<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CIRCON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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 0-11.
(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:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[PICTURE]
NOTICE OF 1997
ANNUAL MEETING
AND
PROXY STATEMENT
[LOGO]
<PAGE>
IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW CIRCON SHARES YOU
HOLD. PLEASE SIGN AND DATE THE ACCOMPANYING WHITE PROXY CARD AND MAIL IT IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE, whether or not you
expect to attend the meeting. Remember, do not return any blue proxy cards
sent to you by USSC, not even as a vote of protest. If your shares are
registered in the name of a broker, only your broker can execute a proxy and
vote your shares and only after receiving specific instructions. Please
contact the person responsible for your account and direct him or her to
execute a proxy on your behalf today. If you have any questions or need
further assistance in voting, please contact the firm assisting us in
solicitation of proxies:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call toll free at (800) 628-8510
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CIRCON CORPORATION
6500 Hollister Avenue
Santa Barbara, California 93117
<PAGE>
CIRCON CORPORATION
September 11, 1997
Dear Fellow Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
Circon Corporation scheduled to be held Monday, October 6, 1997. Management and
I look forward to greeting those shareholders able to be present.
As you know, at this meeting United States Surgical Corporation ("USSC") is
trying to further its goal of ACQUIRING CIRCON AT THE LOWEST POSSIBLE PRICE by
nominating two directors to serve on our Board. USSC is also asking
shareholders to approve a non-binding resolution that urges the Board to arrange
for the prompt sale of the Company. In casting your vote on these matters I ask
that you carefully consider the following:
- Circon has a strategic plan that is working. As earnings increase we
become more valuable.
- The Board of Circon has unanimously concluded that the USSC tender
offer is inadequate after considering a number of factors including,
the opinion of Bear, Stearns & Co. Inc. ("Bear Stearns"), Circon's
investment bankers, as to the inadequacy of the USSC tender offer
price from a financial point of view.(1)
- USSC wants to cash-out Circon shareholders and capture the upside
potential of Circon for itself at the lowest possible price.
- The USSC nominees have been hand-picked by USSC and have each been
paid $100,000 by USSC in the form of shares of Circon Common Stock as
payment for serving as USSC's nominees. USSC has also agreed to
indemnify the USSC nominees against certain liabilities.
Finally, after extensive consideration, the Board of Circon determined that
the BEST MEANS FOR PROVIDING VALUE TO SHAREHOLDERS OF CIRCON IS FOR THE COMPANY
TO CONTINUE TO PURSUE ITS STRATEGIC PLAN and not be put up for sale at this
time.
Don't sell yourself short. Give your investment a chance to grow as the
Circon strategic plan continues to unfold. SIGN AND DATE THE WHITE PROXY
CARD and return it as soon as possible in the accompanying postage pre-paid
envelope. EVEN IF YOU HAVE ALREADY VOTED FOR USSC'S NOMINEES, IT IS NOT TOO
LATE TO RESCIND YOUR VOTE. VOTE THE WHITE PROXY CARD TODAY.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE CIRCON
NOMINEES TO THE BOARD AND A VOTE "AGAINST" USSC'S NON-BINDING RESOLUTION.
On behalf of everyone at Circon, I wish to thank you for your continued
support. WE REMAIN COMMITTED TO ACTING IN THE BEST INTERESTS OF YOU, OUR
SHAREHOLDERS. Please feel free to call us at (805) 685-5100 or our proxy
solicitor, D.F. King & Co., Inc., at (800) 628-8510, if you have any questions.
Sincerely,
RICHARD A. AUHLL
President & Chairman of the Board
- --------------------
(1) Shareholders are urged to read carefully the full text of the written
opinion of Bear Stearns, dated August 15, 1997, which sets forth the
assumptions made, matters considered and limitations on the review
undertaken. The opinion of Bear Stearns, which is attached as an
Exhibit 9 to Circon's Schedule 14D-9 dated August 17, 1997, is
directed to Circon's Board of Directors and relates only to the
adequacy of the consideration offered pursuant to USSC's tender offer
from a financial point of view, and does not constitute a
recommendation to any shareholder as to whether such shareholder
should tender shares pursuant to the tender offer.
<PAGE>
CIRCON CORPORATION
Notice of Annual Meeting of Shareholders
October 6, 1997
TO THE SHAREHOLDERS OF CIRCON CORPORATION:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Circon Corporation, a Delaware corporation, will be held on Monday, October 6,
1997, at 9:00 a.m. Pacific daylight time, at Fess Parker's Doubletree Resort,
633 East Cabrillo Boulevard, Santa Barbara, California, for the following
purposes:
1. To elect two Directors for the class of directors whose terms are
expiring at the 1997 Annual Meeting.
2. To consider and vote upon a proposal to ratify the appointment of
Arthur Andersen LLP as the Company's independent public accountants
for fiscal year 1997.
3. To consider and vote upon a non-binding resolution proposed by United
States Surgical Corporation ("USSC") to arrange for the prompt auction
of the Company.
4. To transact such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
The Board of Directors has fixed the close of business on August 11, 1997
as the record date (the "Record Date") for the determination of shareholders
entitled to vote at the 1997 Annual Meeting and at any adjournment or
postponement thereof.
You will need a ticket if you plan to attend the Annual Meeting. If your
shares are registered in your name and not in the name of a bank, broker or
other third party, an admission ticket is attached to your proxy card.
Please detach and save the ticket. You will need to present it in order to
be admitted to the Annual Meeting. If your shares are not registered in your
own name, please follow the directions contained in the Section entitled
"Information About Attending the Annual Meeting" that appears on Page 13 of
the Proxy Statement.
It is important that your shares be voted at the 1997 Annual Meeting.
Whether or not you expect to attend, you are urged to sign and date the
accompanying WHITE proxy card and promptly return it to the Company in the
accompanying postage prepaid envelope.
By Order of the Board of Directors,
ANDREW D. SIMONS
Vice President and Secretary
Santa Barbara, California
September 11, 1997
<PAGE>
CIRCON CORPORATION
6500 HOLLISTER AVENUE
SANTA BARBARA, CALIFORNIA 93117
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 6, 1997
This proxy statement and accompanying white proxy card are being furnished
to shareholders of Circon Corporation (the "Company") in connection with the
Annual Meeting of Shareholders to be held on Monday, October 6, 1997, and at any
and all adjournments or postponements thereof (the "Annual Meeting"). The Board
of Directors has fixed the close of business on August 11, 1997 as the record
date for determining the shareholders entitled to vote at the Annual Meeting.
This proxy statement and the accompanying WHITE proxy card are first being
mailed to shareholders on or about September 11, 1997.
QUORUM AND VOTING RIGHTS
The Board of Directors has fixed the close of business of August 11, 1997,
as the record date (the "Record Date") for the determination of shareholders
entitled to vote at the Annual Meeting. As of the Record Date, there were
outstanding 13,267,277 shares of Common Stock.
A majority of the shares entitled to vote, present in person or represented
by proxy, will constitute a quorum at the Annual Meeting. For purposes of
determining a quorum, shares represented by all valid proxies received will be
counted, including proxies that contain instructions to abstain as to certain
votes and proxies filed by brokers or others indicating that their voting
authority does not extend to all agenda items ("broker non-votes"). On each
agenda item, broker non-votes will be disregarded and abstentions will be
treated as negative votes.
Pursuant to Section 2.7.3 of the Company's Bylaws, shareholders of the
Company will be entitled to cumulate their votes for Director nominees at the
Annual Meeting if any shareholder has given advance notice to the Company of
an intent to so cumulate votes and has complied with certain other
requirements. On August 22, 1997, the Company received notice in compliance
with this Bylaw provision from Traute Segal, a shareholder of record on the
Record Date, and, accordingly, holders of Common Stock will be entitled to
cumulate their votes at the Annual Meeting. In the election of Directors
under cumulative voting, each shareholder is entitled to the number of votes
to which such shareholder's shares would normally be entitled, multiplied by
the number of Directors to be elected. A shareholder then casts all such
votes for a single candidate or allocates them among as many candidates as
the shareholder may choose (up to the number of Directors to be elected). If
no vote is specified or a vote FOR all nominees is marked, the cumulative
votes represented by a proxy card will be cast, unless contrary instructions
are given, at the discretion of the proxy holders named therein in order to
elect as many nominees as they believe possible under the then prevailing
circumstances.
Whether or not you plan to attend the meeting, you are urged to vote by
proxy. Duly executed and unrevoked proxies received by the Company prior to the
Annual Meeting will be voted in accordance with the shareholder's specifications
marked thereon. If no specifications are marked thereon, the WHITE proxies
distributed by your Board will be voted FOR the election of your Board's
nominees, FOR the ratification of the appointment of Arthur Andersen LLP as
independent public accountants and AGAINST the USSC non-binding resolution. Any
shareholder giving a proxy may revoke it at any time prior to voting at the
Annual Meeting by filing with the Secretary of the Company a duly executed
revocation, by submitting a later dated proxy with respect to the same shares or
by attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute a revocation of your proxy).
-1-
<PAGE>
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone or other methods
and in person. Solicitations may be made by directors, officers, investor
relations personnel and other employees of the Company, none of whom will
receive additional compensation for such solicitations. The Company will
request banks, brokerage houses and other custodians, nominees and fiduciaries
to forward all of its solicitation materials to the beneficial owners of the
shares of Common Stock they hold of record.
The Company has retained D.F. King & Co., Inc. ("D.F. King") for
solicitation and advisory services in connection with the solicitation, for
which D.F. King is to receive a fee estimated at $75,000.00 plus reimbursement
for its reasonable out-of-pocket expenses. The Company has also agreed to
indemnify D.F. King against certain liabilities and expenses. It is anticipated
that D.F. King will employ approximately 25 persons to solicit shareholders for
the Annual Meeting. D.F. King is also acting to assist the Company in
connection with the USSC offer, for which D.F. King will be paid customary
compensation in addition to reimbursement for reasonable out-of-pocket expenses.
All expenses incurred in connection with this solicitation, including
postage, printing, handling, and all the actual expenses incurred by custodians,
nominees, and fiduciaries in forwarding proxy materials to beneficial owners,
will be paid by the Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. The term
of one of the three classes expires each year. The term of the Class I
Directors expires in 1997 and each third year thereafter, the term of the
Class II Director expires in 1998 and each third year thereafter, and the term
of the Class III Directors expires in 1999 and each third year thereafter. If
any Director who was elected while serving as an officer ceases to be an officer
during that Director's term, such Director's term will expire at the next
subsequent annual meeting of Shareholders.
Two Class I Directors will be elected at the 1997 Annual Meeting. The
Board of Directors has nominated Richard A. Auhll and Paul W. Hartloff, Jr. who
are currently serving as Class I Directors. The Board's nominees have agreed to
serve if elected, but in the event that the nominees are not available to serve,
the proxy holders will vote for the election of such other persons as the Board
may direct.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE BOARD'S NOMINEES
AS DIRECTORS OF THE COMPANY
The Board believes that the election of USSC's handpicked representatives
to the Company's Board of Directors would not be in the best interests of the
shareholders. Your Board opposes USSC's nominees for several reasons. First,
the USSC nominees support a prompt auction of the Company. The Board has
determined that, at this time, the interests of the shareholders will be best
served by the Company remaining independent and pursuing its strategic plan.
Second, the Board believes that USSC's relationship with the nominees it has
selected should be carefully considered by shareholders. As a hostile bidder for
Circon, USSC has interests concerning Circon that are significantly different
from the interests of Circon shareholders. It would certainly be in the best
interests of USSC to acquire Circon at the lowest possible price. The USSC
nominees have been recruited and selected by USSC and have each been paid
$100,000 by USSC in the form of shares of Circon Common Stock as payment for
serving as USSC's nominees. USSC has also agreed to indemnify the nominees
against certain liabilities that they may incur in the course of discharging
their functions as directors of Circon. As a result, in deliberations of
Circon's Board on matters potentially affecting the corporate interest of
USSC, the USSC nominated directors may have a conflict of interest.
-2-
<PAGE>
Third, even if USSC's nominees were elected, they could not by themselves
bring about the sale of the Company. Therefore, the likely consequence of the
election of USSC's nominees would be to disrupt the Board and divert the
management of Circon from successful execution of the strategic plan.
The Circon Board has determined that successful execution of the strategic
plan will provide greater shareholder value than the USSC tender offer. The
Board intends to monitor the Company's performance under the strategic plan and
to take appropriate action, including the possible merger or sale of the
Company, if performance falls short of the plan's objectives. In monitoring
performance under the strategic plan, in considering appropriate action if
performance falls short and in all other matters, the Company needs an
independent, experienced and cohesive Board of Directors --- not a divided and
contentious one with some members who have loyalties to another company,
particularly one that seeks to purchase Circon for the price most advantageous
to its own shareholders.
If USSC's nominees for directors are elected and, as a result, Mr. Auhll
is not reelected as a Director of the Company, the Board of Directors may, in
view of the importance of having the Company's Chief Executive Officer on the
Board, give consideration to alternative strategies that permit Mr. Auhll to
remain on the Board. The Board believes that it is critical to their
successful deliberations to have the Chief Executive Officer of the Company
included as a member of the Board given the depth of his knowledge of the
Company and the industry in which the Company competes. The Board has not
made any decisions with respect to these alternative strategies but is
generally aware that the Company's Bylaws provide that the Board may fill any
vacancies on the Board. Pursuant to the Company's Certificate of
Incorporation and Bylaws, a vacancy may be created by resolution of the
Directors or the resignation, retirement or other removal of a duly elected
Director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF
THE BOARD'S NOMINEES (PROPOSAL NO. 1)
In April 1997, George Cloutier was added to the Board of Directors after
the Board determined that it would be of benefit to the Company to add a new
member with significant business management experience such as Mr. Cloutier.
In June 1997, Bruce Thompson was added to the Board of Directors as the Board
concluded that given Mr. Thompson's in-depth understanding of the Company's
affairs it would be in the best interests of the Company to have Mr. Thompson
as a member.
The following persons are currently serving on the Board of Directors of
the Company:
<TABLE>
<CAPTION>
Director
Name Principal Occupation Class Age Since
- ------------------- ---------------------------------- ----- --- ---------
<S> <C> <C> <C> <C>
Richard A. Auhll Chairman of the Board, President,
and Chief Executive Officer of
the Company I 56 1969
John F. Blokker President and Chief Executive
Officer, Luxcom, Inc. III 67 1991
George A. Cloutier Chairman of the Board, President
and Chief Executive Officer of
American Management Services, Inc. II 52 1997
Harold R. Frank Investor III 73 1984
Paul W. Hartloff, Jr. Partner, law firm of Jarvis,
Hartloff & Simon I 64 1991
Rudolf R. Schulte Rancher, Investor II 65 1977
R. Bruce Thompson Executive Vice President and Chief
Financial Officer of the Company II 53 1997
</TABLE>
Mr. Auhll has been the Chairman of the Board of Directors, President and
Chief Executive Officer of the Company since 1969. Mr. Auhll has a Bachelor of
Science degree in Engineering from the University of Michigan, a Master of
Science degree in Engineering from Stanford University, and a Master of Business
Administration degree from Harvard University. Prior to 1969, Mr. Auhll held
positions with United Technologies Corporation and was a management consultant.
Mr. Auhll is a member of the Board of Trustees of the University of California
at Santa Barbara Foundation and a member of the Foundation's Executive
Committee. He is past Chairman of the Board of Directors of Seton School for
Developmentally Disabled Children.
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<PAGE>
Mr. Blokker is President and Chief Executive Officer of Luxcom, Inc., a
telecommunications company. He was a general partner of Hambrecht & Quist
Venture Partners, an investment banking firm, from February 1985 to February
1988. Prior to 1985, he served for twenty-seven years in various executive and
management positions including Vice President, General Manager with
Hewlett-Packard Company, a manufacturer of computers and electronic test and
measurement instruments. He is a member of the Boards of Directors of
Mid-Peninsula Bank of Palo Alto and Whittier Trust Company.
Mr. Cloutier is Chairman of the Board, President and Chief Executive
Officer of American Management Services, Inc., a consulting firm for small to
mid-size businesses. Prior to founding American Management Services in 1986,
Mr. Cloutier held a number of executive positions with companies providing a
broad range of business consulting and management services.
Mr. Frank is the founder of Applied Magnetics Corporation, a manufacturer
of magnetic recording heads. He served as Chairman of its Board of Directors
from inception until February, 1996, and continues to serve as a Director.
Mr. Frank also currently serves on the Boards of Directors of Trust Company of
the West and as Chairman of the Board of Key Technology, Inc. Mr. Frank is past
Chairman of the Board of the American Electronics Association.
Mr. Hartloff is a partner of the law firm of Jarvis, Hartloff & Simon, LLP
founded in 1996. He was a senior partner of the law firm of Schramm & Raddue
from 1964 to 1996. Mr. Hartloff serves as a member of the Board of Directors of
Mehl Biophile International Corporation.
Mr. Schulte was a founder of Heyer-Schulte Corporation and served as
President and Chairman of its Board of Directors from 1963 until it was acquired
by American Hospital Supply Corporation in 1974. From 1978 to 1995 Mr. Schulte
served as Chairman of the Board of Directors of Pudenz-Schulte Medical Research
Corporation, a manufacturer of medical products acquired by Medtronic, Inc. in
1995. Mr. Schulte has been an independent investor since 1974.
Mr. Thompson has been Executive Vice President and Chief Financial Officer
of the Company since 1985, and Vice President since 1982. He joined the Company
in 1977 as Controller. Prior to 1977, Mr. Thompson held positions with
Heyer-Schulte Corporation, a subsidiary of American Hospital Supply Corporation,
and Cutter Laboratories Inc. Mr. Thompson is also a member of the Board of
Directors and Chairman of the Finance Committee of MEDMARC Insurance Company, a
product liability insurance provider for medical product companies. Mr.
Thompson is a past member of the Board of Directors of R.N. Linquist and
Associates (Qupe), a winery in the California Central Coast region.
BOARD MEETINGS AND COMMITTEES
The Board of Directors meets on a regularly scheduled basis and, during
1996, met on nine occasions. In addition, significant communications occur
between the Directors and the Company apart from regularly scheduled meetings of
the Board and the Board Committees. Accordingly, management considers many
factors, including attendance at meetings, in their evaluation of contributions
by Directors to the Company. For the Board of Directors as a whole, average
attendance at meeting of the Board and the Board Committees (the aggregate of
the total number of meetings of the Board of Directors and the total number of
meetings of all Board Committees on which each Director served) during 1996 was
94.7%. During 1996, none of the incumbent Directors attended less than 80% of
the aggregate of the total number of Board meetings and the total number of
Committee meetings on which he served.
The Company has an Audit Committee and a Compensation Committee. The
function that would be performed by a nominating committee is performed by the
Board of Directors as a whole.
The Audit Committee, which consists of directors Blokker, Hartloff and
Frank, held two meetings in 1996. The Audit Committee recommends the
appointment of independent auditors for the Company, approves the services
performed by the Company's independent auditors, reviews the Company's
accounting principles and consults with the independent auditors on matters
relating to internal financial controls and procedures.
The Compensation Committee, which consists of directors Auhll, Frank and
Schulte, held two meetings in 1996. The Compensation Committee reviews and
makes recommendations to the Board concerning the Company's executive
compensation policy, bonus plans and equity incentive plans. The Compensation
Committee also administers the Company's stock option plans.
-4-
<PAGE>
DIRECTORS' COMPENSATION
The compensation for outside Directors was modified effective July 1, 1997,
as discussed below. First, the annual retainer for services as a Director was
increased from $2,500 to $10,000. Second, provision was made for annual grants
of Common Stock equivalents. These changes were made to bring the Company's
Directors within comparable levels of compensation for companies similar in
size, capital structure and board structure. The new compensation program is
designed to ensure that a significant portion of a non-employee Director's
compensation is equity-based and, therefore, highly dependent on the long-term
performance of Circon Common Stock. Thus, the program is designed to align the
interests of Circon's non-employee Directors and its shareholders.
Effective July 1, 1997, each Director who is not an employee of the Company
receives an annual retainer of $10,000 for services as a Director. These fees
are paid quarterly in cash. Directors continue to receive a fee of $500 for
each Board and committee meeting attended and reimbursement for expenses
incurred in connection with attendance at Board and committee meetings.
In 1995, the shareholders approved the adoption of the 1995 Directors Stock
Option Plan (the "1995 Plan") to replace the 1984 Directors Stock Option Plan
(the "1984 Plan") which expired in 1994. The 1995 Plan is substantially similar
to the 1984 plan. Under the 1995 Plan, options for up to 200,000 shares of
common stock may be granted to Directors who are not officers of the Company,
for a price not less than 85% of the fair market value of the common stock on
the date of grant. The vesting schedule for the options granted is determined
by a committee of Directors (the "Committee") at the time of the option grant.
The maximum option term is ten years. If the optionee ceases to be a Director
for any reason, any options granted which have not been exercised will be
canceled according to the terms of the stock option agreement. No options were
granted to Directors in 1996. In July 1997, the Committee elected to accelerate
the vesting schedule for previously granted options. Each Director who is not
an employee of the Company received accelerated options or a combination of
accelerated options and new stock Common Stock options in recognition of
services rendered over the past year. The number of accelerated options or new
options granted in the July 1997 grant to a particular Director was determined
by using a schedule designed to bring that Director's total stock options
vesting in 1997 to 11,000 shares. Directors who are not employees will receive
subsequent option grants not to exceed 5,000 shares, on an annual basis.
The Company also provides Director liability insurance for all Directors.
PROPOSAL NO. 2
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to ratification by the
shareholders, the firm of Arthur Andersen LLP, certified public accountants, to
audit the consolidated financial statements of the Company and its subsidiary
for the fiscal year ending December 31, 1997. Arthur Andersen LLP has served as
independent certified public accountants of the Company since 1977. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting of Shareholders and will be given the opportunity to make a statement
and to respond to appropriate questions. A majority of the shares represented
at the meeting and entitled to vote on this proposal is required to ratify the
selection of Arthur Andersen LLP as independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL NO. 2
PROPOSAL NO. 3
THE USSC NON-BINDING RESOLUTION
The Company has been advised by USSC that it intends to present the
following resolution at the Annual Meeting:
"RESOLVED, that the shareholders of Circon Corporation urge the Circon
Board of Directors to arrange for the prompt sale of Circon to the
highest bidder."
The Board of Directors unanimously opposes the resolution as it has
determined that the USSC offer is inadequate and not in the best interests of
the shareholders. The best means for providing value to shareholders is for
Circon to continue to pursue its strategic plan and not be put up for sale at
this time. The Board believes that it is an inopportune
-5-
<PAGE>
time to auction the Company and such a strategy would yield a less favorable
return to shareholders than would be achieved if the Company remains independent
and successfully implements its strategic plan.
As mentioned above, the Board will closely monitor the performance of the
Company under the strategic plan and take appropriate action, including
consideration of a sale or merger, in the event the Company's performance
indicates that the strategic plan is no longer the best means for maximizing
shareholder value.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST"
THE USSC RESOLUTION TO ARRANGE FOR A PROMPT AUCTION OF THE COMPANY
(PROPOSAL NO. 3)
EXECUTIVE OFFICERS
The Executive Officers of the Company are elected by and serve at the
discretion of the Board of Directors. As of August 11, 1997, the Executive
Officers of the Company were as follows:
Officer
Name Position Age Since
- ----------------- -------------------------------------- --- --------
Richard A. Auhll Chairman of the Board, President and
Chief Executive Officer 56 1969
Winton L. Berci Vice President, Marketing and Sales 42 1989
Frank D. D'Amelio Vice President and Chief Manufacturing
Officer 39 1989
Andrew D. Simons Vice President, General Counsel and
Secretary 36 1996
R. Bruce Thompson Executive Vice President and Chief
Financial Officer 53 1982
David P. Zielinski Vice President, ACMI Division General
Manager 54 1994
For certain information concerning the business experience of Mr. Auhll,
see "Proposal No. 1 - Election of Directors."
Winton Berci joined the Company as Vice President, Marketing and Sales, in
1989. Prior to joining Circon, he worked for fourteen years with Karl Storz
Endoscopy America, Inc., a major Circon competitor. He held various positions
with Karl Storz including Director of Marketing for six years.
Frank D'Amelio was appointed Vice President, Chief Manufacturing Officer in
1994, prior to which he was Vice President, General Manager of the Video
Division since 1993, and Vice President, CIRCON ACMI Engineering and Quality
Control, beginning in 1989. Prior to 1989, Mr. D'Amelio held various positions
with the Company including Director of Quality Assurance. He joined ACMI in
1982.
Andrew Simons joined the Company as Vice President, Secretary and General
Counsel in 1996. From 1992 until joining Circon, Mr. Simons worked for Tokos
Medical Corporation in various capacities, including Vice President, General
Counsel and Corporate Secretary. Prior to 1992, Mr. Simons was an Associate at
the law firm of Gibson, Dunn & Crutcher.
For certain information concerning the business experience of Mr. Thompson,
see "Proposal No. 1 - Election of Directors."
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<PAGE>
David Zielinski was appointed Vice President, ACMI Division General Manager
in 1994, prior to which he was Vice President of Manufacturing for Circon ACMI.
Prior to 1986, Mr. Zielinski held various positions with the Company including
Director of Manufacturing for ACMI. He joined ACMI in 1982. Prior to joining
ACMI, Mr. Zielinski held various positions with General Electric.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership as well as changes in ownership with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc. ("NASDAQ"). Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for such persons, the Company believes that during the fiscal year
ended December 31, 1996 all filing requirements applicable to its executive
officers, directors and greater than ten percent beneficial owners were complied
with.
REMUNERATION OF OFFICERS
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE. The following table sets forth three years of
compensation history for the Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company as of the last
completed fiscal year:
<TABLE>
<CAPTION>
Annual Compensation (1) Long-Term Compensation
------------------------------------- -------------------------------------
Awards Payouts
-------------------------------------
Restricted Securities LTIP All Other
Name and Stock Underlying Payouts Compen-
Principal Position Year Salary ($) Bonus ($) Other ($) ($) Options(#) ($) sation ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R Auhll 1996 316,500 39,274 - - - - 10,538 (2)
President, CEO and 1995 298,000 136,739 - - - - 10,408
Chairman of the Board 1994 237,930 107,475 - - - - 10,210
R B Thompson 1996 176,000 26,860 - - - - 5,312 (3)
Executive Vice President 1995 166,000 64,840 - - - - 4,192
Chief Financial Officer 1994 140,080 52,202 - - 20,000 - 3,977
F D'Amelio 1996 181,000 43,365 - - - - 4,432 (4)
Vice President 1995 169,000 58,000 - - - - 3,672
Chief Manufacturing Officer 1994 143,000 48,310 - - 23,750 - 3,303
W Berci 1996 163,240 39,329 - - - - 3,621 (5)
Vice President 1995 154,000 45,500 - - - - 3,283
Marketing and Sales 1994 132,000 36,073 - - 20,000 - 2,567
D Zielinski 1996 150,431 19,272 - - - - 2,819 (6)
Vice President 1995 141,916 56,526 - - - - 4,279
ACMI Division 1994 136,000 51,790 - - 23,750 - 3,559
General Manager
</TABLE>
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) Reflects $4,750 Company match of employee contributions to 401(k) plan
and $5,788 premium on life insurance paid by the Company.
(3) Reflects $3,948 Company match of employee contributions to 401(k) plan
and $1,364 premium on life insurance paid by the Company.
(4) Reflects $3,739 Company match of employee contributions to 401(k) plan
and $693 premium on life insurance paid by the Company.
(5) Reflects $3,107 Company match of employee contributions to 401(k) plan
and $514 premium on life insurance paid by the Company.
(6) Reflects $2,819 premium on life insurance paid by the Company.
-7-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR. None of the executive officers named in
the Summary Compensation Table above received a grant of stock options during
the year ended December 31, 1996. The Company has never granted stock
appreciation rights (SARs).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES.
The following table sets forth, for each of the executive officers named in the
Summary Compensation Table above, each exercise of stock options during the year
ended December 31, 1996 and the year-end value of unexercised options:
<TABLE>
<CAPTION>
Number of Securities Value(1) of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares at Fiscal Year End 1996 at Fiscal Year End 1996
Acquired on Value ----------------------- -----------------------
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Auhll n/a n/a 30,000(2) 10,000 $150,000 $ 50,000
R. Thompson n/a n/a 5,714 14,286 $ 34,284 $ 85,716
F. D'Amelio n/a n/a 24,817 22,812 $238,561 $141,584
W. Berci n/a n/a 16,914 14,286 $160,284 $ 85,716
D. Zielinski n/a n/a 6,786 16,964 $ 40,716 $101,784
</TABLE>
1 Excess of $15.25 (market price at year end) over exercise price.
2 Mr. Auhll also holds warrants to purchase 100,000 shares which were fully
exercisable at year end. The value of these warrants, computed as above,
was $1,064,000. The warrants were issued in 1990 in connection with Mr.
Auhll's guarantee of certain indebtedness of the Company and not in
connection with his performance of services to the Company.
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PRINCIPLES
The compensation policies of the Company for all employees, including
executive officers, are guided by the following principles:
- Attract, retain and motivate well qualified employees who contribute
to the long-term success of the Company.
- Encourage the development and achievement of objectives that enhance
long-term shareholder value.
- Relate compensation to the overall success of the Company which
includes providing sales growth coupled with sound financial
performance, quality products and services for customers, and
fostering an environment which enables employees to achieve
objectives.
EXECUTIVE COMPENSATION PRACTICES
The Company's executive compensation program consists primarily of cash and
equity based elements. Salary and annual awards, if warranted, under the
Management Incentive Compensation Program ("MICP") comprise the cash elements.
Grants of stock options under the Company's employee stock option plans and
participation in the Company's employee stock purchase plan comprise the equity
based elements. The Company also provides health and welfare benefits to the
named officers through programs that are generally available to all employees.
In addition, all Company officers are entitled to have life insurance up to four
times their annual base salary.
-8-
<PAGE>
CASH COMPONENTS
It is the Company's intent to provide a compensation program that can
attract, motivate and retain high performance executives who are critical to the
long-term success of the Company. Salary levels and MICP target levels are
established annually for executive officers by the Compensation Committee, after
a review of compensation surveys for the medical/dental equipment and supply
industry. For 1996, the survey group consisted of 302 publicly traded companies
whose principal business was the manufacture or distribution of medical/dental
equipment and supplies. Of these companies, 131 are included in the NASDAQ
index covering medical stocks (see "Stock Performance Graph"). Salaries for
executive officers are established by evaluating the responsibilities of the
position held and the experience of the individual and by reference to the
competitive marketplace for executive talent.
The MICP plan provides for annual awards which are paid after the end of
the fiscal year, based on the achievement of pre-established annual increases
in specific objectives. The overall MICP program typically has many
objectives. The 1996 MICP plan had 102 objectives. For every participant, a
target payout is established for each objective and the weighting or value is
assigned to each component. Each MICP participant has a unique set of
objectives which constitute his or her specific MICP program. There are also
one or two subjective elements in each participant's program. An individual
objective has a pre-established minimum performance level before any payment
will occur and a maximum performance level where further payment ceases. The
range of payouts for each objective is from zero to 200% of a target amount.
The Compensation Committee establishes goals for overall growth in sales,
gross profit, operating and net income on a Company wide basis and reviews
the complete MICP program each year. Using these Company wide goals as
guidelines, targets are then determined for other business units, and other
subsets of sales, gross profit and operating income. In years where there is
a significant change in the overall business, or in an individual's
responsibility, the MICP targets are modified to make the performance
measurements meaningful. Awards are prorated for participation for less than
one year. Employees with other commission or bonus arrangements are
generally excluded from participation in the MICP plan. The MICP plan may be
modified from time to time, or discontinued at the discretion of the
Compensation Committee. During 1996, executive officers had four to eleven
objectives in their MICP program with each objective having a weight of two
to forty-nine percent of their total program. The weight of the objectives
varied widely among the group depending on the responsibilities of the
individual. For 1996, actual payouts for the named executive officers' MICP
programs averaged 47% of target.
Employees, including executive officers, who participate in the 401(k) plan
may receive a Company matching contribution of up to a maximum of 11/2% of their
salary per year.
EQUITY BASED COMPONENTS
The Company utilizes equity based compensation in the form of stock options
and a 20% matching program for stock purchases under a stock purchase plan for
its employees to focus employees and management on creating and enhancing long
term shareholder value. The actual value of such equity based compensation
correlates directly to the Company's stock price performance.
Stock options are an essential element of the Company's compensation
program. This component is intended to provide a long term incentive for
employees to stay with the Company and to motivate them to work toward
appreciation in the price of the Company stock over time. Three hundred four
employees ( or approximately 26 % of all employees) participate in the various
employee stock option plans. Stock options are currently outstanding under the
1979 Employee Stock Option Plan, the 1983 Employee Stock Option Plan, which
expired in 1989 and 1993 respectively, the 1993 Stock Option Plan (the"1993
Plan") and the Cabot Stock Option Plan (the "Cabot Plan").
In determining the number of shares subject to options being granted to
executive officers, the Compensation Committee considers survey data on options
granted to executives with comparable positions at comparable companies, the
number of shares subject to options previously granted to the executive, the
number of unvested shares subject to outstanding options held by the executive
(which is an indicator of the retention value of the outstanding options) and an
evaluation of the executive's individual performance. In 1996, options were
granted to Andrew Simons who joined the Company as Vice President, Secretary and
General Counsel. Other than Mr. Simons, there were no options granted to
executive officers in 1996.
-9-
<PAGE>
In the 1979, 1983 and 1993 Employee Stock Option Plans, options generally
become exercisable cumulatively or "vest" at an annual rate of 14.3% of the
total shares granted for seven years commencing one year from the date of grant.
All outstanding stock options were granted at the "market price" as of the date
of grant. Correspondingly, options in the Cabot Plan generally become
exercisable over a three year vesting period. The 1979, 1983, 1993 and Cabot
Plans provide for full vesting of options in the event there is a change in
control of the Company.
1996 CHIEF EXECUTIVE COMPENSATION
Mr. Auhll, in his capacity as Chairman of the Board, Chief Executive
Officer and President participates in substantially the same compensation
programs as the other named officers. The Compensation Committee has based Mr.
Auhll's total compensation, including compensation derived from the MICP plan at
a level it believes is competitive with comparably sized medical companies,
based on survey data. Circon's sales put the Company in the 75th percentile of
the companies surveyed.
After considering all factors, the committee approved a $316,500 salary for
Mr. Auhll for 1996, an increase of 6.2% over his $298,000 salary for the prior
year. Mr. Auhll's target bonus for 1996 MICP program was set at $123,000. Mr.
Auhll's MICP program consisted of ten objectives covering sales growth,
operating performance and financial ratios, each having a weight of two to
forty-nine percent of his total program. Mr. Auhll's bonus program had payouts
for individual factors that range from 0% to 200% of the target values for 1996.
This resulted in an actual payout of $39,274 or 31.9% of his target bonus. Mr.
Auhll's base salary falls 16% above and his bonus falls 79% below the 75th
percentile compared to the CEOs in the survey group.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly-held corporations for compensation
exceeding $1 million paid to certain of the Company's executive officers. In
1996, the performance-based compensation paid to the Company's executive
officers did not exceed the $1 million limit per officer. It is the
Compensation Committee's intention to review the Company's compensation policies
and regulate compensation levels in order to comply with the statute and avoid
non-deductible compensation payments.
Respectfully submitted,
Richard A. Auhll
Harold R. Frank
Rudolf R. Schulte
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Auhll, Frank and Schulte comprise the Compensation Committee.
Mr. Auhll also serves as President and Chief Executive Officer of the Company.
Mr. Auhll participates in discussions regarding compensation for executive
officers, except discussions regarding the Chief Executive Officer. As a member
of the Compensation Committee, Mr. Auhll is ineligible to receive stock option
grants under the Company's stock option plans.
No other member of the Compensation Committee is a former or current
officer or employee of the Company or any of its subsidiaries. Furthermore,
there are no compensation committee interlocks between Circon and other entities
involving the Company's executive officers and board members.
-10-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 11, 1997,
except as otherwise indicated, regarding the beneficial ownership of Common
Stock of Circon by (i) each person who is known to Circon to be the beneficial
owner of 5% or more of Circon's Common Stock, (ii) each director of Circon,
(iii) certain executive officers of Circon and (iv) all directors and executive
officers as a group. To the Company's knowledge, the beneficial owners named in
the table have sole voting and investment power with respect to the shares.
Shares
Beneficially Percent
Name Owned of Class (1)
- ----------------------------------- ------------ ------------
United States Surgical Corporation 1,959,348 (2) 14.4%
150 Glover Avenue
Norwalk, CT 06856
Richard A. Auhll 1,558,142 (3) 11.5%
6500 Hollister Avenue
Santa Barbara, CA 93117
Chancellor LGT Asset Management, Inc. 1,333,600 (4) 9.8%
1166 Avenue of the Americas
New York, NY 10036
Rudolf R. Schulte 418,841 (5) 3.1%
Harold R. Frank 46,848 (6) *
R. Bruce Thompson 41,917 (7) *
Paul W. Hartloff, Jr. 38,531 (8) *
John F. Blokker 37,531 (9) *
Frank D. D'Amelio 28,377(10) *
Winton L. Berci 20,271(11) *
David P. Zielinski 15,679(12) *
George A. Cloutier 11,000(13) *
All directors and executive officers
as a group (11 persons) 2,218,866(14) 16.4%
- -----------------------------
* Less than 1%
(1) Percent of the outstanding shares of Common Stock, treating as
outstanding all shares issuable upon exercise of options held by the
particular beneficial owners that are included in the first column.
(2) Information is given as of July 24, 1997 and is based on a Form 4
Statement of Changes in Beneficial Ownership of Securities as filed with
the Securities and Exchange Commission.
(3) Includes 140,000 shares subject to warrants and options exercisable
currently or within 60 days.
(4) Information is given as of December 31, 1996 and is based on a Schedule
13G filed by this shareholder.
(5) Includes 12,429 shares subject to options exercisable currently or within
60 days.
(6) Includes 12,429 shares subject to options exercisable currently or within
60 days.
(7) Includes 8,571 shares subject to options exercisable currently or within
60 days.
-11-
<PAGE>
(8) Includes 37,531 shares subject to options exercisable currently or within
60 days.
(9) Includes 37,531 shares subject to options exercisable currently or within
60 days.
(10) Includes 28,377 shares subject to options exercisable currently or within
60 days.
(11) Includes 19,771 shares subject to options exercisable currently or within
60 days.
(12) Includes 10,179 shares subject to options exercisable currently or within
60 days.
(13) Includes 11,000 shares subject to options exercisable currently or within
60 days.
(14) Includes 319,247 shares subject to options exercisable currently or
within 60 days.
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative performance for the Company's
Common Stock over the last five years compared with the performance of the
NASDAQ Composite index (U.S. companies) and an index of NASDAQ-listed companies
with standard industrial classification codes beginning with "38" (SIC 3800-
3899, Measuring, analyzing, and controlling instruments; photographic, medical
and optical goods; watches and clocks), published by the Center for Research in
Security Prices, University of Chicago. The price of the Common Stock, and the
levels of such indices, on December 31, 1991, have been converted to a base of
100 in the graph. The performance shown is not necessarily indicative of future
performance.
Shareholders interested in obtaining a list of companies included in the
industry index may do so by written request to the Company.
[GRAPH]
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
LEGEND
Symbol CRSP Total Returns Index for: 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ------ ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----/ / CIRCON CORPORATION 100.0 66.7 34.8 32.6 61.4 46.2
- ----* Nasdaq Stock Market (US Companies) 100.0 116.4 133.6 130.6 184.7 227.2
- ----Triangle NASDAQ Stocks (SIC 3800-3899 US Companies) 100.0 85.8 72.6 78.2 115.1 120.6
Measuring instruments; photo, med & optical
goods; timepieces
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/91.
-12-
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
Individual shareholders of the Company may be entitled to submit proposals
which they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations which govern the inclusion of such
proposals in annual proxy materials.
If a shareholder desires to have a proposal considered for inclusion in
the Proxy Statement and form of Proxy of the Board of Directors for the 1998
Annual Meeting of Shareholders, such proposal must be received by the close
of business on May 8, 1998, at the executive offices of the Company, 6500
Hollister Avenue, Santa Barbara, California 93117, Attention: Office of the
Secretary.
Each proponent and each proposal submitted must conform to the applicable
proxy rules of the Securities and Exchange Commission concerning the submission,
content and form of shareholder proposals.
FINANCIAL STATEMENTS
The Company's 1996 Annual Report to the shareholders, which has been mailed
to shareholders with this Proxy Statement, contains audited consolidated
financial statements of the Company. Such Annual Report does not constitute a
part of the proxy soliciting material. If any shareholder did not receive such
Annual Report, we will immediately mail one upon receipt of a request from such
shareholder.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY SHAREHOLDER UPON
WRITTEN REQUEST A COPY OF THE ANNUAL REPORT ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUESTS
SHOULD BE SENT TO SHAREHOLDER RELATIONS:
Circon Corporation
6500 Hollister Avenue
Santa Barbara, CA 93117
INFORMATION ABOUT ATTENDING THE MEETING
The Annual Meeting of Shareholders will be held this year at Fess Parker's
Doubletree Resort, 633 East Cabrillo Boulevard, Santa Barbara, California. If
directions to the Annual meeting are not included with your pre-printed proxy
card, directions may be obtained by contacting the Doubletree Resort at
(805)564-4333.
Each shareholder will need a ticket to attend the Annual Meeting. If a
shareholder's stock is registered in his or her name and not in the name of a
bank, broker or other third party, the shareholder will receive an admission
ticket attached to his or her proxy card. This ticket must be presented in
order to be admitted to the Annual Meeting.
However, if a shareholder's stock is not registered in his or her name, the
shareholder must advise the firm that is the holder of record of those shares
(bank, broker or other institution holding such shares) that he or she wishes to
attend the Annual Meeting. That firm must provide the shareholder with
documentation showing his or her ownership of shares of Circon Common Stock as
of the Record Date, August 11, 1997. Alternatively, a shareholder must produce
a bank, broker or other valid monthly statement which clearly shows that he or
she was a shareholder of Circon Common Stock as of the Record Date. The
shareholder must bring this documentation to the Annual Meeting in order to gain
admittance to the Annual Meeting. Shareholders whose shares are not registered
in their own name should plan on arriving early to allow adequate time to have
their proof of ownership reviewed prior to the start of the Annual Meeting.
Circon will establish reasonable rules and procedures for the conduct of
the Annual Meeting to ensure that there is sufficient time to address all of the
items on the agenda and to facilitate an orderly meeting. Attendance at the
Annual Meeting is limited to Circon's shareholders. These rules will be posted
at the Annual Meeting and will include an agenda for the Annual Meeting,
procedures for maintaining order and limitations on the time allotted to
questions or comments by shareholders.
-13-
<PAGE>
VOTING OF PROXIES AND OTHER MATTERS
Properly executed and returned proxies, unless revoked, will be voted as
directed by the shareholders or in the absence of such direction, will be voted
FOR the election of the Director Nominees to the Board of Directors, AGAINST the
USSC non-binding resolution and FOR the ratification of the selection of
independent auditors.
Management does not know of any other matters which will come before the
Annual Meeting. However, if any other matter should come before the Annual
Meeting or any adjournment thereof, the proxies will be voted in the manner
directed by the Board of Directors.
By Order of the Board of Directors,
Andrew D. Simons
Vice President and Secretary
-14-
<PAGE>
[LOGO]
6500 Hollister Avenue - Santa Barbara, California 93117-3019 - (805) 658-5100 -
- -Fax (805) 968-7385 OTC (CCON)
<PAGE>
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
CIRCON'S DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2.
WITHHELD
FOR FOR ALL
1. ELECTION OF DIRECTORS / / / /
Richard A. Auhll
Paul W. Hartloff, Jr.
WITHHELD FOR: (Write that nominee's name in the space provided below).
--------------------------
FOR AGAINST ABSTAIN
2. RATIFICATION OF THE SELECTION OF ARTHUR / / / / / /
ANDERSEN LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE COMPANY
CIRCON'S DIRECTORS RECOMMEND A VOTE "AGAINST" PROPOSAL 3.
FOR AGAINST ABSTAIN
3. U.S. SURGICAL CORPORATION'S NON-BINDING / / / / / /
RESOLUTION TO ARRANGE FOR A PROMPT AUCTION
OF THE COMPANY.
Signature Date
--------------------- -------------------
Signature Date
--------------------- -------------------
NOTE: Please sign as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
1 FOLD AND DETACH HERE 1
PLEASE RETAIN THIS LETTER FOR ADMISSION TO THE MEETING
Circon Corporation
6500 Hollister Avenue
Santa Barbara, CA 93117
Telephone: (805) 685-5100
September 11, 1997
The Annual Meeting of Shareholders of Circon Corporation will be held at 9:00
a.m., Pacific daylight time, on Monday, October 6, 1997 at Fess Parker's
Doubletree Resort, 633 East Cabrillo Boulevard, Santa Barbara, California.
Please fill in the boxes on the proxy card to indicate how your shares should be
voted, sign and date your proxy card and return it as soon as possible in the
enclosed postpaid envelope.
PLEASE NOTE: IF YOU PLAN TO ATTEND THIS YEAR'S ANNUAL MEETING, YOU WILL NEED TO
PRESENT THE ADMISSION TICKET ON THE REVERSE SIDE OF THIS LETTER. EACH TICKET
ADMITS ONE PERSON UNLESS YOUR ACCOUNT IS HELD JOINTLY. PROOF OF OWNERSHIP IS
REQUIRED. PLEASE BRING THE ADMISSION TICKET WHICH IS ON THE REVERSE SIDE OF
THIS LETTER WITH YOU TO THE ANNUAL MEETING.
Andrew D. Simons
Secretary
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR CIRCON CORPORATION
The owner of the shares represented by this proxy hereby appoints Richard
A. Auhll and R. Bruce Thompson, or either of them, Proxies to vote at Circon
Corporation's Annual Meeting of Shareholders on October 6, 1997 and any
adjournments or postponements thereof on the matters referred to on the opposite
side of this card as well as any other matters which may properly come before
the Annual Meeting, in accordandance with and as more fully described in the
Notice of Meeting and Proxy Statement, receipt of which is acknowledged. This
proxy revokes all prior proxies given by the undersigned.
The Proxies will vote your shares in accordance with your directions on
this card. IF YOU DO NOT INDICATE YOUR CHOICES ON THIS CARD, THE PROXIES WILL
VOTE YOUR SHARES IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS, NAMELY "FOR"
PROPOSALS 1 AND 2 AND "AGAINST" PROPOSAL 3.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
1 FOLD AND DETACH HERE 1
ADMISSION TICKET
CIRCON CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
MONDAY, OCTOBER 6, 1997
9:00 - 10:00 A.M.
LOCATION OF MEETING
Fess Parker's Doubletree Resort
633 East Cabrillo Boulevard
Santa Barbara, CA 93103
(805) 564-4333
DIRECTIONS FROM THE SOUTH
From LAX, take the 405 North (aka the San Diego Freeway). Take 101 North (aka
the Ventura Freeway) to Santa Barbara. Exit the freeway on Cabrillo Blvd/Beach
Area. Turn left onto Cabrillo Blvd. Follow Cabrillo for approximately 1/2
mile. Turn right on Milpas Street. Turn left onto Calle Puerta Vallarta (first
light). Turn right into hotel entrance.
DIRECTIONS FROM THE NORTH
Take 101 southbound to Santa Barbara. Exit the freeway on Milpas Street. Turn
right onto Milpas. Turn right on Calle Puerta Vallarta (first light past train
tracks). Turn right into hotel entrance.
