SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 1)
Under the Securities Exchange Act of 1934
CIRCON CORPORATION
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
172736-10-0
(CUSIP Number)
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Peter M. Schoenfeld Thomas Sandell
P. Schoenfeld Asset Management LLC Castlerigg Master Investments, Ltd.
1330 Avenue of the Americas c/o Sandell Asset Management Corp.
New York, NY 10019 65 East 55th Street
New York, NY 10019
Jeffrey E. Schwarz
Metropolitan Capital Advisors, Inc.
660 Madison Avenue
20th Floor
New York, NY 10021
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with copies to:
Robert W. Forman, Esq.
Shapiro Forman & Allen LLP
380 Madison Avenue, 25th Floor
New York, NY 10017
212-972-4900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 28, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |__|.
Check the following box if a fee is being paid with the statement |__|.
Page 1 of 12 Pages
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CUSIP NO. 172736-10-0 Page 2 of 12 pages
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STATEMENT FOR SCHEDULE 13D
This statement amends Items 4, 6 and 7 of the Statement to the Schedule 13D
filed with the Commission on October 20, 1998 by The Circon Shareholders
Committee (the "Committee"), its members and their affiliates and associates
(all of the foregoing, the "Reporting Persons") with respect to the common stock
of Circon Corporation, a Delaware corporation (the "Company").
Item 4. Purpose of Transaction.
On October 20, 1998, the Company announced that three directors (as opposed
to two, as had been previously announced) would be elected at the 1998 Annual
Meeting of Shareholders scheduled for November 24, 1998 (the "Annual Meeting").
On October 28, 1998, members of the Committee notified the Company of their
intent to nominate a third candidate, Lester Hill, for election as a director at
the Annual Meeting. From February 1997 through March 10, 1998, Mr. Hill was
chairman and chief executive officer of Pacific Scientific Corporation. The
Reporting Persons have proposed that the Company appoint Mr. Hill as a director
and chief executive officer of the Company and, if the Company does not accept
such proposal, the Nominees intend to make that proposal to the Company's board
when elected. If Mr. Hill becomes chief executive officer, he has advised
members of the Committee that he intends to seek to appoint David Schlotterbeck,
who was chief operating officer of Pacific Scientific, as chief operating
officer of the Company. Mr. Schlotterbeck was also president and chief operating
officer of VitalCom, a medical network manufacturer, and executive vice
president of Nellcor, Inc., a medical device maker.
Certain members of the Committee met with the Company's interim chief
executive officer and one of its outside directors on October 23, 1998 in an
attempt to resolve the proxy contest. No resolution was reached at that meeting.
At such meeting, the Committee proposed that the Company consider, at some
future meeting of shareholders, amending its certificate of incorporation to
repeal the provisions for a staggered board, and also consider making
modifications to the Company's poison pill. The Committee's members intend to
continue communicating with the Company's board but, unless a satisfactory
resolution regarding the composition of the Company's board is reached, they
intend to finalize their proxy materials and solicit proxies in favor of the
Committee's Nominees.
Other than as described above, the Reporting Persons have no present plan
or proposal with respect to the Company. Subject to the Agreement described in
Item 6, which generally precludes the sale of Shares of Common Stock until the
earlier of the execution of a definitive agreement by the Company providing for
the sale of the Company, or the Annual Meeting, each Reporting Person intends to
review its investment in the Company on a continuing basis and, depending on
various factors, including, without limitation, the Company's performance, the
Company's progress toward shareholder value maximization, including the
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CUSIP NO. 172736-10-0 Page 3 of 12 pages
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progress of the sale process, the price levels of the Company's Common Stock,
conditions in the securities markets and general economic and industry
conditions, may take such actions with respect to its investment as it deems
appropriate in light of the circumstances then existing.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Company.
On October 28, 1998, the Committee and each of its members entered into an
agreement with Lester Hill, a copy of which is filed herewith as Exhibit 8 and
is incorporated herein by reference.
On October 23, 1998, the agreement among the Committee Members was amended
to substitute Castlerigg as a party for SAMC. As reported in the original
Schedule 13D, Castlerigg is the holder of the Shares beneficially owned by SAMC.
Except as set forth in this Item 6 and in Item 6 of the Reporting Persons'
original Schedule 13D, no Reporting Person has any contract, arrangement,
understanding or relationship with respect to the Common Stock of the Company.
Item 7. Material to be Filed as Exhibits.
8. Agreement among the Committee and its members and Lester Hill, dated
October 28, 1998.
9. Letter dated October 22, 1998 Amending Agreement Among Committee
Members.
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CUSIP NO. 172736-10-0 Page 4 of 12 pages
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SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief, each
of the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: October 30, 1998
P. SCHOENFELD ASSET MANAGEMENT, INC.
By: /s/ Peter M. Schoenfeld
-------------------------------------
Peter M. Schoenfeld
/s/ Peter M. Schoenfeld
----------------------------------------
PETER M. SCHOENFELD
CASTLERIGG MASTER INVESTMENTS, LTD.
By: Sandell Asset Management Corp.
By: /s/ Thomas Sandell
-------------------------------------
Thomas Sandell
SANDELL ASSET MANAGEMENT CORP.
By: /s/ Thomas Sandell
-------------------------------------
Thomas Sandell
/s/ Thomas Sandell
----------------------------------------
THOMAS SANDELL
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CUSIP NO. 172736-10-0 Page 5 of 12 pages
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METROPOLITAN CAPITAL ADVISORS, INC.
By: /s/ Jeffrey E. Schwarz
-------------------------------------
Jeffrey E. Schwarz
Chief Executive Officer
METROPOLITAN CAPITAL III, INC.
By: /s/ Jeffrey E. Schwarz
-------------------------------------
Jeffrey E. Schwarz
Chief Executive Officer
METROPOLITAN CAPITAL ADVISORS
INTERNATIONAL, LTD.
By: Metropolitan Capital III, L.P.
By: Metropolitan Capital III, Inc.
By: /s/ Jeffrey E. Schwarz
-------------------------------------
Jeffrey E. Schwarz
Chief Executive Officer
/s/ Jeffrey E. Schwarz
----------------------------------------
JEFFREY E. SCHWARZ
/s/ Karen Finerman
----------------------------------------
KAREN FINERMAN
BEDFORD FALLS INVESTORS, L.P.
By: Metropolitan Capital Advisors, L.P.
By: Metropolitan Capital Advisors, Inc.
By: /s/ Jeffrey E. Schwarz
-------------------------------------
Jeffrey E. Schwarz
Chief Executive Officer
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CUSIP NO. 172736-10-0 Page 6 of 12 pages
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EXHIBIT INDEX
Exhibit Number Title Page Number
8. Agreement among the Committee and its members 7
and Lester Hill, dated October 28, 1998.
9. Letter dated October 22, 1998 Amending Agreement 12
Among Committee Members.
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CUSIP NO. 172736-10-0 Page 7 of 12 pages
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EXHIBIT 8
AGREEMENT
AGREEMENT made this 28th day of October, 1998, by and between the Circon
Shareholder Committee (the "Committee"), which consists of Sandell Asset
Management Corp. ("Sandell"), Metropolitan Capital Advisors, Inc.
("Metropolitan"), P. Schoenfeld Asset Management LLC ("PSAM"), and Lester Hill
("Nominee"), with respect to the common stock of Circon Corporation, a Delaware
corporation (the "Company").
R E C I T A L S:
A. The Committee has been formed for the purpose of nominating two or more
persons (the "Nominees") and soliciting proxies for the election of such
Nominees as directors at the Company's Annual Meeting of Shareholders.
B. The Committee has asked, and the Nominee has agreed, to serve as one of
the Committee's nominees.
NOW, THEREFORE, the parties hereto agree as follows:
1. Indemnification. (a) In consideration of serving as a Nominee, the
Committee and its member jointly and severally hereby agree to indemnify and
hold the Nominee harmless from and against any losses, claims, damages,
liabilities, judgments or expenses (including, without limitation, legal fees;
collectively "Losses") which relate to or are incurred in connection with the
Nominee's serving as a Nominee whenever occurring. Indemnification of any such
Losses shall be made as soon as practicable but in any event no later than 15
days after written request is made to the Committee accompanied by supporting
documentation. The foregoing indemnification shall specifically include, but
shall not be limited to, any Losses that
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CUSIP NO. 172736-10-0 Page 8 of 12 pages
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the Nominee may incur in connection with any actual or alleged securities laws
violations relating to the contemplated proxy solicitation (other than such
violations finally adjudicated to have been the result of the Nominee's willful
misconduct).
(b) If any claims are asserted against the Nominee with respect to which
indemnity may be sought from the Committee pursuant to the immediately preceding
paragraph, the Nominee shall, within a reasonable time after receipt of notice
of such claim, notify the Committee and simultaneously notify its counsel,
Shapiro Forman & Allen LLP, 380 Madison Avenue, New York, New York 10017, of the
assertion of such claim (but the failure to so notify shall not, except to the
extent that the Committee may be materially prejudiced thereby, relieve the
Committee from any liability which the Committee may have to the Nominee), and
the Committee shall assume the defense thereof, including the employment of
counsel selected by the Committee and reasonably acceptable to the Nominee and
the payment of all fees and expenses in connection therewith. The Nominee shall
have the right to employ separate counsel with respect to any such claim and
participate in the defense thereof, but the fees and expenses of such separate
counsel shall be at the Nominee's expense, unless (a) the employment of such
separate counsel has been specifically authorized in writing by the Committee,
(b) the Committee has failed to timely assume such defense or employ counsel
reasonably acceptable to the Nominee, or (c) the parties to any such claim
include both the Nominee and any one or more members of the Committee, and the
Nominee shall have been advised by counsel that there may be one or more legal
defenses available to the Nominee that are different from or additional to those
available to any one or more members of the Committee or that there is a
conflict of interest between the Nominee and one or more members of the
Committee of such a nature that a
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CUSIP NO. 172736-10-0 Page 9 of 12 pages
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joint representation of the Nominee and any one or more members of the Committee
by the same counsel would not be in the Nominee's best interest (in any of which
cases the Committee shall not have the right to assume the defense of such
claim, but shall be liable for the reasonable fees and expenses of counsel
selected by the Nominee and reasonably acceptable to the Committee). The
Committee shall not settle any claim in any manner that would impose any
expense, penalty, obligation or limitation on the Nominee, or would contain
language (other than a recitation of any amounts to be paid in settlement) that
could reasonably be viewed as an acknowledgment of wrongdoing on the part of the
Nominee or as materially detrimental to the reputation of the Nominee, without
Nominee's prior written consent (which consent shall not be unreasonably
withheld).
2. No Presumptions. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with
or without court approval), or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the Nominee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
3. Right to Review. The Nominee shall be given reasonable time to review
and comment upon any public statement, announcement, press release, public
filing with United States Securities and Exchange Commission or any other
governmental authority or national securities exchange, or notice delivered to
the Company, in each case made by the Committee or members thereof, or any of
their respective affiliates, relating to the Nominees and/or any matter relating
to the solicitation of proxies by the Committee to elect one or more of the
Nominees and directors of the Company (a "Committee Communication"). In the
event any Committee
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CUSIP NO. 172736-10-0 Page 10 of 12 pages
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Communication is not approved by the Nominee prior to its public release, public
filing or delivery to the Company, the Nominee shall have the right to withdraw
as Nominee and terminate this Agreement, and the indemnity provisions contained
in Section 1 and the provisions of Sections 2, 6, 7 and 8 shall survive
termination of this Agreement.
4. Support. If one or more of the Nominees is nominated to be elected as a
director of the Company at the Company's next Annual Meeting of Stockholders,
the members of the Committee agree that they will vote all of voting securities
of the Company held or controlled by them for the election of each of the
Nominees as directors of the Company, provided however, that in the event
cumulative voting is permitted in the election of directors at the Company's
next Annual Meeting of Shareholders, the members of the Committee agree that
they will vote all of the voting power of all of the voting securities of the
Company held or controlled by them for the election of the Nominee (unless such
cumulation will prevent the Committee from electing at least two Nominees).
5. Non-exclusivity, Etc. The rights of the Nominee hereunder shall be in
addition to any other rights Nominee may have under any by-law, insurance
policy, Delaware General Corporation Law, or otherwise. To the extent that a
change in applicable law (whether by statute or judicial decision) would permit
greater indemnification by agreement than would be afforded currently under this
Agreement, it is the intent of the parties hereto that the Nominee shall enjoy
by this Agreement the greater benefits so afforded by such change.
6. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any
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CUSIP NO. 172736-10-0 Page 11 of 12 pages
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other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
8. Fee. In consideration of the Nominee's agreement to serve as a Nominee
through the conclusion of the Meeting, the Committee shall pay the Nominee the
sum of $25,000 within two business days of the execution of this Agreement
whether or not the Nominee is actually nominated to be a director of the
Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
/s/ Lester Hill
----------------------------------------
LESTER HILL
THE CIRCON SHAREHOLDERS COMMITTEE
By: CASTLERIGG MASTER INVESTMENTS, LTD.
By: SANDELL ASSET MANAGEMENT CORP.
By: /s/ Thomas Sandell
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METROPOLITAN CAPITAL ADVISORS, INC.
By: /s/ Jeffrey Schwarz
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METROPOLITAN CAPITAL III, INC.
By: /s/ Jeffrey Schwarz
-------------------------------------
P. SCHOENFELD ASSET MANAGEMENT, INC.
By: /s/ Peter Schoenfeld
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CUSIP NO. 172736-10-0 Page 12 of 12 pages
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EXHIBIT 9
Sandell Asset Management Corp.
c/o Mariner Investment Group
65 East 55th Street
New York, NY 10021
October 22, 1998
Metropolitan Capital Advisors, Inc.
Metropolitan Capital III, Inc.
660 Madison Avenue, 20th Floor
New York, NY 10021
P. Schoenfeld Asset Management LLC
1330 Avenue of the Americas
34th Floor
New York, NY 10019
Dear Fellow Committee Members:
Please accept this letter as an amendment to our agreement dated
October 16, 1998 (the "Agreement") substituting Castlerigg Master Investments
Ltd ("Castlerigg"), the holder of the Circon shares attributed to Sandell Asset
Management Corp. ("SAMC") for SAMC as a party to the Agreement. Castlerigg
hereby agrees to be bound by the terms and conditions of the Agreement.
Please confirm your acceptance to the foregoing amendment by signing below.
Castlerigg Master Investments Ltd.
By: Sandell Asset Management Corp.
By: /s/ Thomas Sandell
-------------------------------------
Thomas Sandell
AGREED AND ACCEPTED:
Metropolitan Capital Advisors, Inc.
By: /s/ Jeffrey Schwarz
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Metropolitan Capital III, Inc.
By: /s/ Jeffrey Schwarz
-------------------------------------
P. Schoenfeld Asset Management, Inc.
By: /s/ Peter Schoenfeld
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