SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Circon Corporation.
(Exact Name as Specified in its Charter)
The Circon Shareholders Committee
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Preliminary Proxy Statement
Dated November 2, 1998
THE CIRCON SHAREHOLDERS COMMITTEE
c/o MacKenzie Partners,
Inc.
156 Fifth Avenue
New York, New York 10010
* * *
PROXY STATEMENT IN SUPPORT OF CIRCON SHAREHOLDERS
COMMITTEE'S NOMINEES
FOR THE ELECTION AS DIRECTORS OF CIRCON CORPORATION
1998 ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
This Proxy Statement and the accompanying BLUE proxy card are being
furnished in connection with the solicitation of proxies by the Circon
Shareholders Committee (the "Committee") for use at the 1998 Annual Meeting of
Shareholders of Circon Corporation ("Circon" or the "Company") scheduled for
November 24, 1998, or any adjournment or postponement thereof (the "Annual
Meeting"). Circon has not yet announced a location or a time for the Annual
Meeting. This Proxy Statement and the BLUE proxy card are first being sent to
shareholders of the Company on or about November 4, 1998. The Company's
principal executive offices are located at 6500 Hollister Avenue, Santa Barbara,
CA 93117.
The Company has set October 23, 1998 as the record date (the "Record Date")
for determining shareholders entitled to notice of, and to vote at, the Meeting.
According to the Company's Preliminary Proxy Statement filed with the Securities
Exchange Commission on October 30, 1998, as of the Record Date, there were
outstanding 13,441,419 shares of common stock, par value $.01 per share.
As of the Record Date, members of the Committee and other participants in
the Committee's solicitation beneficially own, in the aggregate, 1,295,360
shares or 9.6% of the Company's common stock and are seeking your vote for the
election of Lester Hill, Jonathan R. Macey and Alain Oberrotman (the "Nominees")
as directors of Circon at the Annual Meeting for a three-year term expiring at
the 2001 Annual Meeting of Shareholders. Each of the Committee members intends
to vote its Circon shares for the election of the Nominees.
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The members of the Committee consist of Castlerigg Master Investments,
Ltd., Metropolitan Capital Advisors, Inc., Metropolitan Capital III, Inc. and P.
Schoenfeld Asset Management, LLC. Certain additional information concerning the
members of the Committee and other participants in the Committee's solicitation
is set forth in Appendices A and B and elsewhere herein.
THE COMMITTEE'S NOMINEES WILL SEEK
TO IMMEDIATELY MAXIMIZE SHAREHOLDER VALUE
The Committee believes that it is in the shareholders' best interest for
the Company's board to aggressively seek the prompt maximization of shareholder
value, including the full and immediate exploration of the sale of the Company
at fair value. The Committee believes that the Nominees, when elected and
subject to their fiduciary duties, will actively explore the sale of the Company
at an appropriate price. Because neither the Committee members nor the Nominees
have access to detailed information concerning the Company's financial
condition, they have not formed an opinion as to what constitutes an appropriate
price.
If all of the Nominees are elected, they will constitute three directors of
the seven-member Circon Board. Under Circon's Certificate of Incorporation and
Bylaws, a majority of the whole Board constitutes a quorum, and Board action may
be taken by a vote of a majority of the directors when a quorum is present.
Accordingly, if all of the Nominees are elected, they may not be able, without
the support of at least one other Board member, to take Board action.
Nonetheless, if elected, the Nominees will, subject to their fiduciary duties,
seek to convince other members of the Circon Board that fully exploring
alternatives for the immediate maximization of shareholder value, including a
prompt sale of Circon at a price reflecting the Company's fair value, is in the
best interest of all shareholders.
In addition, if the Nominees are elected, they intend to seek to install
Lester Hill, one of the Nominees, as Chief Executive Officer of the Company. The
Committee believes that Mr. Hill's experience makes him an ideal person to lead
the Company through the shareholder maximization process. If Mr. Hill becomes
chief executive officer, he intends to seek to appoint David Schlotterbeck as
chief operating officer of the Company and to the board if a vacancy should
occur. Together, Messrs. Hill and Schlotterbeck led Pacific Scientific
Corporation, which was trading at $12 per share in February 1997 (when they
became involved with that Company), to a sale at $30.25 per share in March 1998.
For information concerning Mr. Hill's experience, see page 5; Mr. Schlotterbeck
was president and chief executive officer from 1995-1997 of VitalCom, a medical
network manufacturer, and from 1991-1994, was executive vice president and chief
operating officer of Nellcor, Inc., a medical device maker.
THE COMMITTEE BELIEVES THAT THE ELECTION OF THE NOMINEES REPRESENTS THE
BEST OPPORTUNITY TO MAXIMIZE SHAREHOLDER VALUE. For over two years, the Circon
Board resisted offers by U.S. Surgical Corporation ("U.S. Surgical") to acquire
Circon, despite the fact that Circon shareholders overwhelmingly supported such
sale.
More than two years ago, U.S. Surgical was willing to pay $18 per share in
a tender offer for all of Circon's common stock, which at the time represented a
premium of approximately 83% over the average closing price of the stock during
the ten days prior to the tender offer. In response to that offer, the Circon
directors installed various anti-takeover provisions, which prevented the
shareholders from deciding whether or not to sell the Company. The Circon Board
stated that $18 per share did not reflect Circon's long term value. They stated
that management needed additional time to implement its operating plan.
In the last two years, the Circon Board has succeeded in causing U.S.
Surgical to lower its bid, and on September 15, 1998, U.S. Surgical withdrew its
tender offer.
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As a result of the Circon Board's refusal to remove its anti-takeover
defenses, management was given a two year opportunity to implement its operating
plan. WHAT HAS MANAGEMENT SUCCEEDED IN DOING? It has succeeded in causing you to
lose an $18 offer for your Circon shares two years ago. It has succeeded in
causing you to lose a succession of decreasing offers for your shares, each one,
however, still substantially higher than the $8.12 price of your stock on
October 20, 1998 the day the Committee announced its intention to nominate two
candidates at the Annual Meeting. MANAGEMENT'S OPERATING PLAN AND THE CIRCON
BOARD'S IDEA OF LONG TERM VALUE HAS COST YOU ALMOST $10 FOR EACH SHARE YOU OWN.
On October 20, 1998, the Company announced that Richard Auhll resigned as
chairman and chief executive officer. In that same release, the Company also
announced that "The Circon Board has determined not to continue actively
soliciting new acquisition proposals at this time ...." The Committee believes
that Mr. Auhll's resignation should offer renewed opportunity for sale
negotiations and, with the election of the Committee's Nominees, provide
shareholders with greater representation in the process of maximizing
shareholder value. Only then will shareholders be assured that the Board is
adequately considering shareholders' interests.
The Committee also believes that Mr. Hill represents an ideal replacement
as chief executive officer, and, with the proposed addition of Mr.
Schlotterbeck, provides an excellent management team to lead the Company through
the value maximization process.
If you believe, as we do, that the Circon Board has failed to take
appropriate steps to maximize shareholder value over the past two years, the
Committee urges you to vote your BLUE proxy card FOR each of the Committee's
Nominees.
VOTING AND REVOCATION OF PROXIES
Holders of record of Circon common stock on the Record Date are entitled to
one vote per share for the election of directors at the Meeting, except that
cumulative voting will apply to the election of directors if any shareholder
properly notifies the Company of an intention to vote cumulatively at the
Meeting. The Committee expects that cumulative voting will apply in the election
of directors at the Annual Meeting. Under cumulative voting, each shareholder is
entitled to (a) cast the number of votes equal to the number of his or her
shares multiplied by the number of directors to be elected (three) and (b)
distribute such votes among the nominees for election as directors or to vote
for a lesser number, or a single nominee, as he or she sees fit. If a
shareholder wishes to distribute his or her votes in a specific manner, the
proxy card should be marked to indicate clearly how the votes are to be
distributed among the nominees. For example, the shareholder may write on the
proxy card the number of votes to be cast next to the name of the Nominee or
Nominees for whom the shareholder desires to cast such votes. If a shareholder
strikes out the name of a Nominee, all the cumulative votes of such shareholder
will be
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distributed to the remaining Committee Nominees. If no specific instruction is
given regarding the distribution of votes, the Committee's proxy holders
currently intend to distribute the shares which they are entitled to vote first,
to cause Mr. Hill's election (unless that would prevent the Committee from
electing at least two of its Nominees) and, second, in favor of the other
Nominees in their discretion.
The Committee is not aware of any matter other than the election of
directors at the Annual Meeting. Should any other business properly come before
the Annual Meeting, the Committee's BLUE proxy card confers upon the Committee's
proxy holders discretionary authority to vote in respect to any such business in
accordance with their judgment.
Execution and delivery of a proxy card will not effect a shareholder's
right to attend the Annual Meeting and vote in person. A shareholder in whose
name the shares are registered as of the Record Date and who has given a proxy
may revoke it at any time before it is voted by executing and delivering a
written revocation to the Committee or to the Secretary of the Company, by
presentation of a later dated proxy or by attending the Annual Meeting and
voting by ballot (which has the effect of revoking the prior proxy). Attendance
at the Annual Meeting, however, will not in and of itself revoke a proxy.
A shareholder who is a beneficial owner but not a registered owner as of
the Record Date, cannot vote his or her shares except by the shareholder's
broker, bank or nominee executing a proxy on his or her behalf. Your broker,
bank or other nominee cannot vote your stock without your specific instructions.
Whether or not you plan to attend the Annual Meeting, please sign, mark and
date the enclosed BLUE proxy card and return it in the accompanying envelope as
soon as possible. Sign your BLUE proxy card exactly as our name appears on the
label.
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<PAGE>
THE COMMITTEE'S NOMINEES
Certain information regarding the Nominees, their present principal
occupations and business addresses, their business experience, their ages, the
aggregate number of shares of Circon stock beneficially owned, directly, or
indirectly, by each of them as of October 15, 1998 and a summary of their
transaction history of Circon stock during the past two years is set forth
below.
<TABLE>
<CAPTION>
<S> <C> <C>
Name, Principal Occupation, Shares Owned of Record or
Business Address and Age Business Experience Beneficially
- ------------------------ ------------------- ------------
<S> <C> <C>
Jonathan R. Macey Since 1991, Mr. Macey has been Mr. Macey does not own any
Professor of law at Cornell a professor of law at Cornell securities issued by
University School of Law University School of Law. In Circon nor has he
Cornell School of Law the fall of 1993, he was a purchased or sold Company
306 Myron Taylor Hall visiting professor, faculty of securities during the past
Ithaca, NY 14850 law, Stockholm School of two years.
Age: 43 Economics. From 1993 through
June 1994, Mr. Macey was a
research fellow, International
Center for Economic Research,
Turin, Italy.
Alain M. Oberrotman From 1992-1997, Mr. Oberrotman Mr. Oberrotman does not
Independent Management was a principal in the private own any securities issued
Consultant equity group at Odyssey by Circon nor has he
5 Woodland Drive Partners, L.P., involved with, purchased or sold Company
Rye Brook, NY 10573 among other things, securities during the past
Age: 47 acquisitions, financings and two years.
restructurings of Odyssey's
portfolio companies. Since
1997, Mr. Oberrotman has been
an independent management
consultant. Mr. Oberrotman
currently serves on the board
of directors of Eagle Food
Centers, Inc. (food retailing).
Lester Hill Since March 10, 1998, Mr. Hill Mr. Hill does not own any
Private Investor has been a private investor. securities issued by
34771 Doheny Place From February 1997 until March Circon nor has he
Capistrano Beach, CA 92624 10, 1998, Mr. Hill was a purchased or sold Company
Age: 54 director, Chairman of the Board securities during the past
and Chief Executive Officer of two years.
Pacific Scientific Corporation.
From 1996 to February 1997, Mr.
Hill was a business consultant.
From 1992 through 1995, Mr.
Hill was Executive Vice
President of the Communications
Division of General Instrument
Corporation. Mr. Hill also
serves as a director of Object
Share, Inc. (a software tool,
training and consulting
business).
</TABLE>
Each Nominee has consented to serve as a director of the Company, if
elected. If any Nominee is unable or declines to serve, the discretionary
authority provided to the Committee's proxy holders will be exercised to vote at
the Annual Meeting for a substitute designated by the Committee's proxy holders.
The Committee has no reason to believe that any of its Nominees will be unable
to or will decline to serve.
Each Nominee is a party to an agreement with the Committee whereby the
Committee has agreed to pay each Nominee $25,000 to serve as a Nominee and to
indemnify each Nominee against certain expenses and liabilities that may be
incurred in the proxy solicitation (the "Nominee Agreement"). Other than the
Nominee Agreement, none of the Nominees
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<PAGE>
is, or was within the past year, a party to any contract, arrangements or
understandings with any person with respect to any securities of the Company.
Based on conversations with the Nominees, the Committee believes that the
Nominees will seek to enhance shareholder value immediately by pursuing the
prompt sale of the Company, although neither the members of the Committee nor
the Nominees have determined an appropriate price for such sale.
In addition, if Mr. Hill is elected as a director and chief executive
officer of the Company, he intends to have the Company appoint David
Schlotterbeck as chief operating officer of the Company and to add Mr.
Schlotterbeck to the Company's board of directors if a vacancy in the board
occurs.
THE COMMITTEE'S SOLICITATION EXPENSES
Pursuant to an agreement among the members of the Committee, the expenses
of preparing, printing and distributing this Proxy Statement, the accompanying
form of proxy and any other soliciting materials of the Committee, and the
expenses of soliciting proxies for the election of the Nominees will be borne by
the members of the Committee in proportion to the highest number of shares of
the Company's common stock each owns between October 15, 1998 and the date of
the Annual Meeting. Such expenses are estimated to be approximately $150,000,
and (if there should be litigation) possibly more. Pursuant to the Nominee
Agreement, the members of the Committee have agreed to indemnify the Nominees
and to pay each Nominee a fee of $25,000 to serve as a Nominee. The total
expenditures of the Committee to date (including the fees to the Nominees) are
estimated to be approximately $125,000. If elected, the Nominees intend to seek
reimbursement from the Company without a vote of the Company's security holders
for the Committee's expenses incurred in connection with the Committee's
solicitation of proxies.
The Committee has engaged MacKenzie Partners, Inc. for consulting services
and to assist in the solicitation process. MacKenzie Partners, Inc. will be paid
its reasonable and customary fees for its services, which will not be less than
$15,000 and will be reimbursed for its expenses. MacKenzie Partners, Inc. will
use approximately 35 persons in its solicitation efforts. In addition to the use
of the mails, solicitations of proxies may be made by means of personal calls
upon, or telephonic communications to or with shareholders or their personal
representatives by the Committee, employees of members of the Committee, and by
MacKenzie Partners, Inc. Copies of the Committee's soliciting materials will be
furnished to banks, brokerage houses, fiduciaries and other nominees for
forwarding to beneficial owners of shares and the Committee will reimburse them
for their reasonable out-of-pocket expenses for forwarding such materials.
CERTAIN OTHER INFORMATION
Certain information regarding Circon common stock, the beneficial ownership
of Circon common stock held by Circon directors, nominees, management and 5%
shareholders, other information concerning Circon's management, and the
procedures for submitting proposals for consideration at the next Annual Meeting
of Shareholders is or will be contained in Circon's proxy statement and is
incorporated herein by reference. Circon has provided its stockholders
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with its Annual Report to Stockholders for the year ended December 31, 1997 and
with its Form 10-Q for the quarter ended June 30, 1998, which contain certain
information as to Circon's financial condition and other matters.
The Committee assumes no responsibility for the accuracy or completeness of
any information contained herein which is based on, or incorporated by reference
to, Circon's proxy statement, its Annual Report to Stockholders for the year
ended December 31, 1997 or its Form 10-Q for the quarter ended June 30, 1998.
VOTE TODAY -- ELECT THE COMMITTEE'S NOMINEES
Your vote is important, no matter how many or how few Circon shares you
own. The Committee urges you to mark, sign, date and return the enclosed BLUE
proxy card to vote for election of the Nominees. The Committee urges you to vote
for the Nominees and support their goal of taking immediate steps to maximize
shareholder value.
The Committee urges you not to sign any proxy card sent to you by Circon.
If you have already done so, you may revoke your proxy by delivering a written
notice of revocation or a later dated proxy for the Annual Meeting to The Circon
Shareholders Committee, c/o MacKenzie Partners, Inc., 156 Fifth Avenue, New
York, New York 10010, or to the Secretary of the Company, or by voting in person
at the Annual Meeting. Only your latest dated proxy will count at the Meeting.
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If your Circon shares are registered in your own name, please mark, sign
and date the enclosed BLUE proxy card and return it to The Circon Shareholders
Committee, c/o MacKenzie Partners, Inc., in the enclosed envelope in time to be
voted at the Meeting. If any of your Circon shares are held in the name of a
brokerage firm, bank, bank nominee or other institution on the record date, only
it can vote such Circon shares and only upon receipt of your specific
instructions. Accordingly, please contact the person responsible for your
account and instruct that person to execute on your behalf the BLUE proxy card.
The Committee urges you to confirm your instructions in writing to the person
responsible for your account and to provide a copy of such instructions to The
Circon Shareholders Committee, c/o MacKenzie Partners, Inc. at the address
indicated below:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Call toll-free (800) 800-322-2885
November 4, 1998
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY CARD PROMPTLY. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. BY MARKING, SIGNING, DATING
AND RETURNING THE ENCLOSED BLUE PROXY CARD, ANY PROXY PREVIOUSLY SIGNED BY YOU
WILL BE REVOKED. REMEMBER, ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE ANNUAL
MEETING.
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APPENDIX A
THE COMMITTEE
Certain information regarding the members of the Committee, including, but
not limited to the aggregate number of shares of Circon stock beneficially
owned, directly, or indirectly, by each of them as of October 15, 1998 is set
forth below. Their transactions in Circon stock during the past two years is set
forth in Appendix B.
On October 15, 1998, P. Schoenfeld Asset Management, LLC ("PSAM"),
Metropolitan Capital Advisors, Inc. ("Metropolitan Capital"), Metropolitan
Capital III, Inc. ("Metropolitan III") and Sandell Asset Management Corp.
("SAMC"), entered into an agreement with respect to the formation and conduct of
the Committee (the "Solicitation Agreement"). On October 23, 1998, Castlerigg
Master Investments, Ltd. ("Castlerigg" or "the Master Fund"), an entity
controlled by SAMC, replaced SAMC as a party to the Solicitation Agreement.
Pursuant to the Solicitation Agreement, the Committee's proxy solicitation
expenses will be borne by the members of the Committee pro rata to their
shareholdings. The Solicitation Agreement prohibits any member of the Committee
from selling any of its shares of Circon Common Stock until the Company holds
the Annual Meeting or until the Company makes an announcement that all of the
Company's common stock is to be acquired by a third party. The Solicitation
Agreement also requires that all of the members of the Committee vote in favor
of the Nominees. To that end, the members of the Committee granted an
irrevocable proxy with respect to the Circon common stock they own as of the
Record Date to Messrs. Sandell, Schwarz and Schoenfeld, acting by any two of
them, to vote the Committee's shares at the Annual Meeting. The members of the
Committee are also parties to the Nominee Agreement. As of October 15, 1998,
members of the Committee and their affiliates beneficially own, in the
aggregate, 1,246,215 shares of Circon Common stock, representing approximately
9.3% of the outstanding shares.
PSAM is a New York limited liability company registered as a non-clearing
broker-dealer and an investment adviser with the Securities and Exchange
Commission and is a member of the National Association of Securities Dealers,
Inc. The principal business of PSAM is to provide investment advisory services
with respect to global event arbitrage activities to managed accounts (the
"Managed Accounts") and to certain investment partnerships (the "Partnerships")
for which entities controlled by Peter Schoenfeld serve as the general partner.
Mr. Schoenfeld is the Managing Member of PSAM. As of the close of business on
October 15, 1998, PSAM and Mr. Schoenfeld may be deemed to have beneficial
ownership for purposes of Section 13(d) of the Securities Exchange Act of 1934
("Beneficial Ownership") of 250,855 shares of the Company's common stock,
representing 1.9% of the outstanding common stock, as of October 15, 1998. PSAM
shares voting power and dispositive power over the its Circon common stock,
subject to the Solicitation Agreement, with Mr. Schoenfeld. Mr. Schoenfeld and
P. Schoenfeld Asset Management, LLC have a business address at 1330 Avenue of
the Americas, New York, NY 10019. Information concerning PSAM's purchases and
sales of Circon common stock within the last two years on behalf of the
Partnerships and Managed Accounts is set forth in Appendix B.
Metropolitan Capital, a New York corporation, is the General Partner of
Metropolitan Capital Advisors L.P., the sole General Partner of Bedford Falls
Investors, L.P. ("Bedford"), which is in the business of purchasing, for
A-1
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investment and trading purposes, securities and other financial instruments.
Bedford holds 243,535 shares of the Company's common stock.
Metropolitan III, a Delaware corporation, is the General Partner of
Metropolitan Capital Partners III, L.P., a privately owned partnership which
renders investment management and advisory services to Metropolitan Capital
Advisors Investment Limited ("Metropolitan International"), which is in the
business of purchasing, for investment and trading purposes, securities and
other financial instruments. Metropolitan International holds 160,129 shares of
the Company's common stock.
Jeffrey E. Schwarz is a shareholder, Director, and the Chief Executive
Officer, Treasurer and Secretary of Metropolitan Capital and Metropolitan III.
Karen Finerman is a shareholder, Director and the President of Metropolitan
Capital and Metropolitan III.
Mr. Schwarz and Ms. Finerman are also controlling persons of KJ Advisors,
Inc., a New York corporation ("KJ"), which acts as General Partner of
Metropolitan Capital Partners II, L.P., which, in turn, provides administrative
services to Bedford, and which also renders investment management and advisory
services to institutional and other private investors regarding investment and
trading in securities and other financial instruments. One such institution
beneficially owns 15,500 shares of the Company's common stock. As a result, Mr.
Schwarz and Ms. Finerman may be deemed beneficial owners of such shares of
Company common stock.
Mr. Schwarz, Ms. Finerman, Metropolitan Capital, Metropolitan III,
Metropolitan International and Bedford (collectively, the "Metropolitan
Parties") may be deemed to have Beneficial Ownership of an aggregate of 419,164
shares of the Company's common stock, representing 3.2% of the outstanding
common stock, as of October 15, 1998. The Metropolitan Parties have a business
address at 660 Madison Avenue, New York, NY 10022. Information concerning the
Metropolitan Parties' purchases and sales of Circon common stock within the last
two years is contained in Appendix B.
SAMC, a British Virgin Island Company, is the investment manager of
Castlerigg, also a British Virgin Island Company, which invests and trades in a
wide range of United States and non-United States equity and debt securities and
other financial and investment interests, instruments and property, focusing
primarily on a global event-driven investment strategy. Thomas Sandell, a
Swedish citizen, is the principal of SAMC. Castlerigg, SAMC and Mr. Sandell may
be deemed to Beneficially own 575,996 shares of the Company's common stock,
representing 4.3% of the outstanding common stock, as of October 15, 1998. Mr.
Sandell, the Master Fund and SAMC have a business address at 65 East 55th
Street, New York, NY 10022. Information concerning the Master Fund's purchases
and sales of Circon common stock within the last two years is contained in
Appendix B.
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APPENDIX B
The Master Fund Trades
Date Purchase/Sale Quantity Price
- ---- ------------- -------- -----
10-15-98 S 29,000 8.997800
- --------------------------------------------------------------------------------
10-08-98 S 2,000 8.750000
- --------------------------------------------------------------------------------
10-07-98 S 2,500 9.062500
- --------------------------------------------------------------------------------
09-16-98 S 50,000 9.625000
- --------------------------------------------------------------------------------
07-17-98 P 17,000 16.625000
- --------------------------------------------------------------------------------
07-10-98 P 20,000 16.484375
- --------------------------------------------------------------------------------
07-08-98 P 10,000 15.875000
- --------------------------------------------------------------------------------
07-08-98 P 5,000 15.875000
- --------------------------------------------------------------------------------
07-07-98 P 2,000 15.500000
- --------------------------------------------------------------------------------
07-06-98 P 400 15.500000
- --------------------------------------------------------------------------------
07-02-98 P 800 15.375000
- --------------------------------------------------------------------------------
07-02-98 P 25,000 15.562500
- --------------------------------------------------------------------------------
07-01-98 P 25,000 15.500000
- --------------------------------------------------------------------------------
06-19-98 P 72,000 15.312500
- --------------------------------------------------------------------------------
06-17-98 P 53,896 15.000000
- --------------------------------------------------------------------------------
06-17-98 P 34,000 15.000000
- --------------------------------------------------------------------------------
06-16-98 P 50,000 14.500000
- --------------------------------------------------------------------------------
06-16-98 P 4,000 14.500000
- --------------------------------------------------------------------------------
06-04-98 P 25,000 15.250000
- --------------------------------------------------------------------------------
06-03-98 P 40,000 15.212200
- --------------------------------------------------------------------------------
03-04-98 P 125,400 16.470000
- --------------------------------------------------------------------------------
03-03-98 P 150,000 16.370000
- --------------------------------------------------------------------------------
B-1
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The shares of Circon common stock held by the Master Fund may be held
through margin accounts maintained with brokers, which extend margin credit, as
and when required to open or carry positions in such margin accounts, subject to
applicable federal margin regulations, stock exchange rules and the credit
policies of such firms. The positions held in the margin accounts, including the
shares of Circon common stock, are pledged as collateral security for the
repayment of debit balances in the respective accounts. The amount of margin
debt applicable to the Circon common stock is not readily ascertainable.
B-2
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TRANSACTION SUMMARY Bedford Falls Investors, L.P.
Date Security Quantity Price per Share
- ---- -------- -------- ------------------
06-25-97 Circon Corp. 9,900 $14.00
07-09-97 Circon Corp. 1,700 $14.38
07-21-97 Circon Corp. 3,300 $14.38
07-22-97 Circon Corp. 2,900 $14.38
12-08-97 Circon Corp. 4,000 $15.12
12-09-97 Circon Corp. 1,300 $15.10
12-10-97 Circon Corp. 1,400 $15.10
12-11-97 Circon Corp. 1,000 $14.92
12-12-97 Circon Corp. 2,000 $15.04
12-16-97 Circon Corp. 5,800 $15.15
12-17-97 Circon Corp. 5,500 $15.03
12-18-97 Circon Corp. 2,500 $15.02
12-22-97 Circon Corp. 5,500 $14.97
12-29-97 Circon Corp. 835 $14.99
12-30-97 Circon Corp. 5,200 $15.03
03-03-98 Circon Corp. 5,000 $16.44
03-06-98 Circon Corp. 70,800 $16.44
03-26-98 Circon Corp. 19,000 $16.63
04-08-98 Circon Corp. 31,300 $16.63
04-14-98 Circon Corp. 14,200 $16.81
05-12-98 Circon Corp. 5,000 $16.86
05-13-98 Circon Corp. 2,100 $16.85
05-14-98 Circon Corp. 4,400 $16.77
05-18-98 Circon Corp. 800 $16.80
05-26-98 Circon Corp. 15,700 $14.36
05-26-98 Circon Corp. 8,800 $14.38
05-29-98 Circon Corp. 9,400 $13.88
----------
Shares contributed
to Bedford 4,200
Total Shares Held at 10/12/98 243,535
=======
(All of the transactions set forth above were purchases)
B-3
<PAGE>
The shares of Circon common stock held by Bedford may be held through
margin accounts maintained with brokers, which extend margin credit, as and when
required to open or carry positions in such margin accounts, subject to
applicable federal margin regulations, stock exchange rules and the credit
policies of such firms. The positions held in the margin accounts, including the
shares of Circon common stock, are pledged as collateral security for the
repayment of debit balances in the respective accounts. The amount of margin
debt is not readily ascertainable.
B-4
<PAGE>
TRANSACTION SUMMARY
(Shares Contributed to Bedford)
Date Security Quantity Price per Share
- ---- -------- -------- ------------------
06-25-97 Circon Corp. 900 $14.00
07-22-97 Circon Corp. 800 $14.38
12-12-97 Circon Corp. 1,000 $15.05
12-16-97 Circon Corp. 500 $15.18
12-17-97 Circon Corp. 500 $15.06
12-22-97 Circon Corp. 500 $15.00
---------
4,200 (1)
=====
(1) These securities were contributed to Bedford Falls Investors, L.P. as a
January 1, 1998 capital contribution.
(All of the transactions set forth above were purchases)
B-5
<PAGE>
TRANSACTION SUMMARY
[Trades Attributable to Schwarz and Finerman]
Date Security Quantity Price per Share
- ---- -------- -------- ---------------
06-25-97 Circon Corp. 800 $14.00
07-22-97 Circon Corp. 500 $14.38
12-12-97 Circon Corp. 1,000 $15.05
12-16-97 Circon Corp. 500 $15.18
12-17-97 Circon Corp. 500 $15.06
12-22-97 Circon Corp. 400 $15.01
03-06-98 Circon Corp. 5,000 $16.44
03-26-98 Circon Corp. 1,200 $16.64
04-08-98 Circon Corp. 1,700 $16.63
04-14-98 Circon Corp. 1,000 $16.83
05-13-98 Circon Corp. 400 $16.88
05-14-98 Circon Corp. 300 $16.81
05-26-98 Circon Corp. 1,100 $14.37
05-26-98 Circon Corp. 600 $14.40
05-29-98 Circon Corp. 500 $13.90
-----
15,500
======
(All of the transactions set forth above were purchases)
The foregoing shares of Circon common stock held in a managed account over
which Mr. Schwarz and Ms. Finerman share voting and dispositive power may be
held through margin accounts maintained with brokers, which extend margin
credit, as and when required to open or carry positions in such margin accounts,
subject to applicable federal margin regulations, stock exchange rules and the
credit policies of such firms. The positions held in the margin accounts,
including the shares of Circon common stock, are pledged as collateral security
for the repayment of debit balances in the respective accounts. The amount of
margin debt is not readily ascertainable.
B-6
<PAGE>
TRANSACTION SUMMARY
Metropolitan Capital Advisors Int'l
Date Security Quantity Price per Share
- ---- -------- -------- ---------------
06-25-97 Circon Corp. 3,400 $14.00
07-09-97 Circon Corp. 3,300 $14.38
07-14-97 Circon Corp. 650 $14.34
07-21-97 Circon Corp. 1,700 $14.38
07-22-97 Circon Corp. 800 $14.38
12-08-97 Circon Corp. 2,387 $15.12
12-09-97 Circon Corp. 1,952 $15.10
12-10-97 Circon Corp. 1,212 $15.10
12-11-97 Circon Corp. 1,279 $14.92
12-16-97 Circon Corp. 3,786 $15.15
12-17-97 Circon Corp. 3,500 $15.03
12-18-97 Circon Corp. 1,663 $15.02
12-22-97 Circon Corp. 3,600 $14.97
12-24-97 Circon Corp. 400 $14.98
12-26-97 Circon Corp. 3,000 $14.97
12-30-97 Circon Corp. 2,200 $15.04
02-27-98 Circon Corp. 3,000 $16.17
03-03-98 Circon Corp. 5,000 $16.44
03-06-98 Circon Corp. 49,200 $16.44
03-11-98 Circon Corp. 600 $16.38
03-26-98 Circon Corp 12,800 $16.63
04-08-98 Circon Corp. 17,000 $16.63
04-14-98 Circon Corp. 9,800 $16.81
05-14-98 Circon Corp. 3,000 $16.77
05-26-98 Circon Corp. 10,700 $14.36
05-26-98 Circon Corp. 5,600 $14.38
05-29-98 Circon Corp. 6,100 $13.88
06-15-98 Circon Corp. 2,500 $13.80
-----
160,129
(All of the transactions set forth above were purchases)
The shares of Circon common stock held by Metropolitan International may be
held through margin accounts maintained with brokers, which extend margin
credit, as and when required to open or carry positions in such margin accounts,
subject to applicable federal margin regulations, stock exchange rules and the
credit policies of such firms. The positions held in the margin accounts,
including the shares of Circon common stock, are pledged as collateral security
for the repayment of debit balances in the respective accounts. The amount of
margin debt is not readily ascertainable.
B-7
<PAGE>
TRANSACTION SUMMARY FOR SHARES
DEEMED TO BE BENEFICIALLY OWNED BY
PSAM and PETER SCHOENFELD
Date Price Quantity Buy/Sell
- ---- ----- -------- --------
10/21/96 17 10,000 Buy
12/3/96 16.125 10,000 Buy
12/4/96 16 20,000 Buy
1/6/97 16 3,000 Buy
1/7/97 15.875 1,600 Buy
1/8/97 15.625 1,000 Sell
1/14/97 14.90 25,000 Sell
1/15/97 14.875 8,600 Sell
1/22/97 15 10,000 Sell
2/14/97 15.354 12,000 Buy
2/21/97 15.375 13,000 Buy
2/26/97 15.25 5,000 Buy
2/27/97 15.375 15,000 Buy
2/28/97 15.375 2,500 Buy
3/4/97 15.5456 36,900 Buy
3/5/97 15.5 5,000 Buy
3/6/97 15.375 5,600 Buy
3/11/97 15.375 5,000 Buy
3/19/97 14.25 2,000 Buy
3/20/97 14.25 2,000 Buy
3/21/97 14.25 5,000 Buy
3/25/97 14.125 5,000 Buy
3/26/97 14.125 25,000 Buy
4/18/97 13 7,500 Sell
4/21/97 13.414 3,200 Sell
4/22/97 13.875 2,500 Sell
4/28/97 13.0568 55,000 Sell
5/8/97 13 5,000 Sell
5/15/97 13 5,000 Sell
6/6/97 13.125 5,000 Sell
6/16/97 13.4202 25,700 Buy
6/17/97 13.4375 10,000 Buy
7/14/97 14.25 2,600 Buy
7/15/97 14.625 7,500 Buy
10/22/97 16.1562 20,000 Buy
12/29/97 15 5,000 Buy
B-8
<PAGE>
Date Price Quantity Buy/Sell
- ---- ----- -------- --------
12/30/97 15 2,800 Sell
12/30/97 15 2,800 Buy
1/9/98 15.5625 4,000 Buy
1/12/98 15.5625 10,000 Buy
1/26/98 15.5625 7,500 Buy
1/27/98 15.5625 5,000 Buy
2/4/98 15.75 2,500 Buy
2/17/98 16.1875 10,000 Buy
2/23/98 16.375 7,500 Buy
2/24/98 16.25 7,000 Buy
2/25/98 16.25 10,000 Buy
3/2/98 16.1875 100,000 Buy
3/3/98 16.375 50,000 Buy
3/4/98 16.438 100,000 Buy
4/1/98 16 23/32 25,600 Buy
4/1/98 16.6875 25,600 Sell
4/8/98 16.625 7,000 Buy
5/26/98 14.4354 60,000 Sell
5/27/98 13.5147 17,000 Sell
6/2/98 14.5191 11,800 Sell
6/2/98 14.5 10,000 Sell
6/2/98 14.625 1,800 Sell
6/3/98 14.9286 17,500 Sell
6/4/98 15 5,000 Sell
6/29/98 15.5 10,000 Sell
7/1/98 15.375 30,000 Sell
7/2/98 15.5 25,000 Sell
7/7/98 16 5,000 Sell
7/8/98 15.875 25,000 Sell
7/13/98 16 13/32 15,000 Sell
7/15/98 16.375 25,000 Sell
7/16/98 16.25 15,000 Sell
7/24/98 15.375 20,000 Sell
8/25/98 15.375 15,000 Sell
9/10/98 13.375 1,500 Sell
9/11/98 13.25 1,200 Sell
B-9
<PAGE>
Date Price Quantity Buy/Sell
- ---- ----- -------- --------
9/15/98 13.3182 5,500 Sell
9/16/98 9.575 25,000 Buy
9/24/98 10.1063 25,000 Sell
10/1/98 8.75 15,000 Buy
10/7/98 9.067 28,000 Buy
10/9/98 7.9375 10,000 Buy
10/12/98 8.25 200 Buy
10/13/98 7.9375 25,000 Buy
10/15/98 9.000 20,943 Sell
10/15/98 9.0625 20,943 Buy
The foregoing shares of Circon common stock held by PSAM and Mr. Schoenfeld
may be held through margin accounts maintained with brokers, which extend margin
credit, as and when required to open or carry positions in such margin accounts,
subject to applicable federal margin regulations, stock exchange rules and the
credit policies of such firms. The positions held in the margin accounts,
including the shares of Circon common stock, are pledged as collateral security
for the repayment of debit balances in the respective accounts. The amount of
margin debt is not readily ascertainable.
B-10
<PAGE>
PROXY SOLICITED BY THE
CIRCON SHAREHOLDERS COMMITTEE (THE "COMMITTEE")
IN SUPPORT OF ITS NOMINEES TO THE BOARD OF DIRECTORS OF
CIRCON CORPORATION
The undersigned hereby appoints PETER SCHOENFELD, JEFFREY SCHWARZ and
THOMAS SANDELL and each of them, the proxy or proxies of the undersigned, with
full power of substitution to vote all shares of Common Stock, par value $.01
per share, of CIRCON CORPORATION (the "Company") which the undersigned would be
entitled to vote if personally present at the 1998 Annual Meeting of
Shareholders of the Company and at any and all adjournments, postponements,
reschedulings or continuations thereof (the "Meeting").
THE COMMITTEE RECOMMENDS A VOTE
FOR THE ELECTION OF DIRECTORS BELOW.
1. ELECTION OF DIRECTORS (check one box only)
[_] FOR ALL NOMINEES listed below
[_] WITHHOLD AUTHORITY to vote for all nominees listed below:
ALAIN OBERROTMAN LESTER HILL JONATHAN R. MACEY
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK THE "FOR" BOX
ABOVE AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW).
- --------------------------------------------------------------------------------
THE PROXIES ARE HEREBY AUTHORIZED TO VOTE IN THEIR DISCRETION UPON ALL OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS,
POSTPONEMENTS, RESCHEDULINGS OR CONTINUATIONS THEREOF.
(Over)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, IT
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 AND, IN THE
DISCRETION OF THE PROXIES, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENTS, POSTPONEMENTS, RESCHEDULINGS OR CONTINUATIONS
THEREOF. IF THERE IS CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS, UNLESS
OTHERWISE INDICATED BY THE STOCKHOLDER, A VOTE FOR THE NOMINEES LISTED IN
PROPOSAL 1 WILL GIVE THE PROXIES DISCRETIONARY AUTHORITY TO CUMULATE ALL VOTES
TO WHICH THE UNDERSIGNED IS ENTITLED AND TO ALLOCATE SUCH VOTES IN FAVOR OF ONE
OR ALL OF SUCH NOMINEES, AS THE PROXIES MAY DETERMINE.
THE COMMITTEE RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES NAMED IN
PROPOSAL 1.
DATED: _____________________, 1998
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly
-----------------------------------
Title or Authority
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY. JOINT
OWNERS SHOULD EACH SIGN
PERSONALLY. IF SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE INCLUDE YOUR
FULL TITLE. CORPORATE PROXIES
SHOULD BE SIGNED BY AN AUTHORIZED
OFFICER.
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
