MAXXIM MEDICAL INC, DEF 14A, 1998-02-20

MAXXIM MEDICAL INC
DEF 14A, 1998-02-20
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES

Previous: MAXXIM MEDICAL INC, S-3/A, 1998-02-20

Next: TYSONS FINANCIAL CORP, SC 13D, 1998-02-20

<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

MAXXIM MEDICAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

MAXXIM MEDICAL, INC.
10300 49TH STREET NORTH
CLEARWATER, FLORIDA 33762

[MAXXIM MEDICAL LOGO]

February 20, 1998

Dear Shareholder:

You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of Maxxim Medical, Inc. (the "Company"). The Meeting will be held at the Feather
Sound Country Club, 2201 Feather Sound Drive, Clearwater, Florida, on Thursday,
March 12, 1998 at 10:00 a.m. Eastern time.

The Notice of the Meeting and the Proxy Statement on the following pages
cover the formal business of the Meeting, which includes (i) the election of
Directors, (ii) a proposal to approve the 1998 Non-Employee Directors' Stock
Option Plan and the issuance to non-employee Directors of options to purchase an
aggregate of 30,000 shares of Common Stock of the Company thereunder, (iii) a
proposal to ratify the adoption of the Senior Management Stock Purchase Plan and
the sale of 400,000 shares of Common Stock of the Company thereunder, and (iv) a
proposal to ratify the appointment of the Company's independent certified public
accountants. We will also report on the progress of the Company and comment on
matters of current interest.

It is important that your shares be represented at the Meeting. We ask that
you promptly sign, date and return the enclosed proxy card in the envelope
provided, even if you plan to attend the Meeting. Returning your proxy card to
us will not prevent you from voting in person at the Meeting if you are present
and choose to do so.

PLEASE NOTE: If your shares are held in street name by a brokerage firm,
bank or other nominee, such nominee will supply you with a proxy to be returned
directly to it. It is important that you return the form TO THE NOMINEE as
quickly as possible so that it may vote your shares. You may not vote such
shares in person at the Meeting unless you obtain a power of attorney or legal
proxy from the nominee authorizing you to vote the shares, and you present this
power of attorney or proxy at the Meeting.

Your Board of Directors and management look forward to greeting you
personally at the Meeting.

Sincerely,

/s/ KENNETH W. DAVIDSON

Kenneth W. Davidson,
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MARCH 12, 1998

To the Shareholders of
Maxxim Medical, Inc.

Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Maxxim Medical, Inc. (the "Company") will be held at the Feather Sound Country
Club, 2201 Feather Sound Drive, Clearwater, Florida, on Thursday, March 12, 1998
at 10:00 a.m. Eastern time, for the following purposes:

(1) To elect seven Directors;

(2) To approve the adoption of the 1998 Non-Employee Directors' Stock
Option Plan and the issuance to non-employee Directors of options to
purchase an aggregate of 30,000 shares of Common Stock of the Company;

(3) To ratify the adoption of the Senior Management Stock Purchase
Plan and the sale of 400,000 shares of Common Stock of the Company
thereunder;

(4) To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for fiscal year 1997; and

(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.

Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete description of the matters to be acted upon at the Meeting.
The 1997 Annual Report of the Company is also enclosed. Shareholders of record
at the close of business on February 2, 1998 are entitled to receive notice of
and to vote at the Meeting and any adjournment thereof.

All shareholders are cordially invited to attend the Meeting. Whether or
not you expect to attend, please sign and return the enclosed Proxy promptly in
the envelope provided to assure the presence of a quorum. You may revoke your
Proxy and vote in person at the Meeting if you desire.

By order of the Board of Directors

/s/ PETER M. GRAHAM
Peter M. Graham,
Secretary

February 20, 1998
<PAGE> 4

MAXXIM MEDICAL, INC.
10300 49TH STREET NORTH
CLEARWATER, FLORIDA 33762

PROXY STATEMENT

1998 ANNUAL MEETING OF SHAREHOLDERS
OF MAXXIM MEDICAL, INC.

SOLICITATION, EXERCISE AND REVOCATION OF PROXIES

The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of Maxxim Medical, Inc. (the "Company"), to be voted at the 1998
Annual Meeting of Shareholders of the Company (the "Meeting"). The Meeting will
be held at the Feather Sound Country Club, 2201 Feather Sound Drive, Clearwater,
Florida, on Thursday, March 12, 1998 at 10:00 a.m. Eastern time. In addition to
the original solicitation by mail, certain regular employees of the Company may
solicit proxies by telephone or telecopy or in person. The Company has also
retained Corporate Investor Communications, Inc. to assist in the solicitation
of proxies, and it is estimated that the fee for such services will be
approximately $5,000. All expenses of this solicitation, including the costs of
preparing and mailing this Proxy Statement and the reimbursement of brokerage
firms, banks and other nominees for their reasonable expenses in forwarding
proxy materials to beneficial owners of shares, will be borne by the Company.
You may vote in person at the Meeting, if you wish, even though you have
previously mailed in your proxy. This Proxy Statement and the accompanying proxy
are being mailed to shareholders beginning on or about February 20, 1998.

All duly executed proxies will be voted in accordance with the instructions
thereon. Shareholders who execute proxies, however, retain the right to revoke
them at any time before they are voted. The revocation of a proxy will not be
effective until written notice thereof has been given to the Secretary of the
Company, unless the shareholder granting such proxy votes in person at the
Meeting.

VOTING OF SECURITIES

The record date for the determination of shareholders entitled to vote at
the Meeting is February 2, 1998. As of such date, the Company had outstanding
10,170,262 shares of Common Stock, $.001 par value per share (the "Common
Stock"). The Common Stock is the only class of stock of the Company outstanding
and entitled to vote at the Meeting. Each shareholder is entitled to one vote
for each share of Common Stock held. For the purposes of determining the
presence of a quorum at the Meeting, abstentions will be counted toward the
number of shares represented at the Meeting. Broker non-votes will be
disregarded. The shareholders present at the Meeting may continue to transact
business until adjournment, notwithstanding the subsequent withdrawal of enough
shareholders to leave less than a quorum or the refusal of any shareholder
present in person or by proxy to vote or participate in the Meeting. All votes
on the proposals set forth below will be taken by ballot.

ELECTION OF DIRECTORS
(PROPOSAL 1)

GENERAL INFORMATION

The Board currently consists of seven Directors, with no vacancies. All
seven Directors have been nominated to stand for reelection at the Annual
Meeting. Directors serve until the next annual meeting of shareholders and until
their successor is elected and has qualified, or until their earlier
resignation, removal from office or death.

The Board believes that the reelection of Kenneth W. Davidson, Donald R.
DePriest, Peter G. Dorflinger, Martin Grabois, M.D., Ernest J. Henley, Ph.D.,
Richard O. Martin, Ph.D., and Henk R.
<PAGE> 5

Wafelman, Ing., as Directors of the Company is in the best interest of the
Company and its shareholders. The Board therefore unanimously recommends that
shareholders vote FOR each of the nominees, and all proxies not marked to the
contrary will be so voted. Shareholders may vote for up to seven nominees and
the seven nominees receiving the most votes cast at the Meeting, in person or by
proxy, will be elected as Directors. Shareholders may not vote cumulatively in
the election of Directors. In the event any of the nominees should be unable to
serve, which is not anticipated, the persons named in the accompanying proxy
will vote for such other person or persons for the office of Director as the
Board of Directors may recommend.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth (i) the names and ages of the Directors and
executive officers of the Company and the positions they hold with the Company
and (ii) the names and ages of the nominees for Director listed herein.
Executive officers serve at the pleasure of the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Kenneth W. Davidson....................... 51 Chairman of the Board, President and Chief Executive
Officer
Peter M. Graham........................... 51 Executive Vice President, Chief Operating Officer
and Secretary
David L. Lamont........................... 51 Vice President, Group Vice President
Henry T. DeHart........................... 51 Vice President, Executive Vice President Operations,
Case Management
Jack F. Cahill............................ 48 Vice President, Executive Vice President Sales and
Marketing, Case Management
Alan S. Blazei............................ 42 Vice President, Controller and Treasurer
Joseph D. Dailey.......................... 49 Vice President, Information Services
Suzanne R. Garon.......................... 45 Vice President, Human Resources
Rob W. Beek............................... 53 Vice President, Managing Director, Maxxim Medical
Europe
Donald R. DePriest........................ 58 Director
Peter G. Dorflinger....................... 46 Director
Martin Grabois, M.D....................... 58 Director
Ernest J. Henley, Ph.D.................... 71 Director
Richard O. Martin, Ph.D................... 58 Director
Henk R. Wafelman, Ing..................... 67 Director
</TABLE>

Kenneth W. Davidson has served as a Director of the Company since 1982, and
as Chairman of the Board of Directors, Chief Executive Officer and President of
the Company since November 1, 1986. Mr. Davidson is also a director of Henley
Healthcare, Inc., a manufacturer of products used in physical therapy, and of
Encore Orthopedics, Inc., a designer and manufacturer of implantable orthopedic
devices.

Peter M. Graham has served as Executive Vice President and Chief Operating
Officer since January 1986, and was elected Secretary in July 1997. Mr. Graham
also served as Treasurer from April 1986 through June 1997.

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, Argon Medical division.

Henry T. DeHart has served as Vice President since November 1993. Since
June 1995, he has served as Executive Vice President Operations, Case
Management. From December 1992 through July 1995, he served as President of
Boundary Healthcare division.

2
<PAGE> 6

Jack F. Cahill has served as Vice President since May 1995. Since June
1995, he has served as Executive Vice President Sales and Marketing, Case
Management. From May 1994 through June 1995, he served as President of the
Sterile Design division. From July 1993 to May 1994, he served as Executive Vice
President, Sterile Design. For over five years prior to July 1993, he worked for
Johnson & Johnson Medical, Inc. serving in various capacities, the latest of
which being Business Director.

Alan S. Blazei has served as Vice President and Controller since December
1990. In July 1997, Mr. Blazei was elected Treasurer of the Company.

Joseph D. Dailey has served as Vice President, Information Services since
August 1994. Previously, he had served as Director of Information Services since
January 1991.

Suzanne R. Garon has served as Vice President since January 1997.
Previously, she had served as Vice President Human Resources, Case Management
since August 1995. From July 1993 to August 1995, Ms. Garon served as Manager of
Human Resources, Sterile Design. From April 1980 to July 1993, Ms. Garon
provided human resource management to Johnson & Johnson Medical, Inc.

Rob W. Beek has served as Vice President, Managing Director, Maxxim Medical
Europe since January 1997. Prior to that time he was Managing Director of Medica
B.V., a Netherlands corporation acquired by the Company in January 1995, for
more than five years.

Donald R. DePriest was elected as a Director, effective December 1992,
pursuant to the terms of the agreement between the Company and Boundary
Healthcare Products Corp. ("Boundary") under which the Company acquired
Boundary. Since July 1987, Mr. DePriest has been the President of MedCom
Development 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 President of Boundary from July 1987 until it
was acquired by the Company. Mr. DePriest is also Chairman of the Board of
American Telecasting, Inc.

Peter G. Dorflinger has served as a Director of the Company 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 Instruments, 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 President
and Chief Operating Officer of Physicians Resource Group, Inc., a physicians
practice management company. Mr. Dorflinger is also a director of Benchmark
Electronics, Inc.

Martin Grabois, M.D. has served as a Director of the Company 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 Attending and
Medical Director in the Department of Physical Medicine at the Methodist
Hospital, Houston, Texas, Consultant Physiatrist to the Texas Institute for
Rehabilitation and Research, Houston, Texas, and the Physician-in-Chief for the
Physical 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. has served as a Director of the Company since 1976,
and served as a consultant to the Company from that date until May 1996. Dr.
Henley's principal employment for more than the past five years has been as a
Professor of Chemical Engineering at the University of Houston. Dr. Henley is
also a consultant and director of Henley Healthcare, Inc.

Richard O. Martin, Ph.D. has served as a Director of the Company since
November 1989. Dr. Martin served from April 1, 1991 until February 3, 1997, as
President and Chief Executive Officer, and since February 3, 1997, as Chairman
and Chief Executive Officer, of Physio-Control International Corp., a
manufacturer of cardiac defibrillators and monitoring equipment. Dr. Martin also
serves as a director of SeaMED Corporation, which engages in contract
engineering and manufacturing for medical and other

3
<PAGE> 7

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 Medical Device Manufacturers Association.

Henk R. Wafelman, Ing. has served as a Director of the Company since 1987.
Since 1990, Mr. Wafelman has been the executive chairman of the Dutch Society of
Enterprises in Medical Technology, a Netherlands based technology society, and
holds the position of Chairman of an advisory committee for 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.

No family relationships exist between the Directors of the Company, the
persons listed as nominees for election as Directors at the Meeting and the
executive officers of the Company. There are no arrangements or understandings
between any Director or nominee and any other person concerning service or
nomination as a Director, with the exception of the employment agreement between
the Company and Kenneth W. Davidson, which provides that Mr. Davidson shall
serve as the Chairman of the Board of Directors.

BOARD COMMITTEES

The Board has appointed from among its members three standing committees of
the Board, as set forth below.

The Compensation Committee is composed of Messrs. Davidson and DePriest and
Dr. Martin. The principal function of the Compensation Committee is to set
compensation policy for all employees. See "COMPENSATION COMMITTEE REPORT." In
addition, Mr. DePriest and Dr. Martin comprise the Stock Option Committee that
is responsible for awarding stock options under the Company's Employee Stock
Option Plans.

The Audit Committee is composed of Mr. Wafelman and Dr. Grabois. The
principal functions of the Audit Committee include overseeing the performance
and reviewing the scope of the audit function of the Company's independent
auditors. The Audit Committee also reviews, among other things, audit plans and
procedures, the Company's policies with respect to conflicts of interest and
prohibition against the use of corporate funds or assets for improper purposes,
changes in accounting policies and the use of independent auditors for non-audit
services.

The Nominating Committee is composed of Messrs. Davidson and Dorflinger and
Dr. Henley. The primary function of the Nominating Committee is to recommend to
the Board persons to be considered for election to the Board. In making such
recommendations, the Nominating Committee will consider nominations submitted by
shareholders to the Secretary of the Company.

During fiscal year 1997 (the year ended November 2, 1997), the Board held
thirteen meetings in person or by telephone. Members of the Board are provided
with information between meetings regarding the operations of the Company and
are consulted on an informal basis with respect to pending business. Such
consultation from time to time leads to director action between meetings by
unanimous written consent of the Directors, which did not occur during fiscal
1997. During fiscal year 1997, the Compensation Committee held three meetings,
the Nominating Committee held two meetings and the Audit Committee held four
meetings. Each of the incumbent Directors who was a Director during fiscal year
1997 attended at least 75% of the total number of meetings of the Board, and the
total number of meetings held by all committees of the Board on which such
Director served, during the year.

DIRECTOR COMPENSATION

Directors of the Company currently serve without monetary compensation for
their service as Directors. The Company has, in the past, issued options to
purchase shares of Common Stock to non-employee Directors. The Company also
intends to issue to each non-employee Director an option to purchase up to 5,000
shares of Common Stock, as further described under "APPROVAL OF 1998
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN," subject to shareholder approval of
such plan at the Meeting. In
4
<PAGE> 8

the future, the Company may continue to compensate its outside Directors for
serving in such capacity with additional options or such other remuneration as
determined by the Board.

Non-Employee Directors' Stock Option Plans

In March of 1997, the Board approved the 1997 Non-Employee Directors' Stock
Option Plan (the "1997 Directors' Plan"). In March of 1996, the Board approved
the 1996 Non-Employee Directors' Stock Option Plan (the "1996 Directors' Plan")
and in January of each of 1995, 1994, and 1993, respectively, the Board approved
the 1995 Non-Employee Directors' Stock Option Plan (the "1995 Directors' Plan"),
the 1994 Non-Employee Directors' Stock Option Plan (the "1994 Directors' Plan")
and the 1993 Non-Employee Directors' Stock Option Plan (the "1993 Directors'
Plan") (collectively the "Past Directors' Plans"). The terms of the Past
Directors' Plans are substantially identical, except for exercise price and
relevant dates, as discussed below.

For the 1997 Directors' Plan and for the Past Directors' Plans, 40,000 and
30,000 shares of Common Stock, respectively, have been reserved for issuance
under each of the plans. The grant of options to non-employee Directors of the
Company is non-discretionary under each of the 1997 Directors' Plan and the Past
Directors' Plans. Accordingly, each Director of the Company at the time of the
Company's relevant Annual Meeting of Shareholders, i.e., the meeting when each
such plan was approved, who was neither an employee nor an executive officer of
the Company, was granted an option to purchase 5,000 and 3,000 shares of Common
Stock under the 1997 Directors' and each such Past Directors' Plans,
respectively. The purchase or exercise price under the 1997 Directors' Plan is
$11.48 per share (85% of the opening sales price of the Common Stock on the New
York Stock Exchange on November 1, 1996). The purchase or exercise price under
the 1996 Directors' Plan is $11.48 per share (85% of the opening sales price of
the Common Stock on the New York Stock Exchange on November 1, 1995). The
purchase or exercise price under the 1995 Directors' Plan is $10.73 per share
(85% of the opening sales price of the Common Stock on the New York Stock
Exchange on November 1, 1994). The purchase or exercise price under the 1994
Directors' Plan is $15.40 per share (85% of the opening sales price of the
Common Stock on the American Stock Exchange on November 1, 1993). The purchase
or exercise price under the 1993 Directors' Plan is $13.39 per share (85% of the
opening sales price of the Common Stock on the American Stock Exchange on
November 1, 1992). The options first became exercisable on November 4, 1997,
January 12, 1997, January 12, 1996, January 12, 1995 and January 12, 1994 and
are exercisable through November 4, 2000, January 12, 2000, January 12, 1999,
January 12, 1998 and January 12, 1997, in the case of the 1997 Directors' Plan,
the 1996 Directors' Plan, the 1995 Directors' Plan, the 1994 Directors' Plan and
the 1993 Directors' Plan, respectively; except that, in the case of each such
Plan, if an optionee ceases to serve as a Director of the Company for any
reason, the options will terminate on the earlier of their respective
termination date or the first anniversary of the date on which the Director
ceased to serve as a Director. As of February 2, 1998, options to purchase an
aggregate of 3,000 shares had been exercised under the 1993 Directors' Plan, and
the remaining options to purchase 15,000 shares expired unexercised; options to
purchase all 18,000 shares under the 1994 Directors' Plan had been exercised;
options to purchase an aggregate of 3,000 shares had been exercised under both
the 1995 Directors' Plan and the 1996 Directors' Plan and the remaining options
to purchase 15,000 shares under the 1995 Directors' Plan and the 1996 Directors'
Plan, respectively, remain unexercised; options to purchase 5,000 shares had
been exercised under the 1997 Directors' Plan, and the remaining 25,000 remain
unexercised.

Both the 1997 Directors' Plan and each Past Directors' Plan provides that
any person who is elected as a Director for the first time after the adoption of
such plan at the Company's Annual Meeting of Shareholders, is entitled to an
option to purchase 5,000 or 3,000 shares of Common Stock under the 1997
Directors' Plan or such Past Directors' Plan, respectively, for the purchase
price equal to 85% of the last reported sales price of the Common Stock on the
date of grant. No additional options have been granted under any of the 1997
Directors' Plan or the Past Directors' Plans described above as a result of any
additional Directors being elected at an Annual Meeting.

5
<PAGE> 9

COMPENSATION OF EXECUTIVE OFFICERS

The following table is a summary of the compensation paid or accrued by the
Company for the last three fiscal years for services in all capacities to each
of the persons who qualified as a "named executive officer" (as defined in Item
402(a)(3) of Regulation S-K under the Securities Exchange Act of 1934) during
fiscal year 1997 ("Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (G) (I)
- ---------------------------- ---- -------- -------- ------------ ---------- ---------
LONG
TERM
COMPEN-
SATION
----------
ANNUAL COMPENSATION AWARDS
------------------------------------ ----------
OTHER ANNUAL SECURITIES ALL
COMPEN- UNDERLYING OTHER
NAME AND SALARY BONUS SATION OPTIONS COMPEN-
PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#)(2) SATION(3)
- ---------------------------- ---- -------- -------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Davidson 1997 $320,000 $160,000 $70,525 40,000 $4,750
Chief Executive Officer 1996 320,000 160,000 22,853 50,000 4,750
1995 320,000 100,000 18,569 50,000 4,620

Peter M. Graham 1997 140,000 68,750 23,343 25,000 4,750
Executive Vice President 1996 135,000 67,500 n/a 35,000 5,471
1995 124,615 18,000 n/a 40,000 4,488

Jack F. Cahill 1997 140,000 68,750 20,542 20,000 4,750
Vice President 1996 135,000 67,500 n/a 30,000 5,091
1995 135,000 5,000 n/a 30,000 3,947

David L. Lamont 1997 125,000 61,250 18,208 20,000 4,750
Vice President 1996 120,000 60,000 n/a 30,000 4,109
1995 116,538 11,000 n/a 30,000 3,140

Henry T. DeHart III 1997 125,000 61,250 18,208 20,000 4,750
Vice President 1996 120,000 60,000 n/a 17,000 4,572
1995 120,000 5,000 n/a 15,000 3,600
</TABLE>

- ---------------

(1) Includes the value of the interest imputed on non-interest bearing loans
made by the Company. See "Certain Transactions."
(2) For each indicated fiscal year, includes options granted to be effective as
of the first day of the next fiscal year with respect to the performances of
the named executive officers during the indicated fiscal year.
(3) Includes contributions made by the Company to its 401(k) plan on behalf of
the employee. Each eligible employee has the option to contribute up to 20%
of his or her salary, and to have such deferred amounts invested in the
plan. The Company may, but is not required to, make a matching contribution
to the plan of up to 6% of the salary of such participating employee. All
employee contributions are fully vested. Company contributions vest over a
five-year period at the rate of 20% per year.

6
<PAGE> 10

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED
OPTIONS MARKET ANNUAL RATES OF STOCK PRICE APPRECIATION
GRANTED TO EXERCISE VALUE OF FOR OPTION TERM
OPTIONS EMPLOYEES OR BASE STOCK ON -------------------------------------------
GRANTED IN FISCAL PRICE DATE OF EXPIRATION
NAME (#)(1) YEAR ($/SH)(2) GRANT($/SH) DATE 5%($) 10%($) 0%($)
- ---- ------- ---------- --------- ----------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth W. Davidson..... 40,000 16.5% $19.02 $22.38 11/3/03 $381,472 $680,929 $134,400
Peter M. Graham......... 25,000 10.3 19.02 22.38 11/3/03 238,420 425,580 84,000
David L. Lamont......... 20,000 8.3 19.02 22.38 11/3/03 190,736 340,464 67,200
Henry T. DeHart III..... 20,000 8.3 19.02 22.38 11/3/03 190,736 340,464 67,200
Jack F. Cahill.......... 20,000 8.3 19.02 22.38 11/3/03 190,736 340,464 67,200
</TABLE>

- ---------------

(1) Comprised of options granted effective as of November 3, 1997, with respect
to the respective performances of the named executive officers during fiscal
year 1997.
(2) The options granted are exercisable as to twenty percent of the underlying
shares on November 3 of each year beginning in 1998 and ending in 2002.

The Company has not granted any stock appreciation rights.

Set forth in the following table is summary information regarding stock
option exercises in fiscal 1997 and the value of all unexercised options as of
the end of fiscal 1997 for each of the executive officers included in the
Summary Compensation Table:

AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FISCAL YEAR-END IN-THE-MONEY OPTIONS
(#) AT FISCAL YEAR-END($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(1)
- ---- --------------- ----------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Kenneth W. Davidson....... 3,000 $23,760 100,000/113,000 $1,133,820/$1,259,280
Peter M. Graham........... 3,000 27,870 80,600/86,400 896,156/963,824
David L. Lamont........... 3,000 23,760 61,200/67,800 680,292/755,568
Henry T. DeHart III....... 0 0 25,600/32,400 279,982/357,708
Jack F. Cahill............ 0 0 20,600/43,400 222,754/473,176
</TABLE>

- ---------------

(1) Excludes options to purchase 40,000, 25,000, 20,000, 20,000 and 20,000
shares of Common Stock granted to Messrs. Davidson, Graham, Lamont, DeHart,
Cahill, respectively, effective as of November 3, 1997 with respect to their
respective performances during fiscal year 1997.

EMPLOYMENT CONTRACTS

Effective November 1, 1997, the Company entered into an employment
agreement with Kenneth W. Davidson, the Chairman of the Board, President and
Chief Executive Officer of the Company, which employment agreement replaced the
employment agreement dated effective November 1, 1994, expiring on October 31,
1997. The employment agreement provides for Mr. Davidson's employment through
October 31, 2000, with an automatic renewal for consecutive one year periods
thereafter unless either party gives notice to the contrary at least six months
prior to the beginning of any such renewal. The agreement requires the Company
to (i) pay Mr. Davidson an annual salary of $350,000 per year, subject to
periodic increase upon the recommendation of the Compensation Committee of the
Board; (ii) pay Mr. Davidson an annual bonus of at least one-half his annual
salary for each year that Mr. Davidson fully meets certain performance goals,
which are to be developed jointly by the Board and Mr. Davidson each year, or,
if Mr. Davidson does not fully meet such performance goals, an annual bonus in
an amount to be determined by the Board in its sole discretion; (iii) provide
other miscellaneous benefits generally available to other executive officers of
the Company; and

7
<PAGE> 11

(iv) make a loan or loans (collectively "Loans") to Mr. Davidson not to exceed
an aggregate of $400,000, including loans made under Mr. Davidson's previous
employment agreement, the principal purpose of which was, or would be, to enable
Mr. Davidson to pay any federal income taxes associated with the exercise by him
of stock options to purchase shares of Common Stock from time to time. Each Loan
to Mr. Davidson under the agreement will be non-interest bearing, unsecured and
repayable in ten equal annual installments due on the third through twelfth
anniversaries of the Loan. See "Certain Relationships and Related Party
Transactions" below for additional information about the Loans.

The employment agreement prohibits Mr. Davidson from providing any services
to, or owning 5% or more of the stock of, any competitor during the term of the
agreement and for a period of two years following termination of the agreement.
The agreement may not be terminated by the Company except for cause, or upon the
death or disability of Mr. Davidson. Mr. Davidson may terminate his employment
under certain circumstances, including the Company's breach of the employment
agreement or a change in control of the Company (for "Good Reason"). In the
event that Mr. Davidson dies or becomes disabled while in office, the Company
will be obligated to continue to pay to him all of the salary, bonuses and other
benefits provided for in the employment agreement for a period of two years
after his termination (reduced by the amount paid to Mr. Davidson under any
disability insurance policy provided by the Company). In the event that Mr.
Davidson voluntarily terminates his employment for Good Reason or the Company
terminates his employment without cause, the Company will be obligated to pay to
him a lump sum equal to twice the amount of his salary and minimum bonus and
provide the other benefits provided for in the employment agreement for a period
of two years after his termination.

The Company also entered into a Termination Agreement with Mr. Davidson,
effective January 31, 1997, which provides that if, after a change in control of
the Company, Mr. Davidson suffers a Termination (as defined below), Mr. Davidson
will be entitled to receive (i) a lump sum payment, within fifteen (15) days
following such termination, equal to two and one-half times the highest annual
level of total cash compensation (including bonus) paid to him during the three
calendar years ended immediately prior to such Termination, (ii) immediate
vesting of all previously granted but unvested stock options, and (iii)
continuing health insurance benefits for a period of twenty-four (24) months. A
Termination will be deemed to have occurred if, following a change in control,
(i) Mr. Davidson's employment with the Company is terminated other than for
cause, (ii) his base salary, bonus, title or responsibilities are reduced or
there is a change in employment conditions deemed by Mr. Davidson to be
materially adverse as compared to those in effect immediately prior to the
change in control, any of which is not remedied within 30 days after notice to
the Company by Mr. Davidson, (iii) the Company requires Mr. Davidson to relocate
without his consent, (iv) the Company fails to obtain the assumption of the
performance of the Termination Agreement by any successor of the Company, or (v)
the Company takes any action which would deprive Mr. Davidson of any material
fringe benefit enjoyed by him at the time of the change in control. The
voluntary termination by Mr. Davidson of his employment following a change in
control will not constitute a Termination. If Mr. Davidson suffers a Termination
entitling him to payment of severance and benefits under the Termination
Agreement, then he will not be entitled to any severance compensation or
benefits under his employment agreement, discussed above.

The Company has not entered into any employment agreement, consulting
agreement or similar arrangement or agreement with any of its other executive
officers or Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is composed of Kenneth W. Davidson, Donald R.
DePriest and Richard O. Martin. Mr. Davidson is the Chairman of the Board,
President and Chief Executive Officer of the Company. Effective November 1,
1997, the Company entered into an employment agreement with Mr. Davidson, which
employment agreement replaced an employment agreement dated effective November
1, 1994, which expired on October 31, 1997. Among other things, the agreement
requires the Company to make a loan or loans (collectively "Loans") to Mr.
Davidson not to exceed an aggregate of $400,000, including loans made under Mr.
Davidson's previous employment agreement, the principal purpose of which was, or
would be, to enable Mr. Davidson to pay any federal income taxes associated with
the exercise by him
8
<PAGE> 12

of stock options to purchase shares of Common Stock. Each Loan made to Mr.
Davidson under the previous employment agreement, and any new Loans made under
the new employment agreement, are non-interest bearing, unsecured and are
repayable in ten equal annual installments, on the third through twelfth
anniversaries of the date of such Loan. During fiscal year 1997, the highest
amount due to the Company from Mr. Davidson under the outstanding Loans was
$390,000. The total amount outstanding under the Loans at January 31, 1998 was
$390,000. Mr. Davidson was, during fiscal year 1997, and at January 31, 1998,
current in all of his repayment obligations under the Loans. See "Employment
Contracts" above.

In May 1997, Mr. Davidson purchased 100,000 shares of Common Stock from the
Company at a price of $13.00 per share under the Senior Management Stock
Purchase Plan (the "Stock Purchase Plan"). See "Ratification of Senior
Management Stock Purchase Plan" below for a description of the Stock Purchase
Plan. Payment for the Shares was made by means of a full recourse promissory
note in the amount of $1,300,000, the payment of which is also secured by a
pledge of the shares. The note is noninterest bearing until its due date. If it
is not paid when due, it will bear interest at the highest maximum legal rate,
or if no maximum rate is established under applicable law, then 18% per year.

COMPENSATION COMMITTEE REPORT

Under the Company's By-laws, the Compensation Committee is authorized to
(i) exercise the authority of the full Board with respect to setting
compensation policy for all employees of the Company, (ii) make compensation
recommendations to the Board regarding executive compensation, and (iii) perform
such additional powers and duties as are delegated to it by the Board. The
primary historical focus of the Committee has been to review with the Board in
detail all aspects of compensation for Kenneth W. Davidson, the Chief Executive
Officer of the Company. Mr. Davidson, a member of the Committee, has
historically focused on the compensation of all other employees of the Company,
including the executive officers of the Company that are named in the
compensation tables included herein ("Named Executives"), although since fiscal
1995, the Compensation Committee has taken an expanded role in implementing
bonuses for other executive officers. In addition, Mr. DePriest and Dr. Martin
constitute the Stock Option Committee that is responsible for annual awards of
stock options to employees under the Company's Employee Stock Option Plans. The
Committee typically reviews executive compensation and grants employee options
following the end of each fiscal year. Since the members of the Committee have
significant personal experience in business, including experience in the
Company's specific industry, the Committee has determined not to incur the
additional expense of retaining outside consultants to assist it in determining
executive compensation levels. During fiscal 1997, the Committee held three
meetings.

Compensation Policies Toward Executive Officers. In determining executive
compensation, the Committee seeks to create a strong financial incentive for
executive officers to maximize the Company's operational results, reward
individual contribution and achievement and enable the Company to attract and
retain highly qualified executive officers. The two primary components of
executive compensation are annual cash compensation and long term incentive
compensation. Annual cash compensation consists primarily of base salary and an
additional bonus based upon extraordinary achievement or attainment of specified
operating results. Executive salaries are set at levels that the Committee
believes to be competitive for executive officers having similar experience and
abilities at other companies that compete with the Company for executive
officers. The Committee has also attempted generally to maintain relatively
moderate levels of compensation for its executive officers so as to promote the
Company's profitability and competitiveness. Long term incentive compensation
consists of the granting of stock options to executive officers and other
employees, which align executive compensation with the interests of
shareholders.

Compensation of Chief Executive Officer. Mr. Davidson's compensation for
fiscal 1997 was based on a three-year employment agreement with the Company,
dated effective November 1, 1994 and expiring October 31, 1997. See "Employment
Contracts" above. That employment agreement was adopted by the Board upon the
recommendation of the Committee, without the participation of Mr. Davidson.
Under the employment agreement, the Company was required to (i) pay Mr. Davidson
an annual salary of $320,000 per year, subject to periodic increase upon the
recommendation of the Compensation Committee of the Board; (ii) pay Mr. Davidson
an annual bonus of at least one-half of his annual salary for each year that
9
<PAGE> 13

Mr. Davidson fully met certain objective performance goals, or, if Mr. Davidson
did not fully meet such performance goals, an annual bonus in an amount to be
determined by the Board in its sole discretion; and (iii) make loans to Mr.
Davidson not to exceed an aggregate of $400,000, including loans made under Mr.
Davidson's previous employment agreement, the principal purpose of which was, or
would be, to enable Mr. Davidson to pay any federal income taxes associated with
the exercise by him of stock options to purchase shares of Common Stock.

Mr. Davidson was compensated pursuant to the terms of the employment
agreement, as discussed above, in fiscal 1997. In addition to the annual salary
provided for by the agreement, Mr. Davidson was eligible for the annual bonus.
The Committee determined, without participation by Mr. Davidson, that the annual
bonus for Mr. Davidson for fiscal 1997 should be $160,000, which is 50% of Mr.
Davidson's annual salary. A number of factors and considerations were relevant
to the Committee in making this determination. Mr. Davidson's performance was
measured against objective revenue and earnings targets previously agreed upon
by the Committee. In addition to the foregoing, the Committee referred to a
number of reports concerning executive compensation to reinforce its belief that
the compensation level of the Company's executive officers would be slightly
below the median of executive officers of comparable companies and to facilitate
the Company's profitability and competitiveness. These reports included (i) 1996
Top Five Data Service Report on Executive Compensation in the Medical/Dental
Equipment & Supply Industry; (ii) 1996 Management Compensation Survey Report,
Health Industry Manufacturers Association; (iii) 1996 Executive Compensation
Survey, William M. Mercer/American Electronics Association; (iv) 1997
Compensation Survey, Salary Retrieval Information System, Organization Resources
Counselors, Inc.; (v) 1997 High Technology Executive Compensation Survey,
Western Management Group; and (vi) 1996-97 Survey of Top Management
Compensation, Watson Wyatt Executive Pay in Perspective. These references
include companies that are not medical supply companies. The Committee believes
that the surveys that were used in considering Mr. Davidson's compensation are
superior to a survey of only publicly-traded medical supply companies for that
purpose, since a significant number of medical supply companies are not
publicly-traded, and the surveys used include data on non-medical companies that
the Committee believes are comparable to the Company for this purpose.

Compensation of Other Executive Officers. Following the end of each fiscal
year, the Committee, based upon the recommendation of Mr. Davidson, determines
the salary and bonus of all other executive officers of the Company. Mr.
Davidson bases his recommendation upon a review of the performance of the
executive officers for such fiscal year. The fiscal 1997 base salaries of the
Named Executives other than Mr. Davidson were increased by minor amounts over
the previous year. Until fiscal 1996, the Company had not historically paid any
significant cash bonuses to executive officers other than to Mr. Davidson under
his employment agreement. The Compensation Committee determined to implement an
informal bonus plan beginning in fiscal 1996 for the other Named Executives that
resembled Mr. Davidson's bonus arrangement under his employment agreement
(providing for a bonus of approximately one-half of annual salary if the
executive met certain objective performance goals) to ensure that other key
executives were given similar incentives and received cash remuneration more in
line with competitive companies. Other than salary and contributions by the
Company to the 401(k) plan on behalf of participating executive officers, the
only additional recurring compensation historically available to executive
officers has been stock options.

Stock Option Grants. Mr. DePriest and Dr. Martin, as the members of the
Stock Option Committee, determine all grants of options under the Company's
Employee Stock Option Plans each year. In determining the allocation of shares
among the executive officers and other employees, the Stock Option Committee
uses the same general criteria used by the Committee in determining other
compensation and relies on the recommendations of Company management for all
employees other than Mr. Davidson. After the end of each fiscal year, Mr.
Davidson provides recommendations to the Stock Option Committee regarding the
grant of stock options to executive officers and other employees, based upon the
officer's or employee's position and responsibilities, recommendations received
from other members of the Company's management, and

10
<PAGE> 14

Mr. Davidson's assessment of such officer's or employee's performance and
relative contributions to the Company as compared to other officers and
employees during the fiscal year.

COMPENSATION COMMITTEE

Richard O. Martin, Ph.D., Chairman
Kenneth W. Davidson
Donald R. DePriest

SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS

The following table sets forth, as of February 2, 1998, information as to
the beneficial ownership of the Company's Common Stock by (i) each person known
to the Company as having beneficial ownership of more than 5% of the Company's
Common Stock, (ii) each person serving the Company as a Director on such date
and each nominee for Director, (iii) each person serving the Company as an
executive officer on such date who qualifies as a "named executive officer" as
defined in Item 402(a)(3) of Regulation S-K under the Securities Exchange Act of
1934, and (iv) all of the Directors and executive officers of the Company as a
group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
BENEFICIAL OWNER(1) NUMBER PERCENT
- ------------------- ----------- ---------
<S> <C> <C>
Wellington Management Co., L.L.P.
75 State Street
Boston, Massachusetts 02109............................... 664,000(2) 6.5%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11(th) Floor
Santa Monica, California 90401............................ 595,179(3) 5.9
Peter G. Dorflinger......................................... 464,936(4) 4.6
Ernest J. Henley, Ph.D. .................................... 345,349(5) 3.4
Kenneth W. Davidson......................................... 338,368(6) 3.3
Peter M. Graham............................................. 151,100(7) 1.5
David L. Lamont............................................. 115,486(8) 1.1
Henry T. DeHart III......................................... 65,500(9) *
Jack F. Cahill.............................................. 64,600(10) *
Martin Grabois, M.D......................................... 17,000(11) *
Richard O. Martin, Ph.D. ................................... 16,000(12) *
Henk R. Wafelman, Ing....................................... 13,000(13) *
Donald R. DePriest.......................................... 11,000(14) *
All executive officers and Directors as a group (15
persons).................................................. 1,760,109(15) 16.6
</TABLE>

- ---------------

* Less than 1%
(1) The address for all executive officers and Directors is 10300 49th Street
North, Clearwater, Florida 33762.
(2) According to the Amendment No. 1 to Schedule 13-G filed by it on February
10, 1998, Wellington Management Company, L.L.P., a registered investment
adviser, shares voting power over 363,500 shares, and shares dispositive
power over 664,000 shares, of Company stock owned by its clients.
(3) According to the Amendment to Schedule 13-G filed by it on February 10,
1998, Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, has sole voting power over 392,500 shares, and has sole
dispositive power over 595,179 shares, of Company stock owned by its
clients. Further, persons who are officers of Dimensional also serve as
officers of DFA Investment Dimensions Group Inc. (the "Fund") and The DFA
Investment Trust Company (the "Trust"), each a registered open-end
investment company. In their capacities as officers of such entities, these
persons vote 70,179

11
<PAGE> 15

additional shares which are owned by the Fund and 132,500 shares which are
owned by the Trust. Dimensional disclaims beneficial ownership of all of
the shares.
(4) Includes 6,100 shares held of record and 458,836 shares purchasable under
options exercisable within 60 days after February 2, 1998. Mr. Dorflinger
is the former Vice President and General Counsel of Sulzer Intermedics,
Inc. ("Intermedics"), a subsidiary of Sulzer Medica Ltd., and holds a fully
exercisable option to purchase all of the 447,836 shares held of record by
Intermedics.
(5) Includes 334,349 shares owned of record by Dr. Henley and 11,000 shares
purchasable under options exercisable within 60 days after February 2,
1998. Excludes 305,185 shares beneficially owned by Davis C. Henley, and
168,616 shares owned by Alan J. Henley, sons of Dr. Henley, as to which
shares Dr. Henley disclaims beneficial ownership.
(6) Includes 236,368 shares owned of record by Mr. Davidson and 102,000 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(7) Includes 70,500 shares owned of record by Mr. Graham and 80,600 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(8) Includes 54,286 shares owned of record by Mr. Lamont and 61,200 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(9) Includes 39,900 shares owned of record by Mr. DeHart and 25,600 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(10) Includes 44,000 shares owned of record by Mr. Cahill and 20,600 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(11) Includes 6,000 shares held of record by Dr. Grabois and 11,000 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(12) Includes 5,000 shares held of record by Dr. Martin and 11,000 shares
purchasable under options exercisable within 60 days after February 2,
1998.
(13) All shares owned of record.
(14) Represents shares purchasable under options exercisable within 60 days
after February 2, 1998.
(15) Includes 447,836 shares held of record by Intermedics, described in
footnote 4 above. Includes 410,420 shares purchasable under options issued
to various Directors and executive officers of the Company that are
exercisable within 60 days after February 2, 1998, including those
described in footnotes 4 through 14 above. Does not include options
issuable under the 1998 Non-Employee Directors' Stock Option Plan. See
"APPROVAL OF 1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN."

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under Section 16(a) of the Securities Exchange Act of 1934, Directors,
certain officers and beneficial owners of 10% or more of the Company's Common
Stock are required from time to time to file with the Commission reports on Form
3, 4, or 5, relating principally to transactions in Company securities by such
persons. Based solely upon review of Forms 3 and 4 and amendments thereto
furnished to the Company during its fiscal year 1997 and thereafter, Forms 5 and
amendments thereto furnished to the Company with respect to its fiscal year
1997, and any written representations received by the Company from a Director,
officer or beneficial owner of more than 10% of the Common Stock ("reporting
persons") that no Form 5 is required, the Company believes that the following
reporting persons failed to file on a timely basis the following reports
required by Section 16(a) of the Securities and Exchange Act of 1934 during the
Company's 1997 fiscal year.

Mr. DePriest filed one late report disclosing five sales of Common Stock.
Dr. Henley filed one late report disclosing one gift of Common Stock and one
late report disclosing the exercise of options for Common Stock and the
simultaneous sale of Common Stock. Dr. Martin filed one late report disclosing
one sale of Common Stock. Mr. Wafelman filed one late report disclosing three
exercises of options for Common Stock and two simultaneous sales of Common
Stock. Each of Messrs. Davidson, Graham, Lamont, DeHart, Cahill, Blazei and
Dailey filed one late report disclosing the grant to them of options in 1997
under the 1995 Employee Stock Option Plan.

12
<PAGE> 16

PERFORMANCE GRAPH

The following table shows a comparison of the five-year cumulative total
return to shareholders for Maxxim Common Stock, the Dow Jones Global U.S. Index
(formerly known as the Dow Jones Equity Market Index) and the Dow Jones Medical
Supplies Index, assuming $100 invested in each on November 2, 1992.

[GRAPH]

<TABLE>
<CAPTION>
Measurement Period Dow Jones Global Dow Jones Medical
(Fiscal Year Covered) Maxxim Medical US Supplies
<S> <C> <C> <C>
11/2/92 100 100 100
11/2/93 115 114 96
11/2/94 82 117 110
11/2/95 87 152 146
11/2/96 86 185 187
11/2/97 142 246 213
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Senior Management Stock Purchase Plan. On May 9, 1997, the Board of
Directors approved the Senior Management Stock Purchase Plan (the "Stock
Purchase Plan"). Under the Stock Purchase Plan, a total of 400,000 shares of
Common Stock (the "Shares") were made available for purchase by executive
officers or persons deemed to be key employees of the Company (the
"Participants") at a price of $13.00 per share, which was the closing sale price
per share of the Common Stock on the New York Stock Exchange on April 30, 1997.
Payment for the Shares was made by means of a full recourse promissory note from
each Participant ("Promissory Note"), the payment of which is also secured by a
pledge of the Shares. The Promissory Notes are noninterest bearing until their
due date. If they are not paid when due, the Promissory Notes bear interest at
the highest maximum legal rate, or if no maximum rate is established under
applicable law, then 18% per year. All 400,000 shares were subscribed for and
purchased by the Participants in May 1997. The executive officers of the Company
purchased the numbers of shares set forth in the table below, with the remaining
shares being purchased by other officers and key employees. See "Ratification of

13
<PAGE> 17

Senior Management Stock Purchase Plan" below for additional information about
the Stock Purchase Plan and the terms of the Promissory Notes.

<TABLE>
<CAPTION>
ORIGINAL AND CURRENT
NAME SHARES PURCHASED BALANCE OF PROMISSORY NOTE
- ---- ---------------- --------------------------
<S> <C> <C>
Kenneth W. Davidson..................................... 100,000 shares $1,300,000
Peter M. Graham......................................... 50,000 shares 650,000
Jack F. Cahill.......................................... 44,000 shares 572,000
David L. Lamont......................................... 39,000 shares 507,000
Alan S. Blazei.......................................... 39,000 shares 507,000
Henry T. DeHart......................................... 39,000 shares 507,000
Joseph D. Dailey........................................ 28,000 shares 364,000
Rob W. Beek............................................. 12,000 shares 156,000
Suzanne R. Garon........................................ 7,000 shares 91,000
</TABLE>

Loans to Kenneth W. Davidson. Effective November 1, 1997, the Company
entered into an employment agreement with Kenneth W. Davidson, Chairman of the
Board, Chief Executive Officer and President of the Company, which employment
agreement replaced an employment agreement dated effective November 1, 1994,
which expired on October 31, 1997. Among other things, the agreement requires
the Company to make a loan or loans (collectively "Loans") to Mr. Davidson not
to exceed an aggregate of $400,000, including loans made under Mr. Davidson's
previous employment agreement, the principal purpose of which was, or would be,
to enable Mr. Davidson to pay any federal income taxes associated with the
exercise by him of stock options to purchase shares of Common Stock. Each Loan
made to Mr. Davidson under the previous employment agreement, and any new Loans
made under the new employment agreement, are non-interest bearing, unsecured and
are repayable in ten equal annual installments, on the third through twelfth
anniversaries of the date of such Loan. During fiscal year 1997, the highest
amount due to the Company from Mr. Davidson under the outstanding Loans was
$390,000. The total amount outstanding under the Loans at January 31, 1998, was
$390,000. Mr. Davidson was, during fiscal year 1997, and at January 31, 1998,
current in all of his repayment obligations under the Loans. See "Employment
Contracts" above.

APPROVAL OF 1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(PROPOSAL 2)

On February 11, 1998, the Board approved the 1998 Non-Employee Directors'
Stock Option Plan (the "1998 Directors' Plan"), conditioned upon approval by the
Company's shareholders at the Meeting. The purpose of the 1998 Directors' Plan
is to assist the Company in attracting and retaining qualified and competent
persons for service as members of the Board. Drs. Henley, Grabios and Martin and
Messrs. DePriest, Dorflinger and Wafelman are currently the only persons who are
eligible to participate in the 1998 Directors' Plan. The grant of options to
non-employee Directors is non-discretionary under the 1998 Directors' Plan, and
each non-employee Director of the Company has been granted an option to purchase
5,000 shares of Common Stock under the Plan. In addition, in the event that any
person is elected as a Director of the Company for the first time at any Annual
Meeting of Shareholders after the Annual Meeting, such person will be entitled
to an option to purchase 5,000 shares of Common Stock under the 1998 Directors'
Plan. The 1998 Directors' Plan will automatically terminate effective on the
date of the 2002 Annual Meeting.

The Board has authorized the reservation of 40,000 shares of Common Stock
of the Company for issuance in accordance with the provisions of the 1998
Directors' Plan. Shares of Common Stock to be delivered under the provisions of
the 1998 Directors' Plan are to be issued by the Company from its authorized but
unissued shares of Common Stock. The 1998 Directors' Plan is evidenced by a
formal written plan. The shares subject to the options to be granted to the six
persons named above are not set forth in the Security Ownership table included
in this Proxy Statement because (i) the grant of such options under the 1998
Directors' Plan remains subject to the approval of the Company's shareholders at
the Meeting and (ii) such options will not be exercisable until March 12, 1999.

14
<PAGE> 18

The Options granted under the 1998 Directors' Plan to the six current
non-employee Directors are exercisable at $19.02 per share, or 85% of the
opening price of the Company's Common Stock on the New York Stock Exchange on
November 3, 1997, the effective date of options granted to certain officers and
employees of the Company (including employee Directors). Options granted under
the 1998 Directors' Plan to new non-employee Directors will be exercisable at a
price per share equal to 85% of the opening price of the Company's Common Stock
on the New York Stock Exchange on the date on which such new Director is elected
to such position.

Only Directors of the Company who are neither employees or executive
officers of the Company are eligible to receive options under the 1998
Directors' Plan. All options granted under the 1998 Directors' Plan will be
first and fully exercisable after the first anniversary of the first annual
meeting of the shareholders of the Company held after the grant of such option
(if such grant date is the date of an annual shareholders' meeting, then one
year after such date) (the "Vesting Date"), provided that at such date the
optionee has served as a Director of the Company at all times from the date of
grant up to the date preceding the Vesting Date. Thereafter, options are fully
exercisable through the expiration of three years from the Vesting Date, except
that if for any reason a Director ceases to serve as a Director, the options
will terminate on the earlier of their termination date or the first anniversary
of the date on which the Director ceased to serve as a Director. Options granted
under the 1998 Directors' Plan become exercisable in full automatically upon any
change in control of the Company, including (but not limited to) an acquisition
by any person of 40% or more of the voting power of the stock of the Company, a
change in the majority of the members of the Board at a meeting of the
shareholders of the Company, or a merger in which the shareholders of the
Company own less than 50% of the ownership in the surviving entity. Options
granted under the 1998 Directors' Plan are not transferable, except by will or
by the laws of descent and distribution.

All options granted under the 1998 Directors' Plan are conditioned upon the
approval of the 1998 Directors' Plan by the shareholders of the Company at the
Meeting and both the Plan and all options previously granted under the Plan will
automatically terminate if such approval is not received. No other options have
been issued to non-employee Directors other than as described above under
"Management -- Director Compensation."

On February 2, 1998 the last reported sales price per share of Common Stock
on the New York Stock Exchange was $22.81.

FEDERAL INCOME TAX CONSEQUENCES

All options granted under the 1998 Directors' Plan will be non-statutory
options, not entitled to special tax treatment under Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code") or otherwise. The
following is a summary of the current Federal income tax rules related to the
grant and exercise of nonqualified stock options ("NQSO").

A grantee of a NQSO will not recognize taxable income upon the grant of the
option. Upon a grantee's exercise of a NQSO, (1) the grantee will recognize
ordinary income in an amount equal to the difference between the exercise price
of the shares purchased pursuant to the NQSO and their fair market value on the
exercise date, and (2) the Company will be entitled to a tax deduction in an
amount equal to such difference.

15
<PAGE> 19

VALUE OF 1998 DIRECTOR OPTIONS GRANTED

Set forth below is a summary table as to the dollar value of options
granted under the 1998 Non-Employee Directors' Stock Option Plan, subject to
shareholder approval.

1998 Non-Employee Directors' Stock Option Plan

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
UNDERLYING 1998
DOLLAR VALUE(1) DIRECTOR OPTIONS(2)
--------------- -------------------
<S> <C> <C>
Non-Employee Directors as a Group........................... $162,600 30,000
</TABLE>

- ---------------

(1) Dollar value on the date of grant, February 11, 1998, based upon an opening
price on the NYSE of $24.44 per share. Exercise price of all options is
$19.02.
(2) Options granted February 11, 1998, subject to shareholder approval.

BOARD RECOMMENDATION

The Board believes that the adoption of the 1998 Directors' Plan is in the
best interest of the Company and its shareholders. The Board therefore
recommends a vote FOR approval of the 1998 Non-Employee Directors' Stock Option
Plan, and it is intended that the proxies not marked to the contrary will be so
voted.

The affirmative vote of a majority of the shares of Common Stock
represented at the Meeting, in person or by proxy, is required for approval of
the 1998 Directors' Plan, provided that the total votes cast on the proposal
(including abstentions) represents more than 50% of the total number of shares
of Common Stock outstanding on the Record Date. Broker non-votes will be
disregarded.

RATIFICATION OF SENIOR MANAGEMENT STOCK PURCHASE PLAN
(PROPOSAL 3)

On May 9, 1997, the Board of Directors approved the Senior Management Stock
Purchase Plan (the "Stock Purchase Plan") for the purpose of advancing the
interests of the Company and its subsidiaries by providing stock ownership
opportunities to senior management and key employees of the Company who
contribute significantly to the management, growth and financial success of the
Company and its subsidiaries. The Board believed that aligning executive
officers' and key employees' personal interests more closely with those of the
shareholders and with the Company's financial performance would benefit the long
term growth of the Company while aiding it in retaining employees of exceptional
ability.

Under the Stock Purchase Plan, a total of 400,000 shares of Common Stock
(the "Shares") were made available for purchase by executive officers and
persons deemed to be key employees of the Company (the "Participants") at a
price of $13.00 per share, which was the closing sale price per share of the
Common Stock on the New York Stock Exchange on April 30, 1997. All 400,000
shares were subscribed for and purchased by the Participants in May 1997. The
following executive officers of the Company purchased the number of shares set
forth opposite their names.

<TABLE>
<S> <C> <C> <C>
Kenneth W. Davidson........... 100,000 shares Henry T. DeHart............... 39,000 shares
Peter M. Graham............... 50,000 shares Joseph D. Dailey.............. 28,000 shares
Jack F. Cahill................ 44,000 shares Rob W. Beek................... 12,000 shares
David L. Lamont............... 39,000 shares Suzanne R. Garon.............. 7,000 shares
Alan S. Blazei................ 39,000 shares
</TABLE>

16
<PAGE> 20

The Company has been informed by the New York Stock Exchange that the Stock
Purchase Plan must be ratified by the Company's shareholders prior to the
listing of the Shares on the Exchange. A summary of the terms of the Stock
Purchase Plan is set forth below.

TERMS OF THE STOCK PURCHASE PLAN

Payment for Shares. Payment for the Shares was made by means of a full
recourse promissory note from each Participant ("Promissory Note"), the payment
of which is also secured by a pledge of the Shares. The Promissory Notes are
noninterest bearing until their due date. If the Promissory Notes are not paid
when due, they bear interest at the highest maximum legal rate, or if no maximum
rate is established under applicable law, then 18% per year.

The Promissory Notes are due on May 23, 2000, provided that the Participant
remains in the employ of the Company until such date. If the employment of the
Participant with the Company is terminated for any reason other than
Participant's death at any time prior to the payment in full of the
Participant's Promissory Note, then the maturity date of the Promissory Note is
accelerated to the date and under the circumstances described below:

(a) If the Participant's employment with the Company is terminated for
cause, then the maturity date of the Promissory Note is immediately
accelerated to the effective date of termination established by the
Company.

(b) If the Participant's employment with the Company is terminated by
the Company without cause, or by the Participant or the Company because of
a change in control of the Company, or if his health shall become impaired
to an extent that makes his continued performance of his duties hazardous
to his physical or mental health or his life, then the maturity date of the
Promissory Note is immediately accelerated to the date that is six months
after the effective date of termination established by the Company, but in
no event later than the stated maturity date under the Promissory Note.

(c) If the Participant's employment with the Company is terminated
voluntarily by the Participant, then the maturity date of the Promissory
Note is immediately accelerated to the date that is three months after the
effective date of termination established by the Company, but in no event
later than the stated maturity date under the Promissory Note.

Forfeiture of Gain by the Participant. If the Participant sells his Shares
prior to the expiration of three years from the effective date of the sale of
the Shares to him for any reason other than pursuant to a change in control of
the Company, or a merger, acquisition or other corporate transaction pursuant to
which the Shares are effectively sold, converted or transferred by operation of
law, then 50% of any gain realized by the Participant upon such sale will be
forfeited and paid over to the Company immediately upon such sale. The purpose
of this forfeiture provision is to further and promote the purpose of the Plan,
and will not be applicable to the sale of Shares by the heirs or legal
representatives of a Participant in the event of his death.

BOARD RECOMMENDATION

The Board believes that the Stock Purchase Plan has fulfilled its purpose
of aligning executive officers' and key employees' personal interests more
closely with those of the shareholders and with the Company's financial
performance and has benefited the long term growth of the Company while aiding
it in retaining the executives who participated in the Stock Purchase Plan.
Therefore, the Board believes that the ratification of the Stock Purchase Plan
is in the best interest of the Company and its shareholders. The Board
recommends a vote FOR ratification of the Stock Purchase Plan, and it is
intended that the proxies not marked to the contrary will be so voted.

The affirmative vote of a majority of the shares of Common Stock
represented at the Meeting, in person or by proxy, is required for ratification
of the Stock Purchase Plan, provided that the total votes cast on the proposal
(including abstentions) represents more than 50% of the total number of shares
of Common Stock outstanding on the Record Date. Broker non-votes will be
disregarded. In the event that the Stock Purchase Plan is not approved by the
shareholders, the Company either will have to repurchase the Shares under
17
<PAGE> 21

circumstances that will provide the executives with substantially the same
economic benefits that they would have realized had the Stock Purchase Plan been
approved or make other arrangements with the Participants to provide them with
such benefits. Any such arrangements likely will cause the Company to incur
significant compensation expenses, based upon the increase in the value of the
Shares since the date of purchase. Net compensation costs associated with the
issuance of the Shares was not significant.

RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Company engaged the firm of KPMG Peat Marwick LLP, independent
certified public accountants, to report upon the financial statements included
in the Annual Report submitted herewith. A representative from said firm will be
in attendance at the Meeting, will have the opportunity to make a statement if
desired, and will be available to respond to any questions from those in
attendance. The Company is seeking ratification of the appointment of KPMG Peat
Marwick LLP as the Company's independent certified public accountants to report
upon its 1997 financial statements by the shareholders at the Meeting.
Shareholder approval of the Company's independent certified public accountants
is not required by the Company's By-Laws or otherwise. The Board of Directors
has elected to seek such ratification as a matter of good corporate practice and
unanimously recommends that you vote "FOR" such ratification. If the
shareholders do not ratify this appointment, other certified public accountants
will be considered by the Board of Directors for future reports upon
recommendation of the Audit Committee.

OTHER BUSINESS

Management of the Company does not know of any other business that may be
presented at the Meeting. If any matter not described herein should be presented
for shareholder action at the Meeting, the persons named in the enclosed Proxy
will vote the shares represented thereby in accordance with their best judgment.

18
<PAGE> 22

SHAREHOLDER PROPOSALS FOR
PRESENTATION AT THE 1999 ANNUAL MEETING

The Board of Directors requests that any shareholder proposals intended for
presentation at the 1999 Annual Meeting be submitted to Peter M. Graham,
Secretary, in writing no later than October 22, 1998, for consideration for
inclusion in the Company's proxy materials for such meeting.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY TO ENSURE THAT A QUORUM
WILL BE PRESENT AT THE MEETING. THEREFORE, SHAREHOLDERS ARE REQUESTED TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON.

PLEASE NOTE: IF YOUR SHARES ARE HELD IN STREET NAME BY A BROKERAGE FIRM,
BANK OR OTHER NOMINEE, SUCH NOMINEE WILL SUPPLY YOU WITH A PROXY TO BE RETURNED
DIRECTLY TO IT. IT IS IMPORTANT THAT YOU RETURN THE FORM TO THE NOMINEE AS
QUICKLY AS POSSIBLE SO THAT IT MAY VOTE YOUR SHARES. YOU MAY NOT VOTE SUCH
SHARES IN PERSON AT THE MEETING UNLESS YOU OBTAIN A POWER OF ATTORNEY OR LEGAL
PROXY FROM THE NOMINEE AUTHORIZING YOU TO VOTE THE SHARES, AND YOU PRESENT THIS
POWER OF ATTORNEY OR PROXY AT THE MEETING.

By Order of the Board of Directors

/s/ PETER M. GRAHAM
Peter M. Graham,
Secretary

Dated: February 20, 1998

19
<PAGE> 23

MAXXIM MEDICAL, INC.
10300 49TH STREET NORTH
CLEARWATER, FLORIDA 33762

PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 12, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby designates and appoints Peter M. Graham, David L.
Lamont and Alan S. Blazei, and each of them with authority to act without the
others, as attorneys and proxies for the undersigned, with full power of
substitution, to vote all shares of Common Stock, $.001 par value per share, of
Maxxim Medical, Inc. that the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Maxxim Medical, Inc., to be held at 10:00 a.m.
Eastern Time on Thursday, March 12, 1998, or at any adjournment thereof, with
all the powers the undersigned would possess if personally present, such proxies
being directed to vote as specified below and in their discretion on any other
business that may properly come before the Meeting.

1. ELECTION OF DIRECTORS:
Nominees: Kenneth W. Davidson, Donald R. DePriest, Peter G. Dorflinger,
Martin Grabois, M.D., Ernest J. Henley, Ph.D.,
Richard O. Martin, Ph.D., and Henk R. Wafelman, Ing.

<TABLE>
<S> <C>
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
(EXCEPT AS MARKED TO THE CONTRARY BELOW) ABOVE
</TABLE>

(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)

- --------------------------------------------------------------------------------
2. To approve the adoption of the 1998 Non-Employee Directors' Stock Option Plan
and the issuance to non-employee directors thereunder of options to purchase
an aggregate of 30,000 shares of Common Stock of the Company.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. To ratify the adoption of the Senior Management Stock Purchase Plan and the
sale of 400,000 shares of Common Stock of the Company thereunder.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(Please sign and date on reverse side.)

(Continued from other side.)

4. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for fiscal year 1997.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. In their discretion, on such other business as may properly come before the
Meeting.

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE
EVEN IF YOU PLAN TO ATTEND THE MEETING.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR PROPOSALS 2, 3 AND 4.

The undersigned reserves the right to revoke this Proxy at any time prior to the
Proxy being voted at the Meeting. The Proxy may be revoked by delivering a
signed revocation to the Company at any time prior to the Meeting, by submitting
a later-dated Proxy, or by attending the Meeting in person and casting a ballot.
The undersigned hereby revokes any proxy previously given to vote such shares at
the Meeting.

Dated:
-----------------------------

-----------------------------------
Signature of Shareholder

Please sign Proxy EXACTLY as your
name appears on your stock
certificate(s). JOINT OWNERS SHOULD
EACH SIGN PERSONALLY. When signing
as attorney, executor,
administrator, trustee, guardian,
partner or corporate officer,
please give full your full title as
such.