<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------
CIRCON CORPORATION
(NAME OF SUBJECT COMPANY)
MMI ACQUISITION CORP.
MAXXIM MEDICAL, INC.
MAXXIM MEDICAL, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
172736 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
--------------
KENNETH W. DAVIDSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MAXXIM MEDICAL, INC.
10300 49TH STREET NORTH
CLEARWATER, FL 33762
TELEPHONE: (727) 561-2100
FACSIMILE: (727) 561-2170
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
MICHAEL E. GIZANG, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NY 10022
TELEPHONE: (212) 735-3000
FACSIMILE: (212) 735-2000
--------------
CALCULATION OF FILING FEE
===============================================================================
TRANSACTION VALUATION* $219,797,445 AMOUNT OF FILING FEE $43,960
===============================================================================
* Estimated for purposes of calculating the amount of the filing fee only.
This amount assumes the purchase of 14,653,163 shares of common stock,
$0.01 par value per share (the "Shares"), of Circon Corporation at a price
of $15.00 per Share in cash, without interest thereon. Such number of
Shares represents the 13,440,490 Shares outstanding as of November 20,
1998, and assumes the issuance prior to the consummation of the Offer of
1,212,673 Shares upon the exercise or conversion of outstanding stock
options and warrants. The amount of the filing fee calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, as amended, equals 1/50th of one percent of the value of the
transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
===============================================================================
<PAGE>
14D-1
CUSIP NO. 172736 10 0
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MMI ACQUISITION CORP.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
2
<PAGE>
14D-1
CUSIP NO. 172736 10 1
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MAXXIM MEDICAL, INC.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
3
<PAGE>
14D-1
CUSIP NO. 172736 10 1
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MAXXIM MEDICAL, INC.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE
- -------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
4
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates
to the offer by MMI Acquisition Corp., a Delaware corporation ("Purchaser") and
a wholly owned subsidiary of Maxxim Medical, Inc., a Delaware corporation
("Parent"), a wholly owned subsidiary of Maxxim Medical Inc., a Texas
Corporation ("Maxxim"), to purchase all of the outstanding shares of common
stock, par value $0.01 per share (the "Common Stock") including the associated
preferred stock purchase rights issued pursuant to the Rights Agreement, dated
as of August 14, 1996, by and between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights" and, together with the Common
Stock, the "Shares"), of Circon Corporation, a Delaware corporation (the
"Company"), at $15.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated November 30, 1998 (the "Offer to Purchase"), a copy of which is
attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a
copy of which is attached hereto as Exhibit (a)(2) (which, as amended or
supplemented from time to time, constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Circon Corporation, and the
address of its principal executive offices is 6500 Hollister Avenue, Santa
Barbara, CA 93117. The telephone number of the Company at such location is
(805) 685-5100.
(b) The information set forth in the "INTRODUCTION" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Price Range of the Shares; Dividends"
of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by Maxxim, Parent and
Purchaser. The information set forth in the "INTRODUCTION" and "Certain
Information Concerning Maxxim, Parent and Purchaser" of the Offer to Purchase
is incorporated herein by reference. The name, business address, present
principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of Maxxim, Parent and Purchaser and the name, principal
business and address of any corporation or other organization in which such
occupations, positions, offices and employments are or were carried on are set
forth in Schedule I to the Offer to Purchase and incorporated herein by
reference.
(e)-(f) During the last five years, none of Maxxim, Parent or Purchaser
nor, to the best knowledge of Maxxim, Parent or Purchaser, any of the persons
listed in Schedule I to the Offer to Purchase have (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding were or are subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, none of
Maxxim, Parent or Purchaser nor, to the best knowledge of Maxxim, Parent or
Purchaser, any of the persons listed in Schedule I to the Offer to Purchase
have entered into any transaction with the Company, or any of the Company's
affiliates which are corporations, since the commencement of the Company's
third full fiscal year preceding the date of this Statement, the aggregate
amount of which was equal to or greater than one percent of the consolidated
revenues of the Company for (i) the fiscal year in which such transaction
occurred or (ii) the portion of the current fiscal year which has occurred if
the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, none of
Maxxim, Parent or Purchaser nor, to the best knowledge of Maxxim, Parent or
Purchaser, any of the persons listed in
5
<PAGE>
Schedule I to the Offer to Purchase have entered into any transaction since the
commencement of the Company's third full fiscal year preceding the date of this
Statement with the executive officers, directors or affiliates of the Company
which are not corporations, in which the aggregate amount involved in such
transaction or in a series of similar transactions, including all periodic
installments in the case of any lease or other agreement providing for periodic
payments or installments, exceeded $40,000.
(b) The information set forth in the "INTRODUCTION," "Certain Information
Concerning Maxxim, Parent and Purchaser," "Background of the Offer; Purpose of
the Offer and the Merger; the Merger Agreement and Certain Other Agreements"
and "Plans for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the "INTRODUCTION" and "Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e) The information set forth in the "INTRODUCTION," "Background of
the Offer; Purpose of the Offer and the Merger; the Merger Agreement and
Certain Other Agreements" and "Plans for the Company; Other Matters" of the
Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in the "INTRODUCTION" and "Effect of the
Offer on the Market for the Shares; Stock Listing; Exchange Act Registration;
Margin Regulations" of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "INTRODUCTION," "Certain
Information Concerning Maxxim, Parent and Purchaser" and "Background of the
Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION," "Source and Amount of
Funds," "Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and Certain Other Agreements," "Plans for the Company; Other
Matters" and "Fees and Expenses" of the Offer to Purchase is incorporated
herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 of this Statement, there are no
present or proposed material contracts, arrangements, understandings or
relationships between Maxxim, Parent or Purchaser, or to the best knowledge of
Maxxim, Parent or Purchaser, any of the persons listed in Schedule I to the
Offer to Purchase, and the Company or any of its executive officers, directors,
controlling persons or subsidiaries.
6
<PAGE>
(b)-(c) The information set forth in the "INTRODUCTION," "Conditions to
the Offer" and "Certain Legal Matters" of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in "Effect of the Offer on the Market for
the Shares; Stock Listing; Exchange Act Registration; Margin Regulations" and
"Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, to the extent not otherwise incorporated herein by
reference, is incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated November 30, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Press Release, dated November 21, 1998.
(a)(8) Press Release, dated November 30, 1998.
(a)(9) Summary Advertisement.
(b)(1) Commitment Letter, dated as of November 21, 1998, by and among
Maxxim, NationsBank, N.A. and NationsBanc Montgomery Securities
LLC.
(c)(1) Agreement and Plan of Merger, dated as of November 21, 1998, by
and among Parent, Purchaser and the Company.
(c)(2) Exclusivity Agreement, dated as of November 17, 1998, by and
between Maxxim and the Company.
(d) None.
(e) Not applicable.
(f) None.
7
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: November 30, 1998
MMI ACQUISITION CORP.
By: /s/ KENNETH W. DAVIDSON
------------------------------------
Name: Kenneth W. Davidson
Title: President
MAXXIM MEDICAL, INC.
By: /s/ KENNETH W. DAVIDSON
------------------------------------
Name: Kenneth W. Davidson
Title: Chairman of the Board,
President and
Chief Executive Officer
MAXXIM MEDICAL, INC.
By: /s/ KENNETH W. DAVIDSON
------------------------------------
Name: Kenneth W. Davidson
Title: Chairman of the Board,
President and
Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE NO.
- ------------- -----------
<S> <C> <C>
(a)(1) Offer to Purchase, dated November 30, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Press Release, dated November 21, 1998.
(a)(8) Press Release, dated November 30, 1998.
(a)(9) Summary Advertisement.
(b)(1) Commitment Letter, dated as of November 21, 1998, by and among Maxxim,
NationsBank, N.A. and NationsBanc Montgomery Securities LLC.
(c)(1) Agreement and Plan of Merger, dated as of November 21, 1998, by and among
Parent, Purchaser and the Company.
(c)(2) Exclusivity Agreement, dated as of November 17, 1998, by and between
Maxxim and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CIRCON CORPORATION
AT
$15.00 NET PER SHARE
BY
MMI ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
MAXXIM MEDICAL, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, JANUARY 5, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF NOVEMBER 21, 1998, BY AND AMONG MAXXIM MEDICAL, INC. ("PARENT"), MMI
ACQUISITION CORP. ("PURCHASER") AND CIRCON CORPORATION (THE "COMPANY"). THE
BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE
MERGER, AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN) SUCH NUMBER OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH IN
THIS OFFER TO PURCHASE. SEE SECTION 14.
--------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such
stockholder's Shares (as defined herein) should either (i) complete and sign
the enclosed Letter of Transmittal (or a facsimile thereof) in accordance with
the Instructions in the Letter of Transmittal, have such stockholder's
signature thereon guaranteed (if required by Instruction 1 to the Letter of
Transmittal), mail or deliver the Letter of Transmittal (or a facsimile
thereof) and any other required documents to the Depositary (as defined herein)
and either deliver the certificates for such Shares to the Depositary or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 of this Offer to Purchase or (ii) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder, in each case on or prior to the Expiration
Date. Any stockholder whose Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee to tender such
Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, who cannot comply with
the procedures for book-entry transfer on a timely basis, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) at its address and telephone numbers set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase, the related Letter of Transmittal, the Notice of Guaranteed
Delivery and the other tender offer documents may be directed to the
Information Agent or brokers, dealers, commercial banks or trust companies.
--------------
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC. LOGO
November 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION ........................................................................... 1
THE OFFER .............................................................................. 3
1. Terms of the Offer .............................................................. 3
2. Acceptance for Payment and Payment .............................................. 5
3. Procedures for Tendering Shares ................................................. 6
4. Withdrawal Rights. .............................................................. 8
5. Certain U.S. Federal Income Tax Consequences. ................................... 9
6. Price Range of the Shares; Dividends. ........................................... 10
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act
Registration; Margin Regulations ................................................ 10
8. Certain Information Concerning the Company ...................................... 11
9. Certain Information Concerning Maxxim, Parent and Purchaser ..................... 13
10. Sources and Amount of Funds. .................................................... 14
11. Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements. ......................................... 16
12. Plans for the Company; Other Matters ............................................ 23
13. Dividends and Distributions. .................................................... 25
14. Conditions to The Offer ......................................................... 25
15. Certain Legal Matters ........................................................... 27
16. Fees and Expenses ............................................................... 29
17. Miscellaneous ................................................................... 29
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
MAXXIM, PARENT AND PURCHASER .......................................................... I-1
</TABLE>
i
<PAGE>
To the Holders of Common Stock of
Circon Corporation:
INTRODUCTION
MMI Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of Maxxim Medical, Inc., a Delaware corporation ("Parent"), a
wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation
("Maxxim"), hereby offers to purchase all outstanding shares of common stock,
par value $0.01 per share (the "Common Stock"), including the associated
preferred stock purchase rights issued pursuant to the Rights Agreement (as
defined below) (the "Rights" and, together with the Common Stock, the
"Shares"), of Circon Corporation, a Delaware corporation (the "Company"), at a
price of $15.00 per Share, net to the seller in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, collectively constitute the
"Offer").
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they charge any service fees. The Purchaser will pay all fees and
expenses of Mackenzie Partners, Inc. ("Mackenzie"), which is acting as
Information Agent (in such capacity, the "Information Agent"), and Harris Trust
Company of New York ("Harris Trust"), which is acting as the Depositary (in
such capacity, the "Depositary"), incurred in connection with the Offer and in
accordance with the terms of the agreements entered into with each such person
in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT
THE OFFER AND TENDER THEIR SHARES.
Bear, Stearns & Co. Inc. ("Bear Stearns"), financial advisor to the
Company, has delivered to the Company Board its opinion, dated as of November
20, 1998 (the "Financial Advisor Opinion"), to the effect that, as of such date
and based upon and subject to certain assumptions and matters stated therein,
the consideration to be received by the public shareholders of the Company in
the Offer and the Merger is fair, from a financial point of view, to such
holders. A copy of the Financial Advisor Opinion is attached as an exhibit to
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which has been filed by the Company with the Securities and
Exchange Commission (the "Commission") in connection with the Offer and which
is being mailed to holders of Shares herewith. Holders of Shares are urged to,
and should, read the Schedule 14D-9 in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN ON OR PRIOR TO THE EXPIRATION DATE SUCH NUMBER OF
SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A
FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM
CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH IN
THIS OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to Purchase,
"fully diluted basis" takes into account the exercise of all outstanding
options, warrants and other rights and securities exercisable into shares of
Common Stock. Purchaser believes that, as of November 20, 1998, there were
13,440,490 Shares issued and outstanding, 985,906 Shares were issuable pursuant
to the exercise of outstanding stock options ("Options") and 226,767 Shares
were issuable pursuant to the exercise of outstanding warrants ("Warrants").
The Merger Agreement provides, among other things, that the Company will not,
without the prior written consent of Parent, issue any additional Shares
(except upon the exercise of outstanding Options and Warrants) or other
securities convertible into, or exercisable or exchangeable for, Shares. See
Section 11. Based on the foregoing and assuming the issuance of all Shares
issuable upon the exercise of outstanding Options and
<PAGE>
Warrants, Purchaser believes that the Minimum Condition will be satisfied if
7,326,582 Shares are validly tendered and not withdrawn prior to the Expiration
Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 21, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware
General Corporation Law, as amended (the "DGCL"), as soon as practicable after
the completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer (sometimes
referred to herein as the "consummation" of the Offer) and the approval and
adoption of the Merger Agreement by the stockholders of the Company (if
required by applicable law), Purchaser shall be merged with and into the
Company (the "Merger") and the Company will be the surviving corporation in the
Merger (the "Surviving Corporation"). At the effective time of the Merger (the
"Effective Time"), each Share then outstanding, other than Shares held by (i)
the Company or any of its subsidiaries, (ii) Parent or any of its subsidiaries,
including Purchaser, and (iii) stockholders who properly perfect their
dissenters' rights under the DGCL, will be converted into the right to receive
from the surviving corporation $15.00 in cash per Share paid in the Offer (the
"Merger Consideration"), without interest. The Merger Agreement is more fully
described in Section 11.
The Merger Agreement provides that upon the acceptance for payment of, and
payment for, Shares by Purchaser pursuant to the Offer, Purchaser shall be
entitled to designate such number of directors on the Company Board, on the
board of directors of each subsidiary of the Company and on each committee
thereof as will give Purchaser a majority of such directors or committee
members, and the Company shall, at such time, take all actions as to cause
Purchaser designees to be so elected; provided, however, that in the event that
Purchaser's designees are elected to the Company Board, until the Effective
Time such Board of Directors shall have at least two directors who are
directors of the Company on the date of execution of the Merger Agreement and
who are not officers of the Company or any of its subsidiaries (the
"Independent Directors").
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law. See Section
11. In the Merger Agreement, the Company has represented to the Purchaser and
Parent that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of any class or series of the Company's
capital stock necessary to approve the Merger Agreement and the Merger at a
meeting of the Company's stockholders. If the Minimum Condition is satisfied
and Purchaser purchases at least a majority of the outstanding Shares in the
Offer, Purchaser will be able to effect the Merger without the affirmative vote
of any other stockholder. Pursuant to the Merger Agreement, Parent has agreed
to vote and to cause any subsidiary of Parent to vote the Shares acquired by
them pursuant to the Offer in favor of the Merger. See Section 12.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the
event that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, then, at the election of Parent, a
short-form merger could be effected without any further approval of the Company
Board or the stockholders of the Company. In the Merger Agreement, Parent,
Purchaser and the Company have agreed that, notwithstanding that all conditions
to the Offer are satisfied or waived as of the scheduled Expiration Date,
Purchaser may extend the Offer for a period not to exceed ten business days,
subject to certain conditions, if the Shares tendered pursuant to the Offer
constitute less than 90% of the outstanding Shares. Even if Purchaser does not
own 90% of the outstanding Shares following consummation of the Offer, Parent
or Purchaser could seek to purchase additional shares in the open market or
otherwise in order to reach the 90% threshold and employ a short-form merger.
The per share consideration paid for any Shares so acquired in open market
purchases may be greater or less than the Offer Price. Parent presently intends
to effect a short-form merger, if permitted to do so under the DGCL, pursuant
to which Purchaser will be merged with and into the Company. See Section 12.
2
<PAGE>
The Company has declared a dividend of one Right for each outstanding
Share pursuant to the Preferred Shares Rights Agreement, dated as of August 14,
1996, by and between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agreement"). The Purchaser understands that
pursuant to the Merger Agreement the Rights Agreement has been amended (i) to
render the Rights Agreement inapplicable to the Offer, the Merger, the Merger
Agreement and the acquisition of Shares by Purchaser pursuant to the Offer,
(ii) to ensure that (y) none of Parent, Purchaser or any of their respective
affiliates shall constitute an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement by virtue of the execution of the
Merger Agreement, commencement and consummation of the Offer, the acquisition
of Shares by Purchaser pursuant to the Offer and the consummation of the Merger
and (z) a Distribution Date or a Shares Acquisition Date (as such terms are
defined in the Rights Agreement) does not occur by reason of the Offer, the
Merger, the execution of the Merger Agreement, the acquisition of the Shares by
Purchaser pursuant to the Offer, or the consummation of the Merger and (iii) to
provide that the Final Expiration Date (as defined in the Rights Agreement)
shall occur immediately prior to the Effective Time. In the Merger Agreement,
the Company has agreed that such amendment will not be further amended by the
Company without the prior consent of Parent.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date, and not withdrawn in accordance
with Section 4. The term "Expiration Date" shall mean January 5, 1999 at 5:00
P.M., New York City time, unless and until Purchaser, in accordance with the
terms of the Merger Agreement, shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser
pursuant to the terms of the Merger Agreement, shall expire. In the Merger
Agreement, subject to certain limitations, Parent and Purchaser have agreed
that if all conditions to Purchaser's obligation to accept for payment and pay
for Shares pursuant to the Offer are not satisfied or waived on the scheduled
Expiration Date, Purchaser may extend the Offer for additional periods. See
Section 14.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the other conditions set forth in Section 14. If such conditions are
not satisfied prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to the applicable
rules and regulations of the Commission, to (i) decline to purchase any Shares
tendered in the Offer and terminate the Offer and return all tendered Shares to
the tendering stockholders, (ii) waive any or all conditions to the Offer
(except the Minimum Condition) and, to the extent permitted by applicable law,
purchase all Shares validly tendered and not withdrawn, (iii) extend the Offer
and, subject to the right of stockholders to withdraw Shares until the
Expiration Date, retain all Shares which have been validly tendered and not
withdrawn during the period or periods for which the Offer is extended or (iv)
subject to the following sentence, modify the terms of the Offer. The Merger
Agreement provides that Purchaser will not, without the consent of the Company,
reduce the number of Shares subject to the Offer, reduce the Offer Price, add
to the Offer conditions, extend the Offer (except as contemplated by the Merger
Agreement), change the form of consideration to be paid in the Offer, waive the
Minimum Condition, or amend any other condition to the Offer in any manner
adverse to the holders of the Shares.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied or waived on
3
<PAGE>
the Expiration Date. However, if, immediately prior to the scheduled Expiration
Date, the number of Shares tendered and not withdrawn pursuant to the Offer
constitutes less than 90% of the Shares outstanding, Purchaser may extend the
Offer on one or more occasions for an aggregate period of not more than ten
business days after the satisfaction or waiver of all of the conditions to the
Offer set forth in Section 14 or for any period required by any rule,
regulation, interpretation or position of the Commission applicable to the
Offer. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act.
Without limiting the obligation of Purchaser under such Rules or the manner in
which Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release to the Dow Jones News
Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is lawfully delayed in its purchase of,
or payment for, Shares, the Depositary may retain tendered Shares on behalf of
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 4.
However, the ability of Purchaser to delay the payment for Shares which
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by, or on behalf of, holders of securities
promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated its view that an offer must remain open for
a minimum period of time following a material change in the terms of the Offer
and that waiver of a material condition, such as the Minimum Condition or the
Offer Price, is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five business days from the
date a material change is first published, or sent or given to security holders
and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares being
sought, a minimum of ten business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such
increased consideration will be paid to all holders whose Shares are purchased
in the Offer whether or not such Shares were tendered prior to such increase.
4
<PAGE>
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
dealers, banks and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and will pay for, as
soon as practicable after the Expiration Date, all Shares validly tendered
prior to the Expiration Date and not withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit in
cash of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
Purchaser and transmitting payment to tendering stockholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares (or
a timely Book-Entry Confirmation (as defined below) with respect thereto), (ii)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined below) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment may be
made to tendering stockholders at different times if delivery of the Shares and
other required documents occur at different times. The per Share consideration
paid to any holder of Shares pursuant to the Offer will be the highest per
Share consideration paid to any other holder of such Shares pursuant to the
Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law. If Purchaser is delayed in its acceptance
for payment of, or payment for, Shares, then, without prejudice to Purchaser's
rights under the Offer (including such rights as are set forth in Sections 1
and 14) (but subject to compliance with Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
being tendered by the holder thereof, certificates evidencing Shares not
tendered or not accepted for purchase will be returned to the tendering
stockholder, or such other person as the tendering stockholder shall specify in
the Letter of Transmittal (subject to the terms and conditions thereof), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined in Section
3) pursuant to the procedures set forth in Section 3, such Shares will be
credited to such account maintained at the Book-Entry Transfer Facility as the
tendering stockholder shall specify in the Letter of Transmittal (subject to
the terms and conditions thereof), as promptly as practicable following the
expiration, termination or withdrawal of the Offer. If no such instructions are
given with respect to Shares delivered by book-entry transfer, any such Shares
not tendered or not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated in the Letter of Transmittal as the
account from which such Shares were delivered.
5
<PAGE>
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date
and either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation (as defined below) must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
tendering stockholder must comply with the guaranteed delivery procedures
described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. Even though delivery of Shares may be effected
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message, and any other required documents must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase on or prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING,
IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
6
<PAGE>
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on
a security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as
aforesaid. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all of the required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Upon the acceptance of Shares for payment pursuant to the Offer, the valid
tender of Shares pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and Purchaser,
upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder will
irrevocably appoint the designees of Parent set forth in the Letter of
Transmittal as such stockholder's attorneys-in-fact and proxies in the manner
set forth in the Letter of Transmittal, each with full power of substitution,
to the full extent of such stockholder's rights with respect to the Shares
tendered by such stockholder and accepted for payment by Purchaser and with
respect to any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect of such Shares on or after
November 21, 1998 (collectively, "Distributions"). All such powers of attorney
and proxies will be considered coupled with an interest in the tendered Shares.
Such appointment will be effective if, as and when, and only to the extent
that, Purchaser accepts for payment the Shares tendered by such stockholder as
provided herein. All such powers of attorney and proxies will be irrevocable
and will be deemed granted in consideration of the acceptance for payment by
7
<PAGE>
Purchaser of Shares tendered in accordance with the terms of the Offer. Upon
such appointment, all prior powers of attorney, proxies and consents given by
such stockholder with respect to such Shares (and any and all Distributions)
will, without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of Purchaser will thereby
be empowered to exercise all voting and other rights with respect to such
Shares (and any and all Distributions), including, without limitation, in
respect of any annual or special meeting of the Company's stockholders (and any
adjournment or postponement thereof), actions by written consent in lieu of any
such meeting or otherwise, as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting, consent and other rights with respect to
such Shares (and any and all Distributions), including voting at any meeting of
stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance for payment of which, or payment for which, may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, to waive any defect or irregularity in
any tender of Shares of any particular stockholder, whether or not similar
defects or irregularities are waived in the case of other stockholders. No
tender of Shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in
either case, the "Payee"), satisfies the conditions described in Instruction 10
of the Letter of Transmittal or is otherwise exempt, the cash payable as a
result of the Offer may be subject to backup withholding tax at a rate of 31%
of the gross proceeds. To prevent backup withholding, each Payee should
complete and sign the Substitute Form W-9 provided in the Letter of
Transmittal. See Instruction 10 to the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by
applicable law, tenders of Shares are irrevocable. Shares tendered pursuant to
the Offer may be withdrawn pursuant to the procedures set forth below at any
time on or prior to the Expiration Date and, unless theretofore accepted for
payment and paid for by Purchaser pursuant to the Offer, may also be withdrawn
at any time after January 29, 1999.
To be effective, a written, telegraphic or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
8
<PAGE>
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time on or prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Paying Agent, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the Offer
or whose Shares are converted to cash in the Merger (a "Holder"). The
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), regulations issued thereunder, judicial decisions and administrative
rulings, all of which are subject to change, possibly with retroactive effect.
The following does not address the U.S. federal income tax consequences to all
categories of Holders that may be subject to special rules (e.g., holders who
acquired their Shares pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, holders who perfect their
appraisal rights under the DGCL, foreign holders, insurance companies,
tax-exempt organizations, dealers in securities and persons who have acquired
the Shares as part of a straddle, hedge, conversion transaction or other
integrated investment), nor does it address the federal income tax consequences
to persons who do not hold the Shares as "capital assets" within the meaning of
Section 1221 of the Code (generally, property held for investment).
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize gain
or loss for federal income tax purposes equal to the difference, if any,
between the amount of cash received and the Holder's adjusted tax basis in the
Shares sold pursuant to the Offer or surrendered for cash pursuant to the
Merger. Gain or loss will be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) tendered
pursuant to the Offer or surrendered for cash pursuant to the Merger. Such gain
or loss will be long-term capital gain or loss if the Holder has held the
Shares for more than one year at the time of the consummation of the Offer or
the Merger. Under recently adopted amendments to the Code, capital gains
recognized by an individual investor (or an estate or certain trusts) upon a
disposition of a Share that has been held for more than one year generally will
be subject to a maximum tax rate of 20% or, in the case of a Share that has
been held for one year or less, will be subject to tax at ordinary income
rates. Certain limitations apply to the use of capital losses.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL,
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE OFFER AND THE
MERGER.
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<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded through the over-the-counter market and are quoted
on the National Association of Securities Dealers Automated Quotation System
("NASDAQ") under the NASDAQ symbol "CCON." The following table sets forth, for
each of the fiscal quarters indicated, the high and low reported sales price
per Share on the NASDAQ, as set forth in the Company 10-K (as hereafter
defined) for 1996 and 1997 and as set forth in published financial sources for
1998.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------
HIGH LOW
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<S> <C> <C>
Fiscal Year Ended December 31, 1996
First Quarter ended March 31, 1996 ............... $20 1/4 $10 3/4
Second Quarter ended June 30, 1996 ............... 15 5/8 10 3/4
Third Quarter ended September 30, 1996 ........... 19 1/2 8 1/2
Fourth Quarter ended December 31, 1996 ........... 17 5/8 15 1/4
Fiscal Year Ended December 31, 1997
First Quarter ended March 31, 1997 ............... 15 3/4 13 3/8
Second Quarter ended June 30, 1997 ............... 14 5/8 12 5/8
Third Quarter ended September 30, 1997 ........... 16 1/8 14
Fourth Quarter ended December 31, 1997 ........... 16 1/2 14 3/4
Fiscal Year Ended December 31, 1998
First Quarter ended March 31, 1998 ............... 16 13/16 15 1/8
Second Quarter ended June 30, 1998 ............... 19 1/8 13 1/4
Third Quarter ended September 30, 1998 ........... 16 3/4 8 7/16
Fourth Quarter through November 27, 1998 ......... 14 21/32 7 27/33
</TABLE>
On November 20, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the NASDAQ was $10 11/16 per Share. On November 27,
1998, the last full trading day prior to the commencement of the Offer, the
last reported sales price of the Shares on the NASDAQ was $14 21/32 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. In addition, under the terms of the
Merger Agreement, the Company is not permitted to declare or pay dividends with
respect to the Shares without the prior written consent of Parent and Parent
does not intend to consent to any such declaration or payment.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
The Offer will reduce the number of holders of Shares and the number of
Shares that might otherwise trade publicly and, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public.
Stock Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers for continued inclusion on the NASDAQ which
requires that an issuer either (i) have at least 750,000 publicly held shares,
held by at least 400 round lot shareholders, with a market value of at least $5
million, have at least two market makers, have net tangible assets of at least
$4 million, and have a minimum bid price of $1.00 or (ii) have at least 1.1
million publicly held shares, held by at least 400 round lot shareholders, with
a market value of at least $15 million, have a minimum bid price of $5.00, have
at least four market makers and have either (A) a market capitalization of at
least $50 million or (B) total assets and revenues each of at least $50
million. If the NASDAQ was to cease to publish quotations for the Shares, it is
possible that the Shares would continue to trade in the over-the-counter market
and that price or other quotations
10
<PAGE>
would be reported by other sources. The extent of the public market for such
Shares and the availability of such quotations would depend, however, upon such
factors as the number of stockholders and/or the aggregate market value of such
securities remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration under the Exchange Act as described below, and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for, or marketability of, the Shares or whether it would cause
future market prices to be greater or lesser than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement pursuant to Section 14(a) in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Purchaser currently intends to seek delisting of the Shares from the
NASDAQ and the termination of the registration of the Shares under the Exchange
Act as soon after the completion of the Offer as the requirements for such
delisting and termination are met. If the NASDAQ listing and the Exchange Act
registration of the Shares are not terminated prior to the Merger, then the
Shares will be delisted from the NASDAQ and the registration of the Shares
under the Exchange Act will be terminated following the consummation of the
Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. None of Maxxim, Parent, Purchaser or the Information
Agent assumes responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Maxxim, Parent, Purchaser or the Information Agent.
The Company designs, manufactures, markets and services medical endoscopy
systems for diagnosis and minimally invasive surgery. The Company's systems are
used for a growing number of medical specialties, including urology,
arthroscopy, laparoscopy, gynecology, thoracoscopy and plastic surgery. The
Company also designs, assembles and markets miniature color video systems used
with endoscope systems.
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<PAGE>
On August 28, 1995, the Company merged with Cabot Medical Corporation
("Cabot Medical"), collectively referred to as "Circon" or "the Company",
creating a publicly-traded minimally invasive surgery company with the largest
United States endoscopy market share in the fields of urology and gynecology.
The Company operates its business through several divisions and subsidiaries
including Circon Video, Circon ACMI, Circon Cabot and Circon Surgitek.
In addition, the merger with Cabot Medical brought the capability to
design, manufacture and market medical devices and systems for use in
gynecological diagnosis and surgery, ureteral stents, urological diagnostic
equipment and various products and systems principally used in general surgery.
Selected Financial Information. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 (the "Company 10-K"), and the Company's report on Form 10-Q for the period
ending September 30, 1998, each as filed with the Commission pursuant to the
Exchange Act.
More comprehensive financial information is included in such reports and
in other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports, documents and financial information may be
inspected and copies may be obtained from the Commission in the manner set
forth below.
CIRCON CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) FISCAL YEARS ENDED DECEMBER 31,
----------------------------- -------------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ------------- ------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales .......................... $ 111,930 $ 119,882 $ 159,954 $ 153,779 $160,447
Operating Income (Loss) ............ 10,522 6,422 10,209 6,709 3,820
Net Income (Loss) .................. 5,437 2,467 5,099 2,071 (5,393)
Basic Net Income (Loss)
per Share: ....................... 0.41 0.19 0.38 0.16 (0.44)
Diluted Net Income (Loss)
per Share ........................ 0.40 0.18 0.37 0.16 (0.44)
BALANCE SHEET DATA:
Total Assets ....................... $ 164,630 $ 175,465 $ 169,357 $ 169,118 $181,399
Total Liabilities .................. 54,365 74,383 65,398 70,217 94,227
Total Shareholders' Equity ......... 110,265 101,082 103,959 98,901 87,172
</TABLE>
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. The information provided
included financial projections for the Company as an independent company (i.e.,
without regard to the impact on the Company of a transaction with Parent). Such
information included projections of total sales, earnings before interest and
taxes and net income for the fiscal year ending December 31, 1999 of
approximately $162.9 million, $19.9 million and $11.6 million, respectively.
The foregoing information was prepared by the Company solely for internal
use and not for publication or with a view to complying with the published
guidelines of the Commission regarding projections or with the guidelines
established by the American Institute of Certified Public Accountants and are
included in this Offer to Purchase only because they were furnished to Parent.
The foregoing information is "forward-looking" and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including industry performance, general business and
economic conditions, changing competition, adverse changes in applicable laws,
regulations or rules
12
<PAGE>
governing tax or accounting matters and other matters. Although the Company
believes the assumptions used in preparing this information were reasonable
when made, such assumptions are inherently subject to significant uncertainties
and contingencies which are impossible to predict and beyond the Company's
control. One cannot predict whether the assumptions made in preparing the
foregoing information will be accurate, and accordingly, there can be no
assurance, and no representation or warranty is made, that actual results will
not vary materially from those described above. The inclusion of this
information should not be regarded as an indication that Maxxim, Parent,
Purchaser, the Company or anyone who received this information considered it a
reliable prediction of future events, and this information should not be relied
on as such. None of Maxxim, Parent, Purchaser, the Company, Bear, Stearns or
Donaldson, Lufkin & Jenrette ("DLJ"), financial advisor to Parent, assumes any
responsibility for the validity, reasonableness, accuracy or completeness of
the projections, and the Company has made no representation to Maxxim, Parent
or Purchaser regarding this financial information. The projections have not
been adjusted to reflect the effects of the Merger and the Company does not
intend to update or otherwise revise these projections prior to the
consummation of the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a website
on the internet at http://www.sec.gov that contains reports, proxy statements
and other information relating to the Company which have been filed via the
Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING MAXXIM, PARENT AND PURCHASER.
Parent and Purchaser. Maxxim is a Texas corporation and (with its
subsidiaries) is a major manufacturer and developer of a diversified range of
specialty medical products and a leading supplier to hospitals, clinics and
outpatient surgery centers of single-use custom procedure trays. Parent is a
Delaware corporation and a wholly owned subsidiary of Maxxim. Maxxim operates a
substantial portion of its business and holds a substantial portion of its
assets through Parent. Parent operates three divisions: Case Management, Argon
Medical and Maxxim Medical Europe. Parent's Case Management division
manufactures, assembles and sells custom procedure trays for a wide variety of
operating room and other medical procedures, complete lines of surgical gloves
and medical examination gloves, infection control apparel for operating room
personnel and patient draping systems. Parent believes that it currently
controls a 35% market share in custom procedure trays and a 61% market share in
non-latex medical examination gloves in the United States. The Argon Medical
division manufactures and markets guidewires, needles, introducers, catheters,
manifolds, transducers, high pressure syringes and certain other single-use
medical and surgical specialty products, which are used in Parent's procedure
trays or are sold separately. This division also assembles and markets
procedure trays for use primarily in cardiology and radiology procedures.
Parent's third division, Maxxim Medical Europe, serves as Parent's European
manufacturer and distributor of its products.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any significant
activities other than in connection with the Offer and the Merger. All of the
outstanding capital stock of Purchaser is owned directly by Parent. Until
immediately prior to the time Purchaser purchases Shares pursuant to the Offer,
it is not anticipated that Purchaser will have any significant assets or
liabilities or engage in any significant activities other than those incident
to its formation and capitalization and the transactions contemplated by the
Offer and the Merger.
13
<PAGE>
The principal offices of Maxxim, Purchaser and Parent are located at 10300
49th Street North, Clearwater, Florida 33762. The telephone number of Maxxim,
Parent and Purchaser at such location is (727) 561-2100.
For certain information concerning the executive officers and directors of
Maxxim, Parent and Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase, none of Maxxim, Purchaser
or Parent, nor, to the best knowledge of Maxxim, Purchaser or Parent, any of
the persons listed on Schedule I, nor any associate or majority owned
subsidiary of any of the foregoing, beneficially owns or has a right to acquire
any Shares, and none of Maxxim, Purchaser or Parent nor, to the best of
knowledge of Maxxim, Purchaser or Parent, any of the persons or entities
referred to above, nor any of the respective executive officers, directors or
subsidiaries of any of the foregoing, has effected any transaction in the
Shares during the past sixty days.
Except as set forth in this Offer to Purchase, none of Maxxim, Purchaser
or Parent has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any securities of the Company, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans, guarantees
against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Maxxim, Purchaser,
Parent, any of their respective affiliates, nor, to the best knowledge of
Maxxim, Purchaser or Parent, any of the persons listed on Schedule I, has had,
since January 1, 1995, any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that would be
required to be reported under the rules of the Commission. Except as set forth
in this Offer to Purchase, since January 1, 1995 there have been no contacts,
negotiations or transactions between Maxxim, Purchaser, Parent, any of their
respective affiliates or, to the best knowledge of Maxxim, Purchaser or Parent,
any of the persons listed on Schedule I, and the Company or its affiliates
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets.
Available Information. Maxxim is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning Maxxim's directors and officers, their
remuneration, options granted to them, the principal holders of Maxxim's
securities and any material interests of such persons in transactions with
Maxxim is required to be disclosed in proxy statements distributed to Maxxim's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661. Copies of such information should be
obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other
information relating to Maxxim which have been filed via the EDGAR System.
10. SOURCES AND AMOUNT OF FUNDS.
The total amount of funds required by Purchaser to consummate the Offer
and the Merger, including the fees and expenses incurred in connection with the
Offer and the Merger and the refinancing of certain debt of the Company, is
estimated to be approximately $257 million. Purchaser will obtain all such
funds from Maxxim and/or Parent in the form of capital contributions and/or
loans.
Maxxim has entered into a commitment letter (the "Commitment Letter") with
NationsBank, N.A. ("NationsBank") and NationsBanc Montgomery Securities, Inc.
("NMSI") pursuant to which NationsBank and NMSI will provide Maxxim or any of
its subsidiaries (the "Borrower") financing in an aggregate amount up to $325
million (the "Facilities"). NationsBank has committed to provide the Facilities
upon the terms and subject to the conditions set forth in the Commitment
Letter, and NMSI has committed to
14
<PAGE>
form a syndicate of financial institutions reasonably acceptable to Maxxim (the
"Lenders"), upon the terms and subject to the conditions set forth in the
Commitment Letter.
Pursuant to the Commitment Letter, the Facilities are expected to consist
of: (i) a $200 million term loan facility (the "Term Loan Facility") which may
be advanced in up to two tranches and (ii) a $125 million revolving credit
facility (the "Revolving Credit Facility").
The following is a summary of the principal terms of the Facilities based
upon the Commitment Letter. This summary is qualified in its entirety by
reference to the Commitment Letter, a copy of which has been filed as an
exhibit to the Schedule 14D-1 filed with the Commission in connection with the
Offer.
The Commitment Letter provides that the commitments of NationsBank and
NMSI will terminate unless the Facilities are closed on or prior to February 1,
1999.
The Facilities will mature six years from the closing thereof and the Term
Loan Facility will be subject to quarterly amortization over such period. In
addition, the Facilities will be subject to certain mandatory prepayments and
commitment reductions tied to the sale of assets, the issuance of permitted
debt and the issuance of equity.
The amounts borrowed pursuant to the Revolving Credit Facility and the
Term Loan Facility will bear interest at a rate equal to, at Borrower's option,
(i) LIBOR plus the Applicable Margin or (ii) the Base Rate (to be defined as
the higher of (a) the NationsBank prime rate and (b) the federal funds rate
plus 0.50%) plus the Applicable Margin. The "Applicable Margin" will be set
forth in a schedule to the Facilities and will be determined by reference to a
ratio of Borrower's total debt to EBITDA (as defined in the Facilities).
The Facilities will contain certain representations and warranties,
certain negative and affirmative covenants, certain conditions and events of
default which are customarily required for similar financings. Such covenants
will include, among others, restrictions and limitations on dividends, stock
redemptions, redemption and/or prepayment of other debt, capital expenditures,
incurrence of debt, liens, negative pledges, investments, acquisitions,
mergers, consolidations and asset sales. The Borrower will also be required to
comply with certain financial covenants such as minimum net worth, maximum
leverage ratio, maximum senior leverage ratio and minimum fixed charge coverage
ratio.
The Facilities will require the Borrower to grant a first priority
perfected security interest in (i) all of the capital stock of the Borrower and
each of its domestic subsidiaries and 65% of the capital stock of each material
foreign subsidiary of the Borrower and (ii) present and future accounts
receivable and inventory of the Borrower and its subsidiaries.
The funding of the Facilities will be subject to customary closing
conditions, including, among others, the execution of satisfactory
documentation, the receipt of all necessary governmental approvals and no
material adverse change in the business or financial condition of the Borrower
or the Company. Although Maxxim expects that the Facilities will be available
to provide funds for the consummation of the Offer and the Merger in accordance
with their respective terms, there can be no assurance that the Facilities will
be consummated. The Offer is not conditioned upon any financing arrangements.
In connection with the Facilities, Maxxim has agreed to pay NationsBank
and NMSI certain commitment, underwriting, administrative and termination fees,
to reimburse NationsBank and NMSI for reasonable out-of-pocket fees and
expenses, whether or not the Facilities close, and to provide certain
indemnities, as is customary for commitments such as the Facilities.
Maxxim anticipates that indebtedness incurred through borrowings under the
Facilities in connection with the Offer and Merger will be repaid from a
variety of sources, which may include funds generated internally by Maxxim and
its subsidiaries, including Parent and, following the Merger, funds generated
by the Company, bank financing, and the public or private sale of debt or
equity securities. No decision has been made concerning the method Maxxim will
employ to repay such indebtedness. Such decision will be made based on Maxxim's
review from time to time of the advisability of particular actions, as well as
on prevailing interest rates and financial and other economic conditions and
such other factors as Maxxim may deem appropriate. Maxxim expressly reserves
its right to obtain financing for the transaction through alternative sources.
15
<PAGE>
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Contacts with the Company; Background of the Offer.
Representatives of Parent were contacted in early May 1998 by Bear Stearns
and in late May 1998 by DLJ regarding the possibility of a business combination
between Parent and the Company.
In late October 1998, after meeting with representatives of Parent, DLJ
contacted Bear Stearns to determine whether the Company would consider a
business combination with Parent. Shortly after such meeting, Kenneth W.
Davidson, President of Parent, sent a letter to the Company's Board of
Directors expressing interest in pursuing a cash acquisition of the Company in
the range of $13.00 to $15.00 per Share.
Following meetings between Parent and the Company and their respective
representatives, and the review by Parent and its representatives of certain
information with respect to the Company, on November 13, 1998, Parent advised
the Company that Parent was prepared to acquire all outstanding Shares for $15
per Share in cash, subject to satisfactory negotiation of a definitive
agreement. Parent also stated that in order to proceed with the negotiation of
a definitive agreement with respect to such transaction, it would require the
Company to enter into an exclusivity agreement pursuant to which neither it nor
its Representatives (as therein defined) would solicit, initiate or encourage
any Acquisition Proposal (as therein defined), engage in negotiations, or
discussions with respect to an Acquisition Proposal, or disclose any non-public
information relating to the Company, from the date of execution of such
agreement, until November 23, 1998. On Monday, November 16, the Company's Board
of Directors met to discuss Parent's proposal. The Company executed and
delivered the Exclusivity Agreement on November 17, 1998. Following further
negotiations, on November 21, 1998, following the approval by the respective
boards of directors, the Merger Agreement was executed. On November 30, 1998,
Parent and Purchaser commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Parent to acquire control of, and the entire equity
interest in, the Company. The Offer is being made pursuant to the Merger
Agreement and is intended to increase the likelihood that the Merger will be
effected. The purpose of the Merger is to acquire all of the outstanding Shares
not purchased pursuant to the Offer.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 12. Similarly, after selling their Shares in the Offer or the
subsequent Merger, stockholders of the Company will not bear the risk of any
decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of
the Company are that such stockholders are being afforded an opportunity to
sell all of their Shares for cash at a price which represents a premium of
approximately 40% over the last reported sales price of the Shares on November
20, 1998, the last full trading day prior to the initial public announcement
that the Company, Purchaser and Parent had executed the Merger Agreement.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement filed with the Commission as an exhibit to the Schedule
14D-1 and is incorporated herein by reference. Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Merger
Agreement. The Merger Agreement may be examined, and copies obtained, as set
forth in Section 9 of this Offer to Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate
16
<PAGE>
organization, subsidiaries, capital structure, options or other rights to
acquire Shares, authority to enter into the Merger Agreement, no conflicts
between the Merger Agreement and applicable laws and certain agreements to
which the Company or its assets may be subject, financial statements, filings
with the Commission, disclosures to be made in the Proxy Statement (as defined
below) and tender offer documents, absence of certain changes or events,
litigation and investigations, absence of changes in benefit plans, labor
relations, ERISA compliance, tax matters, compliance with applicable laws,
intellectual property, material contracts, applicability of state takeover
statutes, absence of excess parachute payments, brokers' and finders' fees,
receipt of the Financial Advisor Opinion, Company Rights Agreement, products
liability and insurance matters.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
no conflicts between the Merger Agreement and the certificate of incorporation
and by-laws of Parent and Purchaser or laws applicable to Parent or Purchaser
disclosures to be made in the Proxy Statement and tender offer documents,
brokers' and finders' fees and financing.
Conditions to the Merger. The respective obligations of Parent and
Purchaser, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction or waiver of each of the following
conditions: (i) the Merger Agreement shall have been approved and adopted by
the requisite vote of the holders of Shares, if required by applicable law, in
order to consummate the Merger; (ii) no statute, rule, regulation, order,
decree, temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other governmental
entity or other legal restraint or prohibition preventing consummation of the
Merger shall be in effect; provided, however, that each of the parties shall
have used reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered; and (iii) Purchaser shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
The Company Board. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment for, Shares by Purchaser pursuant to the
Offer, Purchaser shall be entitled to designate such number of directors on the
Company Board as will give Purchaser, subject to compliance with Section 14(f)
of the Exchange Act, a majority of such directors and the Company shall, at
such time, cause Purchaser's designees to be so elected; provided, however,
that in the event that Purchaser's designees are elected to the Company Board,
until the Effective Time such Board of Directors shall have at least two
directors who are directors of the Company on the date of the Merger Agreement
and who are not officers of the Company or any of its subsidiaries (the
"Independent Directors").
The Merger Agreement further provides that, notwithstanding the foregoing,
if the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Director shall designate a person
to fill such vacancy who shall be deemed to be an Independent Director for
purposes of the Merger Agreement or, if no Independent Directors then remain,
the other directors of the Company on the date of the Merger Agreement shall
designate two persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or affiliates
of Parent or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors. The Company shall, if requested by the Parent, also
cause directors designated by the Parent to constitute at least a majority of
(i) each committee of the Company's Board, (ii) each board of directors (or
similar body) of each subsidiary of the Company, and (iii) each committee (or
similar body) of each such board. Subject to applicable law, the Company shall
take all action requested by Parent necessary to effect any such election. In
connection with the foregoing, the Company will promptly, at the option of
Parent, either increase the size of the Company's Board, any subsidiary or any
committee thereof and/or obtain the resignation of such number of current
directors or committee members as is necessary to enable Purchaser's designees
to be elected or appointed to, and to constitute a majority of such boards and
committees and as provided above.
Stockholders' Meeting. If required by applicable law in order to
consummate the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable law, its Certificate of
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Incorporation and by-laws: (i) as promptly as practicable following the
expiration of the Offer, duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Stockholders Meeting") for the purposes of
obtaining approval of the Merger by an affirmative vote of the holders of a
majority of the Shares outstanding ("Company Stockholder Approval") and the
approval and adoption of the Merger Agreement; (ii) prepare and file with the
Commission a preliminary proxy or information statement relating to the Merger
and the Merger Agreement and (x) obtain and furnish the information required to
be included in the Proxy Statement and, after consultation with Parent, respond
promptly to any comments made by the Commission with respect to the preliminary
proxy or information statement and cause a definitive proxy or information
statement, including any amendment or supplement thereto (the "Proxy
Statement") to be mailed to its stockholders at the earliest practicable date
and (y) use its reasonable best efforts to obtain the necessary approvals of
the Merger and the Merger Agreement by its stockholders; and (iii) unless the
Merger Agreement has been terminated in accordance with the provisions
summarized under the heading "Termination" below, subject to its rights
pursuant to the section summarized under "No Solicitation" below, include in
the Proxy Statement the recommendation of the Company Board that stockholders
of the Company vote in favor of the approval of the Merger and the approval and
adoption of the Merger Agreement. Parent has agreed to vote, or cause to be
voted, all of the Shares then owned by it, Purchaser or any of its other
subsidiaries in favor of the approval of the Merger and the approval and
adoption of the Merger Agreement.
Options. The Merger Agreement provides that immediately prior to the
Effective Time, each then outstanding Option, whether or not then vested or
exercisable, shall, effective as of the commencement of the Offer, become fully
exercisable. Upon the commencement of the Offer, the Company Board or an
appropriate committee thereof shall provide notice to each employee of the
Company or its subsidiaries or a member of the Company Board (each, an
"Optionee"), that any Company Stock Option (as defined in the Merger Agreement)
not exercised within 15 days (10 days in the case of Company Stock Options
granted under the Company 1995 Directors Stock Option Plan) from the date of
such notice shall thereupon be cancelled. The notice may provide each Optionee
with an opportunity to avoid the tendering of the exercise price and receiving
in lieu thereof an amount per option share equal to the excess, if any, of the
Offer Price over the exercise price of the Option. Nothwithstanding anything to
the contrary set forth in this paragraph, any such acceleration, exercise or
cancellation shall be conditioned upon the effectiveness of the Merger. The
Merger Agreement further provides that prior to the commencement of the Offer,
the Company shall (i) obtain any consents from holders of Company Stock Options
and (ii) amend the terms of its equity incentive plans or arrangements, in each
case as is necessary to give effect to the provisions described herein and to
ensure that at the Effective Time, no holder of any Company Stock Option shall
have the right to purchase or receive any Shares.
Conduct of Business by the Company. The Merger Agreement provides that the
Company shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with the manner as currently
conducted and use commercially reasonable efforts to (a) preserve intact their
current business organization, (b) keep available the services of their current
officers and employees and (c) preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, the
Company shall not, and shall not permit any of its subsidiaries to, without
Parent's prior written consent:
(i) other than dividends and distributions by a direct or indirect wholly
owned subsidiary of the Company to its parent or pursuant to the Rights
Agreement, (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
(other than the issuance of Shares upon the exercise of Options or Warrants
outstanding on the date of the Merger Agreement and in accordance with
their terms in effect on the date of execution of the Merger Agreement) or
(z) purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities;
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(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock or any shares of capital stock of its subsidiaries, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than (y) pursuant to the Rights Agreement or
(z) the issuance of Shares upon the exercise of Options or Warrants
outstanding on the date of the Merger Agreement and in accordance with
their terms in effect on the date of execution of the Merger Agreement);
(iii) amend its Certificate of Incorporation, by-laws or other comparable
charter or organizational documents or those of any of its subsidiaries;
(iv) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or otherwise
dispose of any of its material properties or assets, other than in the
ordinary course of business consistent with past practice;
(vi) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, or guarantee any debt securities of another
person, other than short-term bank financing in the ordinary course of
business consistent with past practice; or make any loans, advances or
capital contributions to, or investments in, any other person, other than
in the ordinary course of business consistent with past practice and in any
event not in excess, individually or in the aggregate, of $100,000;
(vii) make or agree to make any material capital expenditure,
individually or in the aggregate, in excess of $25,000;
(viii) except as required to comply with applicable law (in which case
the Company will notify Parent) (A) adopt, enter into, terminate or amend
in any material respect any employment, severance or similar contract,
collective bargaining agreement or Benefit Plan, (B) increase in any manner
the compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee, (C) pay any benefit not provided for under any Benefit
Plan or any other benefit plan or arrangement of the Company or its
subsidiaries, (D) increase in any manner the severance or termination pay
of any officer or employee, (E) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit
Plan (including the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock
or the removal of existing restrictions in any Benefit Plans or agreements
or awards made thereunder), (F) take any action to fund or in any other way
secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Benefit Plan or (G) take any action
to accelerate the vesting of, or cash out rights associated with, any
Options or other benefits;
(ix) enter into any agreement of a nature that would be required to be
filed as an exhibit to Form 10-K under the Exchange Act;
(x) except as required by generally accepted accounting principles, make
any material change in accounting methods, principles or practices;
(xi) make any tax election, make a claim for any tax refund or enter into
any settlement or compromise with respect to any material tax liability;
(xii) amend or terminate any material contract, or waive, release, assign
or settle any material rights or claims;
(xiii) hire or fire or agree to hire any officers;
(xiv) take any action that may reasonably be expected to result in (i)
any of the representations and warranties by the Company becoming untrue,
(ii) any breach of the Company's covenants under the Merger Agreement or
(iii) any of the conditions of the Offer not being satisfied; or
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(xv) authorize any of, or commit or agree to take any of, the foregoing
actions.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it or any subsidiary to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Takeover
Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any nonpublic information with
respect to, or take any other action designed or reasonably likely to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, a Takeover Proposal, or (iii) except as
specifically provided in the applicable provisions of the Merger Agreement and
provided that the Company shall have first complied with all its obligations
under the provisions relating to no solicitation, termination fees and
expenses, enter into any agreement with respect to any Takeover Proposal or
approve or resolve to approve any Takeover Proposal. Upon execution of the
Merger Agreement, the Company agreed to cease any then existing activities,
discussions or negotiations with any parties conducted with respect to any of
the foregoing. Notwithstanding the foregoing, the Merger Agreement provides
that if, at any time prior to the acceptance for payment of Shares pursuant to
the Offer, the Company Board determines in good faith after consultation with
outside counsel, that such action may reasonably be required to discharge the
Company Board's fiduciary duties to the Company's stockholders under applicable
law, the Company may, in response to an unsolicited Takeover Proposal which
constitutes a Superior Proposal (as defined below) made subsequent to the date
of the Merger Agreement, and subject to compliance with the applicable
provisions of the Merger Agreement, (x) furnish information with respect to the
Company to any person that has submitted a Takeover Proposal that constitutes a
Superior Proposal pursuant to a customary confidentiality agreement in form and
substance reasonably satisfactory to Parent and (y) participate in discussions
and negotiations regarding such Takeover Proposal which constitutes a Superior
Proposal. Pursuant to the Merger Agreement, any violation of the restrictions
set forth in the preceding sentence by any director or officer of the Company
or any subsidiary or any investment banker, financial advisor, attorney,
accountant or other representative or agent of the Company or any subsidiary
will be deemed to be a breach of the Merger Agreement by the Company. The term
"Takeover Proposal" means any proposal or offer from any person, in each case,
in writing, relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company and its subsidiaries, taken as a
whole (other than the purchase of the Company's products in the ordinary course
of business), or more than a 30% interest in the total voting securities of the
Company or any tender offer or exchange offer that if consummated would result
in any person beneficially owning 30% or more of any class of equity securities
of the Company or any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company other than the transactions contemplated by
the Merger Agreement.
Pursuant to the Merger Agreement, except as set forth in this paragraph,
neither the Company Board nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent the
approval or recommendation by such Board of Directors or such committee of the
Offer, the Merger or the Merger Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal, (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal or (iv) resolve to take any of the
foregoing actions. Notwithstanding the foregoing, in the event that, prior to
the acceptance for payment of Shares pursuant to the Offer, the Company Board
determines in good faith, after consultation with outside counsel, that such
action may reasonably be required to discharge the Company Board's fiduciary
duties to the Company's stockholders under applicable law, the Company Board
may, in response to an unsolicited Superior Proposal (subject to the following
proviso), (x) withdraw or modify its approval or recommendation of the Offer,
the Merger or the Merger Agreement or (y) approve or recommend any such
Superior Proposal; provided, that in the case of clause (y), such approval or
recommendation shall occur only at a time that is after the later of (i) the
fifth business day following Parent's receipt of written notice advising Parent
that the Company Board has received a Superior Proposal, specifying the
material terms of such Superior Proposal and identifying the person making such
Superior Proposal and (ii) in the event
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of any amendment to the price or any material term of a Superior Proposal,
three business days following Parent's receipt of written notice containing the
material terms of such amendment, including any change in price (it being
understood that each further amendment to the price or any material terms of a
Superior Proposal shall necessitate an additional written notice to Parent and
additional three business day period prior to which the Company can take the
actions set forth in clause (y) above). All notices referred to in the prior
sentence shall include a copy of any such Superior Proposal. The term "Superior
Proposal" means any bona fide Takeover Proposal made by a third party (i) that
is on terms which the Company Board determines in its good faith judgment
(based on the written opinion of the Company's financial advisors as to the
financial terms of such Superior Proposal and after consultation with the
Company's legal advisors) to be more favorable to the Company's stockholders
than the Offer and the Merger and (ii) for which financing, to the extent
required, is available pursuant to definitive agreements with respect thereto.
The Merger Agreement further provides that in addition to the obligations
of the Company set forth in the preceding two paragraphs, the Company will
promptly advise Parent orally and in writing of any request for nonpublic
information (except requests not of a transactional or financial nature by
companies with established commercial relationships with the Company, made in
the ordinary course of business and not in connection with a possible Takeover
Proposal) or of any Takeover Proposal, the material terms and conditions of
such request or Takeover Proposal and the identity of the person making such
request or Takeover Proposal. The Company will promptly inform Parent of any
material change in the details (including amendments or proposed amendments) of
any such request or Takeover Proposal.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the terms of the Merger
Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) Purchaser shall not have accepted for payment any Shares
pursuant to the Offer prior to February 26, 1999 (the "Deadline Condition")
as a result of the failure, occurrence or existence of any of the
Conditions to Offer set forth in Section 14 or (y) the Offer shall have
terminated or expired in accordance with its terms without Purchaser having
accepted for payment any Shares pursuant to the Offer; provided, however,
that the right to terminate the Merger Agreement pursuant to this paragraph
is not available to any party whose failure to perform any of its
obligations under the Merger Agreement results in the failure of the
satisfaction of any such conditions; provided, that if the Offer is
extended, as provided for in the Merger Agreement, to a date later than the
date of the Deadline Condition, the date of the Deadline Condition shall
automatically be extended to the first business day following the extended
expiration date of the Offer;
(ii) if any Governmental Entity (as defined in the Merger Agreement)
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance
for payment of, or payment for, Shares pursuant to the Offer or the Merger
on the terms contemplated in the Merger Agreement, and such order, decree
or ruling or other action shall have become final and nonappealable;
(c) by Parent or Purchaser if, prior to the purchase of Shares pursuant to
the Offer, any of the material representations and warranties of the Company
set forth in the Merger Agreement shall not be true and correct in any material
respect, as of the date of the Merger Agreement, or if the Company shall have
failed to perform in any material respect any obligation or to comply in any
material respect with any agreement or covenant of the Company to be performed
or complied with by it under the Merger Agreement;
(d) by Parent or Purchaser if either Parent or Purchaser is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
Section 14, paragraphs (d), (e), (f) or (g);
(e) by the Company in connection with entering into a definitive agreement
with respect to a Superior Proposal, in accordance with the provisions
summarized under the heading "No Solicitation"
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above, provided that the Company has complied with all provisions thereof,
including the notice provisions therein and that the Company has made the
payments summarized under the heading "Termination Fee" below;
(f) by the Company if, prior to the purchase of Shares pursuant to the
Offer, any of the material representations and warranties of the Parent or
Purchaser set forth in the Merger Agreement shall not be true and correct in
any material respect, at the date of the Merger Agreement, or if the Parent or
Purchaser shall have failed to perform in any material respect any obligation
or to comply with in any material respect any agreement or covenant of Parent
or Purchaser to be performed or complied with by them under the Merger
Agreement; or
(g) by Parent or Purchaser if (i) a tender offer for any securities of the
Company shall have been commenced or publicly proposed to be made by another
person (including the Company or its subsidiaries or affiliates), (ii) any
person or group (as defined in Section 13(d)(3) of the Exchange Act), other
than Parent and Purchaser and other than any person or group which prior to the
date hereof has publicly disclosed beneficial ownership of 10% or more of the
outstanding voting securities of the Company (a "Significant Shareholder")
shall have acquired directly or indirectly beneficial ownership of 10% or more
of the outstanding voting securities of the Company or any of its subsidiaries,
whether through the acquisition of securities, the exercise of rights under
options, warrants or similar instruments, the formation of a group, or
otherwise, or (iii) any Significant Shareholder or group that together would
constitute a Significant Shareholder shall have beneficially acquired
additional voting securities of the Company, whether through the acquisition of
securities, the exercise of rights under options, warrants or similar
instruments, the formation of a group or otherwise, representing 2% or more of
the outstanding voting securities of the Company; provided that in Parent's
reasonable judgment any such event described in clause (ii) or (iii) makes the
successful completion of the Offer unlikely or materially more burdensome to
Parent or Purchaser.
Termination Fee. Pursuant to the Merger Agreement the Company shall pay,
or cause to be paid, in same day funds to Parent the sum of (x) all of Parent's
reasonabe out-of-pocket expenses incurred or to be incurred in connection with
the Offer, the Merger or the Merger Agreement or the preparation therefor, such
amount not to exceed $3,000,000 (the "Expenses"), and (y) $8,800,000 (the
"Termination Fee") if (i) the Company terminates the Merger Agreement pursuant
to clause (e) under the heading "Termination" above, or (ii) prior to
termination of the Merger Agreement, a Takeover Proposal (whether or not such
Takeover Proposal constitutes a Superior Proposal) shall have been received and
within twelve months of such termination such proposal is consummated or the
Company enters into an agreement to consummate or approves or recommends to its
stockholders such proposal. The payment shall be made in the case of a
termination described in clause (i) immediately prior to termination and in the
case of a termination described in clause (ii) concurrently with the earlier of
any such recommendation or the consummation of any such transaction by the
Company. The Company shall pay, or cause to be paid, in same day funds to
Parent all of Parent's Expenses if Parent or Purchaser shall terminate the
Merger Agreement pursuant to clause (c) under the heading "Termination" above,
such payment to be made promptly upon such termination.
Indemnification. The Merger Agreement provides that from and after the
consummation of the Offer, Parent will, and will cause the Surviving
Corporation to, fulfill and honor in all respects the obligations of the
Company pursuant to (i) each indemnification agreement in effect at such time
between the Company and each person who is or was a director or officer of the
Company at or prior to the Effective Time and (ii) any indemnification
provisions under the Company's Certificate of Incorporation or by-laws as each
is in effect on the date of the Merger Agreement (the persons to be indemnified
pursuant to the agreements or provisions referred to in clauses (i) and (ii) of
this sentence shall be referred to as, collectively, the "Indemnified
Parties"). In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time must be reasonably satisfactory to the Surviving Corporation, (ii) after
the Effective Time, the Surviving Corporation shall pay the reasonable fees and
expenses of such counsel; provided, however, that the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld)
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and; provided, further, that the Indemnified Parties as a group may retain only
one law firm to represent them with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
The Certificate of Incorporation and by-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Certificate of Incorporation and by-laws
on the date of the Merger Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of any
Indemnified Party.
The Merger Agreement further provides that the foregoing indemnification
provisions shall survive the consummation of the Merger at the Effective Time,
is intended to be for the benefit of, and enforceable by, the Company, Parent,
the Surviving Corporation and each Indemnified Party and such Indemnified
Party's heirs and representatives, and shall be binding on all successors and
assigns of Parent and the Surviving Corporation. In addition, the Merger
Agreement provides that prior to the consummation of the Merger, the Company
may purchase additional directors and officers liability insurance in an
aggregate amount not to exceed $300,000.
EXCLUSIVITY AGREEMENT
The following is a summary of certain provisions of the Exclusivity
Agreement entered into on November 17, 1998 by Parent and the Company (the
"Exclusivity Agreement"). This summary is not a complete description of the
terms and conditions of the Exclusivity Agreement and is qualified in its
entirety by reference to the full text of the Exclusivity Agreement filed with
the Commission as an exhibit to the Schedule 14D-1 and is incorporated herein
by reference. Capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Exclusivity Agreement. The Exclusivity
Agreement may be examined, and copies obtained, as set forth in Section 9 of
this Offer to Purchase.
Pursuant to the terms of the Exclusivity Agreement that Parent and the
Company entered into on November 17, 1998, the Company agreed that from the
date of the execution of the Exclusivity Agreement until 5:00 p.m., Pacific
time, on November 23, 1998, it would not permit any of its Representatives (as
defined therein) to, directly or indirectly, (a) solicit, initiate or encourage
any Acquisition Proposal (as defined therein), engage in discussions,
negotiations or carry-on a dialogue with any person or Group (as such term is
defined under Section 13d-3 of the Securities Exchange Act of 1934) with
respect to an Acquisition Proposal, or (b) disclose any non-public information
relating to the Company or afford access to the properties, books or records
(financial or otherwise) of the Company to, any person or Group. The Company
further agreed that it would cease any existing activities, discussions or
negotiations with any persons conducted with respect to an Acquisition
Proposal.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
Parent and Purchaser intend following completion of the Offer to conduct a
detailed review of the Company and its assets, corporate structure,
capitalization, business and operations, properties, policies, management and
personnel, including determining how to optimally realize any potential
synergies which may exist between the operations of the Company and those of
Parent and its affiliates, and to consider and determine what, if any, changes
would be desireable in light of the circumstances which then exist. Such review
is not expected to be completed until after the consummation of the Merger,
and, following such review, Parent will consider what, if any, changes would be
desirable in light of the circumstances then existing. Such changes could
include, among other things, changes in the Company's business, corporate
structure, certificate of incorporation, by-laws, capitalization, management or
dividend policy.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to promptly exercise its rights under the
Merger Agreement to obtain majority representation on the Company Board. See
"Merger Agreement--The Company Board" in Section 11. Parent intends to exercise
such rights by causing the Company to elect to the Company Board Messrs.
Kenneth W. Davidson, Peter M. Graham, David L. Lamont, Alan S. Blazei and Henry
T. DeHart. Information with respect to such directors is contained in Schedule
I hereto and in the Schedule 14D-9.
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The Merger Agreement provides that the directors of Purchaser and the officers
of the Company at the Effective Time of the Merger will, from and after the
Effective Time, be the initial directors and officers, respectively, of the
Surviving Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. Purchaser
and its affiliates also reserve the right to dispose of any or all Shares
acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase, none of Maxxim, Parent or
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of a material amount
of assets, involving the Company or any of its subsidiaries, or any material
changes in the Company's capitalization, corporate structure, business or
composition of its management or the Company Board.
Stockholder Approval. Under the DGCL, the affirmative vote of the holders
of a majority of the outstanding Shares is required to adopt and approve the
Merger Agreement and transactions contemplated thereby unless the Merger is
consummated pursuant to the short-form merger provisions under the DGCL
described below (in which case no further corporate action by the stockholders
of the Company will be required to complete the Merger). The Merger Agreement
provides that Parent will vote, or cause to be voted, all of the Shares then
owned by Parent, Purchaser or any of Parent's other subsidiaries and affiliates
in favor of the approval of the Merger and the adoption of the Merger
Agreement. In the event that Parent, Purchaser and Parent's other subsidiaries
acquire in the aggregate at least a majority of the Shares entitled to vote on
the approval of the Merger and the Merger Agreement, they would have the
ability to effect the Merger without the affirmative votes of any other
stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the
event that Parent, Purchaser and any other subsidiaries of Parent acquire in
the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company, subject to compliance with the provisions of Section 253 of the DGCL.
In the Merger Agreement, Parent, Purchaser and the Company have agreed that,
notwithstanding that all conditions to the Offer are satisfied or waived as of
the scheduled Expiration Date, Purchaser may extend the Offer on one or more
occasions for an aggregate period of not more than ten business days beyond the
latest expiration date that would otherwise be permitted under the Merger
Agreement, if the Shares tendered pursuant to the Offer constitute less than
90% of the outstanding Shares. Even if Parent and Purchaser do not own 90% of
the outstanding Shares following consummation of the Offer, Parent and
Purchaser could seek to purchase additional shares in the open market or
otherwise in order to reach the 90% threshold and employ a short-form merger.
The per share consideration paid for any Shares so acquired may be greater or
less than that paid in the Offer. Parent presently intends to effect a
short-form merger if permitted to do so under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of
the Shares at the Effective Time will have certain rights pursuant to the
provisions of Section 262 of the DGCL including the right to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their
Shares. Under Section 262 of the DGCL, dissenting stockholders of the Company
who comply with the applicable statutory procedures will be entitled to receive
a judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash, together with a fair rate of
interest thereon, if any. Any such judicial determination of the fair value of
the Shares could be based upon factors other than, or in addition to, the price
per Share to be paid in the Merger or the market value of the Shares. The value
so determined could be more or less than the price per Share to be paid in the
Merger.
24
<PAGE>
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one (1) year
following consummation of the Offer and in the Merger stockholders would
receive the same price per Share as paid in the Offer. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial information concerning the Company, and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such a transaction, be filed with the Commission and
disclosed to minority stockholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from the date of
the Merger Agreement, without the prior written consent of Parent, neither the
Company nor any of its subsidiaries shall: (A) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, stock or
property), in respect of, any of its capital stock, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock (other than the issuance of Shares upon the exercise of Options
or Warrants outstanding on the date of the Merger Agreement and in accordance
with their terms in effect on the date of the Merger Agreement) or (C)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock or any shares of capital stock of its subsidiaries, any other
voting securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or convertible
securities (other than (x) pursuant to the Rights Agreement or (y) the issuance
of Shares upon the exercise of Options or Warrants outstanding on the date of
the Merger Agreement and in accordance with their terms in effect on the date
of the Merger Agreement).
14. CONDITIONS TO THE OFFER.
The Offer is subject to the Minimum Condition being satisfied by the
Expiration Date or such later date as the Offer may be extended in accordance
with the terms of the Merger Agreement. Pursuant to the Merger Agreement, if
all of the conditions to the Offer have not been satisfied or waived on any
scheduled Expiration Date then, Purchaser may extend the Offer from time to
time until such conditions are satisfied or waived. Notwithstanding any other
provision of the Offer, subject to the terms of the Merger Agreement, Purchaser
shall not be required to accept for payment or pay for any Shares if (i) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall not have expired or been terminated, (ii) the Minimum
Condition shall not have been satisfied or (iii) upon the scheduled Expiration
Date and before the acceptance of such Shares for payment and payment
therefore, any of the following conditions exist:
(a) there shall be instituted or pending by any Governmental Entity any
suit, action or proceeding (i) challenging the acquisition by Parent or
Purchaser of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any of
Parent's subsidiaries of a material portion of the business or assets of the
Company or Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion of the
business or
25
<PAGE>
assets of the Company or Parent and its subsidiaries, taken as a whole, in each
case as a result of the Offer or the Merger or (iii) seeking to impose material
limitations on the ability of Parent or Purchaser to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company or
(iv) seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company or (v) seeking to obtain from the Company any damages
that could reasonably be expected to have a material adverse effect on the
Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, by any Governmental Entity or court, other than the
application to the Offer or the Merger of applicable waiting periods under the
HSR Act, that would result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) the Merger Agreement shall have been terminated in accordance with its
terms;
(d) (i) the Company Board or any committee thereof shall have withdrawn or
modified its approval or recommendation of the Offer or the Merger or its
adoption of the Merger Agreement, or approved or recommended any Takeover
Proposal, (ii) the Company shall have entered into any agreement with respect
to any Takeover Proposal in accordance with the provisions of the Merger
Agreement summarized under the heading "No Solicitation" or (iii) the Company
Board or any committee thereof shall have resolved to take any of the foregoing
actions;
(e) in the event any of the representations and warranties of the Company
set forth in the Merger Agreement shall not be true and correct in any material
respect, at the date of the Merger Agreement or at the scheduled expiration of
the Offer, or if the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(f) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange for a
period in excess of three hours (excluding suspensions or limitations resulting
solely from physical damage or interference with such exchanges not related to
market conditions), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory) by any Governmental Entity, (iii) any limitation or proposed
limitation (whether or not mandatory) by any United States governmental
authority or agency that has a material adverse effect generally on the
extension of credit by banks or other financial institutions, (iv) any change
in general financial bank or capital market conditions such that banks are
unwilling to extend credit to borrowers similar to Parent generally, or (v) any
decline in either the Dow Jones Industrial Average or the Standard & Poor's
Index of 500 Industrial Companies by an amount in excess of 20% from the close
of business on the date of the Merger Agreement;
(g) there shall have occurred any events or changes which constitute or
which are reasonably likely to constitute, individually or in the aggregate, a
material adverse change in the condition of the Company (financial or
otherwise); or
(h) (i) a tender offer for any securities of the Company shall have been
commenced or publicly proposed to be made by another person (including the
Company or its subsidiaries or affiliates), (ii) any person or group (as
defined in Section 13(d)(3) of the Exchange Act), other than Parent and
Purchaser and other than Significant Shareholder, shall have acquired directly
or indirectly beneficial ownership of 10% or more of the outstanding voting
securities of the Company or any of its subsidiaries, whether through the
acquisition of securities, the exercise of rights under options, warrants or
similar instruments, the formation of a group, or otherwise, or (iii) any
Significant Shareholder of group that together would constitute a Significant
Shareholder shall have beneficially acquired additional voting securities of
the Company, whether through the acquisition of securities, the exercise of
rights under options, warrants or similar instruments, the formation of a group
or otherwise, representing 2% or more of the outstanding voting securities of
the Company; provided that in Parent's reasonable judgment any such event
described in clause (ii) or (iii) makes the successful completion of the Offer
unlikely or materially more burdensome to Parent or Purchaser;
26
<PAGE>
which, in the reasonable judgement of Parent or Sub, in its sole discretion,
make it inadvisable to proceed with such acceptance of Shares for payment or
the payment therefor.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and (except for the Minimum Condition) may, subject to the terms of the Merger
Agreement, be waived by Parent and Purchaser in whole or in part at any time
and from time to time in their sole discretion. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any right and all such rights may be asserted at any time or
from time to time.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
(i) any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or Purchaser pursuant
to the Offer, the Merger or otherwise, or (ii) any approval or other action by
any governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by Purchaser
pursuant to the Offer, the Merger or otherwise. Should any such approval or
other action be required, Purchaser and Parent presently contemplate that such
approval or other action will be sought, except as otherwise described below
under "State Antitakeover Statutes." While, except as otherwise described in
this Offer to Purchase, Purchaser does not presently intend to delay the
acceptance for payment of, or payment for, Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of, or other substantial conditions complied with, in the
event that such approvals were not obtained or such other actions were not
taken or in order to obtain any such approval or other action. If certain types
of adverse action are taken with respect to the matters discussed below,
Purchaser could decline to accept for payment, or pay for, any Shares tendered.
See Section 14 for certain conditions to the Offer, including conditions with
respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general,
prohibits a Delaware corporation, such as the Company, from engaging in a
"Business Combination" (defined as a variety of transactions, including
mergers) with an "Interested Stockholder" (defined generally as a person that
is the beneficial owner of 15% or more of the outstanding voting stock of the
subject corporation) for a period of three years following the date that such
person became an Interested Stockholder unless, prior to the date such person
became an Interested Stockholder, the board of directors of the corporation
approved either the Business Combination or the transaction that resulted in
the stockholder becoming an Interested Stockholder. The provisions of Section
203 of the DGCL are not applicable to any of the transactions contemplated by
the Merger Agreement, since the Merger Agreement and the transactions
contemplated thereby were approved by the Company Board prior to the execution
thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the "Supreme Court") invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made certain corporate acquisitions more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining stockholders. The state law before the Supreme Court was by its terms
applicable only to corporations that had a substantial number of stockholders
in the state and were incorporated there.
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<PAGE>
The Company has represented to Parent and Purchaser that the Company
Stockholder Approval (as defined in the Merger Agreement) is the only vote of
the holders of any class or series of the Company's capital stock which is
necessary to approve the Merger Agreement and the transactions contemplated
thereby.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as set forth above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any
state antitakeover statute or regulation. Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly applicable
to the Offer and nothing in this Offer to Purchase or any action taken in
connection with the Offer is intended as a waiver of such right. If it is
asserted that any state antitakeover statute is applicable to the Offer and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, Purchaser might be required to file certain information
with, or to receive approvals from, the relevant state authorities, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer or may be delayed in consummating the Offer in order to
comply with applicable law. In such case, Purchaser may not be obligated to
accept for payment, or pay for, any Shares tendered pursuant to the Offer. See
Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
Parent has filed its Notification and Report Form with respect to the
Offer under the HSR Act on November 24, 1998. The waiting period under the HSR
Act with respect to the Offer will expire at 11:59 p.m., New York City time, on
the fifteenth day after the date of such filing unless early termination of the
waiting period is granted. However, the DOJ or the FTC may extend the waiting
period by requesting additional information or documentary material from Parent
or the Company. If such a request is made, such waiting period will expire at
11:59 p.m., New York City time, on the tenth day after substantial compliance
by Parent with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with the
consent of Parent. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the DOJ or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while such negotiations
continue. The Purchaser will not accept for payment Shares tendered pursuant to
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws (as defined below) of transactions such as Purchaser's acquisition of
Shares pursuant to the Offer and the Merger. At any time before or after
Purchaser's acquisition of Shares, the DOJ or the FTC could take such action
under the Antitrust Laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or otherwise seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Parent or its subsidiaries. Private
parties, as well as state governments, may also bring legal action under the
Antitrust Laws under certain circumstances. Based upon an examination of
information provided by the Company relating to the businesses in which Parent
and the Company are engaged, Parent and Purchaser believe that the acquisition
of Shares by Purchaser will not violate the Antitrust Laws. Nevertheless, there
can be no assurance that a challenge to the Offer or other acquisition of
Shares by Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain government
actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended,
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<PAGE>
and all other Federal and state statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
Federal Reserve Board Regulations. Regulations U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by margin
stock. Such secured credit may not be extended or maintained in an amount that
exceeds the maximum loan value of all the direct and indirect collateral
securing the credit, including margin stock and other collateral. The financing
of the Offer will be structured such that such financing will be in full
compliance with the Margin Regulations.
16. FEES AND EXPENSES.
Purchaser and Parent have retained MacKenzie Partners, Inc. to serve as
the Information Agent and Harris Trust Company of New York to serve as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by personal interview, mail, telephone, telex, telegraph and
other methods of electronic communication and may request brokers, dealers,
commercial banks, trust companies and other nominees to forward the Offer
materials to beneficial holders. The Information Agent and the Paying Agent
will each receive reasonable and customary compensation for their services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities in connection with their services, including
certain liabilities and expenses under the federal securities laws.
Except as set forth above, none of Maxxim, Parent or Purchaser will pay
any fees or commissions to any broker or dealer or other person or entity in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding the
Offer materials to their customers.
17. MISCELLANEOUS.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state.
No person has been authorized to give any information or to make any
representation on behalf of Maxxim, Parent or Purchaser not contained herein or
in the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
Purchaser, Parent and Maxxim have filed with the Commission the Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9 pursuant
to Rule 14d-9 under the Exchange Act, setting forth its recommendation with
respect to the Offer and the reasons for its recommendation and furnishing
certain additional related information. Such Schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the same manner set forth in Section 9 of this Offer to
Purchase (except that such material will not be available at the regional
offices of the Commission).
MMI ACQUISITION CORP., a Delaware Corporation
MAXXIM MEDICAL, INC., a Delaware Corporation
MAXXIM MEDICAL, INC., a Texas Corporation
November 30, 1998
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<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
OF MAXXIM, PARENT AND PURCHASER
(a) DIRECTORS AND EXECUTIVE OFFICERS OF MAXXIM. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Maxxim. Unless otherwise indicated, each such
person is a citizen of the United States of America and the business address of
each such person is c/o Maxxim Medical, Inc., 10300 49th Street North,
Clearwater, Florida 33762. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with Maxxim. Unless
otherwise indicated, each such person has held his or her present occupation as
set forth below, or has been an executive officer at Maxxim for the past five
years.
<TABLE>
<S> <C>
Kenneth W. Davidson ......... Kenneth W. Davidson has served as a Director of
Maxxim since 1982, and as Chairman of the Board
of Directors, Chief Executive Officer and President
of Maxxim since November 1986. Mr. Davidson is
also a director of Henley Healthcare, Inc., a manu-
facturer of products used in physical therapy, En-
core Orthopedics, Inc., a designer and manufac-
turer of implantable orthopedic devices and Bovie
Medical Corp., a supplier of electrosurgery genera-
tors and accessories. Mr. Davidson is a citizen of
Canada.
Peter M. Graham ............. Peter M. Graham has served as Executive Vice
President and Chief Operating Officer since Janu-
ary 1986, and was elected Secretary in July 1997.
Mr. Graham also served as Treasurer from
April 1986 through June 1997. Mr. Graham is a
citizen of Canada.
Alan S. Blazei .............. Alan S. Blazei has served as Vice President and
Controller since December 1990. In July 1997, Mr.
Blazei was elected Treasurer.
David L. Lamont ............. David L. Lamont has served as Vice President since
March 1988 and Group Vice President since
July 1993. From January 1992 to July 1993, Mr.
Lamont was President of Argon Medical, a division
of Maxxim. Mr. Lamont is a citizen of Canada.
Henry T. DeHart ............. Henry T. DeHart has served as Vice President since
November 1993. Since June 1995, he has served as
Executive Vice President of Operations of Case
Management, a division of Maxxim. From Decem-
ber 1992 through July 1995, he served as President
of Boundary Healthcare Products Corp. ("Bound-
ary").
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Jack F. Cahill ............. Jack F. Cahill has served as Vice President since
May 1995. Since June 1995, he has served as
Executive Vice President Sales and Marketing of
Case Management, a division of Maxxim. From
May 1994 through June 1995, he served as Presi-
dent of Sterile Design, a division of Johnson &
Johnson Medical, Inc. ("Johnson & Johnson").
From July 1993 to May 1994, he served as Execu-
tive Vice President of Sterile Design. For over five
years prior to July 1993, he worked for Johnson &
Johnson serving in various capacities, the latest of
which being Business Director.
Joseph D. Dailey ........... Joseph D. Dailey has served as Vice President,
Information Services since August 1994. Previ-
ously, he had served as Director of Information
Services since January 1991.
Suzanne R. Garon ........... Suzanne R. Garon has served as Vice President
since January 1997. Previously, she had served as
Vice President Human Resources of Case Manage-
ment, a division of Maxxim since August 1995.
From July 1993 to August 1995, Ms. Garon served
as Manager of Human Resources of Sterile Design,
a division of Johnson & Johnson. From April 1980
to July 1993, Ms. Garon provided human resource
management to Johnson & Johnson.
Rob W. Beek ................ Rob W. Beek has served as Vice President,
Managing Director of Maxxim Medical Europe, a
division of Maxxim since January 1997. Prior to
that time, he was Managing Director of Medica
B.V., a Netherlands corporation acquired by
Maxxim in January 1995, for more than five years.
Mr. Beek is a citizen of The Netherlands.
Donald R. DePriest ......... Donald R. DePriest was elected as a Director of
Maxxim, effective December 1992, pursuant to the
terms of an agreement with Boundary under which
Maxxim acquired Boundary. Since July 1987, Mr.
DePriest has been the President of MedCom De-
velopment Corporation, the General Partner of
MCT Investors, L.P., a limited partnership engaged
in the business of venture capital investing. Mr.
DePriest was the principal shareholder and Presi-
dent of Boundary from July 1987 until its acquisi-
tion. Mr. DePriest is also Chairman of the Board of
American Telecasting, Inc.
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
Peter G. Dorflinger ............. Peter G. Dorflinger has served as a Director of
Maxxim since 1986 and as Secretary from 1992 to
1997. From June 1990 until October 1996, Mr.
Dorflinger served as Group Vice President and
General Counsel of Sulzer Medica USA, Inc., a
subsidiary of Sulzer Medica Ltd., a Swiss medical
device manufacturer. From January 1997 through
January 1998, Mr. Dorflinger was Vice President
and General Counsel of Advanced Medical Instru-
ments, Inc., a manufacturer of medical monitoring
equipment. From September 1997 to January 1998,
Mr. Dorflinger also served as President of GlasTech,
Inc., a manufacturer of dental products. Since
January 24, 1998, Mr. Dorflinger has been Presi-
dent and Chief Operating Officer of Physicians
Resource Group, Inc., a physicians practice man-
agement company. Mr. Dorflinger is also a director
of Benchmark Electronics, Inc.
Martin Grabois, M.D. ............ Martin Grabois, M.D. has served as a Director of
Maxxim since February 1991. Dr. Grabois has been
a Professor and Chairman of the Department of
Physical Medicine and Rehabilitation at Baylor
College of Medicine in Houston, Texas since 1978.
Since 1978, he has also served as the Senior At-
tending and Medical Director in the Department of
Physical Medicine at the Methodist Hospital, Hous-
ton, Texas, Consultant Physiatrist to the Texas
Institute for Rehabilitation and Research, Hous-
ton, Texas, and the Physician-in-Chief for the Physi-
cal Medicine and Rehabilitation Services of Harris
County Hospital District, Houston, Texas. In 1994,
Dr. Grabois was elected President of the Academy
of Physical Rehabilitation.
Ernest J. Henley, Ph.D. ......... Earnest J. Henley, Ph.D. has served as a Director of
Maxxim since 1976, and served as a consultant to
Maxxim from that date until May 1996. Dr. Henley
has been as a Professor of Chemical Engineering at
the University of Houston for more than five years.
Dr. Henley is also a consultant and director of
Henley Healthcare, Inc.
</TABLE>
I-3
<PAGE>
<TABLE>
<S> <C>
Richard O. Martin, Ph.D. ......... Richard O. Martin, Ph.D. has served as a Director
of Maxxim since November 1989. Dr. Martin served
from April 1991 until February 1997, as President
and Chief Executive Officer, and since Febru-
ary 1997, as Chairman and Chief Executive Officer,
of Physio-Control International Corp., a manufac-
turer of cardiac defibrillators and monitoring equip-
ment. Dr. Martin also serves as a director of
SeaMED Corporation, which engages in contract
engineering and manufacturing for medical and
other industries, CardioDynamics International
Corporation, a manufacturer of noninvasive digital
heart monitoring devices and related products and
Encore Orthopedics, Inc. Dr. Martin also serves as
Chairman of the Board of Directors for the Medi-
cal Device Manufacturers Association.
Henk R. Wafelman, Ing. ........... Henk R. Wafelman, Ing. has served as a Director of
Maxxim since 1987. Since 1990, Mr. Wafelman has
been the executive chairman of the Dutch Society
of Enterprises in Medical Technology, a Nether-
lands based technology society, and holds the posi-
tion of Chairman of an advisory committee for the
standardization of medical aids. For more than five
years prior to that time, Mr. Wafelman was the
President of N.V. Enraf Nonius Delft Holland, a
major Dutch instrument company and a leading
manufacturer of physical therapy products. Mr.
Wafelman is a citizen of The Netherlands.
</TABLE>
I-4
<PAGE>
(b) DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent. Unless otherwise indicated, the
business address of such person is c/o Maxxim Medical, Inc., 10300 49th Street
North, Clearwater, Florida 33762. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to employment with Parent.
Unless otherwise indicated each such person has held his or her present
occupation as set forth below, or has been an executive officer at Parent, or
the entity indicated, for the past five years.
<TABLE>
<S> <C>
Kenneth W. Davidson ......... Kenneth W. Davidson has served as a Director of
Maxxim since 1982, and as Chairman of the Board
of Directors, Chief Executive Officer and President
of Maxxim since November 1986 and as sole Di-
rector and President of Parent for more than five
years. Mr. Davidson is also a director of Henley
Healthcare, Inc., a manufacturer of products used
in physical therapy, Encore Orthopedics, Inc., a
designer and manufacturer of implantable orthope-
dic devices and Bovie Medical Corp., a supplier of
electrosurgery generators and accessories. Mr.
Davidson is a citizen of Canada.
Peter M. Graham ............. Peter M. Graham has served as Executive Vice
President and Chief Operating Officer of Maxxim
since January 1986, and was elected Secretary in
July 1997. Mr. Graham also served as Treasurer of
Maxxim from April 1986 through June 1997. Mr.
Graham has been the Secretary of Parent for more
than five years. Mr. Graham is a citizen of Canada.
</TABLE>
I-5
<PAGE>
(c) DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table
sets forth the name and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five
years, of each director and executive officer of Purchaser. Unless otherwise
indicated, the business address of each such person is c/o Maxxim Medical,
Inc., 10300 49th Street North, Clearwater, Florida 33762. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Purchaser. Unless otherwise indicated, each such person has
held his or her present occupation as set forth below, or has been an executive
officer at Purchaser, or the entity indicated, for the past five years.
<TABLE>
<S> <C>
Kenneth W. Davidson ......... Kenneth W. Davidson has served as a Director of
Maxxim since 1982, and as Chairman of the Board
of Directors, Chief Executive Officer and President
of Maxxim since November, 1986. Mr. Davidson is
also a director of Henley Healthcare, Inc., a manu-
facturer of products used in physical therapy, En-
core Orthopedics, Inc., a designer and manufac-
turer of implantable orthopedic devices and Bovie
Medical Corp., a supplier of electrosurgery genera-
tors and accessories. Mr. Davidson has been the
sole Director and President of Purchaser since
November 18, 1998. Mr. Davidson is a citizen of
Canada.
Peter M. Graham ............. Peter M. Graham has served as Executive Vice
President and Chief Operating Officer of Maxxim
since January 1986, and was elected Secretary in
July 1997. Mr. Graham also served as Treasurer of
Maxxim from April 1986 through June 1997. Mr.
Graham has been the Secretary of Purchaser since
November 18, 1998. Mr. Graham is a citizen of
Canada.
</TABLE>
I-6
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set forth
below:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand and Overnight Courier:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, New York 10268-1023 New York, New York 10005
By Facsimile Transmission: (212) 701-7636 or (212) 701-7637
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (212) 701-7624
For Information Call: (212) 701-7624
Any questions or requests for assistance or additional copies of this
Offer to Purchase, the related Letter of Transmittal, the Notice of Guaranteed
Delivery and the other tender offer documents may be directed to the
Information Agent at the address and telephone numbers set forth below.
Stockholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC. LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or
Call Toll Free: (800) 322-2885
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CIRCON CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 30, 1998
BY
MMI ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
MAXXIM MEDICAL, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, JANUARY 5, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand and Overnight Courier:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, New York 10268-1023 New York, New York 10005
By Facsimile Transmission: (212) 701-7636 or (212) 701-7637
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (212) 701-7624
For Information Call: (212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Circon
Corporation if certificates for Shares (as such term is defined below) are to
be forwarded herewith or, unless an Agent's message (as defined in Instruction
2 below) is utilized, if delivery of Shares is to be made by book-entry
transfer to an account maintained by the Depositary (as defined in the
INTRODUCTION of the Offer to Purchase at the Book-Entry Transfer Facility (as
defined in, and pursuant to the procedures set forth in, Section 3 of the Offer
to Purchase). Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders who
deliver shares are referred to herein as "Certificate Stockholders."
Stockholders who wish to tender their Shares but whose certificates for
Shares are not immediately available or who cannot deliver either the
certificates for their Shares, or a Book-Entry Confirmation (as defined in
Section 3 of the Offer to Purchase) with respect to their Shares, and all other
documents required hereby to the Depositary on or prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) must tender such Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
--------------------------------------------
Account Number: Transaction Code Number:
--------------------- ----------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
------------------------------------------
Window Ticket Number (if any):
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------
Name of Institution that Guaranteed Delivery:
----------------------------
If delivered by Book-Entry Transfer, check box: [ ]
Account Number:
----------------------------------------------------------
Transaction Code Number:
----------------------------------------------
- -------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SCHEDULE LIST IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES:
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
(2) UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES REPRESENTED
BY SHARE CERTIFICATES DELIVERED TO THE DEPOSITARY ARE BEING TENDERED
HEREBY. SEE INSTRUCTION 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to MMI Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Maxxim Medical,
Inc., a Delaware corporation ("Parent"), a wholly owned subsidiary of Maxxim
Medical, Inc., a Texas corporation ("Maxxim"), the above-described shares of
common stock, par value $0.01 per share (the "Common Stock"), including the
associated preferred stock purchase rights (the "Rights" and, together with the
Common Stock, the "Shares"), of Circon Corporation, a Delaware corporation (the
"Company"), pursuant to Purchaser's offer to purchase all of the outstanding
Shares at a price of $15.00 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 30, 1998, and in
this Letter of Transmittal (which, together with any amendments or supplements
thereto or hereto, collectively constitute the "Offer"), The undersigned
understands that Purchaser reserves the right to transfer or assign, in whole
at any time, or in part from time to time, to one or more of its affiliates,
the right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer. Receipt of the Offer is hereby
acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 21, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company.
Upon the terms and subject to the conditions of the Offer (and if the
Offer is extended or amended, the terms of any such extension or amendment),
subject to, and effective upon, acceptance for payment of, and payment for, the
Shares tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all the Shares that are being
tendered hereby (and any and all non-cash dividends, distributions, rights,
other Shares or other securities issued or issuable in respect thereof on or
after November 21, 1998 (collectively, "Distributions")) and irrevocably
constitutes and appoints the Depositary the true and lawful Agent and
attorney-in-fact of the undersigned with respect to such Shares (and any and
all Distributions), with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver certificates for such Shares (and any and all Distributions), or
transfer ownership of such Shares (and any and all Distributions) on the
account books maintained by the Book-Entry Transfer Facility, together, in any
such case, with all accompanying evidences of transfer and authenticity, to or
upon the order of Purchaser, (ii) present such Shares (and any and all
Distributions) for transfer on the books of the Company, and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any and all Distributions), all in accordance with the terms of the
Offer.
By executing this Letter of Transmittal (including delivery through an
Agent's Message), the undersigned hereby irrevocably appoints Kenneth W.
Davidson and Peter M. Graham in their respective capacities as officers of
Purchaser, and any individual who shall thereafter succeed to any such office
of Purchaser, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or
postponement thereof or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all of the Shares (and any and all Distributions) tendered hereby and
accepted for payment by Purchaser. All such powers of attorney and proxies will
be considered coupled with an interest in the tendered Shares. Such appointment
will be effective if, as and when, and only to the extent that, Purchaser
accepts for payment the Shares tendered by such stockholder pursuant to the
Offer. All such powers of attorney and proxies will be irrevocable and will be
deemed granted in consideration of the acceptance for payment by Purchaser of
Shares tendered in accordance with the terms of the Offer. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares (and any and all Distributions) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of Purchaser named above
will thereby be empowered to exercise all voting and other rights with respect
to such Shares (and any and all Distributions), including, without limitation,
in respect of any annual or special meeting of the Company's stockholders (and
any adjournment or postponement thereof), actions by written consent in lieu of
any such meeting or otherwise, as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper. Purchaser reserves the
right to require
<PAGE>
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting, consent and other rights with respect to such Shares (and
any and all Distributions), including voting at any meeting of the Company's
stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
(including any and all Distributions) tendered hereby, that the undersigned
owns the Shares tendered hereby within the meaning of Rule 14e-4 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
that the tender of the tendered Shares complies with Rule 14e-4 under the
Exchange Act, and that when such Shares are accepted for payment by Purchaser,
Purchaser will acquire good, marketable and unencumbered title to such Shares
and to any and all Distributions, free and clear of all liens, restrictions,
charges and encumbrances and such Shares and Distributions will not be subject
to any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Depositary or Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby and and any and all Distributions. In addition, the undersigned
shall remit and transfer promptly to the Depositary for the account of
Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of each such Distributions and
may withhold the entire purchase price of the Shares tendered hereby or deduct
from such purchase price, the amount or value of such Distributions as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and
in the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the Merger Agreement, the
price to be paid to the undersigned will be the amended price notwithstanding
the fact that a different price is stated in this Letter of Transmittal. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, Purchaser may not be required to accept for payment and pay for
any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the name(s)
of the registered holder(s) appearing above under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of all Shares
purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and deliver
such check and/or return any such certificates (and any accompanying documents,
as appropriate) to, the person(s) so indicated. Unless otherwise indicated in
the box entitled "Special Payment Instructions," please credit any Shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof if Purchaser does not accept for payment any of
the Shares so tendered.
4
<PAGE>
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN
HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN
CERTIFICATES:
---------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned or
if Shares tendered hereby and delivered by book-entry transfer that are not
accepted for payment are to be returned by credit to an account maintained at a
Book-Entry Transfer Facility other than the account indicated above.
Issue check and/or Share certificate(s) to:
Name:
-----------------------------------------------------------------------
(PLEASE PRINT)
Address:
---------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
- ------------------------------------------------------------------------------
(ACCOUNT NUMBER)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment is to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown under "Description of Shares
Tendered."
Mail check and/or Share certificates to:
Name:
-------------------------------------------------------------------------
(PLEASE PRINT)
Address:
---------------------------------------------------------------------
- ----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- ----------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: , 199
--------------------- --
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s):
---------------------------------------------------------------------
- ------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm:
-----------------------------------------------------------------
Capacity (full title):
-------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
----------------------------------------------
Tax Identification or Social Security Number:
--------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
--------------------------------------------------------
Name(s):
---------------------------------------------------------------------
- ------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
------------------------------------------------------------------------
Name of Firm:
-----------------------------------------------------------------
Address:
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-----------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes hereof, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) tendered
herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile hereof), together with any required signature
guarantees, or an Agent's Message (in connection with book-entry transfer), and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date and either (i)
certificates for tendered Shares must be received by the Depositary at one of
such addresses on or prior to the Expiration Date or (ii) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary on or prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available
or who cannot deliver their certificates and all other required documents to
the Depositary on or prior to the Expiration Date or who cannot comply with the
book-entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section 3
of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary on or prior to the Expiration
Date and (iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all tendered Shares),
together with a properly completed and duly executed Letter of Transmittal (or
facsimile hereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the New York Stock Exchange is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile hereof), waive any right to receive
any notice of acceptance of their Shares for payment.
<PAGE>
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered." In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder, unless otherwise provided in the appropriate box
on this Letter of Transmittal, as soon as practicable after the Expiration Date
or the termination of the Offer, whichever occurs earlier. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so to
act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such Share
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person(s)) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption therefrom,
is submitted.
Except as otherwise provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the Share certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
Share certificates for Shares not accepted for payment or not tendered are to
be issued in the name of and/or returned to, a person other than the signer(s)
of this Letter of Transmittal or if a check is to be sent, and/or such
certificates are to be returned, to a person other than the signer(s) of this
Letter of Transmittal, or to an address other than that designated above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that Shares
not purchased be credited to such account maintained at the Book-Entry Transfer
Facility as such stockholder(s) may designate in the box entitled "Special
Payment Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above as the account from which such Shares were delivered.
<PAGE>
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent at its address and telephone number set forth below, or from
brokers, dealers, commercial banks or trust companies.
9. WAIVER OF CONDITIONS. Subject to the terms of the Merger Agreement,
Parent and Purchaser reserve the absolute right in their sole discretion to
waive, at any time or from time to time, any of the specified conditions of the
Offer (except the Minimum Condition, as such term is defined in Exhibit A to
the Merger Agreement), in whole or in part, in the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify, under
penalties of perjury, that such TIN is correct and that such stockholder is not
subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the Internal Revenue Service (the "IRS"). If backup
withholding results in an overpayment of tax, a refund can be obtained by the
stockholder upon filing an income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign stockholders should complete and sign the
main signature form and a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid backup
withholding. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares represented by the lost certificate(s). The stockholder will then be
instructed as to the steps that must be taken in order to replace the Share
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen Share
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE ON OR PRIOR TO
THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payor) with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his social security number. If a tendering stockholder is subject to backup
withholding, such stockholder must cross out Part 2 of the Substitute Form W-9.
If the Depositary is not provided with the correct taxpayer identification
number, the stockholder may be subject to a $50 penalty imposed by the IRS. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write "Exempt" on the face of
the Substitute Form W-9 below, and sign, date and return the Substitute Form
W-9 to the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
such stockholder should write "Applied For" in the space provided for in the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part 1 and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price until a
TIN is provided to the Depositary.
<PAGE>
<TABLE>
<S> <C>
PAYOR'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- ---------------------------------------------------------------------------------------------------------------------------------
PART 1 -- Please provide your TIN in the box at right and certify by signing and dating below:
SUBSTITUTE
FORM W-9 Social Security Number or Employer Identification Number
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
----------------------------------- ----------------------------------------------
(If awaiting TIN write "Applied For") (If awaiting TIN write "Applied For")
---------------------------------------------------------------------------------------------------
PART 2 -- CERTIFICATE -- Under penalties of perjury, I certify that:
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION (a) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
NUMBER ("TIN") number to be issued to me), and
(b) I am not subject to backup withholding because: (1) I am exempt from backup withholding, or (2) I
have not been notified by the IRS that I am subject to backup withholding as a result of a failure
to report all interest and dividends, or (3) the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out Part 2 above if you have been notified by the
IRS that you are currently subject to backup withholding because of under-reporting interest or
dividends on your tax returns. However, if after being notified by the IRS that you are subject to
backup withholding, you receive another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such Part 2. (Also see instructions in the enclosed Guidelines).
SIGNATURE : DATE :
------------------------------------- ----------------------------------
---------------------------------------------------------------------------------------------------
PART 3 -- AWAITING TIN [ ]
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number to the Depositary within 60 days, 31%
of all reportable payments made to me thereafter will be withheld, but that
such amounts will be refunded to me if I provide a certified Taxpayer
Identification Number to the Depositary within 60 days.
Signature: Date: , 199
----------------------------- --------------------------- -
- -------------------------------------------------------------------------------
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and the other tender offer documents may
be directed to the Information Agent at its address and telephone numbers set
forth below:
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC. LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or
Call Toll Free: (800) 322-2885
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CIRCON CORPORATION
TO
MMI ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
MAXXIM MEDICAL, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of Common Stock, par value $0.01 per share (the "Common
Stock"), including the associated preferred stock purchase rights (the "Rights"
and, together with the Common Stock, the "Shares"), of Circon Corporation, a
Delaware corporation (the "Company"), are not immediately available, if the
procedure for book-entry transfer cannot be completed on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or if time
will not permit all required documents to reach the Depositary on or prior to
the Expiration Date. This form may be delivered by hand to the Depositary or
transmitted by facsimile transmission, telegram or mail to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand and Overnight Courier:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, New York 10268-1023 New York, New York 10005
By Facsimile Transmission: (212) 701-7636 or (212) 701-7637
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (212) 701-7624
For Information Call: (212) 701-7624
--------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to MMI Acquisition Corp. (the "Purchaser"),
a Delaware corporation and a wholly owned subsidiary of Maxxim Medical, Inc., a
Delaware corporation, a wholly owned subsidiary of Maxxim Medical, Inc., a
Texas corporation, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated November 30, 1998, and the related Letter
of Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged,
the number of shares set forth below of common stock, par value $0.01 per share
(the "Common Stock"), including the associated preferred stock purchase rights
(the "Rights" and, together with the Common Stock, the "Shares"), of Circon
Corporation, a Delaware corporation, pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
- ------------------------------------------------------------------------------
Number of Shares: -------------------------------------------------------
Certificate Nos. (if available):
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Check box if Shares will be tendered by book-entry
transfer: [ ]
Account Number:
----------------------------------------------------------
Date: , 199
------------------------------------------------------ --
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Names(s) of Record Holder(s):
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Please Print)
Address(es): ------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number:
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Signature(s):
-----------------------------------------------------------
-------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form
for transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message (as defined in the Offer to Purchase), and any other documents
required by the Letter of Transmittal, within three trading days (as defined
in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm:
----------------------------- --------------------------------
(Authorized Signature)
Address:
---------------------------------- --------------------------------
(Please Print)
----------------------------------------- --------------------------------
(Zip Code)
Area Code and Telephone Number: Date: , 199
---------- --------------- -----
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
- ------------------------------------------------------------------------------
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CIRCON CORPORATION
AT
$15.00 NET PER SHARE
BY
MMI ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
MAXXIM MEDICAL, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, JANUARY 5, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
November 30, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by MMI Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Maxxim Medical, Inc., a Delaware
corporation ("Parent"), a wholly owned subsidiary of Maxxim Medical, Inc., a
Texas corporation ("Maxxim"), to act as Information Agent in connection with
Purchaser's offer to purchase all outstanding shares of common stock, par value
$0.01 per share (the "Common Stock"), including the associated preferred stock
purchase rights (the "Rights" and, together with the Common Stock, the
"Shares"), of Circon Corporation, a Delaware corporation (the "Company"), at
$15.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
November 30, 1998 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer") enclosed herewith. Please furnish copies
of the enclosed materials to those of your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn on or prior to the Expiration Date (as defined in
the Offer to Purchase) such number of Shares that would constitute at least a
majority of the outstanding Shares on a fully diluted basis on the date Shares
are accepted for payment. The Offer is also subject to certain other conditions
set forth in the Offer to Purchase. See Section 14 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated November 30, 1998;
2. Letter of Transmittal for your use in accepting the Offer and tendering
Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be delivered
to the Depositary (as defined in the Offer to Purchase), or if the
procedures for book-entry transfer cannot be completed, on or prior to the
Expiration Date (as defined in the Offer to Purchase);
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. A letter to stockholders of the Company from George A. Cloutier,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9, dated November 30,
1998, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to Harris Trust Company of New York (the
"Depositary").
<PAGE>
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and pay for Shares
which are validly tendered and not withdrawn on or prior to the Expiration Date
when, as and if Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance of such Shares for payment pursuant to the Offer.
Payment for Shares purchased pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, pursuant to the
procedures described in Section 3 of the Offer to Purchase, (ii) a properly
completed and duly executed Letter of Transmittal (or a properly completed and
manually signed facsimile thereof) or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry transfer and (iii) all other
documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) for soliciting tenders of Shares pursuant to the
Offer. Brokers, dealers, commercial banks and trust companies will be
reimbursed for customary mailing and handling expenses incurred by them in
forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of
the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, JANUARY 5, 1999, UNLESS THE OFFER IS EXTENDED.
In order to tender Shares pursuant to the Offer, a duly executed and
properly completed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or an Agent's Message in connection with a
book-entry transfer of Shares, and any other required documents, should be sent
to the Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer on or prior to the Expiration
Date, a tender may be effected by following the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed documents may be obtained from the
Information Agent at its address and telephone numbers set forth on the back
cover of the Offer to Purchase.
Very truly yours,
MACKENZIE
PARTNERS, INC. LOGO
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
OTHER PERSON THE AGENT OF MAXXIM, PARENT, PURCHASER, THE COMPANY, THE
INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CIRCON CORPORATION
AT
$15.00 NET PER SHARE
BY
MMI ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
MAXXIM MEDICAL, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, JANUARY 5, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
November 30, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated November
30, 1998, and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer") in
connection with the offer by MMI Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Maxxim Medical, Inc., a Delaware
corporation ("Parent"), a wholly owned subsidiary of Maxxim Medical, Inc., a
Texas corporation, to purchase for cash all outstanding shares of common stock,
par value $0.01 per share (the "Common Stock"), including the associated
preferred stock purchase rights (the "Rights" and together with the Common
Stock, the "Shares"), of Circon Corporation, a Delaware corporation (the
"Company"). We are the holder of record of Shares held for your account. A
tender of such Shares can be made only by us as the holder of record and
pursuant to your instructions. The enclosed Letter of Transmittal is furnished
to you for your information only and cannot be used by you to tender Shares
held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $15.00 per Share, net to you in cash, without
interest thereon.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined in the Offer to Purchase) and determined
that the terms of the Offer and the Merger are fair to, and in the best
interests of, the stockholders of the Company and unanimously recommends
that stockholders of the Company accept the Offer and tender their Shares.
4. The Offer and withdrawal rights expire at 5:00 P.M., New York City
time, on Tuesday, January 5, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn on or prior to the Expiration Date (as defined in
the Offer to Purchase) such number of Shares that would constitute at least
a majority of the outstanding Shares on a fully diluted basis on the date
Shares are accepted for payment. The Offer is also subject to certain other
conditions set forth in the Offer to Purchase. See Section 14 of the Offer
to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of
any state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing and returning to us the instruction form
set forth on the reverse side of this letter. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares, all
such Shares will be tendered unless otherwise specified on the reverse side of
this letter. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf on or prior to the Expiration Date.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CIRCON CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated November 30, 1998, and the related Letter of
Transmittal in connection with the Offer by MMI Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Maxxim Medical, Inc., a Delaware
corporation, a wholly owned subsidiary of Maxxim Medical, Inc., a Texas
corporation, to purchase all outstanding shares of common stock, par value
$0.01 per share (the "Common Stock"), including the associated preferred stock
purchase rights (the "Rights" and together with the Common Stock, the
"Shares"), of Circon Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
- -------------------------------------------------------------------------------
DATE: , 199
--------------- --
NUMBER OF SHARES TO BE TENDERED:*
SHARES
-------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SIGNATURE(S)
- ------------------------------------------------------------------------------
PRINT NAME(S)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
ADDRESS(ES)
- ------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
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TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
- ----------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
GIVE THE
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the first individual on the account1
3. Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person1
4. Custodian account of a minor The minor2
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor1
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent3
designated ward, minor, or
incompetent person3
7. a. The usual revocable savings The grantor-trustee1
trust account (grantor is also
trustee)
b. So-called trust account that The actual owner1
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner4
9. A valid trust, estate or pension The legal entity (Do not furnish the identifying
trust number of the personal representative or trustee
unless the legal entity itself is not designated in the
account title.)5
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department The public entity
of Agriculture in the name of a
public entity (such as a State or
local government, school
district, or prison) that receives
agricultural program payments
</TABLE>
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number or employer identification number.
4 Show your individual name. You may also enter your business name. You may use
your social security number or employer identification number.
5 List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to an appropriate nominee.
- - Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments of mortgage interest to you.
- - Payments made to an appropriate nominee.
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend,
interest, or other payments to give correct taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis that results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Maxxim Medical to Acquire Circon Corporation
Maxxim Medical, Inc. (NYSE: MAM), and Circon Corporation (NASDAQ: CCON)
announced that they have entered into a definitive agreement for Maxxim to
acquire Circon. Under the terms of the agreement, Maxxim will commence a cash
tender offer for all of the outstanding shares of Circon common stock at a net
price of $15.00 per share. The total acquisition cost is approximately $205
million in cash and the assumption of approximately $38 million of outstanding
debt. The Boards of Directors of both companies have approved the transaction.
Donaldson, Lufkin & Jenrette advised Maxxim.
Completion of the tender offer is subject to certain conditions, including
among others the tender of at least a majority of the outstanding shares of
Circon and the expiration of the applicable waiting period under the
Hart-Scott-Rodino Act.
Circon, with annual revenues of approximately $155 million, headquartered in
Santa Barbara, CA, is a leading designer, manufacturer, marketer, and
distributor of endoscopy systems for diagnosis and minimally invasive surgery.
"Circon is an excellent strategic fit for Maxxim and provides a unique
opportunity to strengthen Maxxim's long term competitive position," said Ken
Davidson, Maxxim's Chairman, President and Chief Executive Officer. "It should
bring us an outstanding array of products and talented employees and should
enhance our ability to compete in the healthcare marketplace."
Mr. Davidson added, "This transaction also adds important scale to our
operations, offers cost synergies, expands our marketing capabilities, adds new
customers and promotes higher levels of service. We expect this transaction to
be accretive to Maxxim's earnings."
George Cloutier, President and Chief Executive officer of Circon, said, "The
Maxxim/Circon transaction represents an opportunity for us to maximize
shareholder value and allows for the preservation of Circon's identity as a
world leader in endoscopy."
Mr. Cloutier continued, "Maxxim's decision to utilize Circon as a primary
platform for substantial growth in diagnostic endoscopy and minimally invasive
surgery is truly an exciting opportunity for our employees to participate as
members of the Maxxim team."
Maxxim Medical is a major, diversified manufacturer, distributor and marketer
of disposable specialty medical products such as custom procedure trays,
medical gloves, electrosurgical systems and disposable products for use in
cardiology, radiology and critical care. Maxxim has annual revenues of in
excess of $500 million.
FORWARD LOOKING INFORMATION
<PAGE>
Certain statements in the release are "forward looking statements" within the
meaning of the private litigation Reform Act of 1995. All forward looking
statements involve risks and uncertainties. In particular, any statements
contained herein regarding the consummation and benefits of future
acquisitions, as well as expectations with respect to future sales, operating
efficiencies and product expansion, are subject to known and unknown risks,
uncertainties and contingencies, many of which are beyond the control of the
Company, which may cause actual results, performance or achievements to differ
materially from anticipated results, performance or achievements. Factors, that
might affect such forward looking statement include, among other things,
overall economic and business conditions, the demand for the Company's goods
and services, competitive factors in the industries in which the Company
competes, changes in government regulation and the timing, impact and other
uncertainties of future acquisitions.
2
<PAGE>
FOR: MAXXIM MEDICAL, INC.
APPROVED BY: Peter M. Graham
Executive Vice President
727/561-2100
CONTACTS: Mary Lugris
Investor Relations
727/561-2100
Morgen-Walke Associates
Andrea Kaimowitz/Katherine Mittelbusher
Press: Darren Brandt
FOR IMMEDIATE RELEASE 212/850-5600
- ---------------------
MAXXIM MEDICAL ANNOUNCES COMMENCEMENT OF
TENDER OFFER FOR CIRCON CORPORATION
CLEARWATER, FLORIDA, NOVEMBER 30, 1998 -- MAXXIM MEDICAL, INC. (NYSE: MAM)
announced today that MMI Acquisition Corp., its wholly owned subsidiary, has
commenced a cash tender offer to purchase all of the outstanding shares of
Circon Corporation (Nasdaq: CCON) at a price of $15.00 per share.
The offer is being made pursuant to the previously announced merger
agreement with Circon Corporation. The offer is subject to certain conditions,
including among other things, the tender of at least a majority of the shares
of Circon outstanding on a fully diluted basis and the expiration of the
applicable waiting period under the Hart-Scott-Rodino Act. The offer and
withdrawal rights are scheduled to expire at 5:00 pm., New York City time, on
Tuesday, January 5, 1999, unless the offer is extended.
Maxxim Medical is a major, diversified manufacturer, distributor and
marketer of disposable specialty medical products such as custom procedure
trays, medical gloves, electrosurgical systems and disposable products for use
in cardiology, radiology and critical care. Maxxim has annual revenues in
excess of $500 million.
This press release is neither an offer to purchase nor a solicitation
of an offer to sell securities. The tender offer is made only through the Offer
to Purchase and the related Letter of Transmittal which are being mailed to
stockholders today. Additional copies of such documents can be obtained by
contacting, MacKenzie Partners, Inc., the Information Agent, at (212) 929-5500
(collect) or call toll free at (800) 322-2885.
# # #
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated
November 30, 1998, and the related Letter of Transmittal and any amendments or
supplements thereto, and is being made to all holders of Shares. The Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders
of Shares in any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of MMI Acquisition Corp. by one or more registered
brokers or dealers licensed under the laws of such jurisdiction. Notice of
Offer to Purchase for Cash All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights) of Circon
Corporation at $15.00 Net Per Share by MMI Acquisition Corp. a wholly owned
subsidiary of Maxxim Medical, Inc. MMI Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Maxxim Medical,
Inc., a Delaware corporation ("Parent"), a wholly owned subsidiary of Maxxim
Medical, Inc., a Texas Corporation ("Maxxim"), is offering to purchase all of
the outstanding shares of common stock, par value $0.01 per share (the "Common
Stock"), including the associated preferred stock purchase rights issued
pursuant to a Rights Agreement (as defined in the Offer to Purchase) (the
"Rights" and, together with the Common Stock, the "Shares") of Circon
Corporation, a Delaware corporation (the "Company"), at a price of $15.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 30,
1998 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, JANUARY 5, 1999, UNLESS THE OFFER IS EXTENDED. The
Offer is conditioned upon, among other things, there being validly tendered and
not withdrawn on or prior to the Expiration Date (as defined in the Offer to
Purchase) such number of Shares that would constitute at least a majority of
the outstanding Shares on a fully diluted basis on the date Shares are accepted
for payment. The Offer is also subject to certain other conditions set forth in
the Offer to Purchase. See Section 14 of the Offer to Purchase. The Offer is
being made pursuant to an Agreement and Plan of Merger, dated as of November
21, 1998 (the "Merger Agreement"), by and among Parent, Purchaser and the
Company. Pursuant to the Merger Agreement and the Delaware General Corporation
Law, as amended (the "DGCL"), as soon as practicable after the completion of
the Offer and satisfaction or waiver, if permissible, of all conditions,
including the purchase of Shares pursuant to the Offer and the approval and
adoption of the Merger Agreement by the stockholders of the Company (if
required by applicable law), Purchaser shall be merged with and into the
Company (the "Merger") and the Company will be the surviving corporation in the
Merger. At the effective time of the Merger (the "Effective Time"), each Share
then outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Maxxim or any of its subsidiaries, including Parent and
Purchaser and (iii) stockholders who properly perfect their dissenters' rights
under the DGCL will be converted into the right to receive $15.00 in cash per
Share paid in the Offer, without interest. The Company Board has unanimously
approved the Offer and the Merger and determined that the terms of the Offer
and the Merger are fair to, and in the best interests of, the stockholders of
the Company and unanimously recommends that stockholders of the Company accept
the Offer and tender their Shares. For purposes of the Offer, Purchaser will be
deemed to have accepted for payment, and thereby purchased, Shares properly
tendered to Purchaser and not withdrawn, if, as and when Purchaser gives oral
or written notice to the Depositary (as defined in the Offer to Purchase) of
Purchaser's acceptance for payment of such Shares. Payment for Shares accepted
for payment pursuant to the Offer will be made by deposit in cash of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase) and (iii) any other documents required by the Letter of Transmittal.
The per Share consideration paid to any holder of Shares pursuant to the Offer
will be the highest per
Page 1
<PAGE>
Share consideration paid to any other holder pursuant to the Offer. The term
"Expiration Date" shall mean January 5, 1999, at 5:00 P.M., New York City time,
unless and until Purchaser, in accordance with the terms of the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, pursuant to the terms of
the Merger Agreement, shall expire. Subject to the applicable rules and
regulations of the Securities and Exchange Commission and to applicable law,
Purchaser expressly reserves the right, in its sole discretion (subject to the
terms of the Merger Agreement), at any time and from time to time, to extend
for certain reasons, including the occurrence of any of the events specified in
Section 14 of the Offer to Purchase, the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary.
Any such extension will be followed by a public announcement thereof by no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
Without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a press
release to the Dow Jones News Service or otherwise as may be required by
applicable law. Except as otherwise provided below or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time after
January 29, 1999. To be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of the Shares to be withdrawn, if different from the
name of the person who tendered the Shares. If certificates evidencing such
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered by an Eligible Institution (as
defined in the Offer to Purchase), the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedures for book-entry transfer set forth in Section 3 of
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) to be credited with the withdrawn Shares and otherwise
comply with the Book-Entry Transfer Facility's procedures. Withdrawals of
tendered Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by again following one of the procedures
described in Section 3 of the Offer to Purchase at any time prior to the
Expiration Date. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. The information
required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6 under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference. The Company has provided
Purchaser with the Company's stockholder lists and security position listings
for the purpose of disseminating the Offer to holders of Shares. The Offer to
Purchase, the related Letter of Transmittal and the other tender offer
documents will be mailed to record holders of Shares whose names appear on the
stockholder list, and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's stockholder lists, or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares. The Offer to Purchase
and the related Letter of Transmittal contain important information and should
be read carefully before any decision is made with respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, the related Letter of Transmittal and the other tender offer
documents may be directed to the Information Agent (as defined in the Offer to
Purchase), at its address and telephone number set forth below, and copies will
be furnished
Page 2
<PAGE>
promptly at Purchaser's expense. None of Maxxim, Parent or Purchaser will pay
any fees or commissions to any broker or dealer or other person other than the
Information Agent for soliciting tenders of Shares pursuant to the Offer. The
Information Agent for the Offer is: MacKenzie Partners, Inc. 156 Fifth Avenue
New York, New York 10010 (212) 929-5500 (Collect) or Call Toll Free (800)
322-2885 November 30, 1998
Page 3
<PAGE>
NATIONSBANK, N.A.
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
NATIONSBANC MONTGOMERY SECURITIES LLC
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
November 21, 1998
Mr. Kenneth W. Davidson
Chairman, President & Chief Executive Officer
Maxxim Medical, Inc.
10300 49th Street North
Clearwater, FL 33762
Re: $325,000,000 Senior Secured Credit Facilities
Commitment Letter
Ladies and Gentlemen:
Maxxim Medical, Inc, a Texas corporation (the "BORROWER"), has advised
NationsBank, N.A. ("NATIONSBANK") and NationsBanc Montgomery Securities LLC
("NMS") that it or one of its subsidiaries intends to acquire all the
outstanding capital stock (the "TRANSACTION") of Circon Corporation, a Delaware
corporation (the "ACQUIRED COMPANY"), as more specifically described in the
Sources and Uses Table attached hereto as Schedule I, with the respective
amounts expended in connection therewith being set forth therein. References
herein to the "Transaction" shall include the financing described herein, and
all other transactions related to the Transaction.
You have also advised us that you propose to finance the Transaction, the
related premiums, fees and expenses and the ongoing general corporate needs of
the Borrower and its subsidiaries after completion of the Transaction from
approximately $325 million in senior credit facilities (the "SENIOR CREDIT
FACILITIES") of the Borrower comprised of a term loan facility aggregating $200
million (the "TERM LOAN FACILITY") and a $125 million revolving credit facility
(the "REVOLVING CREDIT FACILITY").
In connection with the foregoing, NationsBank is pleased to advise you of its
commitment (this letter being the "COMMITMENT LETTER") to act as exclusive
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") and to
provide the full principal amount of the Senior Credit Facilities, upon and
subject to the terms and conditions of this letter and the Summary of Terms and
Conditions attached hereto as Exhibit A (the "TERM SHEET"). NMS is pleased to
advise you of its willingness, as sole and exclusive Lead Arranger and
Syndication Agent for the Senior Credit Facilities, to form a syndicate of
financial institutions (the "LENDERS") reasonably acceptable to you for the
Senior Credit Facilities.
<PAGE>
Maxxim Medical, Inc.
November 21, 1998
Page 2
NationsBank will act as sole and exclusive Administrative Agent for the Senior
Credit Facilities and NMS will act as sole and exclusive Lead Arranger and
Syndication Agent for the Senior Credit Facilities. In addition, NMS will serve
as Financial Advisor on the Transaction. No additional agents, co-agents or
arrangers will be appointed and no other titles will be awarded without our
prior written approval.
NMS intends to commence syndication efforts promptly and the Borrower agrees to
actively assist, and to cause the Acquired Company to assist, NMS in achieving
a syndication of the Senior Credit Facilities that is satisfactory to it. Such
assistance by you and the Acquired Company shall include (a) the Borrower's
providing and causing its advisors to provide us and the other Lenders upon
request with all information reasonably deemed necessary by us to complete
syndication, including, but not limited to, information and evaluations
prepared by the Borrower and the Acquired Company and their advisors, or on
their behalf, relating to the Transaction; (b) assistance in the preparation of
an Offering Memorandum to be used in connection with the syndication; (c) the
Borrower's using commercially reasonable efforts to ensure that the syndication
efforts benefit materially from existing lending relationships of the Borrower
and the Acquired Company; and (d) otherwise assisting us in our syndication
efforts, including by making senior management and advisors of the Borrower and
the Acquired Company and their subsidiaries available from time to time to
attend and make presentations regarding the business and prospects of the
Borrower and the Acquired Company and their subsidiaries, as appropriate, at
one or more meetings of prospective Lenders.
It is understood and agreed that NationsBank and NMS, after consultation with
you, will manage and control all aspects of the syndication, including
decisions as to the selection of proposed Lenders and any titles offered to
proposed Lenders, when commitments will be accepted and the final allocations
of the commitments among the Lenders. It is understood that no Lender
participating in the Senior Credit Facilities will receive compensation from
the Borrower in order to obtain its commitment, except on the terms contained
herein and in the Term Sheet. It is also understood and agreed that the amount
and distribution of the fees among the Lenders will be at our sole discretion
and that any syndication prior to execution of the definitive documentation for
the Senior Credit Facilities will reduce the commitment of NationsBank.
In the event that such syndication cannot be achieved in a manner satisfactory
to NationsBank and NMS under the structure outlined in the Term Sheet, the
Borrower agrees that NationsBank and NMS shall be entitled, in their sole
discretion, to change the pricing (including the Underwriting Fee), structure
or other terms of the Senior Credit Facilities if NationsBank and NMS determine
that such changes are advisable to ensure a successful syndication or an
optimal credit structure, provided that the total amount of the Senior Credit
Facilities remains unchanged. A successful syndication would be one in which
NationsBank's commitment hereunder is reduced to $50 million or less for the
Senior Credit Facilities. The agreement in this paragraph shall survive closing
of the Senior Credit Facilities.
The commitment of NationsBank hereunder and the agreement of NMS to provide the
services described herein are subject to the agreement in the preceding
paragraph and the satisfaction of each of the following conditions precedent in
a manner acceptable to us in our sole discretion: (a) each of the terms and
conditions set forth herein and in the Term Sheet; (b) the completion of all
legal due diligence with respect to the Borrower, the Acquired Company and
their respective subsidiaries in scope and determination satisfactory to us in
our sole discretion; (c) the completion of all business due diligence with
respect to the Borrower, the Acquired Company and their respective subsidiaries
in scope and determination satisfactory to us in our sole discretion (as of the
date hereof, NationsBank and NMS are satisfied with the results of their
business due diligence conducted with respect to the Borrower, the Acquired
Company and their respective subsidiaries); (d) the absence of a material
<PAGE>
Maxxim Medical, Inc.
November 21, 1998
Page 3
breach of any representation, warranty or agreement of the Borrower set forth
herein; (e) execution by the Borrower and the Acquired Company and/or other
appropriate parties of a definitive merger agreement and other related
documentation for the Transaction (collectively, the "TRANSACTION DOCUMENTS"),
which Transaction Documents shall be in form and substance reasonably
satisfactory to us; (f) our satisfaction that prior to and during the
syndication of the Senior Credit Facilities there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of the Borrower or the Acquired Company; (g) the negotiation,
execution and delivery of definitive documentation for the Senior Credit
Facilities consistent with the Term Sheet and otherwise satisfactory to us (the
"CREDIT AGREEMENT DOCUMENTS"); (h) after the date hereof, no material adverse
change in or material disruption of conditions in the financial, banking or
capital markets which we, in our reasonable discretion, deem material in
connection with the syndication of the Senior Credit Facilities shall have
occurred and be continuing; (i) no change, occurrence or development that
could, in our reasonable opinion, have a material adverse effect on the
business, assets, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of the Borrower and the Acquired Company,
and their subsidiaries taken as a whole, shall have occurred or become known to
us; and (j) our not becoming aware after the date hereof of any information or
other matter affecting the Borrower, the Acquired Company, or any of their
subsidiaries which in our judgment is inconsistent in a material and adverse
manner with any information or other matter disclosed to us prior to the date
hereof.
The Borrower hereby represents, warrants and covenants that (a) all
information, other than the Projections (defined below), which has been or is
hereafter made available to us or the Lenders by the Borrower or any of its
representatives in connection with the transactions contemplated hereby (the
"INFORMATION") is and will be complete and correct in all material respects and
does not and will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein not
misleading, and (b) all financial projections concerning the Borrower and the
Acquired Company and their respective subsidiaries that have been or are
hereafter made available to us or the Lenders by the Borrower or any of its
representatives (the "PROJECTIONS") have been or will be prepared in good faith
based upon assumptions the Borrower believes to be reasonable. The Borrower
agrees to furnish us with such Information and Projections as we may reasonably
request (including due diligence investigations of the Acquired Company
prepared by accountants and advisors of the Borrower to the extent permitted by
such accountants and advisors) and to supplement the Information and the
Projections from time to time until the closing date for the Senior Credit
Facilities so that the representation, warranty and covenant in the preceding
sentence is correct on such closing date. The Borrower understands that in
arranging and syndicating the Senior Credit Facilities NationsBank and NMS will
be using and relying on the Information and the Projections without independent
verification thereof.
By acceptance of this offer, the Borrower agrees to pay all reasonable
out-of-pocket fees and expenses (including reasonable attorneys' fees and
expenses and due diligence expenses) incurred before or after the date hereof
by us in connection with the Senior Credit Facilities, the syndication thereof
and the other transactions contemplated hereby whether or not the Senior Credit
Facilities closes.
The Borrower agrees to indemnify and hold harmless NationsBank, NMS and each of
their affiliates and their directors, officers, employees, advisors and agents
(each, an "INDEMNIFIED PARTY") from and against (and will reimburse each
Indemnified Party as the same are incurred) any and all losses, claims,
damages, liabilities, and expenses (including, without limitation, the
reasonable fees and expenses of counsel and the allocated cost of internal
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
(a) the Transaction or
<PAGE>
Maxxim Medical, Inc.
November 21, 1998
Page 4
any similar transaction and any of the other transactions contemplated thereby,
or (b) the Senior Credit Facilities or any other financings, or any use made or
proposed to be made with the proceeds thereof unless and only to the extent
that, as to any Indemnified Party, it shall be determined in a final,
nonappealable judgment by a court of competent jurisdiction that such losses,
claims, damages, liabilities or expenses resulted primarily from the gross
negligence or willful misconduct of such Indemnified Party. In the case of any
investigation, litigation or proceeding to which the indemnity in this
paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
shareholders or its creditors or an Indemnified Party and whether or not the
Transaction is consummated. The Borrower agrees that no Indemnified Party shall
have any liability to the Borrower or its subsidiaries or affiliates or to its
or their respective security holders or creditors for any indirect or
consequential damages arising out of, related to or in connection with the
Transaction or any of the financings.
The terms of this Commitment Letter, the Term Sheet and the fee letter between
the Borrower and us of even date herewith (the "FEE LETTER") are confidential
and, except for disclosure on a confidential basis to the Borrower's
accountants, attorneys and other professional advisors retained by the Borrower
in connection with the Senior Credit Facilities or as may be required by law,
may not be disclosed in whole or in part to any other person or entity
(including the Acquired Company) without our prior written consent; provided,
however, it is understood and agreed that the Borrower may disclose the terms
of this Commitment Letter and the Term Sheet (but not the Fee Letter) (i) on a
confidential basis to the board of directors and advisors of the Acquired
Company in connection with their consideration of the Transaction, and (ii)
after the Borrower's acceptance of this Commitment Letter and the Fee Letter,
in filings with the SEC and other applicable regulatory authorities and stock
exchanges, and in proxy and other materials disseminated to stockholders and
other purchasers of securities of the Borrower.
The provisions of the immediately preceding three paragraphs shall remain in
full force and effect regardless of whether any definitive documentation for
the Senior Credit Facilities shall be executed and notwithstanding the
termination of this Commitment Letter or any commitment or undertaking
hereunder; provided, however, that the Borrower shall be deemed released of its
reimbursement and indemnification obligations hereunder upon the execution of
all the Credit Agreement Documents.
In connection with the services and transactions contemplated hereby, the
Borrower agrees that NationsBank and NMS are permitted to access, use and share
with any of their bank or non-bank affiliates, agents, advisors (legal or
otherwise) or representatives, any information concerning the Borrower, the
Acquired Company or any of their respective affiliates that is or may come into
the possession of NationsBank, NMS or any of such affiliates. NationsBank, NMS
and their affiliates will treat confidential information relating to the
Borrower, the Acquired Company and their respective affiliates with the same
degree of care as they treat their own confidential information.
This Commitment Letter and the Fee Letter shall be governed by laws of the
State of New York. Each of us hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Commitment Letter, the Term
Sheet, the Fee Letter, the transactions contemplated hereby and thereby or the
actions of NationsBank and NMS in the negotiation, performance or enforcement
hereof.
This Commitment Letter, together with the Term Sheet and the Fee Letter, are
the only agreements that have been entered into among us with respect to the
Senior Credit Facilities and set forth the entire understanding of
<PAGE>
Maxxim Medical, Inc.
November 21, 1998
Page 5
the parties with respect thereto. This letter may be modified or amended only
by the written agreement of all of us. This letter is not assignable by the
Borrower without our prior written consent and is intended to be solely for the
benefit of the parties hereto and the Indemnified Parties.
This offer will expire at 5:00 p.m. eastern standard time on November 25, 1998
unless the Borrower executes this Commitment Letter and the Fee Letter and
returns them to us prior to that time (which may be by facsimile transmission)
and pays the initial amount of the underwriting fee as specified in the Fee
Letter, whereupon this Commitment Letter and the Fee Letter (each of which may
be signed in one or more counterparts) shall become binding agreements.
Thereafter, this undertaking and commitment will expire on the earliest to
occur of (a) the closing of the Transaction without the use of the Senior
Credit Facilities, (b) the acceptance by the Acquired Company or any of its
affiliates of an offer for more than 50% of its capital stock or all or a
substantial portion of its assets other than the offer contemplated hereby, and
(c) February 1,1999 unless definitive documentation for the Senior Credit
Facilities is executed and delivered prior to such date.
We are pleased to have the opportunity to work with you in connection with this
important financing.
Very truly yours,
NATIONSBANK, N.A.
By:_________________________________
Title:
NATIONSBANC MONTGOMERY SECURITIES LLC
By:_________________________________
Title:
Accepted and Agreed to as of ________________, ____:
MAXXIM MEDICAL, INC., a Texas corporation
By:_________________________________
Title:
<PAGE>
SCHEDULE I
SOURCES AND USES TABLE
SOURCES ($ MILLIONS)
- --------------------
Term Loan Facility $200.0
Revolving Credit Facility (Amount funded at Closing)1 $80.3
----
Total Sources $280.3
USES ($ (MILLIONS)
- -----------------
Purchase Capital Stock $206.1
Refinance Existing Debt $54.0
Payment of Fees & Expenses $10.2
Retention Expense $10.0
-----
Total Uses $280.3
- --------
1 Total amount of Revolving Credit Facility will be $125 million
<PAGE>
EXHIBIT A
MAXXIM MEDICAL, INC.
SUMMARY OF TERMS AND CONDITIONS
NOVEMBER 21, 1998
Unless otherwise defined herein, capitalized terms shall have the definitions
assigned to them in the Senior Secured Credit Facilities Commitment Letter (the
"COMMITMENT LETTER"), dated of even date herewith, to which this Summary of
Terms and Conditions is attached.
BORROWER: Maxxim Medical, Inc., a Texas
corporation (the "BORROWER"), which
will acquire through a subsidiary
(the "TRANSACTION") all of the
outstanding capital stock of Circon
Corporation (the "ACQUIRED COMPANY")
and be merged with and into such
subsidiary.
GUARANTORS: The Senior Credit Facilities (defined
below) shall be guaranteed by each
existing and future direct and
indirect domestic subsidiary of the
Borrower (collectively, the
"GUARANTORS") upon consummation of
the Transaction; provided that, if
the merger does not occur upon the
closing of the tender offer, the
Acquired Company and its subsidiaries
shall not be required to guaranty the
Senior Credit Facilities until the
merger occurs. All guarantees shall
be guarantees of payment and not of
collection.
ADMINISTRATIVE AGENT: NationsBank, N.A. (the
"ADMINISTRATIVE AGENT" or
"NATIONSBANK") will act as sole and
exclusive administrative and
collateral agent.
LEAD ARRANGER
AND SYNDICATION
AGENT: NationsBanc Montgomery Securities LLC
("NMS").
LENDERS: A syndicate of financial institutions
(including NationsBank) arranged by
NMS, which institutions shall be
acceptable to the Borrower and the
Administrative Agent (collectively,
the "LENDERS").
SENIOR CREDIT
FACILITIES: An aggregate principal amount of up
to $325 million will be available
upon the terms and conditions
hereinafter set forth:
Revolving Credit Facility: $125
million revolving credit facility
(the "REVOLVING CREDIT FACILITY"),
which will include a sublimit for the
issuance of standby and commercial
letters of credit (each a "LETTER OF
CREDIT") in an amount to be mutually
determined Letters of Credit will be
A-1
<PAGE>
issued by NationsBank (in such
capacity, the "FRONTING BANK") and
each Lender will purchase an
irrevocable and unconditional
participation in each Letter of
Credit.
Term Loan Facility: $200 million term
loan facility (the "TERM LOAN
FACILITY") which may be advanced in
up to two tranches.
The first tranche (the "TENDER LOAN")
would be in an amount not to exceed
the sum of (a) the number of shares
tendered by the Acquired Company's
shareholders or, if applicable,
cashed out in connection with a short
form merger times $15; (b) the
outstanding amount of the Acquired
Company's debt to be refinanced upon
closing of the tender offer; and (c)
the transaction costs and expenses.
The Tender Loan would be made on the
date of the closing of the tender
offer.
If a short form merger could not be
accomplished on the tender offer
closing date, the second tranche (the
"MERGER LOAN") would be in an amount
not to exceed the number of shares
cashed out upon the merger times $15.
The Merger Loan would be made on the
date of the closing of the merger.
The Lenders' commitment to make the
Merger Loan terminates on May 31,
1999.
The Revolving Credit Facility and the
Term Loan Facility are collectively
referred to herein as the "SENIOR
CREDIT FACILITIES".
PURPOSE: The proceeds of the Senior Credit
Facilities shall be used: (i) to
refinance the outstanding principal
amount of existing indebtedness of
the Acquired Company and the
Borrower; (ii) to pay the cash
portion of the purchase price for the
Acquired Company pursuant to the
Transaction Documents (defined
below); (iii) to pay fees and
expenses incurred in connection with
the Transaction; and (iv) to provide
for working capital and other general
corporate purposes of the Borrower
and its subsidiaries.
CLOSING: The execution of definitive loan
documentation to occur on or after
January 4, 1999 and on or before
February 1, 1999.
INTEREST RATES: As set forth in Addendum I.
MATURITY: The Revolving Credit Facility shall
terminate and all amounts outstanding
thereunder shall be due and payable
in full 6 years from closing.
The Term Loan Facility shall be
subject to repayment according to the
Scheduled Amortization, with the
final payment of all amounts
outstanding thereunder being due and
payable in full 6 years from closing.
AVAILABILITY/SCHEDULED
A-2
<PAGE>
AMORTIZATION: Term Loan Facility: Loans made under
the Term Loan Facility will be
available in a single borrowing at
Closing. The Term Loan Facility will
be subject to quarterly amortization
of principal, based upon the annual
amounts set forth below (the
"SCHEDULED AMORTIZATION").
Amortization
------------
Loan year 1 $20,000,000
Loan year 2 $30,000,000
Loan year 3 $35,000,000
Loan year 4 $35,000,000
Loan year 5 $40,000,000
Loan year 6 $40,000,000
SECURITY: Concurrently with the Transaction,
the Administrative Agent (on behalf
of the Lenders) shall receive a first
priority perfected security interest
(i) in all of the capital stock of
the Borrower and each of the domestic
subsidiaries (direct or indirect) of
the Borrower owned by a domestic
company and 65% of the capital stock
of each material foreign subsidiary
(direct or indirect) of the Borrower
owned by a domestic company, which
capital stock shall not be subject to
any other lien or encumbrance; and
(ii) present and future accounts
receivable and inventory of the
Borrower and its subsidiaries;
provided that, if the merger does not
occur upon the closing of the tender
offer, a first priority security
interest in the capital stock and the
present and future accounts
receivable and inventory of the
Acquired Company and its subsidiaries
shall not be required until the
merger occurs.
The foregoing security shall ratably
secure the Senior Credit Facilities
and any interest rate swap/foreign
currency swap or similar agreements
with a Lender or its affiliates under
the Senior Credit Facilities.
MANDATORY PREPAYMENTS
AND COMMITMENT
REDUCTIONS: In addition to the Scheduled
Amortization, the Senior Credit
Facilities will be prepaid by an
amount equal to (i) 100% of the net
cash proceeds of all asset sales by
the Borrower or any subsidiary of the
Borrower (including sales of stock of
subsidiaries), subject to baskets and
reinvestment provisions to be
mutually agreed upon and net of
selling expenses and taxes to the
extent such taxes are paid; (ii) 100%
of the net cash proceeds from the
issuance of any debt by the Borrower
or any of its subsidiaries (excluding
certain permitted debt to be mutually
agreed upon); and (iii) at any time
the Borrower's ratio of total funded
debt/EBITDA is 3.0 to 1.0 or greater,
100% and, at any time the Borrower's
ratio of total funded debt/EBITDA is
less than 3.0 to 1.0, 75% of the net
cash proceeds from the issuance of
equity by the Borrower or any of its
subsidiaries. Prepayments shall be
applied first to reduce the Term Loan
Facility provided, however, that with
respect to clause (i)
A-3
<PAGE>
above, any prepayment shall be
applied pro rata between both
facilities (with corresponding
commitment reductions in the case of
prepayments applied to the Revolving
Credit Facility). In the event that
the Term Loan Facility shall have
been fully repaid, the mandatory
prepayments described above shall be
applied to the Revolving Credit
Facility (without any corresponding
commitment reductions except in the
case of prepayments pursuant to
clause (i) above). All prepayments of
the Term Loan Facility shall be
applied to future Scheduled
Amortization in the inverse order of
maturity.
OPTIONAL PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrower may prepay the Senior
Credit Facilities in whole or in part
at any time without penalty, subject
to reimbursement of the Lenders'
breakage and redeployment costs in
the case of prepayment of LIBOR
borrowings. Prepayments shall be
applied first to reduce the Term
Loan. Term Loan optional prepayments
shall be applied to future Scheduled
Amortization pro rata. The unutilized
portion of any commitment under the
Senior Credit Facilities in excess of
the stated amount of all Letters of
Credit may be irrevocably canceled in
whole or in part.
CONDITIONS
PRECEDENT TO
CLOSING: The Closing (and the initial funding)
of the Senior Credit Facilities will
be subject to satisfaction of the
conditions precedent deemed
appropriate by the Administrative
Agent and the Lenders generally for
transactions similar in nature to
this transaction, including, but not
limited to, the following:
(i) Concurrent Transactions;
Documentation. The Transaction
shall have been consummated in
accordance with the Transaction
Documents, and all conditions
precedent to the consummation
of the Transaction Documents
shall have been satisfied or,
with the prior approval of the
Administrative Agent, waived.
The Borrower and the Guarantors
shall have entered into the
Credit Agreement Documents in
form and substance satisfactory
to the Administrative Agent,
the Lenders and NMS, and all
conditions precedent to the
initial borrowings shall have
been satisfied or waived.
(ii) Tender Loan. The Tender Loan
shall be subject to the
following conditions precedent:
(a) The tender offer shall have
been consummated concurrently
with the making of the Tender
Loan in accordance with the
Transaction Documents and
without any modification
thereto or waiver of any term
or condition thereof; (b) the
acquisition subsidiary shall
have acquired more than a
majority (on a fully diluted
basis) of the common stock of
the Acquired Company in
accordance with the terms of
the tender offer and in
A-4
<PAGE>
accordance with all applicable
legal requirements; (c) taking
into account the effect of
shareholders' appraisal rights,
the Administrative Agent shall
be satisfied that the sole
right of the shareholders of
Acquired Company who do not
tender their shares pursuant to
the tender offer shall be to
receive a cash payment of $15
per share pursuant to the
merger; (d) the respective
boards of directors of the
Acquired Company and the
Borrower and its subsidiaries
shall not have withdrawn,
modified or terminated their
approval of the tender offer,
the Transaction Documents or
any of the transactions
contemplated thereby; (e) the
Lenders' financing of the
tender offer and the security
arrangements in connection
therewith shall not result in
any violation of Regulations U
or X as in effect on the date
of such financing; and (f) the
Administrative Agent shall be
satisfied that the tender offer
and the merger can be
consummated without triggering
any "poison pill," "shark
repellant," or similar
anti-takeover device and
without any adverse effect from
any applicable anti-takeover
statutes and that the
activation of and payments
pursuant to any retention
policies of the Acquired
Company will not exceed
$10,000,000 as of the Closing
date.
(iii) Merger Loan. The Merger Loan
shall be subject to the
following conditions precedent:
(a) The merger shall be
consummated concurrently with
the making of the Merger Loan
in accordance with the
Transaction Documents and
without any material
modification thereto or waiver
of any material term or
condition thereof; (b) the
Administrative Agent shall be
satisfied that the merger can
be consummated without
triggering any "poison pill,"
"shark repellant," or similar
ant-takeover device and without
any adverse effect from any
applicable anti-takeover
statutes and that the
activation of and payments
pursuant to any retention
policies of the Acquired
Company will not exceed
$10,000,000 as of the Closing
date; (c) the respective boards
of directors of the Acquired
Company and the Borrower and
its subsidiaries shall not have
withdrawn, modified or
terminated their approval of
the merger offer, the
Transaction Documents or any of
the transactions contemplated
thereby; and (d) the merger
shall have occurred on or
before May 31, 1999.
(iv) Capitalization; Etc. After
giving effect to the
Transaction, the Administrative
Agent shall be reasonably
satisfied with the corporate,
capital and ownership structure
(including articles of
incorporation and by-laws),
stockholders' agreements and
management of the Borrower and
its subsidiaries.
(v) Financial Statements. The
Administrative Agent shall have
received (a) audited financial
statements of the Acquired
Company for its most recent
three fiscal years, (b) the
most recent unaudited quarterly
financial statements of the
Acquired Company, (c) an
A-5
<PAGE>
unaudited pro forma balance
sheet of the Borrower and its
subsidiaries which gives effect
to the Transaction as if it had
occurred on the last day of the
most recently completely fiscal
quarter of the Acquired
Company, and (d) an unaudited
pro forma income statement of
the Borrower (including a
calculation of EBITDA) which
gives effect to the Transaction
for the trailing 12 months of
operations ending on the most
recently completed fiscal
quarter end of the Acquired
Company. All pro forma
financial statements shall be
prepared in accordance with the
requirements of Regulation S-X
under the Securities Act of
1933, as amended, applicable to
a Registration Statement under
such Act on Form S-1.
(vi) Other Obligations. On or prior
to Closing, all fees and
expenses due and payable to
NationsBank, any other Lender
and/or their affiliates
pursuant to the Commitment
Letter, the Fee Letter or
otherwise shall have been paid
in full as contemplated
therein.
(vii) Consents. All governmental,
shareholder and third-party
consents (including
Hart-Scott-Rodino clearance)
and approvals required as of
the Closing date in connection
with the Transaction and the
other transactions contemplated
hereby shall have been
obtained; all such consents and
approvals shall be in full
force and effect; and all
applicable waiting periods
shall have expired without any
action being taken by any
authority that could reasonably
be expected to restrain,
prevent or impose any material
adverse conditions on the
Transaction or such other
transactions or that could
reasonably be expected to seek
or threaten any of the
foregoing.
(viii)Judgments, Etc. There shall not
exist (a) any order, decree,
judgment, ruling or injunction
which restrains the
consummation of the Transaction
in the manner contemplated by
the Transaction Documents and
(b) any pending or threatened
action, suit, investigation or
proceeding which, if adversely
determined, could reasonably be
expected to materially
adversely affect the ability of
the Borrower or the Guarantors
to perform any of their
respective obligations under
the Credit Agreement Documents
or the ability of the Lenders
to exercise their rights
thereunder.
(ix) Opinions, Etc. The
Administrative Agent shall have
received (a) satisfactory
opinions of counsel to the
Borrower and the Guarantors
(which shall cover, among other
things, authority, legality,
validity, binding effect and
enforceability of the Credit
Agreement Documents) and such
corporate resolutions,
certificates, and other
documents as the Administrative
Agent shall reasonably require
and (b) satisfactory evidence
that the Administrative Agent
holds a perfected, first
priority lien in all collateral
for the Senior Credit
Facilities, subject to no other
liens except for permitted
liens to be
A-6
<PAGE>
determined.
(x) Other Reports. The
Administrative Agent shall have
received, in form and substance
reasonably satisfactory to it,
all environmental reports, Year
2000 questionnaires, and such
other reports, audits or
certifications and is it may
reasonably request.
(xi) Minimum Liquidity. No less than
$35,000,000 shall be available
for borrowing under the
Revolving Credit Facility after
the Closing.
REPRESENTATIONS AND
WARRANTIES: Usual and customary for financings of
this nature, including, but not
limited to, the following: (i)
corporate existence and status; (ii)
corporate power and
authority/enforceability; (iii) no
violation of law or contracts or
organizational documents; (iv) no
material litigation; (v) correctness
of specified financial statements and
other information and no material
adverse change; (vi) no required
governmental or third party
approvals; (vii) use of
proceeds/compliance with margin
regulations; (viii) status under
Investment Company Act; (ix) ERISA
matters; (x) environmental matters;
(xi) perfected liens and security
interests; (xii) payment of taxes;
(xiii) accuracy of disclosure; (xiv)
Year 2000 preparedness; and (xv)
consummation of the Transaction.
COVENANTS: Usual and customary for financings of
this nature, including, but not
limited to, the following (with
exceptions and baskets as shall be
mutually agreed upon): (i) delivery
of financial statements and other
reports; (ii) delivery of compliance
certificates; (iii) delivery of
notices of default, material
litigation and material governmental
and environmental proceedings; (iv)
compliance with laws (including
environmental laws and ERISA matters)
and material contractual obligations;
(v) payment of taxes; (vi)
maintenance of insurance; (vii)
limitation on liens and negative
pledges; (viii) limitation on
mergers, consolidations and sales of
assets; (ix) limitation on incurrence
of debt; (x) limitation on dividends,
stock redemptions and the redemption
and/or prepayment of other debt; (xi)
limitation on investments (including
loans and advances) and acquisitions;
(xii) limitation on capital
expenditures; (xiii) limitation on
transactions with affiliates; (xiv)
satisfactory interest rate
protection, and (xv) Year 2000
compliance.
Financial covenants to include (but
not be limited to):
o Maintenance at all times of a
Minimum Net Worth, with
step-ups equal to 75% of net
income and 100% of the proceeds
of any equity issuances or any
increases in net worth from
other transactions,
o Maintenance on a rolling four
quarter basis of a Maximum
Leverage Ratio (total funded
debt/EBITDA) of 4.5 to 1.0 with
step downs to be
A-7
<PAGE>
determined,
o Maintenance on a rolling four
quarter basis of a Maximum
Senior Leverage Ratio (senior
debt/EBITDA) of 3.25 to 1.0 with
step downs to be determined, and
o Maintenance on a rolling four
quarter basis of a Minimum Fixed
Charge Coverage Ratio.
EVENTS OF DEFAULT: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following:
(i) nonpayment of principal,
interest, fees or other amounts, (ii)
violation of covenants, (iii)
inaccuracy of representations and
warranties, (iv) cross- default to
other material agreements and
indebtedness, (v) bankruptcy and
other insolvency events, (vi)
material judgments, (vii) ERISA
matters, (viii) actual or asserted
invalidity of any loan documentation
or security interests, (ix) the
merger does not occur on or before
May 31, 1999, or (x) change of
control of the Borrower (to be
defined).
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make
assignments in a minimum amount of
$5,000,000 to other financial
institutions approved by the
Borrower, which approval shall not be
unreasonably withheld; provided,
however, that the approval of the
Borrower shall not be required in
connection with assignments to other
Lenders or any of their affiliates.
Lenders will be permitted to sell
participations with voting rights
limited to customary significant
matters such as changes in amount,
rate and maturity date and releases
of all or substantially all of the
collateral and the Guarantors. An
assignment fee of $3,500 shall be
payable by the Lender to the
Administrative Agent upon the
effectiveness of any such assignment
(including, but not limited to, an
assignment by a Lender to any other
Lender).
WAIVERS AND
AMENDMENTS: Amendments and waivers of the
provisions of the loan agreement and
other definitive credit documentation
will require the approval of Lenders
holding loans and commitments
representing more than 66-2/3% of the
aggregate amount of loans and
commitments under the Senior Credit
Facilities, except that the consent
of all of the Lenders affected
thereby shall be required with
respect to (a) increases in the
commitment of such Lenders, (b)
reductions of principal, interest, or
fees, (c) extensions of scheduled
maturities or times for payment, (d)
releases of all or a substantial
portion of the collateral, and (e)
releases of all or substantially all
of the Guarantors.
INDEMNIFICATION: The Borrower shall indemnify the
Administrative Agent, NMS and the
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Lenders and their respective
affiliates from and against all
losses, liabilities, claims, damages
or expenses arising out of or
relating to the Transaction, the
Senior Credit Facilities, the
Borrower's use of loan proceeds or
the commitments, including, but not
limited to, reasonable attorneys'
fees (including the allocated cost of
internal counsel) and settlement
costs.
GOVERNING LAW: New York; the Borrower and each
Guarantor shall each waive its right
to a trial by jury.
FEES/EXPENSES: As set forth in Addendum I.
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 21, 1998, by and
among Maxxim Medical, Inc., a Delaware corporation ("Parent"), MMI Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"),
and Circon Corporation, a Delaware corporation (the "Company").
WHEREAS, in furtherance of the acquisition of the Company by Parent on
the terms and subject to the conditions set forth in this Agreement, Parent
proposes to cause Sub to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase all the
outstanding shares of Common Stock, par value $.01 per share, of the Company
(together with any associated Rights (as defined in the Rights Agreement (as
defined)), the "Company Common Stock"; the shares of Company Common Stock being
hereinafter collectively referred to as the "Shares"), at a purchase price
(the "Offer Price") of $15 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
this Agreement and in Annex A attached hereto (the "Offer Conditions");
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the merger of Sub with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth in this
Agree ment and the Offer Conditions, whereby each issued and outstanding Share,
other than Shares owned directly or indirectly by Parent or the Company and
Dissenting Shares (as defined in Section 3.01(d)), will be converted into the
right to receive the price per Share paid in the Offer; and
WHEREAS, Parent, Sub and the Company desire to make certain repre-
sentations, warranties, covenants and agreements in connection with the Offer
and the Merger and also to prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
<PAGE>
ARTICLE I
THE OFFER
SECTION 1.01. The Offer.
(a) Subject to the provisions of this Agreement and the
satisfac tion or waiver of the conditions set forth in Annex A, as promptly as
practicable but in no event later than five business days after the date of the
public announcement by Parent and the Company of this Agreement, Sub shall, and
Parent shall cause Sub to, commence the Offer. The initial scheduled expiration
date for the Offer shall be January 5, 1999. Sub shall be obligated to, and
Parent shall cause Sub to, accept for payment, and pay for as promptly as
practicable after the expiration of the Offer all Shares validly tendered
pursuant to the Offer and not withdrawn subject only to the conditions set
forth in Exhibit A (the "Offer Conditions") (any of which may be waived in
whole or in part by Sub in its sole discretion, provided that, without the
consent of the Company, Sub shall not waive the Minimum Condition (as defined
in Exhibit A)) and to the terms and conditions of this Agreement. Sub expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company, Sub shall not (i) reduce the number of Shares subject
to the Offer, (ii) reduce the Offer Price, (iii) add to the Offer Conditions,
(iv) except as provided in the next sentence, extend the Offer, (v) change the
form of consideration payable in the Offer or (vi) amend any other term of the
Offer in any manner adverse to the holders of the Shares. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (A) extend the Offer,
if at the initial scheduled or extended expira tion date of the Offer any of
the Offer Conditions shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (B) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer and (C) extend the Offer on one or more occasions for an aggregate period
of not more than 10 business days beyond the latest expiration date that would
other wise be permitted under clauses (A) or (B) of this sentence, if on such
expiration date there shall not have been tendered at least 90% of the
outstanding Shares.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1
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and the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent and Sub agree that the Offer Documents shall comply as to form in all
material respects with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder and the
Offer Documents, on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation or warranty is made by
Parent or Sub with respect to information supplied by the Company or any of
its stockholders specifically for inclusion or incorporation by reference in
the Offer Documents. Each of Parent, Sub and the Company agree promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their
filing with the SEC or dissemination to the stockholders of the Company. Parent
and Sub agree to provide the Company and its counsel any comments Parent, Sub
or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
that Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer.
SECTION 1.02. Company Actions.
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors of the Company, at a meeting duly
called and held, duly and unanimously adopted resolutions approving this
Agreement, the Offer and the Merger (including but not limited to the approval
for purposes of section 203 of the Delaware General Corporation Law (the
"DGCL") hereinafter referred to as the "203 Approval"), determining, as of the
date of such resolutions, that the terms of the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders, recommending that
the Company's stockholders accept the
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<PAGE>
Offer, tender their shares pursuant to the Offer and approve this Agreement (if
required) and approving the acquisition of Shares by Sub pursuant to the Offer
and the other transactions contemplated by this Agreement. The Company believes
that each of its directors currently intends to tender all Shares (other than
Shares, if any, held by such person that, if tendered, could cause such person
to incur liability under the provisions of Section 16(b) of the Exchange Act)
owned by such person pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as supplemented
or amended from time to time, the "Schedule 14D-9") containing, subject to the
terms of this Agreement, the recommendation described in paragraph (a) and
shall mail the Schedule 14D-9 to the stockholders of the Company. The Schedule
14D-9 shall comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations promulgated thereunder and, on
the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by the Company with respect to information
supplied by Parent or Sub specifically for inclusion or incorporation by refer-
ence in the Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that such information shall have become false or misleading in
any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated
to the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of
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<PAGE>
those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control
regarding the beneficial owners of Shares, and shall furnish to Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will deliver, and will use their reasonable
efforts to cause their agents to deliver, to the Company all copies and any
extracts or summaries from such information then in their possession or
control.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Subject to the last two sentences of this
Section 2.01, upon the terms and subject to the conditions set forth in this
Agree ment, and in accordance with the DGCL, Sub shall be merged with and into
the Company at the Effective Time (as defined in Section 2.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the DGCL. At the election of Parent, to the extent that
any such action would not cause a failure of a condition to the Offer or the
Merger, (i) any direct or indirect wholly owned subsidiary (as defined in
Section 10.03) of Parent may be substituted for and assume all of the rights
and obligations of Sub as a constituent corporation in the Merger or (ii) the
Company may be merged with and into Sub with Sub continuing as the Surviving
Corporation with the effects set forth above and in Section 2.04. In either
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take place at
10:00 a.m. (New York time) on a date to be specified by Parent or Sub, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set
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<PAGE>
forth in Article VIII (the "Closing Date"), at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, unless another date, time or place is agreed to in
writing by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this Agree-
ment, as soon as practicable on or after the Closing Date, the parties shall
file with the Delaware Secretary of State a certificate of merger or other
appropriate docu ments (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Delaware Secretary of State, or at such other time as Sub and the Company shall
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall be amended as of the
Effective Time so that Article fourth thereof shall read in its entirety as
follows:
"The total number of shares of stock which the Corporation
shall have the authority to issue is 1,000."
As so amended, such certificate of incorporation shall be the certificate of
incorpora tion of the Surviving Corporation, until thereafter changed or
amended, subject to Section 7.08, as provided therein or by applicable law.
(b) The Bylaws of the Company as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended, subject to Section 7.08, as provided therein or
by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of
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their resignation or removal or their respective successors are duly elected
and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or their respective successors are
duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; PAYMENT OF MERGER CONSIDERATION
SECTION 3.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share
of capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share that is owned by the Company or by any subsidiary of the Company and
each Share that is owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 3.01(d), each
issued and outstanding Share (other than Shares to be canceled in accordance
with Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price per share paid in
the Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration, without interest.
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<PAGE>
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding Shares
held by a person (a "Dissenting Stockholder") who objects to the Merger and
complies with all the provisions of Delaware law concerning the right of
holders of Shares to dissent from the Merger and require appraisal of their
Shares ("Dissenting Shares") shall not be converted as described in Section
3.01(c), but shall be converted into the right to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant to Delaware
law. If, after the Effective Time, such Dissenting Stockholder withdraws his
demand for appraisal or fails to perfect or otherwise loses his right to
appraisal, in any case pursuant to the DGCL, his Shares shall be deemed to be
converted as of the Effective Time into the right to receive the Merger Consid-
eration, without interest. The Company shall give Parent (i) prompt notice of
any demands for appraisal of Shares received by the Company or the receipt by
the Company of any documents or instruments with respect to stockholder's
rights of appraisal pursuant to the DGCL and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
SECTION 3.02. Payment of Merger Consideration.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as paying agent in the Merger (the
"Paying Agent"), and, from time to time on, prior to or after the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent cash in amounts and at the times necessary for
the prompt payment of the Merger Consideration upon surrender of certificates
representing Shares as part of the Merger pursuant to Section 3.01 (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Parent).
(b) Surrender of Certificates. As soon as reasonably
practicable after the Effective Time, the Paying Agent shall mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration.
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<PAGE>
Upon surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmit tal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the satisfaction
of the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which
the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 3.01. No interest will be paid or will accrue on
the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Shares. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares. If thereafter Certificates are presented
to the Surviving Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article III.
(d) No Liability; Termination of Fund. At any time following
six months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat, or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. None of Parent,
Sub, the Company or the Paying Agent shall be
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<PAGE>
liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required
pursuant to Section 3.01, in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof with such assurances as the Paying Agent, in its discretion and as a
condition precedent to the payment of the Merger Consideration, may reasonably
require of the holder of such lost, stolen or destroyed certificates.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization, Standing and Corporate Power. Each of the
Company and its subsidiaries (as defined in Section 10.03) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has all requisite corporate power and
authority to carry on its business as now being conducted. Each of the Company
and its subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed individually or in the aggregate would not have a
material adverse effect (as defined in Section 10.03) on the Company. The
Company has delivered to Parent complete and correct copies of the certificate
of incorporation and by-laws of the Company and each of its subsidiar ies, in
each case as amended to the date hereof.
SECTION 4.02. Subsidiaries. Exhibit B to this Agreement lists as to
each subsidiary (as defined in Section 10.03) of the Company, the number of
shares of capital outstanding and the holders of securities of such capital
stock. All the outstanding shares of capital stock of, or other equity
interests in, each such subsid iary have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens,
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charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Other than with respect to the
subsidiaries listed on Exhibit B and as set forth in Section 4.02 of the
confidential memorandum of the Company as of the date hereof delivered to
Parent (the "Disclosure Schedule"), the Company does not directly or indirectly
own any securities or other beneficial ownership interests in any other entity
(including through joint ventures or partnership arrangements), or have any
investment in any other person.
SECTION 4.03. Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"). At the
close of business on November 20, 1998, (i) 13,440,490 shares of Company Common
Stock and no shares of Preferred Stock were issued and outstanding, (ii) no
shares of Company Common Stock were held by the Company in its treasury, (iii)
960,881 shares of Company Common Stock were reserved for issuance pursuant to
outstand ing Stock Options under Stock Option Plans (as defined in Section
7.04) and 226,767 shares of Company Common Stock were reserved for issuance
pursuant to outstand ing warrants described in Schedule 4.03 (the "Warrants"),
and (iv) shares of Series A Participating Preferred Stock, par value $.01 per
share (the "Series A Preferred Stock") were reserved for issuance in connection
with the Company's Preferred Shares Rights Agreement dated August 14, 1996 (the
"Rights Agreement"). The "In the Money Value" of a Stock Option or a Warrant
means the product of (x) the number of shares subject to such Stock Option or
Warrant, multiplied by (y) the excess (if any) of the Offer Price over the
exercise price thereof. The aggregate In-the-Money Value of all Stock Options
and Warrants on November 20, 1998 was $2,680,696. Except as set forth above, no
shares of capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. All outstanding shares of capital stock
of the Company are, and all shares which may be issued pursuant to the Stock
Option Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into securities having
the right to vote) on any matters on which stockholders of the Company may
vote. Except as set forth above, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its subsidiaries is a party, or by which
the Company or any of its subsidiaries are bound, obligating the Company or any
of its subsidiaries to issue,
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deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. The Company is not a party
to any voting agreement with respect to the voting of any of its securities or
the securities of any of its subsidiaries. There are not any outstanding
contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the Com-
pany or any of its subsidiaries. Following the consummation of the Merger,
there will not be outstanding any rights, warrants, options or other securities
entitling the holder thereof to purchase, acquire or otherwise receive any
shares of the capital stock of the Company (or any other securities exercisable
for or convertible into such Shares).
SECTION 4.04. Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to, if required by law, approval of the Merger by an affirmative vote
of the holders of a majority of the Shares (the "Company Stockholder
Approval"), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transac tions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of this Agreement, to the Company Stockholder Approval if
such approval is required by law. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
Company Stockholder Approval is the only vote of the holders of any class or
series of the Company's capital stock which is necessary to approve this
Agreement and the transactions contemplated hereby. The execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this Agreement will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Liens in or upon any
of the properties or assets of the Company or any of its subsidiaries under any
provision of (i) the Certificate of Incorporation or Bylaws of the Company
(each as amended) or the comparable organizational documents of any of its
subsidiaries, (ii) except as set forth in Section 4.04 of the Disclosure
Schedule, any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
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applicable to the Company or any of its subsidiaries or any of their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the second following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree applicable to
the Company or any of its subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a material adverse effect on the Company, (y) impair the
ability of the Company to perform its obligations under this Agreement or to
carry on its business as currently conducted or (z) prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will breach, or with notice, the passage
of time or otherwise result in a breach of, any of the Company's obligations
under the agreement dated November 9, 1998 between the Company, the Circon
Shareholders Committee and the other signatories thereto. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consum mation by the Company of the Merger or
the transactions contemplated by this Agreement, except for (1) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and filings under similar laws of certain foreign jurisdictions as may
be required ("Foreign Filings"), (2) the filing with the SEC and the Nasdaq
Stock Market, Inc. of (A) the Schedule 14D-9, (B) a proxy statement relating to
the Company Stockholder Approval, if such approval is required by law (as
amended or supplemented from time to time, the "Proxy Statement") and (C) such
reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (3) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (4) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not, individually
or in the aggregate, have a material adverse effect on the Company or prevent
or materially delay the consummation of any of the transactions contemplated
by this Agreement or impair the ability of the Company to carry on its business
as presently conducted.
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SECTION 4.05. SEC Documents; Financial Statements. The Company has
filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1996 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents at the time they were filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly presented the financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments and
the absence of footnotes). Except as set forth in the Filed SEC Documents (as
defined in Section 4.07) or as incurred in the ordinary course of business
consistent with past practice since the date of the most recent financial
statements included in the Filed SEC Documents, neither the Company nor any of
its subsidiaries has any material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required
under GAAP to be set forth on a consolidated balance sheet of the Company and
its subsidiaries taken as a whole.
SECTION 4.06. Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9 or the Proxy
Statement or (iii) the information to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement"), will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under
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which they are made, not misleading. The Schedule 14D-9 and the Information
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference therein.
SECTION 4.07. Absence of Certain Changes or Events. Since December 31,
1997 the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and there
has not been (i) any material adverse change (as defined in Section 10.03) in
the Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock (other than the Rights issued or to be issued
pursuant to the Rights Agreement), (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) except as set forth in
Section 4.07 of the Disclosure Schedule, (w) any granting by the Company or any
of its subsidiaries to any director or officer of the Company or its
subsidiaries of any increase in compensation, except in the ordinary course of
business consistent with prior practice or as required under employment
agreements in effect as of December 31, 1997, (x) any granting by the Company
or any of its subsidiaries to any director, officer or employee of any stock
options, (y) any granting by the Company or any of its subsidiaries to any
officer of any increase in severance or termination pay, or (z) any entry by
the Company or any of its subsidiaries into any employment, severance,
termination or similar agreement with any officer, director or employee, (v)
any damage, destruction or loss, whether or not covered by insur ance, that
individually or in the aggregate would exceed $100,000, (vi) any change in
accounting methods, principles or practices or (vii) any tax election.
SECTION 4.08. Litigation; Investigation. Except as set forth in
Section 4.08 of the Disclosure Schedule, there is no suit, action or proceeding
or investigation by or before any court or administrative agency or arbitral
tribunal pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries as to which there is a
reasonable likelihood of an adverse determina tion that individually or in the
aggregate would have a material adverse effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against, or, to the knowledge of the Company,
investigation by any Governmental Entity involving, the Company or any of its
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subsidiaries that individually or in the aggregate would have a material
adverse effect on the Company.
SECTION 4.09. Contracts. Except as disclosed in the Company's annual
report on form 10-K for the year ended December 31, 1997 and quarterly reports
on Form 10-Q for calendar quarters in 1998 (the "Filed SEC Documents") and as
set forth in item A of Section 4.09 of the Disclosure Schedule, there are no
contracts or agreements that are of a nature required to be filed as an exhibit
under the Exchange Act and the rules and regulations promulgated thereunder.
Except as set forth in item B of Section 4.09 of the Disclosure Schedule,
neither the Company nor any of its subsidiaries is in violation of nor in
default under (nor does there exist any condition, event or occurrence which
upon the passage of time or the giving of notice or both would cause such a
violation of or default under) any lease, permit, concession, franchise,
license or any other contract, agreement, arrangement or understanding to which
it is a party or by which it or any of its properties or assets is bound,
except for violations or defaults that individually or in the aggregate would
not have a material adverse effect on the Company. Except as set forth in item
C of Section 4.09 of the Disclosure Schedule, as of the date hereof, the
Company is not bound by any contract, agreement, arrangement or understanding
with any affiliate of the Company that is currently in effect other than (i)
agreements that are disclosed in the Filed SEC Documents or (ii) agreements in
an aggregate amount not to exceed $150,000. Except as set forth in item D of
Section 4.09 of the Disclosure Schedule, the Company is not a party to or
otherwise bound by any agreement or covenant not to compete or by any agreement
or covenant restricting in any material respect the development, marketing or
distribution of the Company's products and services.
SECTION 4.10. Compliance with Laws.
(i) Except as set forth in Section 4.10 of the Disclosure
Schedule, each of the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments, decrees
and orders of any Governmental Entity (collectively, "Legal Provisions")
applicable to their business or operations, except for instances of possible
noncompliance that individually or in the aggregate would not have a material
adverse effect on the Company or prevent or materially delay the consummation
of the Merger or the transactions contemplated by this Agreement. Each of the
Company and its subsidiaries has in effect all Federal, state, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights, including but not limited to
all authorizations under Environmental Laws (as
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hereinafter defined), the applicable regulations adopted by the U.S. Food and
Drug Administration and the U.S. Food, Drug and Cosmetic Act, and the
regulations thereunder ("Permits"), necessary for it to own, lease or operate
its properties and assets and to carry on its business as now conducted, and
there has not occurred any material default under, or violation of, any such
Permit.
(ii) The term "Environmental Laws" means any Federal, state
or local or foreign statute, ordinance, rule, regulation, policy, permit,
consent, approval, license, judgment, order, decree or injunction ("Laws")
relating to pollution or protection of the environment including, but not
limited to: (A) Releases (as defined in 42 U.S.C. Section 9601(22)) or
threatened Releases of Hazardous Material (as hereinafter defined) into the
environment, (B) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C) the health
or safety of employees in the workplace environment or of persons exposed to
Hazardous Materials, or (D) any laws requiring record keeping, notification,
disclosure and reporting requirements related to Hazardous Material or
endangered species, wildlife and plants and the management and use of natural
resources. The term "Hazardous Material" means (1) hazardous substances (as
defined in 42 U.S.C. Section 9601(14)), (2) petroleum, including crude oil and
any fractions thereof, (3) natural gas, synthetic gas and any mixtures thereof,
(4) asbestos and/or asbestos containing material, (5) PCBs or materials
containing PCBs and (6) any material regulated as a medical waste or infectious
waste, pollutant or contaminant.
(iii) There have been no Releases of Hazardous Material in,
on, under or affecting any of the current or previously owned or leased
properties of the Company or any of its subsidiaries or any surrounding site,
and there has been no disposal on any such properties of any Hazardous Material
in a manner that has led, or could reasonably be anticipated to lead to a
Release, except in each case for those which individually or in the aggregate
would not have a material adverse effect on the Company. The Company and its
subsidiaries have not received any written notice of, or entered into any
order, settlement or decree relating to: (A) any violation of any Environmental
Laws or the institution or pendency of any suit, action, claim, proceeding or
investigation by any Governmental Entity or any third party in connection with
any alleged violation of Environmental Laws, (B) the response to or remediation
of Hazardous Material at or arising from any of the Company's proper ties or
any subsidiary's properties or at any property to which the Company trans
ported or arranged for transportation of Hazardous Materials or (C) payment
for, response to or remediation of Hazardous Material at or arising from any of
the
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Company's properties or any subsidiary's properties, except in each case for
any such notices, orders, settlements or decrees which individually or in the
aggregate would not have a material adverse effect on the Company.
SECTION 4.11. Absence of Changes in Benefit Plans; Labor Relations.
Except as required to comply with applicable laws or to make changes which do
not, individually or in the aggregate, have a material financial impact on the
Company or the Plans (as defined below), since December 31, 1997, there has not
been any adoption or amendment (or any agreement to adopt or to amend) any
deferred compensation and any incentive compensation, stock purchase, stock
option or other equity compensation plan, program, agreement or arrangement;
any severance or termination pay, medical, surgical, hospitalization, life
insurance or other "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); any profit-sharing, stock bonus or other "pension" plan,
fund or program (within the meaning of section 3(2) of ERISA); any employment,
termination, severance or similar agree ment; or any other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the Company or
by any trade or business, whether or not incorporated (an "ERISA Affiliate"),
that together with the Company would be deemed a "single employer" within the
meaning of section 4001(b) of ERISA, or to which the Company or an ERISA
Affiliate is party, whether written or oral, for the benefit of any employee or
former employee of the Company or any Subsidiary (collectively, the "Benefit
Plans" and each Benefit Plan that is subject to Section 302 or Title IV of
ERISA or Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code"), a "Pension Plan"). Except as set forth in Section 4.11 of the
Disclosure Schedule, neither the Company, any Subsidiary nor any ERISA
Affiliate has any commitment or formal plan, whether legally binding or not, to
create any additional employee benefit plan or modify or change any existing
Plan that would affect any employee or former employee of the Company or any
Subsidiary, except as required to comply with applicable law. Except as set
forth on Section 4.11 of the Disclosure Schedule, (i) there exist, as of the
date hereof, no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between the Company
or any of its subsidiaries, and any current employee, officer or director of
the Company, (ii) there are no collective bargaining or other labor union
agreements to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound and (iii) during the
last 3 years, neither the Company nor any of its subsidiaries has encountered
any labor union organizing activity, nor had any actual or threatened employee
strikes, work stoppages, slow-
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downs or lockouts. Except as set forth in Section 4.11 of the Disclosure
Schedule, since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), the Company has not effectuated a "plant
closing" or "mass layoff" (as defined in the WARN Act or any similar state,
local or foreign law or regulation) affecting any site of employment or one of
more facilities or operating units within any site of employment or facility of
the Company or its subsidiaries, without complying with the WARN Act or similar
state, local or foreign law or regulation. In addition, except as set forth in
Section 4.11 of the Disclosure Schedule, none of the Company's employees has
suffered an "employment loss" (as defined in the WARN Act or any similar state,
local or foreign law or regulation) during the ninety day period prior to the
date of this Agreement.
SECTION 4.12. ERISA Compliance.
(i) Section 4.12(i) of the Disclosure Schedule contains a
list of all Benefit Plans. The Company has made available to Parent true,
complete and correct copies of (1) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (2) the most recent annual
report on Form Series 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required), (3) the most recent
summary plan description for each Benefit Plan for which such summary plan
description is required, (4) each trust agreement and group annuity contract
relating to any Benefit Plan and (5) the most recent determination letter
received from the Internal Revenue Service with respect to each Benefit Plan
intended to be qualified under the Code.
(ii) Except as set forth in Section 4.12(ii) of the
Disclosure Schedule, each Benefit Plan has been operated and administered in
all material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code.
(iii) No liability under Title IV or section 302 or ERISA has
been incurred by the Company or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the Company
or any ERISA Affiliate of incurring any such liability, other than liability
for premiums due the Pension Benefit Guaranty Corporation (which premiums have
been paid when due and owing).
(iv) Except as set forth in Section 4.12(iv) of the
Disclosure Schedule, with respect to each Pension Plan, the present value of
accrued benefits
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under such plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such plan's actuary with
respect to such plan did not exceed, as of its latest valuation date, the then
current value of the assets of such plan allocable to such accrued benefits.
(v) Except as set forth in Section 4.12(v) of the Disclosure
Schedule, no Pension Plan is a Plan described in Section 4063(1) of ERISA. With
respect to any Benefit Plan that is a "multiemployer pension plan" as defined
in Section 3(37) of ERISA, (i) neither the Company nor any ERISA Affiliate has
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in sections 4203 and 4205 of ERISA (or any
liability resulting therefrom has been satisfied in full), (ii) no event has
occurred that presents a material risk of a partial withdrawal, (iii) neither
the Company nor any ERISA Affiliate has any contingent liability under section
4204 of ERISA, and (iv) such Benefit Plan is not in reorganization and no
circumstances exist that present a material risk that any such plan will go
into reorganization. With respect to any Benefit Plan that is a "multiemployer
pension plan," the aggregate withdrawal liability of the Company and its ERISA
Affiliates, computed as if a complete withdrawal by the Company and the ERISA
Affiliates had occurred under each such Plan on the date hereof, would not
exceed $500,000.
(vi) All Pension Plans have been the subject of determina
tion or opinion letters, as applicable from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and no such
letter has been revoked nor has any event occurred since the date of its most
recent letter or application therefor that would adversely affect its
qualification (unless the effect of such event is correctable under any
available IRS correction program) or materially increase its costs.
(vii) Except as set forth in Section 4.12(vii) of the Disclo-
sure Schedule, neither the Company, nor any of its subsidiaries, nor any
Commonly Controlled Entity has maintained, contributed or been obligated to
contribute to any Benefit Plan that is subject to Title IV of ERISA.
(viii) Section 4.12(viii) of the Disclosure Schedule lists
all outstanding Stock Options as of November 20, 1998, showing for each such
option: (1) the number of shares issuable, (2) the number of vested shares, (3)
the date of expiration and (4) the exercise price.
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(ix) Except as set forth in Section 4.12(ix) of the
Disclosure Schedule, the consummation of the Merger or the Offer will not (a)
entitle any current or former employee or officer of the Company or any
subsidiary to severance pay, unemployment compensation retention bonus or other
similar payments, (b) accelerate the term of payment or vesting, or increase
the amount of compensation or benefits due to any such employee or officer or
(c) require the Company or any ERISA Affiliate to fund or make or make any
payments to any trust or other funding vehicle in respect of any Benefit Plan.
(x) There are no pending or, to the knowledge of the Company,
anticipated or threatened claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits) which
would have a material adverse plan effective on the Company or its
subsidiaries.
(xi) The deduction of any amount payable pursuant to the
terms of the Benefit Plans will not be subject to disallowance under Section
162(m) of the Code.
SECTION 4.13. Taxes. Each of the Company and its subsidiaries has
timely filed all material tax returns and reports required to be filed by it,
correct and complete, and has paid, or established adequate reserves for, all
taxes required to be paid by it. No material deficiencies for any taxes have
been proposed, asserted or assessed against the Company which have not been
fully paid or satisfied, and no requests for waivers of the time to assess any
such taxes are pending. The Federal income tax returns of the Company and each
of its subsidiaries consolidated in such returns have been examined by and
settled with the United States Internal Revenue Service for all years through
the fiscal year ended December 31, 1995. The statute of limitations on
assessment or collection of any Federal income taxes due from the Company or
any of its subsidiaries has expired for all taxable years of the Company or
such subsidiaries through the fiscal year ended December 31, 1995. As used in
this Agreement, "taxes" shall include all Federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or governmental
charges of any nature whatsoever.
SECTION 4.14. No Excess Parachute Payments. Except as set forth in
Section 4.14 of the Disclosure Schedule, no amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Com-
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pany or any of its subsidiaries who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.28OG-1) under any
employment, severance or termination agreement, other compensation arrangement
or Benefit Plan currently in effect would be an "excess parachute payment" (as
such term is defined in Section 28OG(b)(1) of the Code). No disqualified
individual is entitled to receive any additional payment from the Company or
any of its subsidiaries, the Surviving Corporation or any other person (a
"Parachute Gross-Up Payment") in the event that the excise tax of Section
4999(a) of the Code is imposed on such person. The Board of Directors of the
Company has not granted to any officer, director or employee of the Company any
right to receive any Parachute Gross-Up Payment.
SECTION 4.15. Intellectual Property.
(a) The Company and its subsidiaries own, or are validly
licensed or otherwise have the right to use, free and clear or all liens, all
patents, patent rights, trademarks, trade secrets, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights,
Internet domain names, designs, logos, slogans, and general intangibles of like
nature, Software (as defined below), "mask works" (as defined under 17 USC ss.
901), technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, and methodologies, rights
of publicity and privacy relating to the use of the names, likenesses and
biographical information of real persons and other proprietary intellectual
property rights (collectively "Intellectual Property Rights") which are used or
held for use in the business of the Company provided, however, the Company does
not give any representation as to the Intellectual Property Rights of any third
party. For purposes of this Section 4.15, "Software" means any and all (i)
computer programs, whether in source code or object code form, (ii) databases
and compilations, and (iii) all documentation, including user manuals and
training materials, relating to any of the foregoing.
(b) Schedule 4.15(b) sets forth, for the Intellectual
Property Rights owned or licensed by Company or any subsidiary, a complete and
accurate list of all material U.S. and foreign (i) patents and patent
applications; (ii) trademark registrations (including Internet domain
registrations), trademark applications, and material unregistered trademarks;
(iii) copyright and mask work registrations, copyright and mask work
applications; and (iv) all Software.
(c) Schedule 4.15(c) sets forth a complete and accurate list
of all agreements, whether oral or written, and whether between the Company or
any
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subsidiaries and third parties or inter-corporate, (other than licenses of
readily available commercial software programs having an acquisition price of
less than $10,000) to which Company or any subsidiary is a party or otherwise
bound, (i) granting or obtaining any right to use or practice any rights under
any Intellectual Property Right or (ii) restricting the Company's or any
subsidiary's rights to use any Intellectual Property Right, including but not
limited to license agreements, develop ment agreements, distribution
agreements, settlement agreements, consent to use agreements, and covenants not
to sue (collectively, the "Intellectual Property Agreements"). The Intellectual
Property Agreements are valid and binding obligations of all parties thereto,
enforceable in accordance with their terms, and there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice of lapse of time or both) a default under any such
Intellectual Property Agreement by (i) the Company or any subsidiary, or (ii)
to the knowledge of the Company, any third party. No royalties, honoraria or
other fees are payable by Company or any subsidiary to any third parties for
the use of or right to use any Intellectual Property Right except pursuant to
the Intellectual Property Agreements.
(d) Except as set forth in Schedule 4.15(b) or 4.15(d):
(i) The Company or a subsidiary is listed in the
records of the appropriate United States, state, or foreign registry as the
sole current owner of record for each application and registration listed on
Section 4.15(b) of the Disclosure Schedule.
(ii) The Intellectual Property Rights owned by
Company or any subsidiary and, to the Company's knowledge, any Intellectual
Property Right used by Company or any subsidiary, are subsisting and are valid
and enforceable.
(iii) There are no settlements, forebearances to
sue, consents, judgments, or orders or similar obligations (other than the
Intellectual Property Agreements) which (a) restrict Company's or any
subsidiary's rights to use any Intellectual Property Right, (b) restrict
Company's or any subsidiary's business in order to accommodate a third party's
intellectual property rights or (c) permit third parties to use any
Intellectual Property Right owned or controlled by the Company or any
subsidiary.
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(iv) To the Company's knowledge, the conduct of
Company's and any subsidiary's business as currently and heretofore conducted
does not infringe upon (either directly or indirectly such as through
contributory infringement or inducement to infringe) any Intellectual Property
Right owned or controlled by any third party.
(v) Company and each subsidiary takes reasonable
measures to protect the secrecy of its confidential technology, trade secrets,
know-how, proprietary processes, formulae, algorithms, models, and
methodologies (collectively "Trade Secrets"), including requiring its employees
and other parties having access thereto to execute written non-disclosure
agreements. To the Com pany's knowledge since December 31, 1997, no Trade
Secret has been disclosed or authorized to be disclosed to any third party
other than pursuant to a non-disclosure agreement. With respect to any
non-disclosure agreement relating to its Trade Secrets, the Company is not, and
to the Company's knowledge the other party is not, in breach or default
thereof.
(vi) With respect to the Software set forth in
Section 4.15(b) of the Disclosure Schedule which Company purports to own, such
Software was either developed (a) by employees of Company or any subsidiary
within the scope of their employment or (b) by independent contractors who have
assigned their rights to Company or any subsidiary pursuant to written
agreements. Each agreement in which the Company or any subsidiary has licensed
products containing owned software to third parties contains provisions (y)
limiting the Company's or its subsidiary's liability to the amount of the fees
paid pursuant to the agreement; or (z) disclaiming any warranties as to the
performance of functionality of the software, other than stating that the
software would perform in accordance with its documentation and/or
specifications.
(vii) The Company's Intellectual Property Rights
will not be adversely affected because of the consummation of the Offer and the
Merger.
(viii) No claim of any infringement, misappropria
tion, unauthorized use or dilution of any Intellectual Property Rights of any
third party has been made or asserted against the Company or any of its
subsidiaries in respect of the operation of the Company's or any subsidiary's
business.
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(ix) To the knowledge of the Company, no person is
infringing the rights of the Company or any subsidiary with respect to any
Intellectual Property Right. Neither the Company nor any subsidiary has
licensed, or otherwise granted, to any third party, any material rights in or
to any Intellectual Property Rights.
SECTION 4.16. State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger and this Agreement, and such
approval is sufficient to render inapplicable to the Offer, the Merger, this
Agreement and the transactions contemplated by this Agreement the provisions of
Section 203 of the DGCL to the extent, if any, such Section is applicable to
the Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement.
SECTION 4.17. Rights Agreement. The Board of Directors of the Company
has adopted resolutions providing that the Rights Agreement shall be amended,
and the Rights Agreement shall be so amended, within two business days
following the date hereof, to (i) render the Rights Agreement inapplicable to
the Offer, the Merger, this Agreement and the acquisition of Shares by Sub
pursuant to the Offer, (ii) ensure that (y) none of Parent, Sub or any of their
respective affiliates is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement solely by virtue of the execution
of this Agreement, commencement and consummation of the Offer, the acquisition
of Shares by Sub pursuant to the Offer and the consummation of the Merger and
(z) a Distribution Date or a Shares Acquisition Date (as such terms are defined
in the Rights Agreement) does not occur by reason of the Offer, the Merger, the
execution of this Agreement, the acquisition of the Shares by Sub pursuant to
the Offer, or the consummation of the Merger and (iii) provide that the Final
Expiration Date (as defined in the Rights Agreement) shall occur immediately
prior to the Effective Time, and such amendment will not be further amended by
the Company without the prior consent of Parent in its sole discretion.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Bear, Stearns
& Co. Inc., the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
furnished to Parent true and complete copies of all agreements under which any
such fees or expenses are payable and all indemnification and other agreements
related to the engagement of the persons to whom such fees are payable.
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SECTION 4.19. Opinion of Financial Advisor. The Company has received
the opinion of Bear, Stearns & Co. Inc., dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, a signed copy of which opinion is currently being
delivered to Parent.
SECTION 4.20. Annual Meeting. No shareholder of the Company has given
the notice required under the Company's By-laws to present at the Company's
November 24, 1998 Annual Meeting of Shareholders any business not set forth in
the notice to shareholders relating to such meeting and as a result the only
business that may be conducted at such meeting in accordance with this
Agreement and the Company's By-laws are the items specifically set forth in the
notice relating to the Annual Meeting.
SECTION 4.21. Products Liability. (a) Except as set forth in Section
4.21 of the Disclosure Schedule, (i) there is no notice, demand, claim action,
suit inquiry, hearing, proceeding, notice of violation or investigation of a
civil, criminal or administrative nature by or before any court or governmental
or other regulatory or administrative agency, commission or authority pending
against or involving the Company or any of its Subsidiaries (past or present)
or concerning any product relating to the businesses of the Company and its
Subsidiaries (past or present which is pending or threatened, relating to or
resulting from an alleged defect in design, manufacture, materials or
workmanship of any product designed, manufactured, distributed, or sold by or
on behalf of the Company or any of its Subsidiaries (past or present), or any
alleged failure to warn, or from any alleged breach of express or implied
warranties or representations, (ii) since December 31, 1997 there has not been
any Occurrence (as defined in this Section 4.21 herein); (iii) during the last
five years, there has not been any product recall or post-sale warning
(collectively, "Recalls") by the Company or any of its Subsidiaries (past or
present) concerning any products relating to the businesses of the Company and
its Subsidiaries (past or present) which were designed, manufactured,
distributed, or sold by the businesses of the Company and its Subsidiaries
(past or present), or to the best of the Company's knowledge, after due
inquiry, any investigation or any action that would require the consideration
by the Company's corrective action committee, made by any person or entity
concerning whether to undertake or not to undertake any Recalls. For pur poses
of this Section 4.21 and Section 4.22, the term "Occurrence" shall mean any
accident, happening or event which is caused or allegedly caused by any alleged
hazard or alleged defect in manufacture, design, materials or workmanship
including, without limitation, any alleged failure to warn or any breach of
express or implied
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warranties or representations with respect to, or any accident, happening or
event otherwise involving, a product (including any parts or components)
relating to the businesses of the Company and its Subsidiaries (past or
present) designed, manufac tured, distributed, or sold by or on behalf of the
Company and its Subsidiaries (past or present) which results or is alleged to
have resulted in injury or death to any person or damage to or destruction of
property, or other consequential damages, at any time.
SECTION 4.22. Insurance. Section 4.22 of the Disclosure Schedule
contains a complete and accurate list of: (i) all primary, excess and umbrella
policies of general liability, fire, products liability, completed operations,
employers' liability, workers' compensation, bonds and other forms of insurance
owned or held by or on behalf of and/or providing insurance coverage to the
Company as of August 1, 1998, including the following information for each such
policy: type(s) of insurance coverage provided; name of insurer; effective
dates; policy number; per occurrence and annual aggregate deductibles or
self-insured retentions; per occurrence and annual aggregate limits of
liability; the extent, if any, to which the limits of liability have been
invaded or exhausted; and (ii) all claims and lawsuits in excess of $100,000
made or filed since December 31, 1997 with respect to the businesses of the
Company or its subsidiaries, and the total number and amount of all claims and
lawsuits, including the following information: names of claimants/plaintiffs;
event or accident; nature of the claim and product involved, if any; and amount
paid to satisfy, compromise or otherwise dispose of the claim or lawsuit and
the source of such payment. All current policies set forth on Schedule 4.21 are
in full force and effect, and with respect to all policies, all premiums
currently payable or previously due and payable with respect to all periods up
to and including the date of Closing have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
To the Company's knowledge, all such policies are sufficient for compliance
with all requirements of law and of all agreements to which the Company or any
of its subsidiaries is a party; are valid, outstanding, collectible and
enforceable policies; provide adequate insurance coverage; will remain in full
force and effect through the respective dates set forth in Schedule 4.22
without the payment of additional premiums. None of such policies contains a
provision that would permit the termination, limitation, lapse, exclusion, or
change in the terms of coverage (including, without limitation, a change in the
limits of liability) by reason of consummation of the transactions contemplated
by this Agreement. The Company has not been refused any insurance with respect
to its products or operations, nor has any coverage been limited by any
insurance carrier to which the Company
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has applied for any such insurance or with which they have carried insurance
during the last 3 years.
ARTICLE V
Representations and Warranties of Parent and Sub
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. Organization, Standing and Corporate Power. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed individually or in the
aggregate would not have a material adverse effect on Parent. Parent has
delivered to the Company complete and correct copies of its Certificate of
Incorpora tion and By-Laws and the Certificate of Incorporation and By-Laws of
Sub, in each case as amended to the date hereof.
SECTION 5.02. Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consum mate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub, and constitutes a valid and binding
obligation of each such party, enforceable against each such party in
accordance with its terms. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
accelera tion of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Parent or Sub under, any provision of (i) the Certificate of Incorporation or
By-Laws of Parent or Sub, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
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instrument, permit, concession, franchise or license applicable to Parent or
Sub or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree applicable to Parent or Sub or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Parent, (y) impair in any
material respect the ability of each of Parent and Sub to perform its
obligations under this Agreement, as the case may be, or (z) prevent or
materially delay the consumma tion of any of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Parent or Sub in connection with the execution and
delivery of this Agreement by Parent and Sub or the consummation by Parent and
Sub of the transactions contemplated by this Agreement, except for (1) Foreign
Filings and the filing of a premerger notification and report form under the
HSR Act, (2) the filing with the SEC of (A) the Offer Documents and (B) such
reports under Sections 13(a), 13(d) and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement (3) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (4) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under the "blue sky" laws of various states, the
failure of which to be obtained or made would not, individually or in the
aggregate, have a material adverse effect on Parent or prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
SECTION 5.03. Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time
of the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Offer Documents will
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comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that (other than
with respect to the Proxy Statement) no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.04. Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
SECTION 5.05. Brokers. No broker, investment banker, financial advisor
or other person, other than Donaldson, Lufkin & Jenrette, the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
SECTION 5.06. Financing. At the expiration of the Offer and the
Effective Time, Parent and Sub will have available all the funds necessary for
the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all shares of Company Common Stock validly tendered into
the Offer or outstanding at the Effective Time.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company.
(a) Conduct of the Business by the Company. The Company
shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with the manner as heretofore
conducted and use commer cially reasonable efforts to (x) preserve intact their
current business organization, (y) keep available the services of their current
officers and employees and (z) preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the
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generality of the foregoing, other than as set forth in Section 6.01 of the
Disclosure Schedule or as otherwise contemplated by this Agreement, the Company
shall not, and shall not permit any of its subsidiaries to, without Parent's
prior written consent (which shall not be unreasonably withheld):
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent or pursuant to
the Rights Agreement, (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock (other than the
issuance of shares of Company Common Stock upon the exercise of Stock Options
outstanding on the date of this Agreement and in accordance with their present
terms) or (z) purchase, redeem or otherwise acquire any shares of capital stock
of the Company or any of its subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock or any shares of capital stock of its subsidiaries,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than (y) pursuant to the Rights Agreement or (z)
the issuance of shares of Company Common Stock upon the exercise of Stock
Options and Warrants outstanding on the date of this Agreement and in
accordance with their present terms);
(iii) amend its Certificate of Incorporation, By-Laws or
other comparable charter or organizational documents or those of any of its
subsidiaries;
(iv) acquire or agree to acquire (including, without limita-
tion, by merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its material properties or assets, other than in
the ordinary course of business consistent with past practice;
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(vi) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any
of its subsidiaries, or guarantee any debt securities of another person, other
than short-term bank financing in the ordinary course of business consistent
with past practice; or make any loans, advances or capital contributions to, or
investments in, any other person, other than in the ordinary course of business
consistent with past practice and in any event not in excess, individually or
in the aggregate, of $100,000 ;
(vii) make any material capital expenditure, individually or
in the aggregate, in excess of $25,000;
(viii) except as required to comply with applicable law (in
which case the Company will notify Parent) (A) adopt, enter into, terminate or
amend in any material respect any employment, severance or similar contract,
collective bargaining agreement or Benefit Plan, (B) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director, officer
or employee (except for normal increases of cash compensation or cash bonuses
in the ordinary course of business consistent with past practice), (C) pay any
benefit not provided for under any Benefit Plan or any other benefit plan or
arrangement of the Company or its subsidiaries, (D) increase in any manner the
severance or termination pay of any officer or employee, (E) grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock or the removal of existing restrictions in any Benefit Plans
or agreements or awards made thereunder), (F) take any action to fund or in any
other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Benefit Plan or (G) take any action
to accelerate the vesting of, or cash out rights associated with, any Stock
Options or other benefits;
(ix) enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act;
(x) except as required by GAAP, make any material change in
accounting methods, principles or practices;
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(xi) make any tax election, make a claim for any Tax Refund
or enter into any settlement or compromise with respect to any material tax
liability;
(xii) amend or terminate any material contract in a manner
materially detrimental to the Company, or waive, release, assign or settle any
material rights or claims;
(xiii) hire or fire or agree to hire any officers;
(xiv) take any action that may reasonably be expected to
result in (i) any of the representations and warranties by the Company becoming
untrue in any material respect (ii) any breach of the Company's covenants under
this Agreement or (iii) any of the conditions of the Offer set forth in Exhibit
A not being satisfied; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.02. No Solicitation.
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative or agent retained by it or any subsidiary
to, directly or indirectly, (i) solicit, initiate or encourage the submission
of any Takeover Proposal (as defined below), (ii) participate in any
discussions or negotiations regarding, or furnish to any person any nonpublic
information with respect to, or take any other action designed or reasonably
likely to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to a Takeover Proposal, or
(iii) except as specifically provided in Section 6.02 and provided that the
Company shall have first complied with all its obligations under this Section
6.02 and Section 7.07(b), enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal. Upon execution
of this Agreement, the Company will cease any existing activities, discussions
or negotia tions with any parties conducted with respect to any of the
foregoing. Notwithstand ing the foregoing, if, at any time prior to the
acceptance for payment of Shares pursuant to the Offer, the Board of Directors
of the Company determines in good faith after consultation with outside
counsel, that such action may reasonably be
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required to discharge the Board of Director's fiduciary duties to the Company's
stockholders under applicable law, the Company may, in response to an
unsolicited Takeover Proposal, which constitutes a Superior Proposal made
subsequent to the date hereof, and subject to compliance with Section 6.02(c),
(x) furnish information with respect to the Company to any person that has
submitted a Takeover Proposal that constitutes a Superior Proposal pursuant to
a customary confidentiality agree ment in form and substance reasonably
satisfactory to Parent and (y) participate in discussions and negotiations
regarding such Takeover Proposal that which consti tutes a Superior Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any director or officer of
the Company or any subsidiary or any investment banker, financial advisor,
attorney, accountant or other authorized representative or agent of the Company
or any subsidiary shall be deemed to be a breach of this Section 6.02(a) by the
Company. For purposes of this Agreement, "Takeover Proposal" means any proposal
or offer from any person in each case, in writing, relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of the
Company and its subsidiaries, taken as a whole (other than the purchase of the
Company's products in the ordinary course of business), or more than a 30%
interest in the total voting securities of the Company or any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 30% or more of any class of equity securities of the Company or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Company, other than the transactions contemplated by this Agreement.
(b) Except as set forth in this Section 6.02, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Offer, the Merger or this Agreement, (ii) approve or recommend, or propose to
approve or recommend, any Takeover Proposal, (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to any
Takeover Proposal or (iv) resolve to take any of the foregoing actions.
Notwithstanding the foregoing, in the event that prior to the acceptance for
payment of Shares pursuant to the Offer the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that such
action may reasonably be required to discharge the Board of Director's
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors of the Company may, in response to an unsolicited Superior
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Proposal (as defined below) (subject to the following proviso), (x) withdraw or
modify its approval or recommendation of the Offer, the Merger or this
Agreement or (y) approve or recommend any such Superior Proposal; provided,
that in the case of this clause (y), such approval or recommendation shall
occur only at a time that is after the later of (i) the fifth business day
following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms of such Superior Proposal and identifying the person making such
Superior Proposal and (ii) in the event of any amendment to the price or any
material term of a Superior Proposal, three business days following Parent's
receipt of written notice containing the material terms of such amendment,
including any change in price (it being understood that each further amendment
to the price or any material terms of a Superior Proposal shall necessitate an
additional written notice to Parent and additional three business day period
prior to which the Company can take the actions set forth in clause (y) above).
All notices referred to in the prior sentence shall include a copy of any such
Takeover Proposal or Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any bona fide Takeover Proposal made by a third party
(i) that is on terms which the Board of Directors of the Company determines in
its good faith judgment (based on the written opinion of the Company's
financial advisors as to the financial terms of such Superior Proposal and
after consultation with the Company's legal advisors) to be more favorable to
the Company's stockholders than the Offer and the Merger and (ii) for which
financing, to the extent required, is available pursuant to definitive
agreements with respect thereto.
(c) In addition to the obligations of the Company set forth
in paragraphs (a) and (b) of this Section 6.02, the Company shall promptly
advise Parent orally and in writing of any request for nonpublic information
(except requests not of a transactional or financial nature by companies with
established commercial relationships with the Company, made in the ordinary
course of business and not in connection with a possible Takeover Proposal) or
of any Takeover Proposal the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal. The Company will promptly inform Parent of any material
change in the details (including amendments or proposed amendments) of any
such request or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of the
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Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer, the
Merger or this Agreement or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
SECTION 6.03. Certain Actions. The Company will not take any action at
the November 24, 1998 Annual Meeting of Shareholders other than the election of
the directors set forth in the Company's definitive proxy statement dated
November 13, 1998, and the ratification of the Company's auditors. Except for
the election of those directors set forth in the Company's definitive proxy
statement dated November 13, 1998 at the Company's Annual Meeting to be held on
November 24, 1998 and as contemplated in Section 7.06 and for the election of
Lester Hill to the Board of Directors, should the Board of Directors determine
to do so, the Company will not take any action to modify, change the
composition or increase the size of the Board of Directors of the Company.
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement.
(a) If the Company Stockholder Approval is required by law,
the Company shall, as soon as practicable following the expiration of the
Offer, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company shall, through its Board of
Directors, recommend to its stockholders that the Company Stockholder Approval
be given. Notwithstanding the foregoing, if Parent, Sub or any other subsidiary
of Parent shall acquire at least 90% of the outstanding Shares, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law,
the Company shall, as soon as practicable following the expiration of the
Offer, prepare
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and file a preliminary Proxy Statement with the SEC and shall use its best
efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy State ment or for additional information
and will supply Parent with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or its staff, on
the other hand, with respect to the Proxy Statement or the Merger. If at any
time prior to the Stockholders Meeting there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
shall promptly prepare and mail to its stockholders such an amendment or
supplement.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent or any subsidiary of Parent to
be voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. The Company shall, and shall
cause each of its subsidiaries to, afford to Parent and to the officers,
employees, accoun tants, counsel and other representatives of Parent reasonable
access, during normal business hours during the period prior to the Effective
Time, to all their properties, books, contracts, commitments and records and,
during such period, the Company shall, and shall cause each of its subsidiaries
to, make available promptly to Parent upon request (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of the federal or state
securities laws or the federal tax laws, or state, local or foreign tax laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request (including the Company's outside accountants'
work papers). Except as otherwise agreed to by the Company, and notwithstanding
termination of this Agreement, the terms of the Confidentiality Agreement dated
May 21, 1998, between Parent and the Company (the "Confidentiality Agreement")
shall apply to all information about the Company which has been furnished under
this Agreement by the Company to Parent or Sub.
SECTION 7.03. State Takeover Laws. Notwithstanding any other provision
in this Agreement, in no event shall the Section 203 Approval be withdrawn,
revoked or modified by the Board of Directors of the Company. If any state
takeover statute other than Section 203 of the DGCL becomes or is deemed to
become applicable to
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the Company, the Offer, the Merger or this Agreement, the Company shall take
all reasonable action necessary to render such statute inapplicable to all of
the foregoing.
SECTION 7.04. Reasonable Efforts.
(a) Upon and subject to the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by this Agreement, including using reasonable efforts
to take the following actions: (i) the taking of all reasonable acts necessary
to cause the Offer Conditions to be satisfied, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to avoid an action or proceeding by any
Governmental Entity including, but not limited to, all filings under the HSR
Act which are required in connection with the transactions contemplated by this
Agreement. Each party shall cooperate with the other party in connection with
the other party's filings under the HSR Act including taking all reasonable
actions to cause early termination of all applicable waiting periods, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, but subject to the terms and conditions hereof, the
Company and its Board of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to the Offer, the
Merger, this Agreement or any other transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Offer, the Merger and
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer,
the Merger, this Agreement and the other transactions contemplated by this
Agreement.
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(b) The Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 7.05. Company Stock Options.
(a) Each option granted to an employee of the Company or its
subsidiaries or a member of the Board of the Company (an "Optionee") to acquire
Shares ("Company Stock Option") that is outstanding immediately prior to the
commencement of the Offer, whether or not then vested or exercisable, shall,
effec tive as of the commencement of the Offer, become fully exercisable
subject to the last sentence of this paragraph. Upon the commencement of the
Offer, the Board of the Company or an appropriate committee thereof shall
provide notice to each Optionee that any Company Stock Option not exercised
within 15 days (10 days in the case of Company Stock Options granted under the
Company 1995 Directors Stock Option Plan) from the date of such notice shall
thereupon be cancelled. The notice may provide each Optionee with an
opportunity to avoid the tendering of the exercise price and receiving in lieu
thereof an amount per option share equal to the excess, if any, of the Offer
Price over the exercise price of the Option. Notwithstanding anything to the
contrary set forth in this Section 7.05, any such acceleration, exercise or
cancellation shall be conditioned upon the effectiveness of the Merger.
(b) Prior to the commencement of the Offer, the Company shall
(i) obtain any consents from holders of Company Stock Options and (ii) amend
the terms of its equity incentive plans or arrangements, in each case as is
necessary to give effect to the provisions of paragraph (a) of this Section
7.05 and to ensure that at the Effective Time no holder of any Company Stock
Option shall have the right to purchase or receive any Shares.
SECTION 7.06. Directors. Promptly upon the acceptance for payment of,
and payment for, Shares by Sub pursuant to the Offer, Sub shall be entitled to
designate such number of directors on the Board of Directors of the Company as
will
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give Sub, subject to compliance with Section 14(f) of the Exchange Act, a
majority of such directors, and the Company shall, at such time, cause Sub's
designees to be so elected by its existing Board of Directors; provided,
however, that in the event that Sub's designees are elected to the Board of
Directors of the Company, until the Effective Time such Board of Directors
shall have at least two directors who are directors of the Company on the date
of this Agreement and who are not officers of the Company or any of its
subsidiaries (the "Independent Directors") and; provided further that, in such
event, if the number of Independent Directors shall be reduced below two for
any reason whatsoever, the remaining Independent Director shall designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of this Agreement or, if no Independent Directors then remain, the
other directors of the Company on the date hereof shall designate two persons
to fill such vacancies who shall not be officers or affiliates of the Company
or any of its subsidiaries, or officers or affiliates of Parent or any of its
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. The Company shall, if requested by the Parent, also
cause directors designated by the Parent to constitute at least a majority of
(i) each committee of the Company's Board of Directors, (ii) each board of
directors (or similar body) of each subsidiary of the Company, and (iii) each
committee (or similar body) of each such board. Subject to applicable law, the
Company shall take all action requested by Parent necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided
to the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either increase
the size of the Board of Directors of the Company, any subsidiary or any
committee thereof and/or obtain the resignation of such number of current
directors or committee members as is necessary to enable Sub's designees to be
elected or appointed to, and to constitute a majority of such boards and
committees as provided above.
SECTION 7.07. Fees and Expenses.
(a) All fees and expenses incurred in connection with the
Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Offer or the Merger is consummated.
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(b) The Company shall pay, or cause to be paid, in same day
funds to Parent the sum of (x) all of Parent's reasonable out-of-pocket
expenses incurred or to be incurred in connection with the Offer, the Merger or
this Agreement or the preparation therefor such amount not to exceed $3,000,000
(the "Expenses"), and (y) $8,800,000 (the "Termination Fee") if (i) the Company
terminates this Agreement pursuant to Section 9.01(e), or (ii) prior to
termination of this Agreement, a Takeover Proposal (whether or not such
Takeover Proposal constitutes a Superior Proposal) shall have been received and
within twelve months of such termination such proposal is consummated or the
Company enters into an agreement to consum mate or approves or recommends to
its stockholders such proposal. The payment shall be made in the case of a
termination described in clause (i) immediately prior to termination and in the
case of a termination described in clause (ii) concurrently with the earlier of
any such recommendation or the consummation of any such transaction by the
Company. The Company shall pay, or cause to be paid, in same day funds to
Parent all of Parent's Expenses if Parent or Sub shall terminate this Agreement
pursuant to Section 9.01(c), such payment to be made promptly upon such
termination.
SECTION 7.08. Indemnification.
(a) From and after the consummation of the Offer, Parent
will, and will cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company pursuant to (i) each indemnification
agreement in effect at such time between the Company and each person who is or
was a director or officer of the Company at or prior to the Effective Time and
(ii) any indemnification provisions under the Company's Certificate of
Incorporation or By-laws as each is in effect on the date hereof (the persons
to be indemnified pursuant to the agreements or provisions referred to in
clauses (i) and (ii) of this Section 7.08(a) shall be referred to as,
collectively, the "Indemnified Parties"). In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) any counsel retained by the Indemnified Parties for any
period after the Effective Time must be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel provided, however,
that the Surviving Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and provided, further, that the Indemnified Parties as a group may retain only
one law firm to represent them with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
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Parties. The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Certificate of
Incorporation and By-laws on the date of this Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of any Indemnified Party.
(b) This Section 7.08 shall survive the consummation of the
Merger at the Effective Time, is intended to be for the benefit of, and
enforceable by, the Company, Parent, the Surviving Corporation and each
Indemnified Party and such Indemnified Party's heirs and representatives, and
shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
SECTION 7.09. Certain Litigation. The Company agrees that it shall not
settle any litigation against the Company or any of its directors by any
stockholder of the Company relating to the Offer, the Merger or this Agreement
or any Takeover Proposal made by another party whether before or after the date
of this Agreement without the prior written consent of Parent (not to be
unreasonably withheld).
SECTION 7.10. Rights Agreement. Except as provided above or as re
quested in writing by Parent, the Board of Directors of the Company shall not
(a) amend the Rights Agreement or (b) take any action with respect to, or make
any determination under, the Rights Agreement, including a redemption of the
Rights or any action to facilitate a Takeover Proposal.
SECTION 7.11. Notification of Certain Matters. The Company shall give
prompt notice to Parent, of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect, and (ii) any failure by the Company to satisfy any covenant condition
or agreement to be complied with or satisfied by it hereunder; provided however
that the delivery of any notice pursuant to this Section shall not limit or
otherwise affect the representations, warranties and covenants set forth in
this Agreement or the remedies available hereunder or under applicable law.
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ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. If required by applicable
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted
for payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the terms
of this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) Sub shall not have accepted for payment
any Shares pursuant to the Offer prior to February 26, 1999 (the "Deadline
Condition")
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as a result of the failure, occurrence or existence of any of the conditions
set forth in Exhibit A to this Agreement or (y) the Offer shall have terminated
or expired in accordance with its terms without Sub having accepted for payment
any Shares pursuant to the Offer; provided, however, that the right to
terminate this Agreement pursuant to this Section 9.01(b)(i) shall not be
available to any party whose failure (including, in the case of Parent, a
failure by Sub) to perform any of its obligations under this Agreement results
in the failure of the satisfaction of any such conditions; provided, that if
the Offer is extended pursuant to clause C of the last sentence of Section
1.01(a) to a date later than the date of the Deadline Condition, the date of
the Deadline Condition shall automatically be extended to the first business
day following the extended expiration date of the Offer.
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or payment
for, Shares pursuant to the Offer or the Merger on the terms contemplated in
this Agreement and such order, decree or ruling or other action shall have
become final and nonappealable;
(c) by Parent or Sub if prior to the purchase of Shares
pursuant to the Offer, any of the material representations and warranties of
the Company set forth in this Agreement shall not be true and correct in any
material respect, as of the date of this Agreement, or if the Company shall
have failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of the Company to be
performed or complied with by it under this Agreement; or;
(d) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraphs (d), (e), (f) or (g) of Exhibit A to this Agreement;
(e) by the Company in connection with entering into a
definitive agreement with respect to a Superior Proposal, in accordance with
Section 6.02(b), provided that the Company has complied with all provisions
thereof, including the notice provisions therein and that the Company has made
the payments pursuant to Section 7.07(b); or
(f) by the Company if prior to the purchase of Shares
pursuant to the Offer, any of the material representations and warranties of
the Parent or Sub set forth in this Agreement shall not be true and correct in
any material respect, at the
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date of this Agreement, or if the Parent or Sub shall have failed to perform in
any material respect any obligation or to comply with in any material respect
any agreement or covenant of Parent or Sub to be performed or complied with by
them under this Agreement; or
(g) By Parent or Sub if (i) a tender offer for any securities
of the Company shall have been commenced or publicly proposed to be made by
another person (including the Company or its subsidiaries or affiliates), (ii)
any person or group (as defined in Section 13(d)(3) of the Exchange Act), other
than Parent and Sub and other than any person or group which prior to the date
hereof has publicly disclosed beneficial ownership of 10% or more of the
outstanding voting securities of the Company (a "Significant Shareholder")
shall have acquired directly or indirectly beneficial ownership of 10% or more
of the outstanding voting securities of the Company or any of its subsidiaries,
whether through the acquisition of securities, the exercise of rights under
options, warrants or similar instruments, the formation of a group, or
otherwise, or (iii) any Significant Shareholder or group that together would
constitute a Significant Shareholder shall have beneficially acquired
additional voting securities of the Company, whether through the acquisition of
securities, the exercise of rights under options, warrants or similar
instruments, the formation of a group or otherwise, representing 2% or more of
the outstanding voting securities of the Company; provided that in Parent's
reasonable judgment any such event described in clause (ii) or (iii) makes the
successful completion of the Offer unlikely or materially more burdensome to
Parent or Sub.
SECTION 9.02. Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent or Sub as provided in Section
9.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.05, the last sentence of Section 7.02,
Section 7.07, this Section 9.02 and Article X; provided, however, that nothing
herein shall relieve any party for liability for fraud or for breach of the
provisions of this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the parties
hereto, by duly authorized action taken, at any time before or after obtaining
the Company Stockholder Approval, but, after the purchase of Shares pursuant to
the Offer, no amendment shall be made which decreases the Merger Consideration
and, after the Company Stockholder Approval, no amendment shall be made which
by law requires further approval by such stockholders without obtaining such
further
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approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Following the election or
appointment of Sub's designees pursuant to Section 7.06 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement, (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement or (iv) take any action
to amend or otherwise modify the Company's Certificate of Incorporation or
By-laws (or similar governing instruments of the Company's subsidiaries) in
violation of Section 7.08 hereof.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, subject to Section
9.03, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and Agree
ments. None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time or, in the case of the Company, shall survive the acceptance for payment
of, and payment for, Shares by Sub pursuant to the Offer. This Section 10.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time, including Section 7.08.
SECTION 10.02. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or
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mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to
Maxxim Medical, Inc.
10300 49th Street North
Clearwater, Florida 34622
Attention: Kenneth W. Davidson
Telecopy No.: 813-561-2180
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Attention: Michael E. Gizang
Telecopy No.: 212-735-2000
and
(b) if to the Company, to
Circon Corporation
6500 Hollister Avenue
Santa Barbara, California 93117
Attention: George A. Cloutier
Telecopy No.: 805-968-8174
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Robert Jack
Telecopy No.: 650-493-6811
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SECTION 10.03. Interpretation. When a reference is made in this Agree-
ment to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is
to be made available. As used in this Agreement, the term "subsidiary" of any
person means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person. As used in this
Agreement, "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, as the case may be, any change
or effect that is materially adverse to the business, properties, assets,
liabilities, financial condition or results of operations of such entity and
its subsidiaries taken as a whole.
SECTION 10.04. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Sections 7.05 and 7.08 hereof, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law
(including Rule 14d-9 promulgated under the Exchange Act), court process or the
rules of the
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NYSE or the Nasdaq National Market or as contemplated or provided elsewhere
herein, for so long as this Agreement is in effect, neither the Company nor
Parent shall, or shall permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence but without relieving any party hereof of any
obligation hereunder, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the partes shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a court of the United States located in
the State of Delaware or a Delaware state court.
SECTION 10.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall
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negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
MAXXIM MEDICAL, INC.
By:________________________________
Name: Kenneth W. Davidson
Title: Chairman of the Board,
President & Chief
Executive Officer
MMI ACQUISITION CORP.
By:________________________________
Name: Kenneth W. Davidson
Title: President
CIRCON CORPORATION
By:________________________________
Name: George A. Cloutier
Title: Chief Executive Officer
<PAGE>
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay and may delay the acceptance
for payment of or the payment for any Shares tendered pursuant to the Offer and
may amend or terminate the Offer, consistent with the terms of the Merger
Agreement unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would
constitute at least a majority of the outstanding Shares, determined on a
fully diluted basis (the "Minimum Condition"), and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Furthermore, Sub shall not be required
to accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may, in accordance with
Section 9.01, termi nate this Agreement or, amend the Offer with the consent of
the Company, if, upon the scheduled expiration date of the Offer and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions exists:
(a) there shall be instituted or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition by Parent
or Sub of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any of
Parent's subsidiaries of a material portion of the business or assets of the
Company or Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and its subsidiaries, taken as a
whole, in each case as a result of the Offer or the Merger or (iii) seeking to
impose material limitations on the ability of Parent or Sub to acquire or hold,
or exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company or
(iv) seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the
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Company or (v) seeking to obtain from the Company any damages that could
reasonably be expected to have a material adverse effect on the Company;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, by any Governmental Entity or court,
other than the application to the Offer or the Merger of applicable waiting
periods under the HSR Act, that would result in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) this Agreement shall have been terminated in accordance
with its terms;
(d) (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified its approval or
recommendation of the Offer or the Merger or its adoption of this Agreement, or
approved or recommended any Takeover Proposal, (ii) the Company shall have
entered into any agreement with respect to any Takeover Proposal in accordance
with Section 6.02(b) of this Agreement or (iii) the Board of Directors of the
Company or any committee thereof shall have resolved to take any of the
foregoing actions;
(e) in the event any of the material representations and
warranties of the Company set forth in this Agreement shall not be true and
correct in any material respect, at the date of this Agreement, or if the
Company shall have failed to perform in any material respect any obligation or
to comply in any material respect with any agreement or covenant of the Company
to be performed or complied with by it under this Agreement;
(f) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory) by any Governmental Entity, (3) any
limitation or proposed limitation (whether or not mandatory) by any United
States governmental authority or agency that has a material adverse effect
generally on the extension of credit by banks or other financial institutions,
(4) any change in general financial, bank or capital market conditions such
that banks are unwilling to extend credit to borrowers similar to
A-2
<PAGE>
Parent generally or (5) any decline in either the Dow Jones Industrial Average
or the Standard & Poor's Index of 500 Industrial Companies in excess of 20%
from the close of business on the date hereof;
(g) there shall have occurred any events or changes which
constitute or which are reasonably likely to constitute, individually or in the
aggregate, a material adverse change in the condition of the Company
(financial or otherwise);
(h) (i) a tender offer for any securities of the Company
shall have been commenced or publicly proposed to be made by another person
(including the Company or its subsidiaries or affiliates), (ii) any person or
group (as defined in Section 13(d)(3) of the Exchange Act), other than Parent
and Sub and other than any person or group which prior to the date hereof has
publicly disclosed beneficial ownership of 10% or more of the outstanding
voting securities of the Company (a "Significant Shareholder"), shall have
acquired directly or indirectly beneficial ownership of 10% or more of the
outstanding voting securities of the Company or any of its subsidiaries,
whether through the acquisition of securities, the exercise of rights under
options, warrants or similar instruments, the formation of a group, or
otherwise, or (iii) any Significant Shareholder of group that together would
constitute a Significant Shareholder shall have beneficially acquired
additional voting securities of the Company, whether through the acquisition of
securities, the exercise of rights under options, warrants or similar
instruments, the formation of a group or otherwise, representing 2% or more of
the outstanding voting securities of the Company; provided that in Parent's
reasonable judgment any such event described in clause (ii) or (iii) makes the
successful completion of the Offer unlikely or materially more burdensome to
Parent or Sub.
which, in the reasonable judgment of Parent or Sub, in its sole discretion,
make it inadvisable to proceed with such acceptance of Shares for payment or
the payment therefor.
The foregoing conditions are for the sole benefit of Parent and Sub
and (except for the Minimum Condition) may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub, at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any right and all such rights may be asserted at any time or from time to time.
Terms used but not defined herein shall
A-3
<PAGE>
have the meanings assigned to such terms in the Agreement to which this Exhibit
A is a part.
A-4
<PAGE>
EXHIBIT B
SUBSIDIARIES
Citrus Canada Inc.
Circon GmbH
Circon Export Corporation
Cabot Technology Corp.
Circon S.A.
<PAGE>
AGREEMENT AND PLAN OF MERGER
among
MAXXIM MEDICAL, INC.,
MMI ACQUISITION CORP.
and
CIRCON CORPORATION
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TABLE OF CONTENTS
Page
ARTICLE I The Offer.........................................................................2
SECTION 1.01. The Offer............................................................................2
SECTION 1.02. Company Actions......................................................................3
ARTICLE II The Merger........................................................................5
SECTION 2.01. The Merger...........................................................................5
SECTION 2.02. Closing..............................................................................5
SECTION 2.03. Effective Time.......................................................................6
SECTION 2.04. Effects of the Merger................................................................6
SECTION 2.05. Certificate of Incorporation and Bylaws..............................................6
SECTION 2.06. Directors............................................................................6
SECTION 2.07. Officers.............................................................................7
ARTICLE III Effect of the Merger on the Capital Stock of the Constituent
Corporations; Payment of Merger Consideration.....................................7
SECTION 3.01. Effect on Capital Stock..............................................................7
SECTION 3.02. Payment of Merger Consideration......................................................8
ARTICLE IV Representations and Warranties of the Company....................................10
SECTION 4.01. Organization, Standing and Corporate Power..........................................10
SECTION 4.02. Subsidiaries........................................................................10
SECTION 4.03. Capital Structure...................................................................11
SECTION 4.04. Authority; Noncontravention.........................................................12
SECTION 4.05. SEC Documents; Financial Statements.................................................14
SECTION 4.06. Information Supplied................................................................14
SECTION 4.07. Absence of Certain Changes or Events................................................15
SECTION 4.08. Litigation; Investigation...........................................................15
SECTION 4.09. Contracts...........................................................................16
SECTION 4.10. Compliance with Laws................................................................16
SECTION 4.11. Absence of Changes in Benefit Plans; Labor Relations................................18
SECTION 4.12. ERISA Compliance....................................................................19
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 4.13. Taxes...............................................................................21
SECTION 4.14. No Excess Parachute Payments........................................................21
SECTION 4.15. Intellectual Property...............................................................22
SECTION 4.16. State Takeover Statutes.............................................................25
SECTION 4.17. Rights Agreement....................................................................25
SECTION 4.18. Brokers; Schedule of Fees and Expenses..............................................25
SECTION 4.19. Opinion of Financial Advisor........................................................26
SECTION 4.20. Annual Meeting......................................................................26
SECTION 4.21. Products Liability..................................................................26
SECTION 4.22. Insurance............................................................................27
ARTICLE V Representations and Warranties of Parent and Sub.................................28
SECTION 5.01. Organization, Standing and Corporate Power..........................................28
SECTION 5.02. Authority; Noncontravention.........................................................28
SECTION 5.03. Information Supplied................................................................29
SECTION 5.04. Interim Operations of Sub...........................................................30
SECTION 5.05. Brokers.............................................................................30
SECTION 5.06. Financing...........................................................................30
ARTICLE VI Covenants........................................................................30
SECTION 6.01. Covenants of the Company............................................................30
SECTION 6.02. No Solicitation.....................................................................33
ARTICLE VII Additional Agreements.................................................................36
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement................................36
SECTION 7.02. Access to Information...............................................................37
SECTION 7.03. State Takeover Laws.................................................................37
SECTION 7.04. Reasonable Efforts..................................................................38
SECTION 7.05. Company Stock Options...............................................................39
SECTION 7.06. Directors...........................................................................39
SECTION 7.07. Fees and Expenses...................................................................40
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 7.08. Indemnification.....................................................................41
SECTION 7.09. Certain Litigation..................................................................42
SECTION 7.10. Rights Agreement....................................................................42
SECTION 7.11. Notification of Certain Matters.....................................................42
ARTICLE VIII Conditions.......................................................................43
SECTION 8.01. Conditions to Each Party's Obligation To Effect
the Merger..............................................................43
ARTICLE IX Termination and Amendment........................................................43
SECTION 9.01. Termination.........................................................................43
SECTION 9.02. Effect of Termination...............................................................45
SECTION 9.03. Amendment...........................................................................45
SECTION 9.04. Extension; Waiver...................................................................46
ARTICLE X Miscellaneous....................................................................46
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements..............................................................46
SECTION 10.02. Notices............................................................................46
SECTION 10.03. Interpretation.....................................................................48
SECTION 10.04. Counterparts.......................................................................48
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries.....................................48
SECTION 10.06. Governing Law......................................................................48
SECTION 10.07. Publicity..........................................................................48
SECTION 10.08. Assignment.........................................................................49
SECTION 10.09. Enforcement........................................................................49
SECTION 10.10. Severability.......................................................................49
</TABLE>
-iii-
<PAGE>
MAXXIM MEDICAL INC.
10300 49th Street North
Clearwater, FL 33762
813-561-2100
Fax: 813-561-2180
November 17, 1998
George Cloutier
Circon Corporation
6500 Hollister Avenue
Santa Barbara, California
93117
Dear George:
In connection with Maxxim Medical, Inc.'s ("Maxxim") analysis of the
possible acquisition (the "Acquisition") of Circon Corporation (collectively,
with its subsidiaries "Circon"), Maxxim is unwilling to proceed with such
analysis and work toward the execution of definitive agreements relating
thereto without the agree ments from Circon relating to it and its officers,
employees, directors, affiliates, advisors, consultants, investment bankers,
representatives or other agents (collec tively, the "Representatives") as set
forth below.
In consideration of Maxxim proceeding as set forth above, Circon
hereby agrees as follows:
(1) From the date of the execution of this Agreement until 5:00
p.m. Pacific time on November 23, 1998, Circon shall not, and
shall not permit any of the Representatives to, directly or
indirectly, (a) solicit, initiate or encourage any
Acquisition Proposal (as hereinafter defined), engage in
discussions, negotiations or carry-on a dialogue with any
person or Group (as such term is defined under Section 13d-3
of the Securities Exchange Act of 1934) with respect to an
Acquisition Proposal, or (b) disclose any non-public
information relating to Circon or afford access to the
properties, books or records (financial or otherwise) of
Circon to, any person or Group. Upon execution of this
Agreement, Circon will cease any existing activities,
discussions
<PAGE>
or negotiations with any persons conducted with respect to an
Acqui sition Proposal. Except as required by law, unless and
until a definitive agreement between Maxxim and Circon has
been entered into relating to an Acquisition neither Maxxim
nor Circon shall make any disclosure of this Agreement or the
subject matter hereof to any person except to their
respective Representatives. This Agreement constitutes a
valid and binding agreement of Circon and Maxxim enforceable
in accordance with its terms.
(2) For purposes of this Agreement, "Acquisition Proposal" means
any offer, proposal or indication of interest (in any case
whether written or oral) by a person or Group other than
Maxxim, or a wholly owned subsidiary of Maxxim, for a merger,
consolidation, recapitalization, liquidation or other
business combination involving Circon or the acquisition or
purchase of 15% or more of any class of equity securities of
Circon, or any tender offer (including self-tender offers) or
exchange offer that if consummated could result in any such
person or Group beneficially owning 15% or more of any class
of equity securities of Circon or a substantial portion of
the assets of Circon.
(3) Circon will provide prompt written notice to Maxxim if Circon
or the Representatives (x) are requested or required (by oral
questions, interrogatories, requests for information,
subpoena, civil investigative demand or other otherwise) to
make any disclosure regarding this Agreement or the
Acquisition or (y) receive or become aware of any inquiry,
request for information or other communication from any
person or Group other than Maxxim relating to or constituting
an Acquisition Proposal.
(4) Circon and Maxxim agree that unless and until a definitive
agreement between Maxxim and Circon with respect to the
Acquisition has been executed and delivered, neither Maxxim
nor Circon will be under any legal obligation of any kind
whatsoever with respect to the Acquisition.
(5) It is further understood and agreed that no failure or delay
in exercising any right, power, or privilege hereunder shall
operate as a waiver thereof, and no single or partial
exercise thereof shall preclude any
2
<PAGE>
other or further exercise thereof or the exercise of any
right, power, or privilege hereunder. If any provision of
this Agreement is determined to be invalid or unenforceable
for any reason, in whole or in part, the remaining provisions
of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent
permitted by applicable law.
(6) It is further understood and agreed that money damages would
not be a sufficient remedy for any breach of this Agreement
and that the nonbreaching party shall be entitled to specific
performance and injunc tive or other equitable relief as a
remedy for any such breach, and each party agrees to waive
any requirement for security or posting of any bond in
connection with such remedy for a breach by the other party
of this Agreement, it being understood between the parties
that the foregoing in no way limits the rights and remedies
available at law or in equity to either party.
(7) This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(8) This Agreement contains, and is intended as, a complete
statement of all of the terms and conditions of the
arrangements between the parties with respect to the matters
provided for herein and supercedes any previous agreements
whether written or oral between the parties with respect to
those matters.
(9) This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without
giving effect to the principles, policies or provisions
thereof concerning conflict or choice of law.
3
<PAGE>
If you agree with the foregoing, please sign and return two
copies of this letter, which will constitute our agreement with respect to the
subject matter of this letter.
Very truly yours,
MAXXIM MEDICAL, INC.
By:_______________________
Name:
Title:
CONFIRMED AND AGREED TO
AS OF THE DATE FIRST
ABOVE WRITTEN
CIRCON CORPORATION
By:_________________________
Name:
Title:
4
