FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR QUARTER ENDED September 30, 1997 COMMISSION FILE NO. 0-12025
CIRCON CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-3079904
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6500 Hollister Avenue, Santa Barbara, California 93117-3019
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (805) 685-5100
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter
period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of Common Shares Outstanding at September 30, 1997: 13,280,476
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIRCON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND SEPTEMBER 30,1997
ASSETS
(In thousands, except for share amounts)
(UNAUDITED)
December 31, September 30,
1996 1997
--------- ----------
CURRENT ASSETS:
Cash and temporary cash investments $ 6,234 $ 3,759
Marketable securities 1,074 1,103
Accounts receivable, net of allowance of
$1,644 in 1996 and $1,954 in 1997 28,497 33,709
Inventories 35,123 40,321
Prepaid expenses and other assets 1,939 1,999
Deferred income taxes 8,046 8,046
-------- --------
Total current assets 80,913 88,937
------- --------
DEFERRED INCOME TAXES 831 801
PROPERTY, PLANT, AND EQUIPMENT, NET 53,841 54,483
OTHER ASSETS, at cost net of accumulated amortization 33,533 31,244
-------- -------
Total assets $ 169,118 $ 175,465
======== ========
The accompanying notes are an integral part of
these consolidated balance sheets.
CIRCON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND SEPTEMBER 30,1997
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands, except for share amounts)
(UNAUDITED)
December 31, September 30,
1996 1997
---------- -------------
CURRENT LIABILITIES:
Current maturities of long-term obligations $ 429 $ 370
Accounts payable 6,344 4,913
Accrued liabilities 12,000 12,440
Customer deposits 879 995
--------- ------------
Total current liabilities 19,652 18,718
--------- ------------
NONCURRENT LIABILITIES:
Long-term obligations 50,565 55,665
--------- ------------
SHAREHOLDERS' EQUITY:
Preferred stock: $0.01 par value
1,000,000 shares authorized, none
outstanding
Common stock: $0.01 par value
50,000,000 shares authorized
13,239,746 and 13,280,476 issued and outstanding
in 1996 and 1997, respectively 132 133
Additional paid-in capital 104,426 104,837
Cumulative translation adjustment (502) (1,200)
Accumulated deficit (5,155) (2,688)
---------- -----------
Total shareholders' equity 98,901 101,082
---------- ----------
Total liabilities and shareholders'
equity $ 169,118 $ 175,465
========== ===========
The accompanying notes are an integral part of
these consolidated balance sheets.
<TABLE>
<S>
CIRCON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30, And Nine Months Ended September 30,
(In thousands, except per share amounts)
Three months ended Ni
September 30,
<C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
1996 1997 1996 1997
------------- ---------- --------- ----------
NET SALES $ 38,369 $ 41,034 $ 115,393 $ 119,882
Cost of sales 17,030 18,777 51,260 54,377
------------- --------- --------- ----------
GROSS PROFIT 21,339 22,257 64,133 65,505
OPERATING EXPENSES:
Research and development 3,174 2,658 9,209 8,185
Selling, general and administrative 15,808 16,552 48,026 50,748
Facilities shutdown expense (see note 2) 500 - 2,629 -
Reorganization (see note 3) - 150 - 150
---------- -------- --------- ----------
Total operating expenses 19,482 19,360 59,864 59,083
INCOME FROM OPERATIONS 1,857 2,897 4,269 6,422
USSC Tender Offer (see note 1) (3,200) - (3,200) -
Interest income 86 36 347 217
Interest expense (1,121) (1,065) (3,251) (2,984)
Other expense, net 32 35 (83) 141
---------- ------- --------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (2,346) 1,903 (1,918) 3,796
Provision (benifit) for income taxes (821) 667 (757) 1,329
Non-recurring tax benifit (see note 4) - - (2,000) -
---------- ------- ---------- ----------
NET INCOME (LOSS) $ (1,525) $ 1,236 $ 839 $ 2,467
========== ======= ========== ==========
EARNINGS PER SHARE: $ (0.11) $ 0.09 $ 0.06 $ 0.18
========== ======= ========== ==========
Weighted Average Number of Shares of Common
Stock and Equivalents Outstanding 13,431 13,680 13,201 13,655
----------- ------- ---------- -----------
The accompanying notes are an integral part of
these consolidated statements.
</TABLE>
CIRCON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Nine Months Ended September 30,
(In thousands)
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1997
-------- --------
Net income $ 839 2,467
Adjustments to reconcile net
income to cash provided by (used in)
operating activities:
Depreciation and amortization 6,364 6,462
Deferred income taxes (2,861) 30
Change in assets and liabilities:
Accounts receivable 546 (5,212)
Inventories (2,229) (5,198)
Prepaid expenses and other assets (920) (79)
Other assets 96 157
Accounts payable (2,636) (1,412)
Accrued liabilities 2,171 381
Customer deposits 321 116
---------- -----------
Net cash provided by (used in) operating activities $ 1,691 $ (2,288)
---------- -----------
CIRCON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Nine Months Ended September 30,
(In thousands)
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM INVESTING ACTIVITIES 1996 1997
--------- ----------
Disposals of marketable securities, $ 4,860 -
Purchase of marketable securities - (29)
Purchases of property, plant and equipment (3,611) (4,806)
Purchase of intangible - (166)
Cumulative translation adjustment 149 (698)
--------- --------
Net cash provided by (used in) investing acti 1,398 (5,699)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 4,349 412
Repayments of capital lease obligations (60) -
Repayments of long-term obligations (17,283) -
Borrowings under long-term obligations - 5,100
Tax benefit from exercise of stock options 3,307 -
---------- ---------
Net cash provided by (used in) financing activities (9,687) 5,512
--------- ----------
Net decrease in cash and temporary
cash investments (6,598) (2,475)
Cash and temporary cash investments, beginning
of period 17,586 6,234
--------- ---------
Cash and temporary cash investments, end of period $ 10,988 $ 3,759
======== =========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 1,861 $ 2,921
======== ========
Cash paid for income taxes (net of refunds received) $ 992 $ 38
======== ========
The accompanying notes are an integral part of
these consolidated statements.
CIRCON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(In Thousands except Share Information)
General
- -------
The accompanying condensed consolidated financial
statements include the accounts of Circon Corporation (the
Company) and its subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation.
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. It is suggested that these
condensed consolidated financial statements be read in conjunction
with the statements and notes thereto included in the Company's
annual report for the year ended December 31, 1996.
The Company does not believe any recently issued
accounting standards will have a material impact on its financial
condition or its results of operations.
(1) USSC Tender Offer
-----------------
On August 1, 1996, United States Surgical Corporation
("USSC") through its wholly-owned subsidiary, USS Acquisition
Corp., launched an unsolicited tender offer (the "Offer") for all of the
common stock of the Company at a price of $18 per share. The
Board of directors considered the Offer and recommended that
stockholders reject it so the Company could continue to pursue its
strategic plan. In reaching its conclusion, the Board retained and
consulted with Bear Stearns and Company as financial advisors
and Wilson, Sonsini, Goodrich & Rosati as legal advisors. In
addition, the Company retained The Abernathy/MacGregor Group
Inc. to advise the Company on public relations matters, Corporate
Investor Communications, Inc. to assist the Company in connection
with communications to stockholders and William M. Mercer
Incorporated to advise the Board of Directors on certain employee
matters. In connection with rejecting the Offer, the Company
adopted a Stockholders Right Plan and an Employee Retention
Plan, both of which are the subject of a lawsuit brought by USSC
against the Company and certain of its officers and directors. In
addition, the Company and certain of its directors and officers are
also defendants in certain class action lawsuits purportedly
brought on behalf of Circon stockholders. On December 16, 1996,
USSC reduced the offer to $17 per share and extended the
solicitation until February 13, 1997. On February 13, 1997, the offer
was again extended to June 16, 1997. On June 19, 1997, USSC
modified their tender offer by lowering the price to $14.50 and
reducing the number of shares to 973,174 or 7.3% of Circon's
total outstanding shares. On July 15, 1997, USSC purchased
973,174 shares at $14.50 per share. On August 5, 1997, USSC
launched a new tender offer for all of the common stock of the
Company at a price of $16.50 per share. On October 22, 1997,
USSC extended the offer of $16.50 per share until November 25,
1997. The Company charged $3,000 in 1996 primarily for expenses
related to the Offer and defending the stockholder litigation.
(2) Facilities Shutdown Expense
----------------------------
During the second quarter of 1996, the Company
announced the planned closure of its Langhorne, Pennsylvania
facility. The closure was completed by the end of 1996 and has
resulted in reduced operating costs through human resource and
facility rationalization. In connection with this plan, the Company
recorded a pre-tax charge of $2,629 consisting of $2,174
for employee severance, relocation and out-placement costs and
$455 for the cancellation of operating leases, relocation of product
and equipment and other facility closure related costs.
(3) Reorganization
---------------
During the third quarter of 1997 the Company undertook
a cost reduction/income enhancement program to improve operating
margins in the second half of 1997 and 1998. As part of this program,
the Company eliminated certain domestic sales territories and
realigned others. The Company recorded a $150 charge for the
payment of employee severance.
(4) Non-Recurring Tax Benefit
-------------------------
During the second quarter of 1996, Cabot Medical was
liquidated and merged into Circon. Prior to the merger, the Cabot
net operating loss carryforwards (NOLS) had a valuation allowance
since historical data did not support current recognition of the loss
carryforwards. With the liquidation, Circon's ability to utilize these
NOLS became more probable than not and the Company recognized
a non-recurring tax benefit by reducing the valuation allowance by
$2,000 in 1996.
(5) Inventories
-----------
Inventories include costs of materials, labor and
manufacturing overhead and are priced at the lower of cost
(first-in, first-out) or market. Inventories at December 31, 1996
and September 30, 1997 consist of the following:
1996 1997
-------- -------
Raw materials $11,995 $12,767
Work in process 17,938 20,007
Finished goods 5,190 7,547
-------- -------
$35,123 $40,321
======== =======
(6) Long-Term Obligations
---------------------
Long-term obligations as of December 31, 1996 and
September 30, 1997 consist of the following:
1996 1997
------- --------
Revolving credit facility $46,500 $52,500
Industrial development authority
bonds due December 2, 2006 4,435 3,535
Other 59 -
------- --------
50,994 56,035
Less: current maturities (429) (370)
-------- ---------
$50,565 $55,665
======== =========
The Company has a $75,000 reducing revolving credit facility
(the "Credit Facility") which provides for direct borrowings and a
maximum of $5,000 in letters of credit. The Company has the option
to borrow money based upon (i) the higher of the prime rate or an
adjusted federal funds rate or (ii) an adjusted eurodollar rate.
The unused portion of the Credit Facility has a commitment fee
which ranges from .1875% to .375%. The Credit Facility, which
expires August 1, 2001, contains certain restrictive financial
covenants and is secured by substantially all of the assets of the
Company.
The Company has a letter of credit in the amount of
approximately $4,577 as of June 30, 1997 underlying $7,000 of tax
exempt Industrial Development Authority Bonds (the "Bonds") issued
in December 1991 with a 15 year maturity requiring monthly interest
payments and annual principal payments. The letter of credit has a
renewable 5 year term and carries an annual fee of 1% of the
outstanding bond principal amount. The bonds are subject to
weekly repricing at an interest rate based on the remarketing
agents' professional judgment and prevailing market conditions
at the time. The Bonds and the letter of credit facility are
collateralized by the Company's two Langhorne, Pennsylvania
facilities. These facilities had a net carrying value of $4,453 as
of June 30, 1997.
Future principal maturities of the long term obligation are
as follows:
1998 $ 390
1999 405
2000 430
2001 52,950
2002 475
Thereafter 1,015
---------
$55,665
==========
(7) Litigation
----------
See Discussion of Legal Proceedings in Part II, Item 1.
ITEM 2. Management's Discussion and Analysis of
Operations and Financial Condition
Three Months Ended September 30, 1997
Compared to Three Months Ended September 30, 1996
Sales
------
Third quarter sales were up 6.9% to $41.0 million compared to
$38.4 for the 1996 quarter. Sales by the U.S. sales force totaled
$32.4 million, a 8.5% increase over third quarter 1996. Price
increases had only a 2% impact on sales, with the rest of the
increase due to volume.
Sales of other domestic medical products were $3.0 million,
up 2.9% over the comparable 1996 period. International sales were
up 2.8% over prior year.
Gross Profit
------------
Gross profit for the quarter totaled $22.3 million compared to
$21.3 million for the third quarter of 1996. Gross profit percentage
of 54.2% of sales for the quarter was down from the comparable
1996 period due to variations in the mix of products sold and
several large orders which carried slightly lower prices.
Operating Expenses
------------------
Operating expenses for the third quarter of 1997 were $19.4
million compared to $19.5 million for third quarter 1996. Third
quarter 1997 operating expenses include a $0.2 million charge for
reorganization and third quarter 1996 operating expenses included
a $0.5 million charge for the shutdown of Cabot Medical's
Langhorne facility. Excluding the extraordinary charges in 1997
and 1996, operating expenses increased only 1.2% even though
third quarter sales were up 6.9%. A program to reduce operating
and manufacturing overhead expenses was initiated in mid-August
1997.
Selling, and general and administrative expenses totaled $16.6
million, an increase of 4.7% from the comparable 1996 quarter.
This increase resulted from a 1997 sales incentive program,
increased sales commissions (due to higher sales), and expenses
associated with the new French sales force. These expenditures
are all focused on improving overall sales performance.
Research and Development expenditures were $2.7 million, or
6.5% of sales and down from the prior year, even though new
product introductions remain at a high level. Consolidating R&D
efforts into three centers of excellence, as a result of closing Cabot
Medical's Langhorne facility, has resulted in greater efficiency and
lower costs.
Income/EPS
----------
As a result of increased sales and factors discussed above,
third quarter operating income was $2.9 million compared to $1.9
million in 1996. In the third quarter of 1997 a $0.2 million charge
was recorded for reorganization and in the third quarter of 1996
a $0.5 million charge was recorded for the shutdown of the Cabot
Medical, Langhorne facility.
Income before taxes for the quarter was $1.9 million compared
to a $2.3 million loss in the 1996 quarter. A $3.2 million charge for
expenses associated with the U.S. Surgical hostile tender offer was
included in the 1996 quarter.
Net income totaled $1.2 million or $0.09 per share for the quarter
compared to $1.5 million loss or $(0.11) per share for the 1996 period.
Nine Months Ended September 30, 1997
Compared to Nine Months Ended September 30, 1996
Sales
- -----
Nine month sales totaled $119.9 million compared to $115.4
million for the same 1996 period. Sales by the U.S. sales force
were $91.3 million and international sales totaled $17.7 million
compared to $88.1 million and $17.4 million, respectively, for the
same 1996 period. Other domestic sales were up 6.5% and
Industrial sales were up 29.3%. Price increases accounted for
less than 1% of the sales increase.
Gross Profit
- ------------
Gross profit for the nine months of 1997 totaled $65.5 million
compared to $64.1 million in 1996. Gross profit as a percentage
of sales for the nine months was 54.6% of sales, down from
55.6% for 1996. This decrease was due to product mix.
Operating Expenses
- ------------------
Total operating expenses for the nine months of 1997 were
$59.1 million compared to $59.9 million for 1996. The 1997
period includes a $0.2 million charge for reorganization and the
1996 period includes a $2.6 million charge related to closing
Cabot Medical's Langhorne facility.
Selling, general and administrative expenses were $50.7
million, up 5.7% over prior year. This reflects increased expenses
in four areas: the first national sales meeting since the sales force
merge in October 1995; expenses associated with the new French
direct sales force; increased sales commissions due to higher
sales; and a 1997 incentive program. These expenditures are all
focused on improving overall sales performance.
Research and Development expenses were $8.2 million
compared to $9.2 million for 1996. Although expenses were down,
new product introductions have remained at a high level. This
was accomplished by consolidating R&D efforts into three centers
of excellence as a result of closing Cabot Medical's Langhorne
facility, which resulted in greater efficiency and lower costs.
Income/EPS
- ----------
Operating income for the nine months of 1997 totaled $6.4
million compared to $4.3 million for 1996 due to the factors
discussed above. A $0.2 million charge related to reorganization
was included in the 1997 period and a $2.6 million charge related
to closing Cabot Medical's Langhorne facility was included in the
1996 period.
Net income totaled $2.5 million or $0.18 per share compared
to $0.8 million or $0.06 per share for the same 1996 period.
Liquidity and Capital Resources
Circon's financial position remains strong with working capital
of $70.2 million. Circon's current ratio is 4.8:1.
For the year, $5.1 million of increased borrowings was used
to finance the net $2.3 million of cash used in operating activities.
Accounts Receivable has increased $5.2 million due to
significant sales occurring in the last month of the 2nd and 3rd
quarter 1997, coupled with a higher mix of international customers
which have longer payment terms.
Inventory increased $5.2 million from year-end due to a build
in raw materials and work-in-process for new products, and increased
stock levels to accommodate increased marketing emphasis on
disposable products.
Circon has a $75.0 million reducing secured revolving credit
line with a syndicate of banks. There is currently $52.5 million
outstanding. $50.5 million was used to repurchase Cabot notes
in January 1996 (see footnote 6).
The Company believes that cash flow from operations, existing
cash and marketable securities and available cash from bank credit
facilities are adequate to fund the Company's existing operations for
the foreseeable future.
Forward Looking Statements
See Item 5 regarding forward looking statements in Part II and
certain important cautionary statements.PART II
Item 1. Legal Proceedings.
On May 28, 1996, two purported stockholders of the Company,
Bart Milano and Elizabeth Heaven, commenced an action in the
Superior Court of the State of California for the County of Santa
Barbara, Case No. 213476, purportedly on behalf of themselves
and all others who purchased the Company's common stock
between May 2, 1995 and February 1, 1996, against the Company,
Richard A. Auhll, Rudolf R. Schulte, Harold R. Frank, John F.
Blokker, Paul W. Hartloff, Jr., R. Bruce Thompson, Jon D. St. Clair,
Frederick A. Miller, David P. Zielinski, Winton L. Berci, Jurgen
Zobel, Trevor Murdoch and Warren G. Wood. That complaint
alleged that defendants violated Sections 11 and 15 of the Federal
Securities Act of 1933, as amended, Sections 25400-02 and
25500-02 of the California Corporations Code, and Sections
1709-10 of the California Civil Code, by disseminating allegedly
false and misleading statements relating to Circon's acquisition
of Cabot Medical Corp. by merger and to the combined
companies' future financial performance. In general the complaint
alleged that defendants knew that synergies from the merger
would not be achieved, but misrepresented to the public that they
would be achieved, in order to obtain approval for the merger so
they would be executives of a much larger corporation. This
alleged conduct allegedly had the effect of inflating the Company's
stock price. On July 29, 1996, defendants filed demurrers to the
complaint on the ground that plaintiffs' allegations fail to state facts
sufficient to constitute a cause of action. On or about August 6,
1996, plaintiffs served their response to defendants' demurrers,
stating their intention to file an amended complaint prior to the
hearing on defendants' demurrers. On September 20, 1996,
plaintiffs voluntarily dismissed Rudolf R. Schulte, Harold R. Frank,
John F. Blokker and Paul W. Hartloff, Jr. from the action, without
prejudice. On September 30, 1996, plaintiffs, joined by a third
purported stockholder of the Company, Adam Zetter, filed a first
amended complaint against the remaining defendants. Plaintiffs'
amended complaint is substantially similar to the original complaint,
but adds a new purported cause of action under the unfair business
practices provisions of the California Business & Professions Code,
Sections 17200, et seq. and 17500, et seq. Like the original
complaint, the amended complaint seeks compensatory and/or
punitive damages, attorneys fees and costs, and any other relief
(including injunctive relief) deemed proper. On December 2, 1996,
defendants filed demurrers to the amended complaint again on the
grounds that plaintiffs' allegations fail to state facts sufficient to
constitute a cause of action. On April 17, 1997, a hearing was held
regarding the defendants demurrers to the first amended complaint.
By order dated May 28, 1997, the Superior Court overruled the
defendant's demurrers to the amended complaint and dissolved the
stay of discovery. The parties are now engaged in discovery
proceedings. The Company believes plaintiffs' allegations to be
without merit and intends to vigorously defend the lawsuit.
On August 15, 1996, an action captioned Steiner v. Auhll,
et al., No. 15165 was filed in the Court of Chancery of the State of
Delaware. Shortly thereafter, three substantially similar actions
were filed by three other individuals claiming to be stockholders
of Circon. All four actions allege that Circon and certain of its
officers and directors breached their fiduciary duties to Circon's
stockholders by taking steps to resist the hostile tender offer by
U.S. Surgical Corporation announced on August 2, 1996. All four
of these actions purport to be brought as class actions on behalf
of all Circon stockholders. On August 16, 1996, a separate action
captioned Krim v. Circon Corp., et al., No. 153767, was filed in the
Superior Court of California in Santa Barbara. The plaintiff in that
action also claims to be a Circon stockholder and purports to bring
his claim as a class action. On September 27, 1996, that action
was stayed by the Court in favor of the actions pending in
Delaware; the Court also encouraged the plaintiff to refile his action
in Delaware. On or about August 30, 1996, the Chancery Court
consolidated the four Delaware complaints into a single action, and
plaintiffs filed an amended complaint. The Company and its officers
and directors filed an answer to the amended complaint on
November 12, 1996. The Company believes plaintiffs' allegations
to be without merit and intends to vigorously defend the lawsuits.
On September 17, 1996, an action captioned U.S. Surgical
Corporation v. Auhll, et al., No. 15223NC was filed in the Court of
Chancery of the State of Delaware. The complaint in this action
also alleges that Circon and certain of its officers and directors
breached their fiduciary duties to Circon's stockholders by taking
steps to resist U.S. Surgical's hostile tender offer. The Company
and its officers and directors filed an answer to the complaint on
November 12, 1996. On or about October 28, 1997, U.S. Surgical
filed an Amended and Supplemental Complaint (the "Amended
Complaint"). The Amended Complaint repeats the allegations in
U.S. Surgical's September 17, 1996 complaint and adds new
allegations regarding the supposed breaches of fiduciary duties
by certain officers and directors of Circon since the filing of the
September 17, 1996 complaint. The Company believes plaintiff's
allegations to be without merit and intends to vigorously defend
the lawsuit.
Item 5. Other Information
Additional Cautionary Statements
No Assurance of Cost Savings or Revenue/Earnings Growth
as provided in the Company's Strategic Plan.
Circon has implemented the initial phases of a comprehensive
strategic plan to maximize value for shareholders that includes cost
cutting and revenue/earnings growth components. Implementation
and achievement of the strategic plan is critical to the success of the
Company and the achievement of its corporate goals. Although the
strategic plan has already begun to yield positive results, there can
be no assurance that this trend will continue or that the strategic plan
will result in creating significant value for shareholders. The failure
of the Company to achieve cost and expense reductions in
accordance with the strategic plan, or the occurrence of unforeseen
expenses, could adversely affect the Company's ability to achieve
the goals set forth in the strategic plan. Cost cutting measures
include the elimination of certain personnel, the decision to not fill
several open positions, the reduction in quantities of samples
provided to the sales force, and the reduction of salaries for certain
senior executives. There can be no assurance that such cost cutting
will not have an adverse effect on the Company's operations. The
sales force has gone through a significant reorganization since the
merger with Cabot Medical in 1995 and has not yet demonstrated
the productivity required to achieve the goals of the strategic plan.
In addition, the strategic plan provides for revenues/earnings growth
which is contingent in large part on the success of both the sales
force and the Company's new products, some of which have not yet
been introduced to the marketplace. The failure of the sales force
to achieve targeted results or of the Company's new products to be
accepted in the market may have a material adverse effect on the
Company's financial results and its ability to meet the goals
established in the strategic plan.
Disruptive Effect of Hostile Tender Offer
On August 2, 1996, a subsidiary of United States Surgical
Corporation ("USSC") initiated an unsolicited offer to purchase all
outstanding shares of the Company's Common Stock. This tender
offer has had, and may continue to have, various adverse effects
on the Company's business and results of operations, including the
increased susceptibility of key employees of the Company to
employment offers by other companies, the risk of negative
reactions among distributors, suppliers or customers to the prospect
of such a change in control of the Company, the distraction of
management and other key employees and the fees and other
expenses of financial, legal and other advisors to the Company in
responding to the tender offer and related law suits.
On October 6, 1997, two individuals who were nominated by
USSC to serve on the Circon Board were elected by the shareholders
of the Corporation. A precatory resolution sponsored by USSC
calling for the Board of Circon to arrange for the prompt sale of the
Company was also approved by the shareholders. In addition, USSC
filed a lawsuit in the State of Delaware which, among other things,
seeks to force the Board to redeem the Shareholder Rights Plan and
have the Employee Retention Plans nullified. No assurance can be
given that these actions will not exacerbate one or more of the
potential adverse effects mentioned above.
Increasing Competition and Risk of Obsolescence from
Technological Advances
The markets in which Circon's products compete are
characterized by continuing technical innovation and increasing
competition. Some surgical procedures which utilize the Company's
products could potentially be replaced or reduced in importance by
alternative medical procedures or new drugs which may adversely
affect Circon's business.
Government Regulation
The process of obtaining and maintaining required regulatory
approvals is lengthy, expensive and uncertain. Although Circon has
not experienced any substantial regulatory delays to date, there is
no assurance that delays will not occur in the future, which could have
a significant adverse effect on Circon's ability to introduce new products
on a timely basis. Regulatory agencies periodically inspect Circon's
manufacturing facilities to ascertain compliance with "good
manufacturing practices" and can subject approved products to
additional testing and surveillance programs. Failure to comply with
applicable regulatory requirements can, among other things, result
in fines, suspensions of regulatory approvals, product recalls,
operating restrictions and criminal penalties. While the Company
believes they are currently in compliance, if Circon fails to comply
with regulatory requirements, it could have an adverse effect on
Circon's results of operations and financial condition.
Uncertainties within the Healthcare Markets
Political, economic and regulatory influences are subjecting
the healthcare industry in the United States to rapid, continuing and
fundamental change. Although Congress has not passed
comprehensive health care reform legislation to date, Circon
anticipates that Congress, state legislatures and the private sector
will continue to review and assess alternative health care delivery
and payment systems. Responding to increased costs and to pressure
from the government and from insurance companies to reduce
patient charges, healthcare providers (including customers of Circon)
have demanded, and in many cases received, reduced prices on
medical devices. These customers are expected to continue to
demand lower prices in the future. Circon cannot predict what
impact the adoption of any federal or state healthcare reform
measures, private sector reform or market forces may have on its
business. However, pricing pressure is expected to continue to
adversely affect profit margins.
Product Liability Risk
Circon's products involve a risk of product liability. Although
Circon maintains product liability insurance at coverage levels which
it believes are adequate, there is no assurance that, if the Company
were to incur substantial liability for product liability claims, insurance
would provide adequate coverage against such liability.
New Products
Circon's growth depends in part on its ability to introduce new
and innovative products that meet the needs of medical professionals.
Although Circon has historically been successful at bringing new
products to market, there can be no assurance that Circon will be able
to continue to introduce new and innovative products or that the new
products that Circon introduces, or has introduced, will be widely
accepted by the marketplace. The failure of the Company to continue
to introduce new products or gain wide spread acceptance of a new
product could adversely affect the Company's operations.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit Index
3.2A Bylaws of Circon Corporation, as amended.
(b) The Company filed no reports on Form 8-K in the Third
Quarter of 1997 with the Securities and Exchange Commission.
AMENDED
BYLAWS
OF
CIRCON CORPORATION
(A DELAWARE CORPORATION)
AMENDED
BYLAWS
OF
CIRCON CORPORATION
(a Delaware corporation)
ARTICLE I
NAME; EXECUTIVE OFFICES
1.1 Name of Corporation
-------------------
The name of this corporation is CIRCON CORPORATION.
1.2 Principal Office
----------------
The Board of Directors shall designate the location of the
principal office of the Corporation, which may be at any place within
or without the State of Delaware. The registered office of the
corporation shall remain, unless and until changed as provided for in
Section 133 of the General Corporation Law of the State of Delaware,
as stated in the Certificate of Incorporation. If the principal executive
office is located outside of Delaware,
and if the Corporation has one or more business offices in California,
then the Board of Directors shall designate a principal business office
in the State of California.
1.3 Additional Offices
------------------
The Board of Directors may establish such branch or subordinate
offices from time to time at such locations as it determines to be
appropriate.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
2.1 Place of Meeting
----------------
All meetings of the stockholders of this Corporation shall be
held at the principal office of the Corporation or at such other place
as may be designated from time to time by the Board of Directors or
as may be consented to in writing by all of the persons entitled to
vote who were not present at the meeting.
2.2 Annual Meetings
---------------
The annual meeting of the stockholders shall be held each
year on such date and at such time and place as may be determined
by the Board of Directors. At each annual meeting the stockholders
shall elect a Board of Directors, consider reports of the affairs of the
Corporation, and transact such other business as may properly be
brought before the meeting.
2.3 Special Meetings
----------------
Special meetings of the stockholders may be called only by
the Board of Directors of the Corporation pursuant to a resolution
adopted by a majority of the total number of directors (whether or
not there exist any vacancies in previously authorized directorships
at the time any such resolution is presented to the Board for
adoption), for the purpose of taking any action permitted to be
taken by the stockholders under the Delaware General Corporation
Law and the Certification of Incorporation.
2.4 Notice of Meetings
------------------
2.4.1 Notice of Stockholder Business. At an annual or special
meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly
brought before a meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (b) brought before the meeting by or at the
direction of the Board of Directors, (c) properly brought before an
annual meeting by a stockholder or (d) if, and only if, the notice of a
special meeting provides for business to be brought before the
meeting by stockholders, properly brought before the meeting by a
stockholder. For business to be properly brought before a meeting
by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. Timely notice
shall also be given of any stockholder's intention to cumulate votes
in the election of directors at a meeting. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal
executive offices of the Corporation not less than thirty-five (35) days
prior to the meeting; provided however, that in the event less than
forty-five (45) days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the tenth day following
the day on which such notice of the date of the meeting was mailed
or such disclosure was made. A stockholder's notice to Secretary
shall set for as to each matter the stockholder proposes to bring
before the meeting (a) a brief description of the business desired
to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they
appear on the Corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material
interest of the stockholder in such business. Notwithstanding anything
in the Bylaws to the contrary, no business shall be conducted at a
meeting except in accordance with the procedures set forth in this
Section 2.4.1. The Chairman of a meeting shall, if the facts warrant,
determine that the business was not properly brought before the
meeting and in accordance with the provisions of this Section 2.4.1,
and if he or she should so determine, he or she shall so declare to
the meeting and any such business not properly brought before the
meeting shall not be transacted.
2.4.2 Time of Notice. Notice of meetings, annual or special,
shall be given in writing to each stockholder entitled to vote thereat
by the Secretary or an Assistant Secretary, or if there be no such
officers, by the Chairman of the Board or the President, or in the
case of neglect or refusal, by any director then in office, not less
than ten (10) nor more than sixty (60) days before the date of the
meeting. If notice is mailed, it shall be deemed to have been
given to the person entitled to such notice when placed in the
mail in accordance with Section 2.4.3, below.
2.4.3 Procedure for Giving Notice. Written notice of the
meeting shall be given either personally or by first class mail or
telegraphic or other means of written communication, charges
prepaid, addressed to the stockholder at the address of the
stockholder to the Corporation for the purpose of notice. If no
such address for notice appears on the Corporation's books or
has not been given, notice shall be deemed to have been given
if sent to the stockholder in care of the Corporation's principal
executive office or if published at least once in a newspaper of
general circulation in the county in which the principal executive
office of the Corporation is located. The giving of notice as
provided by these Bylaws may be omitted only to the extent
and in the manner expressly permitted by the Delaware General
Corporation Law.
2.4.4 Contents of Notice. Notice of any meeting of
stockholders shall specify:
A. The place, the date and the hour of the meeting;
B. Those matters which the Board, at the time of
the mailing of the notice, intends to present for action by the
stockholders;
C. If directors are to be elected, the names of
nominees whom, at the time of the notice, management intends to
present for election;
D. With respect to special meetings, the purpose
or purposes for which the meeting is called. In addition, such notice
of a special meeting shall also include, information regarding the
general nature of any proposal to take action with respect to the
approval of (i) a contract or other transaction with an interested
director, (ii) an amendment of the Certificate of Incorporation,
(iii) the reorganization of the Corporation within the meaning of
the Delaware General Corporation Law, (iv) the voluntary dissolution
of the Corporation, or (v) a distribution in dissolution other than in
accordance with the rights of any outstanding preferred shares;
and
E. Such other matters, if any, as may be expressly
required by the Delaware General Corporation Law.
2.4.5 Waiver of Notice of Meetings. The transactions of any
meeting of stockholders, however called and noticed, shall be as
valid as action taken at a meeting duly held after regular call and
notice if a quorum is present either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to
vote, but who are not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of the meeting or an
approval of the minutes thereof. All such waivers, consents and
approvals shall be filed with the corporate records or made a part
of the minutes of the meeting. A waiver of notice of a consent to
the holding of any meeting of stockholders need not specify the
business transacted at or the purpose of any regular or special
meeting, other than any proposal approved or to be approved at
such meeting, the general nature of which was required by
Paragraph D of Section 2.4.4 of these Bylaws to be stated in the
notice thereof.
2.5 Quorum Requirements
--------------------
The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall be requisite and shall
constitute a quorum at all meetings of the stockholders for the
transaction of business, unless a different number is required by
the Certificate of Incorporation. The stockholders present at a
duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum,
if any action taken (other than adjournment) is approved by at
least a majority of the share required to constitute a quorum.
2.6 Adjourned Meetings
------------------
2.6.1 Lack of Quorum. If a quorum shall not be present or
represented at any meeting of the stockholders, the meeting may
be adjourned from time to time by the majority vote of the shares
entitled to vote who are present in person or by proxy, until the
requisite number of voting shares shall be present.
2.6.2 Notice of Adjourned Meeting. When a meeting is
adjourned for more than thirty (30) days or if after the
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given in
accordance with the provisions of Section 2.4 of these Bylaws.
Save as aforesaid, it shall not be necessary to give any notice of
the adjourned meeting, other than by announcement of the time
and place thereof at the meeting at which the adjournment is taken,
and the Corporation may transact at the adjourned meeting any
business which might have been transacted at the original
meeting.
2.7 Voting Rights; Cumulative Voting
2.7.1 General Voting Rights. Subject to Sections 217 and 218
of the General Corporation Law of Delaware, only persons in whose
names shares entitled to vote stand on the share records of the
Corporation on the record date shall be entitled to vote at meetings
of the stockholders. Except as otherwise provided in the Corporation's
Certification of Incorporation or in any Certificate of Designation filed
on behalf of the Corporation, every stockholder entitled to vote shall
be entitled to one vote for each share held of record, and the
affirmative vote of a majority of the shares represented at the meeting
and entitled to vote on any matter shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by the
General Corporation Law of Delaware or by the Certificate of
Incorporation.
2.7.2 Voice Voting; Written Ballots. All voting at meetings of the
stockholders, including on the election of directors by excepting
where otherwise required by law, may be by voice vote or by ballot;
provided, however, that voting must be by written ballot if voting by
ballot is requested by any stockholder entitled to vote, or his or her
proxy, before the voting has commenced.
2.7.3 Cumulative Voting. Every stockholder entitled to vote in any
election of directors of this corporation may cumulate such stockholder's
votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which
the stockholder's shares are otherwise entitled, or distribute the
stockholder's votes on the same principal among as many candidates
as such stockholder thinks fit. No stockholder, however, may
cumulate such stockholder's votes for one or more candidates
unless (a) the names of such candidates have been properly placed
in nomination, in accordance with these Bylaws, prior to the voting,
(b) the stockholder has given advance notice to the Corporation of
the intention to cumulate votes pursuant to Section 2.4.1 of these
Bylaws, and (c) the stockholder has given prior notice to the other
stockholders at the meeting, prior to voting, of such stockholder's
intention to cumulate such stockholder's votes. If any one
stockholder has given proper notice, all stockholders may
cumulate their votes for any candidates who have been properly
placed in nomination. The candidates receiving the highest number
of votes of the shares entitled to be voted for them up to the number
of directors to be elected by such shares shall be declared elected.
2.8 Voting by Proxy
---------------
2.8.1 Form and Use of Proxies. Every stockholder entitled
to vote, or to execute consents, may do so either in person, by
telegram, or by written proxy executed in accordance with the
provisions of the Delaware General Corporation Law and filed with
the Secretary or an Assistant Secretary of the Corporation.
2.8.2 Validity of Proxies. The validity of a proxy tendered
on behalf of a stockholder, and any revocation thereof, shall be
determined in accordance with the provisions of Section 8-212 of
the Delaware General Corporation Law.
2.9 Inspectors of Election
In advance of any meeting of stockholders, the Board of
Directors may appoint any persons other than nominees for office
to act as Inspectors of Election at such meeting or any adjournment
thereof. If no Inspectors of Election are appointed or if an
appointment is vacated by an Inspector who fails to appear
or fails or refuses to act, the Chairman of any such meeting may,
and on the request of any stockholder or his proxy shall, make
such appointment or fill such vacancy at the meeting.
2.10 Stockholder Action Without a Meeting
--------------------------------------
2.10.1 Written Consents. Unless otherwise provided in the
Certificate of Incorporation, any action which may be taken at any
annual or special meeting of the stockholders, other than the
election of directors, may be taken without a meeting and without
prior notice of a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all stockholders
entitled to vote thereon were present and voted.
2.10.2 Notice of Written Consent. Unless the consents of
all stockholders entitled to vote have been solicited in writing,
prompt notice of any corporate action approved by stockholders
without a meeting by less than unanimous written consent shall
be given to those stockholders entitled to vote who have not
consented in writing; should any such action be taken by less than
unanimous written consent with respect to (i) a contract or other
transaction with an interested director, (ii) the indemnification of
any present or former agent of the Corporation within the meaning
of Section 8-145 of the Delaware General Corporation Law, (iii) any
reorganization within the meaning of the Delaware General
Corporation Law, or (iv) a distribution in dissolution other than in
accordance with the rights of any outstanding preferred shares,
then such notice shall be given at least ten (10) days before the
consummation of such action.
2.10.3 Election of Directors by Written Consent. Directors
may not be elected without an annual meeting unless a consent
in writing, setting forth the action so taken, is signed by all of the
persons who would be entitled to vote for the election of directors.
ARTICLE III
DIRECTORS OF THE CORPORATION
3.1 Powers of Directors
-------------------
The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors. In addition to
the powers and authority expressly conferred upon them by the
Certificate of Incorporation, the Bylaws, or the Delaware General
Corporation Law, the directors are hereby empowered to exercise
all such corporate powers and do all acts and things as may be
exercised or done by the Corporation, including, without limiting
the generality of the foregoing, the unqualified power:
A. To declare dividends from time to time in accordance
with law;
B. To purchase or otherwise acquire any property, rights
or privileges on such terms as it shall determine;
C. To authorize the creation, making and issuance, in
such form as it may determine, of written obligation of every kind,
negotiable or on-negotiable, secured or unsecured, and to do all
things necessary in connection therewith;
D. To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any
officer upon any other person for the time being;
E. To confer upon any officer of the Corporation the power
to appoint, remove and suspend subordinate officers, employees and
agents;
F. To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for directors, officers,
employees and agents of the Corporation and its subsidiaries as it
may determine;
G. To adopt from time to time such insurance, retirement,
and other benefit plans for directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine; and
H. To adopt from time to time regulations, not inconsistent
with these Bylaws, for the management of the Corporation's business
and affairs.
3.2 Nomination of Director Candidates
-----------------------------------
Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon
liquidation, nominations for the election of directors may be made by
the Board of Directors or a proxy committee appointed by the Board
of Directors or by any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to vote in the
election of directors generally may nominate one or more persons
for election as directors at a meeting only of timely notice of such
stockholder's intent to make such nomination or nominations has
been given in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and
received at the principal execute offices of the Corporation not
fewer than ninety (90) days prior to the meeting; provided, however,
that in the event that less than one hundred (100) days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so
received no later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed
or such public disclosure was made. Each such notice shall set forth:
(a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record
stock of the Corporation entitled to vote for the election of directors
on the date of such notice and such stockholder intends to appear
in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included
in a proxy rules of the Securities and Exchange Commission,
had the nominee been nominated, or intended to be nominated,
the Board of Directors; and (e) the consent of each nominee to
serve as a director of the Corporation if so elected.
In the event that a person is validly designated as a nominee
in accordance with this Section 3.2 and shall thereafter become
unable or unwilling to stand for election to the Board of Directors or
the stockholder who proposed such nominee upon delivery, not fewer
than five days prior to the date of the meeting for the election of such
nominee of a written notice to the Secretary setting forth such information
regarding such substitute nominee as would have been required to be
delivered to the Secretary pursuant to this Section 3.2 had such
substitute nominee been initially proposed as nominee. Such
notice shall include a signed consent to serve as a director
of the Corporation, if elected, of each such substitute nominee.
If the chairman of the meeting for the election of directors
determines that a nomination of any candidate for election as a
director at such meeting was not made in accordance with the
applicable provision of this Section 3.2, such nomination shall
be void; provided, however, that nothing in this Section 3.2 shall
be deemed to limit any voting rights upon the occurrence
of dividend arrearages provided to holders of Preferred Stock
pursuant to the Preferred Stock designation for any series of
Preferred Stock.
3.3 Number
------
The authorized number of directors of the Corporation shall
initially be five (5) and thereafter, shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the
Board for adoption).
3.4 Election of Directors; Term
---------------------------
3.4.1 Term of Office. The directors shall be elected at each
annual meeting of the stockholders to hold office until the next
annual meeting. Each director, including a director elected to fill
a vacancy or a newly created directorship, shall hold office until
the expiration of the term for which elected and until a successor
has been elected and qualified.
3.4.2 Reduction in Number of Directors. No reduction in the
authorize number of directors shall have the effect of removing any
director prior to the expiration of that director's term of office.
3.5 Resignation and Removal of Directors
-------------------------------------
3.5.1 Resignation. Any director may resign by giving written
notice of resignation to the Chairman of the Board, if any, or to the
President, the Secretary or the Board of Directors.
3.5.2 Removal. Subject to the rights of the holders of any
series of Preferred Stock then outstanding and unless otherwise
restricted by statute, the Certificate of Incorporation or these Bylaws,
any director, or the entire Board of Directors, may be removed from
office at any time, with or without cause, only by the affirmative
vote of the holders of at least a majority of the voting power of
all of the then outstanding share of capital stock of the
Corporation entitled to vote generally in the election of directors,
voting together as a single class; provided, however, that so long
as stockholders of the Corporation are entitled to cumulative voting,
if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his or her removal
would be sufficient to elect that director if then cumulatively voted at
one election of the entire Board of Directors.
3.6 Vacancies and Newly Created Directorships
------------------------------------------
Subject to the rights of the holders of any Preferred Stock
then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office though less
than a quorum.
3.7 Meetings of the Board of Directors
----------------------------------
3.7.1 Place of Meeting. Meetings of the Board of Directors
shall be held at the principal executive office of the Corporation, or
at such other place as may be designated from time to time by
resolution of the Board of Directors. Any meeting, wherever held,
shall be valid if held with the written consent of all members of the
Board of Directors, given either before or after the meeting and filed
with the Secretary or an Assistant Secretary of the Corporation for
insertion into the Corporation's minute book.
3.7.2 Annual Meetings. An annual meeting of the Board of
Directors shall be held within 30 days following the adjournment of
the annual stockholders meeting for the purpose of organizing the
Board, electing any officers desired to be elected and transacting
such other business as may properly come before the meeting.
3.7.3 Other Regular Meetings. Other regular meetings of the
Board of Directors shall be held without call at such time as may be
designated from time to time by resolution of the Board of Directors.
No notice need be given of such regular meetings.
3.7.4 Special Meetings; Notices.
A. Special meetings of the Board of Directors may
be called for any purpose at any time by the Chairman of the Board,
the President, or by a majority of the directors then in office (rounded
up to the nearest whole number.)
B. Notice of the time and place of special meetings
shall be delivered or communicated personally to each director by
telephone, or by telegraph or mail, charges prepaid, addressed to
each director at the address of that director as it is shown upon the
records of the Corporation, or if such address is not readily
ascertainable, at the place in which the meetings of the directors
are regularly held. Notice by mail shall be deposited in the United
States mail at least four (4) days prior to the scheduled time of the
meeting, and notice by telegraph shall be delivered to the telegraph
company at least forty-eight (48) hours prior to the scheduled time
of the meeting. Should notice be delivered personally or by telephone,
it shall be so delivered at least forty-eight (48) hours prior to the
scheduled time of the meeting. Notice given by mail, telegraph or by
delivery in person within the time provided by this Section
shall be due, legal and personal notice to a director. Any oral notice
given within the time provided by this Section shall be due, legal and
personal notice if communicated to a person at the office of the
director for whom intended in the reasonable belief that such person
will promptly communicate such notice to that director.
3.7.5 Conference Telephone Meetings. Any meeting, regular
or special, may be held by conference telephone or similar
communications equipment as long as all directors participating in
the meeting can hear one another, and any such participation shall
constitute presence at the meeting.
3.7.6 Waiver of Notice. The transactions of any meeting of
the Board of Directors, however called and noticed or wherever held,
shall be as valid as action taken at a meeting regularly called and
noticed if all the directors are present and sign a consent thereto on
the records of such meeting, or if a majority of the directors are
present and each of those not present, either before or after the
meeting, signs a written waiver of notice, or a consent to holding
the meeting, or an approval of the minutes thereof. All such
waivers, consent, or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
3.7.7 Quorum Requirements. A majority of the authorized
number of directors shall be necessary to constitute a quorum for
the transaction of business (other than to adjourn) and the action
of a majority of the directors present at a meeting duly held at which
a quorum is present shall be valid as the act of the Board of Directors
unless a greater number is required by the Certificate of
Incorporation, these Bylaws, or the Delaware General Corporation
Law. A meeting at which a quorum initially is present may continue
to transact business, notwithstanding the withdrawal of one or more
directors, if any action taken is approved by at least a majority of the
required quorum for that meeting.
3.7.8 Adjourned Meetings. A majority of the directors present,
whether or not a quorum, may adjourn from time to time by fixing a
new time and place prior to taking adjournment, but if any meeting is
adjourned for more than twenty-four (24) hours, notice of any
adjournment to another time or place shall be given prior to
reconvening of the adjournment to another time or place
shall be given prior to reconvening of the adjourned meeting to any
directors not present at the time the adjournment was taken.
3.8 Director Action Without a Meeting
---------------------------------
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all members of the
Board shall individually or collectively consent in writing to that
action. Each such written consent shall be filed with the minutes
of the proceedings of the Board, and shall have the same force
and effect as a unanimous vote of the directors.
3.9 Committees of Directors
-----------------------
3.9.1 Appointment of Committees. The Board of Directors,
by resolutions adopted by a majority of the authorized number of
directors, may establish one or more committees, including an
Executive Committee, each consisting of two or more directors,
to serve at the pleasure of the Board, and may designate one or
more alternate directors to replace any absent committee members
at any meeting of a committee. The Board of Directors may
delegate to any such committee any of the powers and authority
of the Board of Directors in the business and affairs of the Corporation,
except those powers specifically reserved to the Board of Directors
by the provisions of Section 8-141 of the Delaware General
Corporate Law.
3.9.2 Meetings and Actions of Committees. Meetings of
committees shall be held and actions of committees shall be taken
in the same manner as is provided by these Bylaws for meetings
of directors, except that the time of regular meetings of committees
may be determined either by resolution of the Board of Directors
or by the members of the committee. Alternate committee members
shall be entitled to attend all committee meetings and to receive
notice of special meetings of the committee. The Board of Directors
may adopt rules for the governing of any committee not inconsistent
with the provisions of these Bylaws.
ARTICLE IV
OFFICERS OF THE CORPORATION
4.1 Principal Officers
------------------
The principal officers of the Corporation shall be a President,
a Secretary and a Treasurer. At the discretion of the Board of
Directors, the Corporation may also have a Chairman of the Board,
Vice Chairman, one or more Vice Presidents, and such subordinate
officers as may be appointed pursuant to Section 4.3 of these Bylaws.
4.2 Election; Qualification and Tenure
----------------------------------
4.2.1 Election of Officers. After their election, the Board of
Directors shall meet and organize by electing a President, a
Secretary and a Treasurer, who may be, but need not be, members
of the Board of Directors, and such additional officers provided by
these Bylaws as the Board of Directors shall determine to be
appropriate. Any two or more offices may be held by the same
person.
4.2.2 Term of Employment. Each officer of this Corporation
shall serve at the pleasure of the Board of Directors, subject, however,
to the rights of an officer under any contract of employment with the
Corporation.
4.3 Subordinate Officers
--------------------
Subordinate officers, including Assistant Secretaries and
Assistant Treasurers, and such other officers or agents as the
business of the Corporation may require, may from time to time be
appointed by the Board of Directors, the President, or by any officer
empowered to do so by the Board of Directors, and shall have such
authority and shall perform such duties as are provided in the
Bylaws or as the Board of Directors of the President may from
time to time determine.
4.4 Resignation and Removal of Officers
-----------------------------------
4.4.1 Removal. Any officer may be removed, either with or
without cause, by a majority of the directors at the time in office, at
any regular or special meeting of the Board, or, except in the case
of an officer appointed by the Board of Directors, by any officer upon
whom the power of removal has been conferred by the Board of
Directors.
4.4.2 Resignation. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President,
or to the Secretary or an Assistant Secretary of the Corporation.
Any such resignation shall take effect upon receipt of such notice
or at any later time specified therein, and unless otherwise
specified in the notice, the acceptance of such resignation shall
not be necessary to make it effective.
4.4.3 Contractual Obligations. The resignation or removal
of an officer shall not prejudice the rights of the Corporation or of the
officer under any contract of employment between the officer and the
Corporation.
4.5 Vacancies in Offices
--------------------
Any vacancy in an office occurring because of death,
resignation, removal, disqualification or any other cause may be
filled by the Board of Directors at any regular or special meeting
of the Board, or in such manner as may otherwise be prescribed
in the Bylaws for regular appointment to the vacant office.
4.6 Responsibilities of Officers
----------------------------
4.6.1 Chairman of the Board. The Chairman of the Board, if
there be one shall, when present, preside at all meetings of the
Board of Directors and shall have such other powers and duties as
from time to time shall be prescribed by the Board of Directors.
4.6.2 Vice Chairman. In the absence of the Chairman, the
Vice Chairman, if there be one shall preside at all meetings of the
Board of Directors and shall have such other power and duties as
the Chairman or as may otherwise be prescribed from time to time
by the Board of Directors.
4.6.3 President. The President shall be the general manager
of the Corporation and, subject to the control of the Board of Directors,
shall have general supervision, direction and control of the business
and the officers of the Corporation. In the absence of the Chairman
of the Board, or if there be none, the President shall preside at all
meetings of the stockholders and at all meetings of the Board of
Directors. The President shall have the general powers and duties
as may be prescribed by the Board of Directors or the Bylaws.
4.6.4 Vice-Presidents. In the absence or the disability of the
President, the Vice-Presidents, in order of their rank as fixed by the
Board of Directors, or if not ranked, the Vice-President designated by
the President, shall perform the duties and exercise the powers of
the President and when so acting shall have all of the powers of
and shall be subject to all of the restrictions upon the President.
The Vice-Presidents shall perform such other duties and have
such other powers as the , the Chairman of the Board or the
President shall prescribe.
4.6.5 Secretary. The Secretary shall have such powers and
shall perform such duties as may be prescribed by the Board of
Directors, the Chairman of the Board or the President and shall,
in addition:
A. Keep, or cause to be kept, at the principal
executive office or such other place as the Board of Directors may
order, a book of all minutes of all of the proceedings of its
stockholders and the Board of Directors and committees of the
Board, with the time and place of holding of meetings, whether
regular or special, and if special, how authorized, the notice
thereof given, the names of those present at directors' meetings,
the number of shares present or represented at stockholders'
meetings, and the proceedings thereof;
B. Keep, or cause to be kept, at the principal
executive office or at the office of the Corporation's transfer agent,
a share register or a duplicate share register, showing classes
of shares held by each, the number and date of certificates
issued for the same, and the number and date of cancellation
of every certificate surrendered for cancellation;
C. Give, or cause to be given, notice of all the
meetings of the stockholders and of the Board of Directors required
by the Bylaws or by law to be given; and
D. Keep the seal of the Corporation if one be
adopted, and affix the seal to all documents requiring a seal.
4.6.6 Assistant Secretary. The Assistant Secretary, if
provided for and appointed, shall have all the same rights, duties.
powers and privileges as the Secretary and may act in the place
and stead of the Secretary whenever necessary or desirable.
4.6.7 Treasurer (Chief Financial Officer). The Treasurer
shall have such powers and perform such duties as may be
prescribed by the Board of Directors, the Chairman of the
Board or the President and shall, in addition:
A. Keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses,
capitol, surplus and shares;
B. Deposit all moneys and other valuables in the
name and to the credit of the Corporation with such depositories
as may be designated by the Board of Directors; and
C. Disperse the funds of the Corporation as may
be ordered by the Board of Directors, and render to the President
and the directors, whenever they so request, an account of all
transactions as Treasurer and of the financial condition of the
Corporation.
ARTICLE V
COMPENSATION; INDEMNIFICATION
5.1 Directors' Fees and Expenses
----------------------------
5.1.1 Compensation. Directors and committee members may
receive such compensation, if any, for their services, and may be
reimbursed for expenses incurred by them on behalf of the Corporation,
in the manner and to the extent provided in resolutions duly adopted
by the Board of Directors.
5.1.2 Officer Compensation. This Section 5.1 shall not
preclude any director from also serving as an officer, employee or
agent of the Corporation and receiving compensation from the
Corporation for such services.
5.2 Compensation of Officers
------------------------
The compensation of the officers of the Corporation shall be
fixed from time to time by the Board of Directors or by the Chairman
of the Board, subject to any rights of the officer pursuant to any
employment contract between that officer and the Corporation.
5.3 Indemnification of Agents
--------------------------
5.3.1 Right to Indemnification. Each person who was or is
made a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative ("proceeding"),
by reason of the fact that he or she or a person of whom he or she
is the legal representative, is or was a director, officer or employee
of the Corporation of is or was serving at their request of the
Corporation as a director, officer or employee of another
corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer or employee or in any
other capacity while serving as a director, officer or employee,
shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by Delaware Law, as the same exists or
may hereafter by amended (but, in the case of any such
amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than that Law
permitted the Corporation to provide prior to such amendment)
against all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties, amounts paid
or to be paid in settlement and amounts expended in seeking
indemnification granted to such person under applicable law, this
Bylaw or any agreement with the Corporation) reasonably incurred
or suggested by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be
a director, officer or employee and shall inure to the benefit of his
or her heirs, executors and administrators; provided, however,
that, except as provided in Section 5.3.2 of this Article V, the
Corporation shall indemnify and such person seeking indemnity in
connection with an action, suit or proceeding (or part thereof)
initiated by such person only of such action, suit or proceeding
(or part thereof) was authorized by the Board of Directors of the
Corporation. Such right shall be a contract right, shall attach
even if such indemnification would otherwise be discretionary
under Delaware Law, and shall include the right to be paid, by
the Corporation, expenses incurred in defending any such
proceeding in advance of its final disposition; provided,
however, that if the Delaware General Corporation Law then so
requires, the payment of such expenses incurred by a director
or officer of the Corporation in his or her capacity as a director
or officer (and not in any other capacity in which service was or is
rendered by such person while a director of officer, including,
without limitation, service to an employee benefit plan) in
advance of the final disposition of such
proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director of officer, to
repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be
indemnified under this Section or otherwise.
5.3.2 Right of Claimant to Bring Suit. If a claim under
Section 5.3.1 is not paid in full by the Corporation within twenty
(20) days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim
and, if such suit is not frivolous or brought in bad faith, the claimant
shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to this Corporation) That
the claimant has not met the standards of conduct which make it
permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action
that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that claimant has
not met the applicable standard of conduct.
5.3.3 Non-Exclusivity of Rights. The rights conferred on any
person in Section 5.3.1 and 5.3.2 shall not be exclusive of any other
right which such persons may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, Bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise.
5.3.4 Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer,
employee or agent of the Corporation, or any person serving at the
request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing for
indemnification rights equivalent to or, if the Board of Directors so
determines, greater than those provided for in this Article V.
5.3.5 Insurance. The Corporation shall maintain insurance
to the extent reasonably available, at its expense, to protect itself
and any such director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
5.3.6 Effect of Amendment. Any amendment, repeal or
modification of any provision of this Article V by the stockholders
and the directors of the Corporation shall not adversely affect any
right or protection of a director or officer of the Corporation existing
at the time of such amendment, repeal or modification.
ARTICLE VI
CORPORATE RECORDS AND REPORTS
6.1 Corporate Records
-----------------
The Corporation shall keep and maintain all of the books and
records required by this Section 6.1.
6.1.1 Record of Stockholders. A record of the Corporation's
stockholders, both Common and Preferred, giving the names and
addresses of all stockholders and the number and class of stock
held by each of them, shall be kept at the Corporation's principal
executive office, or at the office of its transfer agent or registrar if
one be appointed. The records of the Corporation's stockholders
shall be open to the stockholders for inspection in the manner and
to the extent provided by Section 8-220 of the Delaware General
Corporation Law.
6.1.2 Corporate Bylaws. The original or a copy of these
Bylaws, as amended to date, shall be kept at the principal
executive office of the Corporation, and shall be open to inspection
by the stockholders at any reasonable time during regular business
hours. If the Corporation has no principal executive or business
office in Delaware, the Secretary shall furnish a copy of the Bylaws,
as amended to date, to any stockholder who makes a written request
to inspect the Bylaws.
6.1.3 Minutes and Accounting Records. Accounting books
and records of the business and properties of the Corporation, and
minutes of the proceedings of its stockholders, the Board of Directors
and its committees shall be kept at the principal executive office of
the Corporation or at such other location as may be fixed by the Board
of Directors from time to time. All such minutes, accounting books
and records shall be open to inspection upon the written request
of a stockholder at any reasonable time during regular business
hours for a purpose reasonably related to the interests of the
requesting stockholder.
6.2 Inspection of Books and Records
--------------------------------
6.2.1 Inspection by Directors and Stockholders. Every
director and stockholder shall have the right to inspect all books,
records and documents of the Corporation and each of its
subsidiaries, and to inspect their respective properties, in the
manner and to the extent provided by the Delaware General
Corporation Law.
6.2.2 Exercise of Inspection Right. Stockholders and
directors may exercise their right of inspection either in person
or by an agent or attorney acting on their behalf. The right to
inspect any records or books of the Corporation shall include
also the right to copy and make extracts of such books and
records.
6.3 Financial Statements
--------------------
6.3.1 Right to Obtain Financial Statement. Upon the written
request of any one or more stockholders holding at least five percent
(5%) of the outstanding shares of any class of its stock, the
Corporation shall furnish a financial statement for the Corporation's
most recent fiscal year ended more than one hundred and twenty
(120) days prior to the date of the request, and for the most recent
interim quarterly or semi-annual period ended more than thirty (30)
days prior to the date of the request. The Treasurer shall cause the
requested financial statements to be prepared, if not previously
prepared, and delivered to any requesting stockholder entitled to do
so within thirty (30) days after receipt of any such request. Upon the
written request of any stockholder, the Corporation shall furnish to
the requesting stockholder a copy of the most recent annual,
semi-annual or quarterly financial statement that the Corporation
has prepared.
6.3.2 Contents of Financial Statement. Any financial
statement prepared by the Corporation at the request of stockholders
entitled to do so shall include at least an income statement for the
period covered thereby and a balance sheet as of the end of that
period. Any annual financial statement so prepared shall include,
in addition, a statement of changes in financial position of the fiscal
year. All such financial statements shall be accompanied by the
report, if any, of any independent accountants engaged by the
Corporation or by the certificate of an authorized officer of the
Corporation that the financial statements were prepared without
audit from the books and records of the Corporation.
ARTICLE VII
CERTIFICATES AND TRANSFER OF SHARES
7.1 Certificates for Shares
-----------------------
7.1.1 Form of Certificate. Every holder of Common or
Preferred Shares in the Corporation, shall be entitled to have a
certificate, in such form and device as the Board of Directors may
prescribe, certifying the number of shares and the classes or series
of stock owned by the stockholder, and containing a statement
setting forth the office or agency of the Corporation from which the
stockholder may obtain, upon request and without charge, a copy of
the statement of any rights, preferences, privileges, and restrictions
granted to or imposed upon each class or series of stock authorized
to be issued and upon the holders thereof, and any other legend or
statement as may be required by federal and state corporate
securities laws.
7.1.2 Officer Signatures. Every certificate for shares shall be
signed in the name of the Corporation by the President or
Vice-President and the Secretary or an Assistant Secretary.
Any signature on the certificate may be by facsimile, provided
that at least one signature, which may but need not be that of the
Corporation's registrar or transfer agent, if any, shall be manually
signed.
7.2 Transfer of Shares on Books
---------------------------
Upon surrender to the Secretary or an Assistant Secretary or
to the transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate and record the transaction
upon its books.
7.3 Lost or Destroyed Certificates
------------------------------
A new certificate may be issued without the surrender and
cancellation of a prior certificate that is lost, apparently destroyed
or wrongfully taken when: (a) the request for the issuance of a new
certificate is made within a reasonable time after the owner of the
prior certificate has notice of its loss, destruction or theft; and (b)
such request is received by the Corporation prior to its receipt of
notice that the prior certificate has been acquired by a bona fide
purchaser; and (c) the owner of the prior certificate gives an
indemnity bond or other adequate security sufficient in the judgment
of the Board of Directors to indemnify the Corporation against any
claim, expense or liability resulting from the issuance of a new
certificate. Upon the issuance of a new certificate, the
rights and liabilities of the Corporation, and of the holders of the
old and new certificates, shall be governed by the provisions of
the Uniform Commercial Code.
7.4 Transfer Agent and Registrars
-------------------------------
The Board of Directors may appoint one or more transfer
agents or transfer clerks, and one or more registrars, which shall
be banks or trust companies, either domestic or foreign, at such
times and places as the Board of Directors determines to be
appropriate.
ARTICLE VIII
GENERAL CORPORATE MATTERS
8.1 Corporate Seal
--------------
The Board of Directors may, in its discretion, adopt a
corporate seal, circular in form and having inscribed thereon the
name of the Corporation and the date and state of its incorporation.
8.2 Record Date
-----------
The Board of Directors may fix, in advance, a record date for
the purpose of determining stockholders entitled to notice of and to
vote at any meeting of stockholders, to consent to corporate action
in writing without a meeting, to receive any report, to receive any
dividend or other distribution or allotment of any right, or to exercise
rights with respect to any change, conversion or exchange of shares.
The record date so fixed shall not be more than sixty (60) days prior
to any event for the purpose for which it is fixed, and shall not be
less than ten (10) days prior to the date of any meeting of the
stockholders. If no such record date is fixed by the Board of
Directors, then the record date shall be that date prescribed by
Section 8-213 of the Delaware General Corporation Law.
8.3 Voting of Shares in Other Corporations
--------------------------------------
Shares standing in the name of this Corporation may be
voted or represented and all rights incident thereto may be exercised
on behalf of the Corporation by the President or, if the President is
unable or refuses to act, by a Vice-President or by such other person
as the Board of Directors may designate.
8.4 Definitions and Interpretation
------------------------------
Unless the context requires otherwise, these Bylaws and
the words and phrases included in them shall be construed and
interpreted in accordance with the general provisions, rules of
construction and definitions in the Delaware General Corporation
Law.
8.5 Facsimile Signatures
--------------------
Facsimile signatures of any officer or officers of the
Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
ARTICLE IX
AMENDMENT TO BYLAWS
9.1 Amendments by Board of Directors
--------------------------------
The Board of Directors is expressly empowered to adopt,
amend or repeal Bylaws of the Corporation. Any adoption,
amendment or repeal of Bylaws of the Corporation by the Board
of Directors shall require the approval of a majority of the total
number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or repeal is
presented to the Board).
9.2 Amendment By Stockholders
-------------------------
In addition to the right of the Board of Directors, as provided
in Section 9.1, above, to adopt, amend or repeal Bylaws of the
Corporation, the stockholders shall have power to adopt, amend or
repeal the Bylaws of the Corporation. In addition to any vote of the
holders of any class or series of stock of this Corporation required
by law or by the Certificate of Incorporation of the Corporation,
the affirmative vote of the holders of at least 66-2/3% of the voting
power of all of the then outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of director,
voting together as a single class, shall be required to adopt, amend
or repeal any provisions of the Bylaws of the Corporation.
9.3 Record or Amendments
--------------------
Any amendment or new Bylaw adopted by the Board of
Directors or the stockholders shall be copied in the appropriate
place in the minute book with the original Bylaws, and the repeal
of any Bylaw shall be entered on the original Bylaws together with
the date and manner of such repeal. The original or a copy of the
Bylaws as amended to date shall be open to inspection by the
stockholders at the Corporation's principal office at all reasonable
times during office hours.
CERTIFICATE OF SECRETARY
------------------------
I, Andrew D. Simons, Secretary of Circon Corporation,
hereby certify that the Bylaws of Circon Corporation, a Delaware
corporation, as amended, are the true and correct Bylaws of the
Corporation, that the same are in full force and effect and that the
Bylaws have not been modified, rescinded, annulled or revoked
as of the date set forth below.
CIRCON CORPORATION
By_____________________
Andrew D. Simons
Secretary
Date: November 11, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CIRCON CORPORATION
Registrant
November 14, 1997 /s/Richard A. Auhll
- ----------------- --------------------
Date RICHARD A. AUHLL
President
Chief Executive Officer
November 14, 1997 /s/R. Bruce Thompson
- ------------------ --------------------
Date R. BRUCE THOMPSON
Executive Vice President
Chief Financial Officer
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