitle an option holder to surrender unexercised stock options for cash
or stock equal to the excess of the fair market value of the shares with respect
to which the stock options are surrendered over the option price of such shares.
No SAR's have been granted. See Report of Compensation/Option Committee, below.

The following table contains information concerning the grant of stock
options to the five named executive officers of the Company.

OPTION/SAR GRANTS IN 1996

<TABLE>
<CAPTION>
Number of Securities % of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or Grant Date
Granted Employees Base Price Expiration Present
Name (#) In Fiscal Year ($/SH) Date Value (1)
- ---- --- -------------- ------ ---- ---------
<S> <C> <C> <C> <C> <C>
Leon C. Hirsch 1,500,000 40.6% $ 33.75 1-30-06 $16,549,800

Turi Josefsen 100,000 2.7 23.93 1-30-06 624,090

Howard M. Rosenkrantz 50,000 1.4 21.75 1-30-06 351,315

Thomas D. Guy 50,000 1.4 21.75 1-30-06 351,315

Thomas R. Bremer 50,000 1.4 21.75 1-30-06 351,315
</TABLE>

- ----------
(1) The estimated fair value of stock options is measured at the date of grant
under the Black-Scholes option pricing model based on four assumptions: expected
volatility of .32 based on the average of the high and low prices of the
Company's Common Stock for the last two years; expected term to exercise of
approximately four years; interest rates equal to the U.S. Treasury Note rates
in effect at the date of the grant (5.05%) for the expected term of the option;
and a dividend yield of .24% based on the yield at the grant date. The actual
value, if any, an executive may realize will depend on the excess of the stock
price over the exercise price on the date the option is exercised. Consequently,
there is no assurance the value realized by an executive will be at or near the
value estimated above.

9
<PAGE> 12
The table below sets forth certain information about the exercise of
stock options during 1996 by each of the named executive officers and the value
of unexercised in-the-money options held by such officers at December 31, 1996.

AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options/SAR's at Year-End at Year-End(1)(2)
Acquired on Value ----------------------------------------------------------
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leon C. Hirsch 0 0 3,177,834 1,500,000 $7,638,027 $8,437,500
Turi Josefsen 0 0 1,000,000 117,000 3,037,500 1,771,419
Howard M. Rosenkrantz 0 0 138,333 97,667 1,171,328 1,255,797
Thomas D. Guy 0 0 148,333 97,667 1,171,328 1,255,797
Thomas R. Bremer 0 0 178,333 97,667 1,985,078 1,255,797
</TABLE>

- ----------

(1) Although the Company's option plans permit the granting of SAR's, no SAR's
have been granted.

(2) Value is calculated by determining the difference between the fair market
value of the securities underlying the options at year-end and the exercise
price of the options.

LONG TERM INCENTIVE AWARDS

Under the long term component of the Company's Executive Incentive
Compensation Plan (for awards through performance periods ending in 1997, the
Long Term Incentive Plan), described more fully in the Compensation/Option
Committee's Report beginning below, senior executives have the opportunity to
earn a cash payment at the end of a performance cycle (currently three years)
based on achievement of sales and earnings per share growth or other objective
performance criteria established by the Committee at the beginning of a
performance period. The table below sets forth certain information regarding
each long term incentive award made to the named executive officers during 1996
under the Incentive Compensation Plan.

LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
Estimated Future Payouts
Performance Under Non-Stock Price-Based Options
Number of or Other -----------------------------------
Shares, Units Period Until
or Other Maturation Threshold Target Maximum
Name Rights (#) or Payout ($) ($) ($)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Leon C. Hirsch 194.5 Units 3 Years $188,243 $376,486 $752,972
Turi Josefsen 85 Units 3 Years 82,294 164,587 329,174
Howard M. Rosenkrantz 29 Units 3 Years 45,615 91,231 182,461
Thomas D. Guy 24.5 Units 3 Years 27,068 54,135 108,895
Thomas R. Bremer 24 Units 3 Years 26,830 53,662 107,324
</TABLE>

10
<PAGE> 13
Set forth below is a graph comparing the cumulative total shareholder
return on the Company's Common Stock with the cumulative total return of the S &
P 500 Index and the S & P Medical Products & Supplies Index. Cumulative total
shareholder return assumes reinvestment of dividends.

The comparison is based upon the assumption that $100 was invested on
December 31, 1991 in United States Surgical Corporation's Common Stock, the S &
P 500 Index and the S & P Medical Products & Supplies Index.

The following depiction of shareholder return shall not be deemed
incorporated by reference into any filings by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

COMMON STOCK PERFORMANCE GRAPH

[GRAPHIC OMITTED]

<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
USSC 100 62 21 17 20 36
S & P 500 100 108 118 120 165 203
S & P Medical Products 100 86 65 77 131 150
</TABLE>

REPORT OF COMPENSATION/OPTION COMMITTEE

The compensation of the Company's executive officers is reviewed and
approved at least on an annual basis by the Compensation/Option Committee (the
"Committee") of the Board of Directors, which consists exclusively of
independent, non-employee Directors who qualify as "outside directors" under
Section 162(m) of the Internal Revenue Code, discussed below.

GENERAL POLICY

The Company's compensation policy, which is endorsed by the Committee,
is to attract and retain the best management talent available, and to pay that
talent based on Company and individual performance. Base salaries

11
<PAGE> 14
are set at competitive levels, but a substantial portion of an executive
officer's compensation opportunity is "at risk" and is realized only for
achievement of specific goals. For 1996, the Committee set achievement of
specific objectives for growth in earnings and cash flow as the benchmarks for
1996 incentive compensation in order to continue the improvement in the
financial strength of the Company. As the Company pursues its aggressive growth
and expansion plans, the Committee will utilize other measurements it believes
will further the Company's goals. The Committee also thinks that, while
performance goals should include corporate financial results, executives should
also be held accountable for individual performance objectives. The Committee
established personal performance objectives for each of the Company's
executives. In 1996, the portion of the annual and long term cash compensation
opportunities of the named executive officers which was "at risk" (subject to
attainment of performance goals) ranged from 42% to 58%, with 58% of such
compensation opportunities of the Chief Executive Officer "at risk". Stock
options, which align the interests of the Company's executives with those of the
shareholders, are also an important part of the Company's compensation program.

The Committee believes annual salaries and incentive compensation
opportunities should be at the higher end of the market for executive talent.
The Company's strategic plan targets significant growth and requires a senior
management team that can create the growth and manage the business as it grows.
However, for most executives, market based compensation was last set for 1992
compensation packages; more recently, compensation packages have been adjusted
from that base, as discussed below. The Committee believes that compensation may
not be set in keeping with its philosophy and engaged an independent
compensation consultant to assist it with an analysis of executive compensation
for the Company, to be used for establishing 1997 compensation programs. The
Company, as it expands into additional surgical specialties, such as cardiology,
urology, and others, is becoming increasingly complex. The Company demands
superior performance from its executives and typically assigns most executive
officers of the Company broader, more complex responsibilities than
corresponding positions in comparative companies. The Company must, in many
cases, compete against significantly larger and more heavily capitalized firms,
and executives must be retained who are equal in ability to the senior
executives at these larger firms. The Committee believes that the senior
management team responsible for the turnaround of the Company following the
healthcare reform downturn during 1993 and 1994, under the direction of the
Chief Executive Officer, must be retained and that those executives, along with
other officers of like ability who are hired, should be offered an opportunity
for rewards based on continued growth in the value of the business.

The Company will continue to hire executives whose talent and
performance place them within the high end of the pool of available executives,
and the Committee intends to set compensation packages which are adequate to
meet this need while furthering Company objectives.

The total compensation program is designed to balance incentives between
short and long term performance, and consists of annual compensation, which
includes base salary and the opportunity to earn an annual bonus, and a long
term incentive program, which includes stock options and the opportunity to earn
cash awards over a multi-year performance period.

Each element of the compensation program, including a specific
discussion as to the Chief Executive Officer's compensation, is set out below.

ANNUAL COMPENSATION.

Generally, annual compensation of executive officers under the Executive
Compensation Program for 1996 consisted of salary and bonus components.

1. Salary.

Under the Company's compensation program, executive officers are paid a
base salary based upon their level of responsibility and their contribution to
the Company, including informal assessments as to their compliance with the
Company's overall corporate policies. The 1996 salaries of executive officers,
including the Chief Executive Officer, were reviewed and approved by the
Compensation/Option Committee in November, 1995. Salaries were increased by 5%
across the board from 1995 levels for the named executive officers, including
the Chief Executive Officer, and for other executives of the Company. For 1995,
the Committee had restored Mr. Hirsch's and the Company's other executives base
salary to 1993 levels, following reductions of 1994 base salaries at the request
of Mr. Hirsch and the Company's other executives (by 20% for Mr. Hirsch, and by
10% for other officers), as part of a cost reduction effort by the Company. The
Committee determined that the continued

12
<PAGE> 15
improvements in the Company's financial and operating position during 1995 were
due to the efforts of the executives and that the increases were below
appropriate levels, with 1996 salaries only 5% above 1993 levels. The Committee
determined that salary levels should be adjusted only modestly pending continued
improvements in Company performance and a thorough market survey. In addition,
the Committee adjusted the salary of Mr. Rosenkrantz upon his election as
President during the year.

2. Bonus.

A significant portion of 1996 executive officer annual compensation was
based on corporate performance. Annual bonuses under the Company's executive
compensation program were based on the Earnings Per Share ("EPS") bonus
component, the cash flow bonus component, and personal performance objectives.
In addition, the Chief Executive Officer was paid a one-time bonus in the amount
of $1.8 million based on his 1996 performance, as discussed below.

Annual bonuses are based on performance. For 1996, 50% of the regular
annual bonus opportunities were weighted equally for most executives between the
EPS and cash flow components, and 50% for the personal performance objective
component. Each bonus performance element was evaluated independently, however,
a failure to achieve personal performance objectives ratably reduces the
opportunity for awards for achievement of EPS and cash flow components. Bonus
opportunity levels are set as a percentage of base salary. For 1996, regular
annual bonus opportunities were increased by 5% for the Chief Executive Officer
and the other named executives, commensurate with increases in base salary
levels.

Performance goals are established by the Committee. Following year-end,
the Committee reviews the extent to which the goals have been achieved with the
assistance of the Company's independent auditors, assesses personal performance
objectives, and determines the amount of the bonus to be paid to the executive
officers, if any. Awards are based on financial performance criteria and may be
reduced, in the Committee's discretion, if individual performance objectives are
not met.

The EPS Bonus Component: The 1996 EPS bonus opportunity ranged from
12.5% to 20% of the salary levels of the executives named in the Summary
Compensation Table, with 20% for the Chief Executive Officer. A percentage of
the bonus may be earned based on a particular year's EPS above a minimum base
(subject to attainment of personal performance objectives), up to a maximum
determined by the Committee. The EPS goals were exceeded for 1996 and the
maximum amounts were paid for the EPS Bonus Component to the Chief Executive
Officer and to three other named (and other) executive officers of the Company.
Because the personal performance objectives of one named officer were not
achieved, less than the maximum bonus was paid to such officer.

The Cash Flow Bonus Component: The 1996 Cash Flow bonus opportunity
ranged from 12.5% to 20% of the salary levels of the executives named in the
Summary Compensation Table, with 20% for the Chief Executive Officer. A
percentage of the bonus may be earned based on the year's cash flow above a
minimum base (subject to attainment of personal performance objectives), up to a
maximum determined by the Committee. The cash flow goals were substantially
exceeded for 1996 and the maximum amount was paid for the Cash Flow Bonus
Component to the Chief Executive Officer and to the named (and other) executive
officers of the Company. Because the personal performance objectives of one
named officer were not achieved, less than the maximum bonus was paid to such
officer.

The PPO Bonus Component: Under the PPO Bonus component, individual
performance objectives are established for the Chief Executive Officer and the
other named (and other) executives by the Committee. Each PPO is weighted and is
related to the particular area for which an executive officer is responsible.
Examples of objectives include, but are not limited to, budget control,
achievement of sales objectives, product design, and manufacturing practices. In
1996, the portion of cash compensation opportunity represented by this component
of compensation ranged from 25% to 40% of the salary levels of the executives
named in the Summary Compensation Table, with 40% for the Chief Executive
Officer.

The Committee also approved a special award for the Chief Executive
Officer, independent of the regular annual bonus opportunity. The Committee
believed that the Company made extraordinary progress during 1996, reflected in
improved financial performance, doubling of the stock price, and introduction of
a wide array of products and technology with significant market potential. The
Committee also believed that these steps were attributable to the foresight and
efforts of the Chief Executive Officer and that the Company is positioned for
future

13
<PAGE> 16
growth as a direct result. The bonus reflects the Committee's judgment as to an
appropriate reward for his achievements during 1996. In addition, the Committee
awarded Mr. Bremer a special bonus of $50,000 during the year in recognition of
a significant and favorable result in a legal proceeding, which the Committee
believed was attributable to Mr. Bremer's efforts and merited special
recognition.

LONG TERM INCENTIVE PROGRAM

The Company's long term incentive program, developed with the advice of
outside compensation consultants, consists of stock options, which directly link
the interests of management with those of the stockholders, and cash incentives
based on financial performance over a three year performance period.

1. Restricted Stock Awards.

No awards of restricted stock were made in 1996 to any executive
officers. In February, 1996, the Board of Directors terminated the Company's
Restricted Stock Incentive Plan, based on the belief that stock options provide
a more effective and less costly incentive program.

2. Stock Options.

The Company seeks to have its executives think of themselves as having a
personal stake in the Company by awarding stock options which give such officers
the opportunity to participate in the growth in the value of the Company's
stock. This approach aligns the interest of the executive officers with those of
the stockholders because the value of the executive officers' stock options will
depend exclusively on how the Company's stock performs. Stock options only have
value to the recipient when the price of the Company's Common Stock exceeds the
exercise price of the option, which is at least the fair market value at date of
grant. Thus, options provide a powerful incentive for employees to maximize the
Company's sales and profits, and build the value of the business, all of which
should be reflected over the long term in the price of the Company's Common
Stock. The Committee believes that stockholders benefit proportionately. During
1996, an option grant was made to the named executive officers and to the Chief
Executive Officer, and to other executive officers, as an incentive for
continuing the growth in value of the business and as a retention incentive for
the core management group which is key to the continued improvement of the
performance of the Company. The Chief Executive Officer's option grant was
submitted to and approved by the Company's shareholders by an overwhelming
margin at the 1996 Annual Meeting. The exercise price of options granted to
executive officers was set at the market price on the date of grant, with the
exception of the grant to Ms. Josefsen, which was set at a ten percent premium
to the market price on the date of grant in accordance with a settlement of
shareholder derivative litigation, and the grant to Mr. Hirsch, which was set at
the market price on the date of stockholder approval, over 50% higher than the
exercise price for the grants to the Company's other executives. The Committee
took into account that many of the outstanding option grants preceded the
downturn in the health care industry, were out of the money, and were not
adequate to further the purpose of the stock grant program. The number of
options granted to the named (and other) executives, other than the Chief
Executive Officer, was at market levels, determined with the input of the
Committee's independent compensation consultant following review of the
Company's option program in comparison with option grants at other companies.
The stock option grants are also intended to provide participants with a
potential source of retirement income since the Company does not provide
pensions. A grant to Mr. Hirsch was made in 1996 by the Committee, subject to
and with the overwhelming approval of the stockholders at the 1996 Annual
Meeting, based, in part, on the Committee's view that options would continue to
provide an incentive for appreciation in the price of the Company's common stock
and on Mr. Hirsch's commitment to remain with the Company for an additional five
years to execute the Company's current strategic plan developed as part of the
Company's restructuring program during 1993 and 1994. Prior to this grant, no
options had been granted to Mr. Hirsch since 1991.

3. Long Term grants under the Executive Incentive Compensation Plan.

The Company's Executive Incentive Compensation Plan (the "Incentive
Plan"), approved by the stockholders at the 1996 annual meeting, continues the
Company's program of compensating executive officers (as well as other
employees) based on their achievement of specific objectives established by the
Compensation/Option Committee of the Board. Executives have the opportunity to
earn annual (discussed above under Annual Compensation) and multi-year bonus
awards. The Committee believes that the incentive compensation program is
important in attracting and retaining individuals of superior ability and in
holding executives personally accountable for the achievement of important
corporate objectives.

14
<PAGE> 17
Under the long term component of the Incentive Plan (for performance
cycles beginning prior to 1996, the predecessor Long Term Incentive Plan), cash
payouts may be earned by a limited number of senior executives based on
achievement of a weighted combination of measurable financial objectives set by
the committee. For 1996 awards, the objectives are sales growth (33%) and EPS
(67%) during a three-year performance cycle. The persons eligible for long term
awards are the executive officers of the Company; during 1996, 6 persons were
issued awards, including the Chief Executive Officer and the other officers
named in the Summary Compensation Table. Other employees of the Company will
continue to be eligible to receive annual cash incentive bonuses outside of and
under terms substantially the same as in the Incentive Plan.

The long term cash incentive opportunity encourages executives to take
steps which build the business for the future, avoiding a possible disincentive
for prudent long term decisions out of concern as to the possible impact on
short term results. Levels of performance are graded on three tiers -- minimum,
target and maximum (corresponding to the threshold, target, and maximum columns
under the table describing Long Term Incentive Awards on page 10) -- with no
compensation payable if the performance is below the minimum tier and no
additional compensation if the performance is above the maximum tier. The amount
of the payout is based on a percentage of the recipient's average annual base
salary during the cycle, ranging from 7.5% to 17.5% for achievement in the
minimum tier, 15% to 35% for achievement in the target tier and 30% to 70% for
achievement in the maximum tier, the exact percentage depending on the
executive's tier. For the Chief Executive Officer, the percentages for these
tiers was 17.5%, 35% and 70%. The maximum long term award for a covered
executive in any year will be $2.0 million.

The Company achieved the minimum level for sales objectives and between
the minimimum and target levels for EPS objectives for the three year
performance cycle ended in 1996, and the Chief Executive Officer and the other
named executives received payouts under the LTIP for that period.

ALL OTHER COMPENSATION.

Included with respect to the Chief Executive Officer as "all other
compensation" reported in the Summary Compensation Table was interest accrued
and forgiven pursuant to the terms of an Installment Option Purchase Agreement
which was entered into in 1984 by the Chief Executive Officer and the Company.
The Installment Option Purchase Plan ("IOPA") was originally entered to
encourage Mr. Hirsch, and other executives, to exercise options in the Company's
stock. In 1994, at the Committee's request, Mr. Hirsch repaid the outstanding
principal option price of $5,370,000 in full to the Company in cash. To keep Mr.
Hirsch in substantially the same position on interest, the Committee agreed to
continue to pay the accrued interest as a bonus as it becomes due and to repay
interest expenses of a personal loan by Mr. Hirsch to obtain the funds to pay
the option price. In effect, the transaction substituted a third party for the
Company as the lender under the installment option purchase arrangement. The
Company obtained a significant net cash benefit and additional equity, and Mr.
Hirsch received no advantage.

TAX CONSIDERATIONS

In 1994, federal tax laws imposed a limit on deductions for each of the
five executives named in the summary compensation table to $1 million. Certain
compensation, including compensation based on performance, is not subject to
this limit if certain conditions are met, primarily, that the compensation is
based on objective performance criteria approved by the stockholders. The
Compensation payments must also be made pursuant to a plan administered by a
committee of outside directors. The Committee must certify that the performance
goals were achieved before payments can be awarded.

The Committee believes that its executive compensation program is
consistent with the intent of this legislation and has taken steps designed to
minimize its effect. The Company's stock option plans under which options may be
granted to executive officers has been approved by the stockholders and
qualifies for the exclusion from the deduction limits for grants through the
date of the annual meeting in 1997. Grants under the LTIP which, depending on
performance, resulted in payouts for performance periods ending in 1996 are
based on objective performance criteria but were not approved by the
stockholders and can not be claimed as a deduction. Grants made under the LTIP
for performance periods beginning in 1995 were approved by the shareholders and
compensation for such periods, if earned, will qualify for the deduction. The
annual bonus opportunity likewise qualifies for the deduction. Base salary and
certain other compensation amounts disclosed in the summary compensation table
do

15
<PAGE> 18
not qualify for the exclusion from the $1 million limit but such amounts of
compensation are not expected to exceed the deduction limits significantly. The
Committee intends to take steps in the future, including stockholder approval,
to maintain deductions for its incentive compensation plans to the greatest
extent practical while maintaining flexibility to take actions which it deems in
the best interests of the Company and its stockholders but which may result in
certain compensation not qualifying for tax deductions.

COMPENSATION/OPTION COMMITTEE:
John R. Silber, Chairman
John A. Bogardus, Jr.
William F. May
Barry D. Romeril

DIRECTORS' COMPENSATION

Directors who are also officers (currently, Messrs. Hirsch, Bremer and
Rosenkrantz and Mmes. Josefsen and Scipione) serve as such without additional
compensation. During 1996, outside directors were each paid the following fees
in each of the capacities served: directors, $32,760 plus $2,625 for each Board
meeting attended; Chairman of a Committee, $4,595; other members of a Committee,
$3,275 per Committee; all Committee members received $1,315 for each Committee
meeting attended on a non-Board meeting day.

Certain Eligible Directors (defined as directors who are not, and have
not been for the preceding l2 months, employees of the Company or its
subsidiaries, and who are not the beneficial owner of five percent or more of
the outstanding Common Stock) have received stock award and option grants under
the Outside Directors Stock Plan ("ODSP"). The ODSP provides for stock awards
and option grants of up to an aggregate maximum of 160,000 shares of Common
Stock, of which 6,000 shares remained available for grant as of December 31,
1996. With stockholder approval at the annual meeting of stockholders of the
proposed amendment to the ODSP, an additional 100,000 shares will be available
for grants thereunder. Upon the forfeiture of shares prior to vesting, and upon
expiration of an option, the forfeited shares and any shares subject to the
option which remain unexercised generally become available again under the ODSP.
The ODSP is administered by the Compensation/Option Committee of the Board of
Directors. The selection and eligibility of grantees and the dates and amounts
of option grants are defined in the ODSP and are not subject to the discretion
of any person.

Option grants of 4,000 shares are automatically made under the ODSP to
Eligible Directors each year upon his or her reelection to the Board by the
stockholders. The option price is the fair market value of the Common Stock on
the date of grant. Each option becomes exercisable as to one-half of the shares
covered by it commencing one year after the date of grant and as to the
remaining one-half commencing two years after the date of grant, provided the
optionee has been in continuous service on the Board at all times since the date
of grant. However, each option becomes fully exercisable in the event of the
grantee's death or permanent disability, and may be exercised to the extent
otherwise exercisable if the grantee retires with the consent of the Board or
his or her service on the Board is terminated after a Change in Control, as
defined. The Eligible Directors each received an option for 4,000 shares in
1996, with an option exercise price of $33.75. Assuming an Eligible Director is
reelected, and approval by the stockholders of the amendment authorizing the
increase in the number of shares, such director will receive an option for 4,000
shares on May 1, 1997. Eligible Directors also receive a one-time stock award of
4,000 shares of restricted stock following the first anniversary of their
election to the board. Ms. Blake received such an award during 1996 and Mr.
Romeril will receive such an award during March, 1997.

CERTAIN TRANSACTIONS

(a) In connection with the exercise of certain options granted under the
1981 Employee Stock Option Plan, the Company entered an installment option
purchase agreement (the "Agreement") with Leon C. Hirsch in 1984 where the
Agreement, as amended, permitted Mr. Hirsch to pay the option price in three
equal installments, with the last installment payable in 1999. Mr. Hirsch
agreed, at the request of the Company, to repay the outstanding principal option
price of $5,370,000 during 1994. In exchange, the Company agreed to continue to
award Mr. Hirsch a bonus equal to scheduled installments of interest payments on
the original option price and for the interest costs on a personal loan taken to
repay the option price. The interest rate on such personal loan is at an annual
rate of 7.25%; interest on the installment payments of interest at the original
option price ranges from 4.88% to 6.33%.

16
<PAGE> 19
Bonuses accrued in 1996 under the Agreement aggregated $624,841. Total
accrued interest under the Agreement at December 31, 1996 was $6,629,737. Under
the Agreement, an amount equal to 100% of the interest for the term of the
Agreement is to be paid as a bonus to Mr. Hirsch while he remains an employee of
the Company as and when such interest is due. See footnote (3) to the Summary
Compensation Table above.

(b) In 1996, Smyth Sanford & Gerard Reinsurance Intermediaries, Inc., of
which Mr. King, a director of the Company, is President and a director,
performed certain insurance brokerage services for the Company for which it
received compensation of $225,846. Mr. King may have benefited indirectly from
these transactions as an officer and employee of that firm.

EMPLOYMENT AGREEMENT

On January 30, 1996, the Company entered an agreement with Howard M.
Rosenkrantz, then Senior Vice President and Chief Financial Officer, providing
for certain separation benefits if Mr. Rosenkrantz decided to retire, provided
that he remained with the Company until March 31, 1997. The agreement was
terminated upon Mr. Rosenkrantz' election as President in July, 1996, and his
decision to forego retirement on March 31, 1997.

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 directors and executive officers and any persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission and the New York Stock Exchange various reports as to ownership of
such Common Stock. Such persons are required by Securities and Exchange
Commission regulation to furnish the Company with copies of all Section 16(a)
forms they file. Mr. Louis Mazzarese, Vice President, Quality and Regulatory
Affairs, inadvertently filed a Form 4 Report with respect to the purchase of 10
shares as a gift for a family member one month late. To the Company's knowledge,
based solely on its review of the copies of such reports furnished to the
Company and written representations to the Company that no other reports were
required, all the aforesaid Section 16(a) filing requirements were otherwise met
on a timely basis during 1996.

STOCKHOLDERS' PROPOSALS

Proposals of stockholders intended to be presented at the 1998 Annual
Meeting must be received at the Company's principal executive offices, 150
Glover Avenue, Norwalk, Connecticut 06856, Attention: Corporate Secretary, for
inclusion in the Company's Proxy Statement and form of proxy relating to that
Annual Meeting, no later than November 7, 1997.

DIRECTOR NOMINEES OR OTHER BUSINESS FOR PRESENTATION
AT THE ANNUAL MEETING

Shareholders who wish to present director nominations or other business
at the Annual Meeting are required to notify the Corporate Secretary of their
intent at least 60 days but not more than 120 days before the meeting and the
notice must provide information as required in the By-laws. A copy of these
By-law requirements will be provided upon request in writing to the Corporate
Secretary of the Company, 150 Glover Avenue, Norwalk, Connecticut 06856. This
requirement does not affect the deadline for submitting shareholder proposals
for inclusion in the Proxy Statement, nor does it apply to questions a
shareholder may wish to ask at the meeting.

EXPENSES OF SOLICITATION

The solicitation of proxies in the form enclosed is made on behalf of
the Board of Directors of the Company. The expenses of the solicitation of
proxies, including preparing, handling, printing and mailing the proxy
soliciting material, will be borne by the Company. Solicitation will be made by
use of the mails and, if necessary, by advertising, electronic
telecommunications and personal interview. The Company has retained the services
of Kissel-Blake Inc. to assist in connection with the soliciting of proxies by
such methods for a fee estimated at $13,000 plus out-of-pocket expenses.
Management may use the services of its directors, officers and employees in
soliciting proxies, who will receive no compensation therefor in addition to
their regular compensation, but who will be reimbursed for their out-of-pocket
expenses incurred. The Company will reimburse banks, brokers, nominees,
custodians and fiduciaries for their expenses in forwarding copies of the proxy
soliciting material to the beneficial owners of the stock held by such persons
and in requesting authority for the execution of proxies.

17
<PAGE> 20
OTHER MATTERS

The persons named in the enclosed form of proxy have no present
intention of bringing before the meeting for action any matters other than those
specifically referred to above, nor has management or the Board of Directors any
such intention, and none of such persons, management or the Board of Directors
is aware of any matters which may be presented by others. If any such business
should properly come before the meeting, the persons named in the form of proxy
intend to vote thereon in accordance with their best judgment.

By Order of the Board of Directors

PAMELA KOMENDA
Corporate Secretary

Dated: March 17, 1997
<PAGE> 21
PROXY

COMMON STOCK

UNITED STATES SURGICAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING MAY 1, 1997

The undersigned hereby constitutes and appoints John A. Bogardus, Jr., Leon C.
Hirsch and William F. May, and each of them, his true and lawful agents and
proxies with full power of substitution in each, to represent and vote all the
Common Shares held by the undersigned at the Annual Meeting of Stockholders of
UNITED STATES SURGICAL CORPORATION to be held at The Equitable building, 787
Seventh Avenue, New York, N.Y. 10019, on Thursday, May 1, 1997, at 2:00 P.M.
(local time), and at any adjournments thereof, as directed on this card upon
the matters set forth on the reverse side hereof, as described in the proxy
statement, and in their discretion upon any other business which may properly
come before said meeting. The undersigned hereby revokes all proxies heretofore
given with respect to such meeting.

Election of Directors -- Nominees:

Julie K. Blake, John A. Bogardus, Jr., Thomas R. Bremer, Leon C. Hirsch,
Turi Josefsen, Douglas L. King, William F. May, James R. Mellor, Barry
D. Romeril, Howard M. Rosenkrantz, Marianne Scipione, John R. Silber.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOX (SEE
REVERSE SIDE). SHARES WILL BE VOTED IN ACCORDANCE WITH SUCH CHOICES. IF YOU DO
NOT MARK ANY BOX THE SHARES WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS. THE NAMED PROXIES CANNOT VOTE YOUR SHARES UNLESS
YOU SIGN AND RETURN THIS CARD.

SEE REVERSE
SIDE

- FOLD AND DETACH HERE -
<PAGE> 22
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of Directors
and FOR Proposal 2.
- -------------------------------------------------------------------------------

1. Election of FOR WITHHELD
Directors / / / /
(see reverse)

For, exempt vote withheld from the following nominee(s):

----------------------------------

2. Amendment to FOR AGAINST ABSTAIN
Outside Directors / / / / / /
Stock Plan

- -------------------------------------------------------------------------------

SIGNATURE(S) DATE
--------------------------------------------------- -----------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.

The signer hereby revokes all proxies heretofore given by this signer to vote
at said meeting or any adjournments thereof.

- FOLD AND DETACH HERE -

[USSC LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.

SERVICES AVAILABLE TO USSC STOCKHOLDERS

A telephone response center is available at USSC's transfer agent, First
Chicago Trust Company of New York, to provide shareholders personal assistance
with:

- - Verifying the number of USSC shares in your account.

- - Replacing lost or stolen stock certificates.

- - Re-registration of stock in the event of marriage, death and estate
transfers, gifts of stock to minors in custodial accounts . . . any transfer
of stock ownership.

- - Inquiries about lost or stolen dividend checks and 1099-DIV's.

- - Any shareholder inquiries concerning USSC common and preferred stock.

- - Consolidation of accounts to eliminate multiple accounts for one holder and
certain duplicate stockholder mailings going to one address. (Dividend
checks, annual reports and proxy materials would continue to be mailed to
each stockholder).

- - Electronic Funds Transfer (Direct Deposit) of Dividends:

- Dividend monies deposited directly into your bank account.
- No worry of lost dividend checks.
- Immediate access to dividend money; no mail delays.
- Verification of dividend receipts on monthly bank statement.

Call First Chicago Trust Company of New York at (201) 324-1225, or write:

First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500

To Participate in Electronic Deposit of Dividends: (800) 870-2340
For hearing impaired: (201) 222-4955
E-mail address: [email protected]
Internet Address: http://www.fctc.com

SERIES A CONVERTIBLE
PREFERRED STOCK

UNITED STATES SURGICAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING MAY 1, 1997

The undersigned hereby constitutes and appoints John A. Bogardus, Jr., Leon C.
Hirsch and William F. May, and each of them, his true and lawful agents and
proxies with full power of substitution in each, to represent and vote all the
Series A Convertible Preferred Shares (each share being entitled to 47.50
votes, equivalent to .95 of a vote for each 1/50 Interest Depositary Share)
held by the undersigned at the Annual Meeting of Stockholders of UNITED STATES
SURGICAL CORPORATION to be held at The Equitable building, 787 Seventh Avenue,
New York, N.Y. 10019, on Thursday, May 1, 1997, at 2:00 P.M. (local time), and
at any adjournments thereof, as directed on this card upon the matters set
forth on the reverse side hereof, as described in the proxy statement, and in
their discretion upon any other business which may properly come before said
meeting. The undersigned hereby revokes all proxies heretofore given with
respect to such meeting.

Election of Directors -- Nominees:

Julie K. Blake, John A. Bogardus, Jr., Thomas R. Bremer, Leon C.
Hirsch, Turi Josefsen, Douglas L. King, William F. May, James R.
Mellor, Barry D. Romeril, Howard M. Rosenkrantz, Marianne Scipione,
John R. Silber.

SEE REVERSE
SIDE

-- FOLD AND DETACH HERE --
<PAGE> 24
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE.

1. Election of FOR WITHHELD
directors / / / /
(see reverse)

For, exempt vote withheld from the following nominee(s):

----------------------------------

2. Amendment to FOR AGAINST ABSTAIN
Outside Directors / / / / / /
Stock Plan

- -------------------------------------------------------------------------------

The signer hereby revokes all proxies heretofore given by this signer to vote
at said meeting or any adjournments thereof.

- FOLD AND DETACH HERE -

[USSC LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.

SERVICES AVAILABLE TO USSC STOCKHOLDERS

A telephone response center is available at USSC's transfer agent, First
Chicago Trust Company of New York, to provide shareholders personal assistance
with:

- - Verifying the number of USSC shares in your account.

- - Replacing lost or stolen stock certificates.

- - Re-registration of stock in the event of marriage, death and estate
transfers, gifts of stock to minors in custodial accounts . . . any transfer
of stock ownership.

- - Inquiries about lost or stolen dividend checks and 1099-DIV's.

- - Any shareholder inquiries concerning USSC common and preferred stock.

- - Electronic Funds Transfer (Direct Deposit) of Dividends:

Call First Chicago Trust Company of New York at (201) 324-1225, or write:

First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500

To Participate in Electronic Deposit of Dividends: (800) 870-2340
For hearing impaired: (201) 222-4955
E-mail address: [email protected]
Internet Address: http://www.fctc.com

Customer Service Representatives are available from 8:30 a.m. to 7:00 p.m.,
Monday through Friday; automated telephone service is available Monday through
Friday, 8:00 a.m. to 10:00 p.m., and Saturday, 8:00 a.m. to 3:30 p.m., Eastern
time.
<PAGE> 25
UNITED STATES SURGICAL CORPORATION
OUTSIDE DlRECTORS STOCK PLAN
(Restated to reflect amendments proposed to be approved by
stockholders at the Annual Meeting of
Stockholders to be held May 1, 1997)

1. Purpose. The purpose of the Plan is to advance the interests of the Company
and its stockholders by encouraging increased Common Stock ownership by members
of the Board who are not significant stockholders of the Company or employees of
the Company or any of its subsidiaries, in order to promote long-term
stockholder value through directors' continuing ownership of the Common Stock.

2. Definitions. Unless the context clearly indicates otherwise, the following
terms, when used in the Plan, shall have the meanings set forth below.

"Beneficial owner" shall have the meaning set forth in Rule 13d-3 under
the Securities Exchange Act of 1934.

"Board" shall mean the Board of Directors of the Company, as it may
from time to time be constituted.

"Change in Control" shall mean (i) the stockholders of the Company
approve any plan for the liquidation or dissolution of the Company or
for a consolidation or merger of the Company (A) in which the Company
would not be the continuing or surviving corporation, and pursuant to
which shares of the Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in
which the holders of the Common Stock immediately prior to the merger
have the same proportionate ownership of Common Stock of the surviving
corporation immediately after the merger, or (B) in which the Company
is the surviving corporation but the holders of the Common Stock prior
to the merger or consolidation will not own 50% or more of the
outstanding voting stock of the surviving corporation immediately after
such merger or consolidation, (ii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company, (iii) any
person, as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial
owner of 30% or more of the Common Stock, or (iv) during any period of
two consecutive years or less, individuals who at the beginning of such
period constitute the entire Board shall cease for any reason to
constitute a majority thereof unless the election, or the nomination
for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the period.

"Committee" shall mean the Compensation/Option Committee of the Board,
as it may from time to time be constituted, or any other committee of
the Board appointed by the Board to administer the Plan.

"Common Stock" shall mean the Common Stock, par value $.10 per share,
of the Company, and shall include the Common Stock as it may be changed
from time to time as described in Paragraph 8 of the Plan.

"Company" shall mean United States Surgical Corporation and any
successor by merger or consolidation.

"Eligible Director" shall mean a member of the Board who is not, and
has not been during the preceding 12 months, an employee of the Company
or any of its subsidiaries and who is not the beneficial owner of five
percent or more of the outstanding Common Stock.
<PAGE> 26
"Fair Market Value" shall mean the last sale price of the Common Stock
on the date in question, as reported on the New York Stock Exchange
Composite Transactions or, if the New York Stock Exchange is closed on
that date, on the last preceding date on which the New York Stock
Exchange was open for trading.

"Grantee" shall mean an Eligible Director who has been awarded a Stock
Award or granted an Option.

"Option" shall mean a nonqualified option to purchase authorized but
unissued Common Stock or Common Stock held in the treasury granted by
the Company pursuant to the terms of the Plan.

"Plan" shall mean the United States Surgical Corporation Outside
Directors Stock Plan, as set forth herein and as amended from time to
time.

"Stock Award" shall mean an award of restricted Common Stock from
authorized but unissued Common Stock or Common Stock held in the
treasury made by the Company pursuant to the terms of the Plan.

"Subsidiary" shall mean any corporation at least 50% of whose
outstanding voting stock is owned, directly or indirectly, by the
Company.

3. Administration. The Plan shall be administered by the Committee. The
Committee shall have all the powers vested in it by the terms of the Plan, such
powers to include authority (within the limitations described herein) to
prescribe the form of the agreements embodying Stock Awards and Options. The
Committee shall, subject to the provisions of the Plan, grant Stock Awards and
Options pursuant to the Plan and shall have the power to construe the Plan, to
determine all questions arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable. Any
decision of the Committee in the administration of the Plan, as described
herein, shall be final and conclusive. The Committee may act only by a majority
of its members in office, except that the members thereof may authorize any one
or more of their members or the Secretary or any other officer of the Company to
execute and deliver documents on behalf of the Committee. No member of the
Committee shall be liable for anything done or omitted to be done by him or by
any other member of the Committee in connection with the Plan, except for his
own willful misconduct or as expressly provided by statute.

4. Participation. Each Eligible Director shall be eligible to receive Stock
Awards and Option grants in accordance with Paragraphs 5, 6 and 7 below.

5. Awards and Grants Under the Plan.

(a) Awards and grants under the Plan shall include only Stock Awards
and Option Grants, subject to the terms, conditions and restrictions
specified in Paragraphs 6 and 7 below. There may be issued under the
Plan pursuant to Stock Awards and the exercise of Options an aggregate
of not more than 260,000 shares of Common Stock, subject to adjustment
as provided in Paragraph 8 below. Shares of Common Stock that are the
subject of a Stock Award but are forfeited, or are the subject of an
Option but not purchased prior to the expiration of the Option, shall
thereafter be considered unissued for purposes of the maximum number of
shares that may be issued under the Plan, and may again be the subject
of Stock Awards or Option grants under the Plan.

(b) An Eligible Director to whom a Stock Award is provided to be made
under the Plan, or to whom an Option is provided to be granted or is
granted under the Plan (and any person succeeding to such an Eligible
Director's right pursuant to the Plan), shall have no rights as a
stockholder with respect to any shares of Common Stock issuable
pursuant to any such Stock Awards or Option until such Stock Award is
made or such Option is exercised. Except as provided in Paragraph 8
below, no

2
<PAGE> 27
adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date a Stock
Award is made or an Option is exercised. Except as expressly provided
for in the Plan, no Eligible Director or other person shall have any
claim or right to be granted a Stock Award or an Option. Neither the
Plan nor any action taken hereunder shall be construed as giving any
Eligible Director any right to be retained in the service of the
Company.

6. Stock Awards. Each Eligible Director shall be granted one Stock Award
consisting of 4,000 shares of Common Stock (subject to adjustment as provided in
Paragraph 8) effective the later of (i) one year following the date such
Eligible Director is first elected to the Board, and (ii) the date of the
initial approval of the Plan by the stockholders of the Company. Each Stock
Award shall be evidenced by an Agreement in such form as the Committee shall
prescribe from time to time in accordance with the Plan and shall comply with
the following terms and conditions, and such additional terms and conditions not
inconsistent with the Plan as from time to time may be prescribed by the
Committee.

(a) Shares of Common Stock awarded as a Stock Award shall be issued in
the name of the Grantee and a certificate therefor shall be delivered
to the Grantee as soon as practicable after the award is made.

(b) Shares of Common Stock that are the subject of a Stock Award shall
be issued without any payment of cash consideration by the Grantee to
the Company. Shares that are the subject of a Stock Award shall be
fully paid from the date of the award.

(d) The shares that are the subject of each Stock Award shall not be
sold, transferred, pledged, hypothecated or otherwise disposed of until
the Vesting Period applicable to such shares has terminated. The
Vesting Periods for each Stock Award shall be one year from the date of
the Stock Award for 25% of the shares awarded, two years from the date
of the Stock Award for 25% of the shares awarded, three years from the
date of the Stock Award for 25% of the shares awarded and four years
from the date of the Stock Award for the remaining 25% of the shares
awarded, subject to paragraph 6(f).

(e) Subject to paragraph 6(f), upon the termination of the Grantee's
service on the Board of Directors of the Company for any reason during
a Vesting Period, all the shares that are then subject to a Vesting
Period that has not yet terminated shall thereupon be forfeited and the
shares and all rights attaching thereto shall be automatically
transferred and reacquired by the Company at no cost to the Company.

(f) Notwithstanding any other terms of the Plan, if the Grantee has
been in continuous service on the Board since the date of the Stock
Award to him and while so serving shall die or become permanently
disabled, then all Vesting Periods shall terminate upon such event.
Notwithstanding any other terms of the Plan, if the Grantee has been in
continuous service on the Board since the date of the Stock Award to
him and while so serving shall die or become permanently disabled or
his service on the Board shall be terminated after a Change in Control
occurs, then no shares that remain subject to a Vesting Period at the
date of such event shall be forfeited due to such event.

(g) Each certificate issued in respect of a Stock Award shall bear the
following or a similar legend:

"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions, including
forfeiture, contained in the United States Surgical Corporation Outside
Directors Stock Plan and an Award Agreement entered into between the
registered owner

3
<PAGE> 28
and such corporation. A copy of such Plan and Agreement is on file in
the offices of the corporation."

(h) Subject to the restrictions herein contained, a Grantee, as owner
of shares that are the subject of a Stock Award, shall have all of the
rights of a stockholder including the right to vote such shares and to
receive all dividends, cash or stock, paid or delivered thereon, from
the date of the Stock Award.

(i) Upon the termination of the Vesting Periods prior to forfeitures
such number of shares as to which such termination applies shall be
vested in the Grantee, and at the request of the Grantee the legend on
the shares for which Vesting Periods have terminated shall be removed,
and an unlegended certificate issued in exchange therefor.

(j) Each Eligible Director granted a Stock Award shall, no later than
the date of the termination of each Vesting Period, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment
of, any federal, state or local taxes of any kind required by law to be
withheld with respect of the shares of Common Stock as to which the
Vesting Period has terminated. Each Grantee agrees that the Company
shall, to the extent permitted by law, have the right to deduct from
any payments of any kind otherwise due to the Grantee any federal,
state or local taxes of any kind required by law to be withheld with
respect to shares of Common Stock subject to a Stock Award.

(k) A Grantee of a Stock Award may elect, within 30 days of the date of
award, and upon written notice of election mailed to the Committee,
care of the Company's principal office, to realize income for federal
income tax purposes equal to excess of the Fair Market Value of the
shares of Common Stock awarded over the amount paid for such shares on
the date of the Stock Award. In such event the Grantee shall make
arrangements satisfactory to the Committee to pay in the year of such
Stock Award any federal, state or local taxes required to be withheld
with respect to such shares. If the Grantee shall fail to make such
payments, the Company shall, to the extent permitted by law, have the
right to deduct from any payments of any kind otherwise due to the
Grantee in the year of such Stock Award any federal, state or local
taxes of any kind required by law to be withheld with respect to such
shares of Common Stock.

7. Option Grants. Each Eligible Director shall be automatically granted an
Option to purchase 4,000 shares of Common Stock (subject to adjustment as
provided in Paragraph 8) each year, effective upon his reelection to the Board
by the stockholders of the Company. Each Option shall be evidenced by an
agreement in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions and such additional terms and conditions not inconsistent with the
Plan as may from time to time be prescribed by the Committee.

(a) The Option exercise price per share shall be the Fair Market Value
of a share of Common Stock: on the date the Option is granted.

(b) The Option shall not be transferable by the Grantee otherwise than
by will or the laws of descent and distribution, and shall be
exercisable during his lifetime only by him.

(c) The Option shall not be exercisable before the expiration of one
year from the date it is granted and after the expiration of up to ten
years from the date it is granted, and may be exercised during such
period as follows: the Option shall become exercisable with respect to
one-half (50%) of the Common Stock covered by it beginning with the
first anniversary of the date it is granted and shall become
exercisable with respect to the remaining one-half (50%) of the Common
Stock covered by it beginning with the second anniversary of the date
it is granted; provided that an

4
<PAGE> 29
Option shall automatically become immediately exercisable in full if
the Grantee ceases to be an Eligible Director due to his death or
permanent disability.

(d) Payment of the Option price shall be made at the time the Option is
exercised and shall be made in United States dollars by cash or check.

(e) An Option shall not be exercisable unless the person exercising the
Option has been, at all times during the period beginning with the date
of grant of the Option and ending on the date of such exercise, in
continuous service on the Board, except that

(i) if any Grantee of an Option shall die or become
permanently disabled or shall retire with the consent of the
Board, holding an Option that has not expired and has not been
fully exercised, he or his executor, administrators, heirs or
distributees as the case may be, may, at any time within one
year after the date of such event (but in no event after the
Option has expired under the provisions of subparagraph
7(c)(i) above), exercise the Option with respect to any shares
as to which the Grantee could have exercised the Option at the
time of his death or disability; or

(ii) if any Grantee shall cease to be a director of the
Company due to a Change in Control, holding an Option that has
not expired and has not been fully exercised, he may exercise
the Option in accordance with the terms of the original option
agreement notwithstanding the termination of his service on
the Board.

(iii) if a Grantee shall cease to serve as a director of the
Company for any reason other than those set forth in 7(e)(i)
or 7(e)(ii) above, while holding an Option that has not
expired and has not been fully exercised, the Grantee, at any
time within three months of the date he ceased to be such an
Eligible Director (but in no event after the Option has
expired under the provisions of subparagraph 7(c)(i) above),
may exercise the Option with respect to any shares of Common
Stock as to which he could have exercised the Option on the
date he ceased to be such an Eligible Director.

(f) Each Grantee of an Option shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of,
any federal, state or local taxes of any kind required by law to be
withheld with respect to the shares of Common Stock as to which an
Option is being exercised.

8. Dilution and Other Adjustments. In the event of any change in the outstanding
Common Stock by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination or exchange of shares or
other similar event, the number or kind of shares that may be issued under the
Plan pursuant to subparagraphs 5(a), 6 and 7 above, the number or kind of shares
subject to any outstanding Option, and the Option price per share under any
outstanding Option, shall be automatically adjusted so that the proportionate
interest of the Eligible Directors or of the Grantee shall be maintained as
before the occurrence of such event. Any adjustment in outstanding Options shall
be made without change in the total Option exercise price applicable to the
unexercised portion of such Options and with a corresponding adjustment in the
Option exercise price per share. Any adjustment permitted by this Paragraph
shall be conclusive and binding for all purposes of the Plan.

9. Miscellaneous Provisions.

(a) An Eligible Director's rights and interests under the Plan may not
be assigned or transferred in whole or in part either directly or by
operation of law or otherwise (except in the event of a participant's
death, by will or the laws of descent and distribution), including, but
not by way of limitation, execution, levy, garnishment, attachment,
pledge, bankruptcy or in any other manner,

5
<PAGE> 30
and no such right or interest of any Eligible Director in the Plan
shall be subject to any obligation or liability of such Eligible
Director.

(b) If the shares of Common Stock that are the subject of a Stock Award
or Option are not registered under the Securities Act of 1933, as
amended, pursuant to an effective registration statement, the Grantee,
if the Committee shall deem it advisable, may be required to represent
and agree in writing (i) that any shares of Common Stock acquired by
such Grantee pursuant to the Stock Award or the Plan will not be sold
except pursuant to an exemption from registration under said Act and
(ii) that such Grantee is acquiring such shares of Common Stock for his
own account and not with a view to the distribution thereof. No shares
of Common Stock shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance
with applicable federal, state and other securities laws.

(c) A Grantee, with the consent of the Committee, may designate a
person or persons to receive, in the event of his death, any Common
Stock or rights to which he would then be entitled under the Plan. Such
designation shall be made upon forms supplied by the Company and may be
revoked in writing. If a Grantee fails to so designate a beneficiary,
then his estate shall be deemed to be his beneficiary.

(d) The expenses of the Plan shall be borne by the Company. The Plan
shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to
assure the making of Stock Awards or the issuance of shares upon
exercise of any Option, and the issuance of shares upon the making of
Stock Awards and upon exercise of Options shall be subordinate to the
claims of the Company's general creditors.

(e) By accepting any Stock Awards, Options or other benefits under the
Plan, each Grantee and each person claiming under or through him shall
be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, the terms and conditions of the Plan
and any action taken under the Plan by the Company or the Board.

(f) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Stock Awards and
Options or any Common Stock issued pursuant thereto as may be required
by the Securities Exchange Act of 1934, as amended, or any other
applicable statute, rule or regulation.

10. Amendment. The Plan may be amended at any time from time to time by the
Board as the Board shall deem advisable, provided, however, that except as
provided in Paragraph 8 above, the Board may not, without further approval by
the stockholders of the Company, increase the maximum number of shares of Common
Stock as to which Stock Awards and Options may be granted, increase the number
of shares to be awarded pursuant to each Stock Award or granted under each
Option, reduce the Vesting Period for Stock Awards, reduce the minimum Option
exercise price, extend the period during which Stock Awards or Options may be
granted or Options may be exercised or change the definition of an Eligible
Director. No amendment of the Plan shall materially and adversely affect any
right of any Grantee with respect to any Stock Award or Option theretofore
granted without such Grantee's written consent.

11. Termination. This Plan shall terminate upon the earlier of the following
dates or events to occur:

(a) upon the adoption of a resolution of the Board terminating the
Plan; or

(b) upon the award and vesting pursuant to Stock Awards or the purchase
upon exercise of Options of all the shares of Common Stock provided to
be awarded or the subject of Options under Paragraph 5(a), as adjusted
pursuant to Paragraph 8.

6
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No termination of the Plan shall materially and adversely affect any of
the rights or obligations of any Grantee, without his consent, under
any Stock Award or Option theretofore granted under the Plan.