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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange
Act of 1934 and Rule 13e-3 thereunder)
MAXXIM MEDICAL, INC.
(Name of Issuer)
MAXXIM MEDICAL, INC.
KENNETH W. DAVIDSON
ERNEST J. HENLEY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
57777G 10 5
(CUSIP Number of Class of Securities)
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KENNETH W. DAVIDSON KENNETH W. DAVIDSON
Chairman of the Board, President and Chief Executive ERNEST J. HENLEY
Officer Maxxim Medical, Inc.
Maxxim Medical, Inc. 10300 49th Street North
10300 49th Street North Clearwater, FL 33762
Clearwater, FL 33762 (727) 561-2100
(727) 561-2100
</TABLE>
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
With copies to:
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PAUL R. LYNCH, ESQ. MICHAEL E. GIZANG, ESQ.
Shumaker, Loop & Kendrick, LLP Skadden, Arps, Slate, Meagher & Flom LLP
101 E. Kennedy Blvd., Suite 2800 919 Third Avenue
Tampa, FL 33602 New York, New York 10022
(813) 229-7600 (212) 735-2000
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This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [X]
CALCULATION OF FILING FEE
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==============================================================================
Transaction Valuation * Amount of Filing Fee
$373,802,475 $74,760
==============================================================================
* For purposes of calculating the fee only. Calculated in accordance with Rule
0-11(b)(2) under the Securities Exchange Act of 1934, as amended. Assumes the
purchase of 13,732,826 shares of Common Stock, par value .001 per share, of
Maxxim Medical, Inc. at $26.00 per share and the purchase of the underlying
options to purchase Common Stock for an aggregate of $16,748,999.
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $74,760
Form or Registration No.: Preliminary Proxy Statement on Schedule 14A
(filed concurrently with this Schedule 13E-3)
Filing Party: Maxxim Medical, Inc.
Date Filed: July 26, 1999
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SCHEDULE 13E-3
INTRODUCTION
This Rule 13e-3 transaction statement is being filed with the Securities
and Exchange Commission in connection with the merger of Fox Paine Medic
Acquisition Corporation with and into Maxxim Medical, Inc. ("Maxxim") pursuant
to an Agreement and Plan of Merger, dated as of June 13, 1999, among Fox Paine
Medic Acquisition Corporation and Maxxim. Under the merger agreement, Maxxim
will continue as the surviving corporation and each share of Maxxim common
stock, par value $.001 per share, outstanding immediately prior to the merger
(together with the preferred stock purchase rights associated with those
shares), other than a portion of the shares held by the Continuing Shareholders
(as defined below), and shares held by dissenting shareholders, will be
converted into the right to receive $26.00 in cash, without interest. The
Continuing Shareholders are Kenneth W. Davidson, Peter M. Graham, David L.
Lamont, Alan S. Blazei, Henry T. Dehart, Joseph D. Dailey, Jack F. Cahill,
Suzanne R. Garon, Ernest J. Henley and Davis C. Henley. Mr. Davidson and Dr.
Henley are members of Maxxim's board of directors and are filing this
transaction statement together with Maxxim. All of the Continuing Shareholders
are participating in the merger and will be treated differently than the other
Maxxim shareholders. Upon consummation of the merger, Maxxim will be owned
approximately 15% (before giving effect to options and warrants) by the
Continuing Shareholders (Mr. Davidson will own 3.9% of Maxxim and Dr. Henley
will own 3% of Maxxim) and 85% by affiliates of Fox Paine & Company, LLC, a
private investment firm, and other related investors.
Concurrently with the filing of this transaction statement, Maxxim has
filed with the SEC a preliminary Proxy Statement on Schedule 14A (the "Proxy
Statement") in connection with a special meeting of the shareholders of Maxxim,
at which meeting the shareholders will be asked to approve the merger agreement.
The following cross reference sheet is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the preliminary Proxy
Statement of the information required to be included in response to the items of
this statement. The information set forth in the preliminary Proxy Statement,
including all appendices thereto, is hereby expressly incorporated herein by
reference and the responses to each item are qualified in their entirety by the
provisions of the preliminary Proxy Statement.
CROSS REFERENCE SHEET
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<CAPTION>
ITEM IN CAPTION OR LOCATION
SCHEDULE 13E-3 IN THE PROXY STATEMENT
-------------- ----------------------
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Item 1(a) "Summary - The Participants"
Item 1(b) "Summary - The Special Meeting," "Historical Market
Information" and "The Special Meeting - Record Date
and Voting"
Item 1(c) - (f) "Historical Market Information"
Item 2(a) - (g) "Summary - The Participants," "Historical Market
Information" and "Information About the Transaction
Participants - The Continuing Shareholders"
Item 3(a)(1) "Summary - Interests of Certain Persons in
the Merger," "Historical Market Information" and
"Special Factors-Interests of Certain Persons in the
Merger"
Item 3(a)(2) "Summary - Interests of Certain Persons in the
Merger," "Historical Market Information," "Special
Factors-Background of the Merger" and "- Interests of
Certain Persons in the Merger"
</TABLE>
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Item 3(b) "Summary - Structure of the Transactions," "- The
Voting Agreements," "- Terms of the Merger
Agreement," "- Interests of Certain Persons in the
Merger," "Special Factors - Structure of the
Transactions; Transaction Participants," "-
Background of the Merger," "- Interests of Certain
Persons in the Merger," "The Special Meeting - Voting
Agreements" and "The Merger"
Item 4(a) "Questions and Answers about the Merger,"
"Summary -Structure of the Transactions," "- Terms of
the Merger Agreement," "- Interests of Certain
Persons in the Merger," "- Appraisal Rights,"
"Special Factors - Structure of the Transactions;
Transaction Participants," "- Interests of Certain
Persons in the Merger," "- Certain Effects of the
Merger; Conduct of Business After the Merger,"
"Merger Financing," "The Merger," "Appraisal Rights"
and Appendix A to the Proxy Statement
Item 4(b) "Questions and Answers about the Merger,"
"Summary - Structure of the Transactions," "- Terms
of the Merger Agreement," "- Interests of Certain
Persons in the Merger," "Special Factors - Structure
of the Transactions; Transaction Participants," "-
Interests of Certain Persons in the Merger," "The
Merger - Merger Consideration" and "- Treatment of
Maxxim Stock Options"
Item 5(a) "Summary - Structure of the Transactions," "-
Terms of the Merger Agreement," "Special Factors -
Structure of the Transactions; Transaction
Participants," "- Certain Effects of the Merger;
Conduct of Business After the Merger" and "The Merger
- Structure and Effective Time"
Item 5(b) "Merger Financing - Senior Bank Loans"
Item 5(c) "Special Factors - Interests of Certain Persons in
the Merger," "- Certain Effects of the Merger;
Conduct of Business After the Merger" and "The Merger
- Directors and Officers"
Item 5(d) "Summary - Merger Financing," "Historical Market
Information," "Merger Financing," "The Merger
Treatment of Maxxim Stock Options" and "-
Retirement/Amendment of Maxxim Senior Notes"
Item 5(e) *
Item 5(f) - (g) "Special Factors - Certain Effects of the Merger;
Conduct of Business after the Merger"
Item 6(a) "Summary - Merger Financing" and "Merger Financing"
Item 6(b) "The Merger - Expenses" and "- Estimated Fees and
Expenses of the Merger"
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Item 6(c) "Summary - Merger Financing" and "Merger Financing"
Item 6(d) *
Item 7(a) "Questions and Answers about the Merger," "Summary -
Structure of the Transactions," "Special Factors -
Structure of the Transactions; Transaction
Participants," "- Background of the Merger," "-
Recommendation of the Special Committee and of the
Full Maxxim Board; Fairness of the Merger," "- The
Continuing Shareholders' Reasons for the Merger," "-
Interests of Certain Persons in the Merger," "The
Merger - Structure and Effective Time" and "-
Consideration"
Item 7(b)-(c) "Special Factors - Background of the Merger,"
"-Recommendation of the Special Committee and of the
Full Maxxim Board; Fairness of the Merger" and
"Information about the Transaction Participants - Fox
Paine Medic Acquisition Corporation and the other Fox
Paine Entities"
Item 7(d) "Questions and Answers About the Merger," "Summary -
Structure of the Transactions," "- Terms of the
Merger Agreement," "- Accounting Treatment," "-
Merger Financing," "- Interests of Certain Persons in
the Merger," "- Appraisal Rights," "Special Factors -
Structure of the Transactions; Transaction
Participants," "- Interests of Certain Persons in the
Merger" "- Certain Effects of the Merger; Conduct of
Business After the Merger," "Merger Financing," "The
Merger - Structure and Effective Time," " - Merger
Consideration," "- Treatment of Maxxim Stock
Options," "- Retirement/Amendment of Maxxim Senior
Notes," "- Directors and Officers," "Appraisal
Rights" and "Federal Income Tax Consequences"
Item 8(a) - (b) "Questions and Answers About the Merger," "Summary -
Recommendations to Shareholders," "- Fairness
Opinion," "Special Factors - Background of the
Merger," "- Recommendations of the Special Committee
and of the Full Maxxim Board," "Opinion of Lazard
Freres & Co. LLC," "- The Continuing Shareholders'
Reasons for the Merger" and "- Position of the
Continuing Shareholders as to Fairness of the Merger"
Item 8(c) "The Special Meeting - Required Vote"
Item 8(d) - (e) "Questions and Answers about the Merger," "Summary -
Recommendations to Shareholders," "- Fairness
Opinion," "Special Factors - Background of the
Merger," "- Recommendation of the Special Committee
and of the Full Maxxim Board; Fairness of the Merger"
and "- Opinion of Lazard Freres & Co. LLC"
Item 8(f) "Special Factors - Background of the Merger" and
"Recommendation of the Special Committee and of the
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Full Maxxim Board; Fairness of the Merger"
Item 9(a)-(c) "Summary - Fairness Opinion," "Special Factors
Background of the Merger," "- Recommendations of the
Special Committee and of the Full Maxxim Board;
Fairness of the Merger," "Opinion of Lazard Freres &
Co. LLC" and Appendix B to Proxy Statement
Item 10(a)-(b) "Principal Shareholders and Stock Ownership of
Management and Others"
Item 11 "Summary - Structure of the Transactions" "- The
Voting Agreements," "- Terms of the Merger
Agreement," "- Interests of Certain Persons in the
Merger," "Special Factors - Structure of the
Transactions; Transaction Participants," "- Interests
of Certain Persons in the Merger," "The Special
Meeting - Required Vote," "- Voting Agreements" and
"The Merger"
Item 12(a) - (b) "Questions and Answers About the Merger," "Summary -
The Voting Agreements," "- Recommendations to
Shareholders," "Special Factors - Background of the
Merger," "- Recommendations of the Special Committee
and of the Full Maxxim Board; Fairness of the
Merger," "- The Continuing Shareholders' Reasons for
the Merger," " - Position of the Continuing
Shareholders as to Fairness of the Merger," "The
Special Meeting - Required Vote" and "- Voting
Agreement"
Item 13(a) "Summary - Appraisal Rights," "The Special
Meeting - Record Date and Voting," "Appraisal Rights"
and Appendix C to the Proxy Statement
Item 13(b) - (c) *
Item 14(a) - (b) "Selected Historical Consolidated Financial Data"
and "Incorporation of Certain Documents by Reference"
Item 15(a) - (b) "The Special Meeting - Proxies; Revocation" and "The
Merger - Estimated Fees and Expenses of the Merger"
Item 16 Proxy Statement
Item 17(a) - (f) *
- -------------------
* Not applicable or answer is negative.
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The information set forth in the section entitled "Summary -
The Participants" of the Proxy Statement is incorporated herein by reference.
(b) The information set forth in the sections entitled "Summary -
The Special Meeting," "Historical Market Information" and "The Special Meeting -
Record Date and Voting" of the Proxy Statement is incorporated herein by
reference.
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(c)-(f) The information set forth in the section entitled "Historical
Market Information" of the Proxy Statement is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(g) This statement is being filed jointly by Maxxim, Kenneth W.
Davidson and Ernest J. Henley. The information set forth in the sections
entitled "Summary - The Participants," "Historical Market Information" and
"Information About the Transaction Participants - The Continuing Shareholders"
of the Proxy Statement is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)(1) The information set forth in the sections entitled "Summary -
Interests of Certain Persons in the Merger," "Historical Market Information" and
"Special Factors - Interests of Certain Persons in the Merger" of the Proxy
Statement is incorporated herein by reference.
(a)(2) The information set forth in the section entitled "Summary -
Interests of Certain Persons in the Merger," "Historical Market Information,"
"Special Factors - Background of the Merger" and "- Interests of Certain Persons
in the Merger" of the Proxy Statement is incorporated herein by reference.
(b) The information set forth in the section entitled "Summary -
Structure of the Transactions," "- The Voting Agreements," "- Terms of the
Merger Agreement," "- Interests of Certain Persons in the Merger," "Special
Factors - Structure of the Transactions; Transaction Participants," "-
Background of the Merger," "- Interests of Certain Persons in the Merger," "The
Special Meeting - Voting Agreements" and "The Merger" of the Proxy Statement is
incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the Proxy Statement under
"Questions and Answers about the Merger," "Summary - Structure of the
Transactions," "- Terms of the Merger Agreement," "- Interests of Certain
Persons in the Merger," "- Appraisal Rights," "Special Factors - Structure of
the Transactions; Transaction Participants," "Interests of Certain Persons in
the Merger," "- Certain Effects of the Merger; Conduct of Business After the
Merger," "Merger Financing," "The Merger," "Appraisal Rights" and Appendix A to
the Proxy Statement is incorporated herein by reference.
(b) The information set forth in the Proxy Statement under
"Questions and Answers about the Merger," "Summary - Structure of the
Transactions," "- Terms of the Merger Agreement," "- Interests of Certain
Persons in the Merger," "Special Factors - Structure of the Transactions;
Transaction Participants," "- Interests of Certain Persons in the Merger," "The
Merger - Merger Consideration" and "- Treatment of Maxxim Stock Options" is
incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) The information set forth in the Proxy Statement under
"Summary - Structure of the Transactions," "- Terms of the Merger Agreement,"
"Special Factors - Structure of the Transactions; Transaction Participants,"
"Certain Effects of the Merger; Conduct of Business After the Merger" and "The
Merger - Structure and Effective Time" and is incorporated herein by reference.
(b) The information set forth in the Proxy Statement under
"Merger Financing - Senior Bank Loans" is incorporated herein by reference.
(c) The information set forth in the Proxy Statement under
"Special Factors - Interests of Certain Persons in the Merger," "- Certain
Effects of the Merger; Conduct of Business After the Merger" and "The Merger
Directors and Officers" is incorporated herein by reference.
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(d) The information set forth in the Proxy Statement under
"Summary - Merger Financing," "Historical Market Information," "Merger
Financing," "The Merger - Treatment of Maxxim Stock Options" and "-
Retirement/Amendment of Maxxim Senior Notes" is incorporated herein by
reference.
(e) None.
(f)-(g) The information set forth in the Proxy Statement under
"Special Factors - Certain Effects of the Merger; Conduct of Business after the
Merger," is incorporated herein by Merger.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Proxy Statement under
"Summary - Merger Financing" and "- Merger Financing" is incorporated herein by
reference.
(b) The information set forth in the Proxy Statement under "The
Merger - Expenses" and "- Estimated Fees and Expenses of the Merger" is
incorporated herein by reference.
(c) The information set forth in the Proxy Statement under
"Summary - Merger Financing" and "Merger Financing" is incorporated herein by
reference.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) The information set forth in the Proxy Statement under
"Questions and Answers About the Merger," "Summary - Structure of the
Transactions," "- Interests of Certain Persons in the Merger," "Special Factors
Structure of the Transactions; Transaction Participants," "- Background of the
Merger," "- Recommendations of the Special Committee and of the Full Maxxim
Board; Fairness of the Merger," "- The Continuing Shareholders' Reasons for the
Merger," "- Interests of Certain Persons in the Merger," "The Merger - Structure
and Effective Time" and "Consideration" is incorporated herein by reference.
(b)-(c) The information set forth in the Proxy Statement under
"Special Factors - Background of the Merger," "- Recommendation of the Special
Committee and of the Full Maxxim Board; Fairness of the Merger" and "Information
about the Transaction Participants - Fox Paine Medic Acquisition Corporation and
the Other Fox Paine Entities" is incorporated herein by reference.
(d) The information set forth in the Proxy Statement under
"Questions and Answers About the Merger," "Summary - Structure of the
Transactions," "- Terms of the Merger Agreement," "- Accounting Treatment," "-
Merger Financing," "Interests of Certain Persons in the Merger," "- Appraisal
Rights," "Special Factors - Structure of the Transactions; Transaction
Participants," "- Interests of Certain Persons in the Merger," "- Certain
Effects of the Merger; Conduct of Business After the Merger," "Merger
Financing," "The Merger - Structure and Effective Time," " Merger
Consideration," "- Treatment of Maxxim Stock Options," "- Retirement/Amendment
of Maxxim Senior Notes," "Directors and Officers," "Appraisal Rights" and
"Federal Income Tax Consequences" is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(b) The information set forth in the Proxy Statement under
"Questions and Answers About the Merger," "Summary - Recommendations to
Shareholders," "- Fairness Opinion," "Special Factors - Background of the
Merger," "Recommendations of the Special Committee and of the Full Maxxim
Board," "- Opinion of Lazard Freres & Co. LLC," "The Continuing Shareholders'
Reasons for the Merger" and "- Position of the Continuing Shareholders as to
Fairness of the Merger" is incorporated herein by reference.
(c) The information set forth in the Proxy Statement under "The
Special Meeting - Required Vote" is incorporated herein by reference.
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(d)-(e) The information set forth in the Proxy Statement under
"Questions and Answers about the Merger," "Summary - Recommendations to
Shareholders," "Special Factors - Background of the Merger," "- Recommendation
of the Special Committee and of the Full Maxxim Board; Fairness of the Merger"
and "- Opinion of Lazard Freres & Co. LLC" is incorporated herein by reference.
(f) The information set forth in the Proxy Statement "Special
Factors - Background of the Merger" and "- Recommendation of the Special
Committee and of the Full Maxxim Board; Fairness of the Merger" is incorporated
herein by reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a)-(c) The information set forth in the Proxy Statement under
"Summary - Fairness Opinion," "Special Factors - Background of the Merger," "-
Recommendations of the Special Committee and of the Full Maxxim Board," "Opinion
of Lazard Freres & Co. LLC" and Appendix B to Proxy Statement is incorporated
herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) The information set forth in the Proxy Statement under
"Principal Shareholders and Stock Ownership of Management and Others" is
incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in the Proxy Statement under "Summary -
Structure of the Transactions," "- The Voting Agreements," "- Terms of the
Merger Agreement," "- Interests of Certain Persons in the Merger," "Special
Factors - Structure of the Transactions; Transaction Participants," "- Interests
of Certain Persons in the Merger," "The Special Meeting - Required Vote," "-
Voting Agreement" and "The Merger" is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD
TO THE TRANSACTION.
(a)-(b) The information set forth in the Proxy Statement under
"Questions and Answers About the Merger" "Summary - The Voting Agreements," "-
Recommendations to Shareholders," "Special Factors - Background of the Merger,"
"- Recommendations of the Special Committee and of the Full Maxxim Board;
Fairness of the Merger," "- The Continuing Shareholders' Reasons for the
Merger," " - Position of the Continuing Shareholders as to Fairness of the
Merger" "The Special Meeting - Required Vote" and "- Voting Agreement" is
incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in the Proxy Statement under
"Summary - Appraisal Rights," "The Special Meeting - Record Date and Voting,"
"Appraisal Rights" and Appendix C to the Proxy Statement is incorporated herein
by reference.
(b) None.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a)-(b) The information set forth in the Proxy Statement under
"Selected Historical Consolidated Financial Data" and "Incorporation of Certain
Documents by Reference" is incorporated herein by reference.
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ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a)-(b) The information set forth in the Proxy Statement under "The
Special Meeting - Proxies; Revocation" and "The Merger - Estimated Fees and
Expenses of the Merger" is incorporated herein by reference.
ITEM 16. ADDITIONAL INFORMATION.
The entirety of the Proxy Statement is incorporated herein by
reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(b) Opinion of Lazard Freres & Co. LLC (included as Appendix B to the
Preliminary Proxy Statement filed by Maxxim Medical, Inc. on July 23,
1999 under cover of Schedule 14A)
(c)(1) Agreement and Plan of Merger, dated as of June 13, 1999, among Fox
Paine Medic Acquisition Corporation and Maxxim (included as Appendix A
to the Preliminary Proxy Statement filed by Maxxim Medical, Inc. on
July 23, 1999 under cover of Schedule 14A)
(c)(2) Form of Voting Agreement, by and between Fox Paine Medic Acquisition
Corporation and each of 10 shareholders of Maxxim Medical, Inc.
(included as Appendix D to the Preliminary Proxy Statement filed by
Maxxim Medical, Inc. on July 23, 1999 under cover of Schedule 14A)
(c)(3) Investor Participation Agreement, dated as of June 13, 1999, by and
among Fox Paine Medic Acquisition Corporation and each of 10
shareholders of Maxxim Medical, Inc., in their individual capacities
(d)(1) Preliminary letter to shareholders (included in the Preliminary Proxy
Statement filed by Maxxim Medical, Inc. on July 23, 1999 under cover of
Schedule 14A)
(d)(2) Preliminary notice of special meeting of shareholders (included in the
Preliminary Proxy Statement filed by Maxxim Medical, Inc. on July 23,
1999 under cover of Schedule 14A)
(d)(3) Preliminary Proxy Statement (incorporated by reference to the
Preliminary Proxy Statement filed by Maxxim Medical, Inc. on July 23,
1999 under cover of Schedule 14A)
(d)(4) Preliminary form of proxy (incorporated by reference to the Preliminary
Proxy Statement filed by Maxxim Medical, Inc. on July 23, 1999 under
cover of Schedule 14A)
(d)(5) Press release issued by Maxxim and Fox Paine & Company, LLC dated as of
June 14, 1999 (incorporated by reference to the Current Report on Form
8-K filed by Maxxim Medial, Inc. on June 16, 1999)
(e) Articles 5.11, 5.12 and 5.13 of the Texas Business Corporation Act
(included as Appendix C to the Preliminary Proxy Statement filed by
Maxxim Medical, Inc. on July 23, 1999 under cover of Schedule 14A)
(f) Not applicable.
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SIGNATURE
After due inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
MAXXIM MEDICAL, INC.
Date: July 23, 1999 By: /s/ Kenneth W. Davidson
-------------------------------------
Kenneth W. Davidson,
Chairman of the Board, President and
Chief Executive Officer
Date: July 23, 1999 /s/ Kenneth W. Davidson
-------------------------------------
Kenneth W. Davidson
Date: July 23, 1999 /s/ Ernest J. Henley
-------------------------------------
Ernest J. Henley
9
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
(b) Opinion of Lazard Freres & Co. LLC (included as Appendix B to the
Preliminary Proxy Statement filed by Maxxim Medical, Inc. on July 23,
1999 under cover of Schedule 14A)
(c)(1) Agreement and Plan of Merger, dated as of June 13, 1999, among Fox
Paine Medic Acquisition Corporation and Maxxim (included as Appendix A
to the Preliminary Proxy Statement filed by Maxxim Medical, Inc. on
July 23, 1999 under cover of Schedule 14A)
(c)(2) Form of Voting Agreement, by and between Fox Paine Medic Acquisition
Corporation and each of 10 shareholders of Maxxim Medical, Inc.
(included as Appendix D to the Preliminary Proxy Statement filed by
Maxxim Medical, Inc. on July 23, 1999 under cover of Schedule 14A)
(c)(3) Investor Participation Agreement, dated as of June 13, 1999, by and
among Fox Paine Medic Acquisition Corporation and each of 10
shareholders of Maxxim Medical, Inc., in their individual capacities
(d)(1) Preliminary letter to shareholders (included in the Preliminary Proxy
Statement filed by Maxxim Medical, Inc. on July 23, 1999 under cover of
Schedule 14A)
(d)(2) Preliminary notice of special meeting of shareholders (included in the
Preliminary Proxy Statement filed by Maxxim Medical, Inc. on July 23,
1999 under cover of Schedule 14A)
(d)(3) Preliminary Proxy Statement (incorporated by reference to the
Preliminary Proxy Statement filed by Maxxim Medical, Inc. on July 23,
1999 under cover of Schedule 14A)
(d)(4) Preliminary form of proxy (incorporated by reference to the Preliminary
Proxy Statement filed by Maxxim Medical, Inc. on July 23, 1999 under
cover of Schedule 14A)
(d)(5) Press release issued by Maxxim and Fox Paine & Company, LLC dated as of
June 14, 1999 (incorporated by reference to the Current Report on Form
8-K filed by Maxxim Medical, Inc. on June 16, 1999)
(e) Articles 5.11, 5.12 and 5.13 of the Texas Business Corporation Act
(included as Appendix C to the Preliminary Proxy Statement filed by
Maxxim Medical, Inc. on July 23, 1999 under cover of Schedule 14A)
(f) Not applicable.
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EXHIBIT (C)(3)
INVESTOR PARTICIPATION AGREEMENT
THIS INVESTOR PARTICIPATION AGREEMENT (this "Agreement"), dated June
13, 1999, is made by and among Fox Paine Medic Acquisition Corporation, a Texas
corporation ("Purchaser") and the undersigned individuals, whose names are set
forth on the signature page below (collectively, the "Investors" and, together
with Purchaser, the "Parties"), acting in their individual capacities (other
than Kenneth W. Davidson, who is acting in his individual capacity and as
general partner of Davidson Management International Limited Partnership).
WHEREAS, concurrently herewith, Purchaser and Maxxim Medical, Inc., a
Texas corporation (the "Company"), are entering into an Agreement and Plan of
Merger, of even date herewith (the "Merger Agreement"), providing for a
recapitalization transaction that will result in Purchaser and the Investors
owning substantially all of the outstanding capital stock of the Company, as
more fully set forth therein;
NOW, THEREFORE, in consideration of the promises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
1. Parties to be Bound by Attached Term Sheet. The Parties, and each of
them, severally agree to all of the terms and conditions set forth in the term
sheet attached hereto as Annex A and the attachments thereto (the "Term Sheet")
and the stock and option treatment provided therein, and, unless and until
definitive documentation incorporating the terms set forth in the Term Sheet has
been executed and delivered, each of the Parties agrees that the Term Sheet
constitutes a binding agreement among the Parties, enforceable against each such
Party in accordance with its terms.
2. Execution of Definitive Documentation. Each Party agrees to
negotiate in good faith and use all reasonable efforts to prepare, execute and
deliver definitive agreements and other instruments implementing the terms set
forth in the Term Sheet on reasonable and customary terms; provided, however,
that no failure or delay in the delivery and execution of such definitive
agreements or instruments shall affect the validity, enforceability or binding
nature of the Term Sheet. Without limiting the foregoing, Purchaser agrees that
after Closing the Company will prepare, adopt and effectuate any employee
benefit plans, including stock option plans, and including issuing options to
purchase shares of its capital stock pursuant to such plans, as may be necessary
to effectuate the purposes and intent of the Term Sheet.
3. Merger Agreement. Each Investor hereby acknowledges that such
Investor has read the Merger Agreement and has had an opportunity to consult
with such Investor's counsel concerning the same, and the Investor accepts and
agrees to the terms and conditions of the Merger Agreement that relate to the
treatment of such Investor's shares of Company common stock (including as
provided in Section 1.8(b)) and such Investor's options to purchase shares of
Common Stock (including as provided in Section 1.10), and the Investor hereby
irrevocably
<PAGE> 2
waives any claim that the Merger Agreement, the Merger or any other
transaction contemplated by the Merger Agreement (including the Circon Sale (as
defined therein)) violates any right of the Investor under the Texas Business
Corporation Act, any fiduciary obligation owed by the Company or any of its
directors or officers to the Investor, or any obligation owed by the Company to
the Investor pursuant to any agreement between the Company and the Investor or
pursuant to any employee benefit plan or stock option or similar plan of the
Company in which the Investor participates.
4. Miscellaneous. The Parties hereto agree as follows:
a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by all of the Parties hereto; provided that any
Party may waive or amend any right of such Party hereunder.
b) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each of the Parties and delivered to the other Parties, it being understood
that each Party need not sign the same counterpart.
c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
regard to the conflicts of law principles thereof.
d) Termination. In the event the Merger Agreement is
terminated in accordance with its terms prior to the occurrence of the Effective
Time, this Agreement shall terminate, and no party shall have any rights or
obligations hereunder and this Agreement shall become null and void and have no
further legal effect immediately following the termination of the Merger
Agreement in accordance with its terms. Nothing in this Section shall relieve
any party of liability for breach of this Agreement.
e) Obligations Several. The obligations of the Investors
hereunder shall be several and not joint and several.
-2-
<PAGE> 3
IN WITNESS WHEREOF, Purchaser, the Company, and each of the Investors
has executed this Agreement as of the date first written above.
FOX PAINE MEDIC ACQUISITION CORPORATION
By: /s/ Saul A. Fox
---------------------------------------
Name: Saul A. Fox
Title: Chief Executive Officer
(Investor Signatures appear on following page)
<PAGE> 4
INVESTORS:
/s/ Kenneth W. Davidson
-----------------------------------------------------
Name: Kenneth W. Davidson, in his individual
capacity and as general partner of
Davidson Management International
Limited Partnership
/s/ Peter M. Graham
-----------------------------------------------------
Name: Peter M. Graham
/s/ David L. Lamont
-----------------------------------------------------
Name: David L. Lamont
/s/ Henry T. DeHart
-----------------------------------------------------
Name: Henry T. DeHart
/s/ Jack F. Cahill
-----------------------------------------------------
Name: Jack F. Cahill
/s/ Alan Blazei
-----------------------------------------------------
Name: Alan Blazei
/s/ Joseph Dailey
-----------------------------------------------------
Name: Joseph Dailey
/s/ Suzanne Garon
-----------------------------------------------------
Name: Suzanne Garon
/s/ Ernest J. Henley
-----------------------------------------------------
Name: Ernest J. Henley
/s/ Davis C. Henley
-----------------------------------------------------
Name: Davis C. Henley
<PAGE> 5
PROJECT MEDIC
MANAGEMENT/DIRECTOR EQUITY INVESTMENT AND STOCK AND COMPENSATION TERM SHEET
This term sheet sets forth the principal terms and conditions under which the
executive management team (the "Management Investors") and Ernest J. Henley and
Davis C. Henley (the "Other Investors", and together with the Management
Investors, the "Rollover Investors") of Maxxim Medical, Inc. ("Medic" or the
"Company") are to retain an equity interest in Medic and Circon Corporation
("Citron") upon the recapitalization of the Company and related transactions
(the "Recapitalization") by the investment funds managed by Fox Paine & Company,
LLC ("Fox Paine") and the Rollover Investors. It also sets forth the principal
terms and conditions of the ongoing stock and compensation arrangements.
RECAPITALIZATION PRICE: $26 per share.
ROLLOVER INVESTORS: The names, share ownership, vested options, and
unvested options of each Rollover Investor are
summarized in Exhibit A. Exhibit B provides
additional detail concerning the split-up of Citron
from Medic and its effect on shares and options held
by the Rollover Investors. If, in order to facilitate
the Recapitalization, Fox Paine reallocates its
relative equity contributions between Medic and
Citron, the Rollover Investors agree that their
respective equity in Medic and Citron will also be
equitably adjusted in order to preserve the
proportionate ownership between the Rollover
Investors and Fox Paine currently reflected in
Exhibits A and B.
SHARE OWNERSHIP AND
ROLLOVER: The Rollover Investors collectively own 927,318
shares of Medic common stock (excluding shares owned
by the Other Investors not being rolled over) (see
Exhibit A). Each Rollover Investor will retain the
number of shares in Medic and acquire with the
proceeds of the cashout of Medic shares in the Merger
the number of shares in Citron in each case as set
forth in Annex III to Exhibit B.
VESTED AND The Management Investors collectively hold options
UNVESTED OPTIONS: to purchase 1,084,200 shares of Medic common stock
(see Exhibit A). Upon the consummation of the
transaction, the Management Investors will receive a
cash payment in respect of 635,864 options (both
vested or unvested) equal to the difference between
the Recapitalization Price and the exercise price of
each such option (less applicable withholding taxes)
on the same basis as other Medic option holders are
being cashed out in the transaction (options at
various purchase prices to be cashed out
proportionately). The after-tax cash proceeds from
the cancellation of the 635,864 Medic options will be
required to be reinvested in Medic common stock at
<PAGE> 6
the Recapitalization Price (the "Medic Additional
Shares"). Each Management Investor will receive a new
option in respect of the number of shares of Medic
common stock set forth on Annex III to Exhibit B at
an exercise price equal to the Recapitalization Price
(the aggregate being 635,864 less the Medic
Additional Shares purchased pursuant to the prior
sentence). The remaining 448,336 options in Medic
held by the Management Investors will be canceled and
each Management Investor will also receive new
options in respect of a number of shares of Citron
equal to such canceled option shares and with an
exercise price equal to the Recapitalization Price.
In addition, the Management Investors will be
entitled to receive a cash bonus payment of
approximately $5.4 million in the aggregate as
provided for in item 3 of the "Option Rollover
Mechanics" section of Exhibit B hereto. New options
will be fully vested and permit cashless exercise
with "mature" shares (payment of the exercise price
with previously owned shares).
CITRON TAX LOAN: In connection with the Citron share rollover from
Medic shares, tax loans will be extended to the
Rollover Investors in an amount sufficient to cover
the taxes due on the Medic shares sold to rollover
into the Citron rollover shares. Interest on the
loans will be imputed at the minimum allowable rate
and will be "bonused" and grossed-up for the tax on
any bonus amounts. The Citron tax loans will be
mandatorily repayable from the after-tax proceeds of
the sale of Citron shares (and not required to be
repaid from the proceeds of the sale of Medic
shares), and shall not accelerate on termination of
employment.
EXISTING MANAGEMENT
PROMISSORY NOTES: In May 1997, the Company issued 400,000 shares of
common stock pursuant to a Senior Management Stock
Purchase Plan at $13.00 per share. The stock was
issued in exchange for an aggregate of $4,498,000
currently outstanding principal amount in
non-interest bearing, full recourse promissory notes
(the "Management Promissory Notes") due May 23, 2000
from the participating managers who are Management
Investors. The Management Promissory Notes will
remain outstanding after the Recapitalization and be
extended until the tenth anniversary of the closing
(except that (x) Management Promissory Notes from any
employee who is not a Management Investor will be
required to be repaid by the employee in connection
with the cash-out of his or her options provided for
in the Merger Agreement and (y) the Management
Investors will be required to prepay the Notes with
the after-tax proceeds of any sales of stock or
options made after the Effective Time). The 50%
profit recovery provision currently in place shall be
amended out of the documents. The Management
Promissory Notes will not accelerate on termination
<PAGE> 7
of employment. The Management Promissory Notes and
related security arrangements will be split pro rata
between Medic and Citron.
NEW MANAGEMENT EQUITY
INCENTIVE PLAN: The Company and Citron each will provide a New
Management Equity Incentive Plan (the "New Incentive
Plan") which will grant to the Management Investors,
as of the Effective Time, options (the "Option Pool")
to purchase up to 10% of the common equity of the
Company and Citron (in each case on a fully diluted
basis) at a strike price equal to the
Recapitalization Price. The New Incentive Plan will
generally provide for a ten year option term and will
permit cashless exercise with "mature" shares
(payment of the exercise price with previously owned
shares). EBITDA Targets will be adjusted equitably to
reflect acquisitions and dispositions. The Option
Pool will consist of (x) half performance-based
options ("Pool A Options") that vest according to the
schedule below and (y) half time-based options that
vest in equal increments on each of the first through
fifth anniversaries of the closing (the "Time Based
Options").
<TABLE>
<CAPTION>
VESTING SCHEDULE FOR POOL A COMPANY OPTIONS
---------------------------------------------------
FISCAL EBITDA % OF OPTION POOL VESTING THROUGH
YEAR TARGET ACHIEVEMENT OF EBITDA TARGET
<S> <C> <C>
1999 $80.9 20%
2000 $84.3 20%
2001 $88.5 20%
2002 $92.9 20%
2003 $97.6 20%
VESTING SCHEDULE FOR POOL A CITRON OPTIONS
---------------------------------------------------
FISCAL EBITDA % OF OPTION POOL VESTING THROUGH
YEAR TARGET ACHIEVEMENT OF EBITDA TARGET
1999 $24.6 20%
2000 $37.4 20%
2001 $38.9 20%
2002 $40.5 20%
2003 $42.1 20%
</TABLE>
<PAGE> 8
Pool A Options that do not vest will become "Pool B
Options" and will vest at the earliest of: (i) the
next fiscal year in which the EBITDA Target is
achieved, (ii) Fox Paine's realization of its
investment in the Company or Citron, as the case may
be, provided that such realization yields an IRR to
Fox Paine of at least 30.0% after giving effect to
the vesting and exercise of the Pool B Options
pursuant to this clause (ii), or (iii) the ninth
anniversary of the date of grant. For the purposes of
the Pool B Options, a primary initial public offering
of the Company's or Citron's stock, as the case may
be (an "Initial Public Offering"), shall not
constitute a realization of Fox Paine's investment in
the Company or Citron, respectively. The Time Based
Options and the Pool A Options will also vest and be
exercisable, regardless of the passage of time, upon
Fox Paine's realization of an IRR of at least 30.0%.
ALLOCATION OF OPTION POOL: The total Option Pool will be granted to the
Management Investors, based on the recommendation of
Kenneth W. Davidson for approval by the Compensation
Committee of the Board of Directors.
TERMINATION OF NEW
INCENTIVE PLAN OPTIONS: Stock options granted under the New Incentive Plans
that are unvested as of the date of a Management
Investor's termination of employment with the
Company, Citron and/or their respective subsidiaries
for any reason will be forfeited upon the date of
termination. Stock options (under old and new plans)
that are vested as of the date of termination may be
exercised for one year following the termination of
employment. Vested stock options that are not
exercised within one year of the date of termination
will be forfeited.
BONUSES: The Management Investors will receive aggregate
bonus compensation, as specified in Exhibit C.
EXISTING SEVERANCE
AGREEMENTS/NEW
EMPLOYMENT AGREEMENTS: Existing employment agreements and severance
agreements for the Management Investors will be
terminated without payment and superseded by new
employment agreements that will become effective upon
the consummation of the transaction. The material
terms of the new agreements are set forth on Exhibit
D.
TAG-ALONG RIGHT: If, at any time prior to an Initial Public Offering,
Fox Paine or a Rollover Investor (as the case may be)
accepts a third party offer to sell any or all of its
common stock in either company (other than to a
permitted transferee), Fox Paine and each other
Rollover Investor (as the case may be) will be able
to participate on a proportionate basis, based on
ownership, at the same price and on the same terms in
the sale of shares of such company.
<PAGE> 9
DRAG-ALONG RIGHTS: Prior to an Initial Public Offering, if Fox Paine
sells at least 50% of its common stock in either
company in a bona fide arm's length transaction or
series of related transactions, Fox Paine may require
the Rollover Investors to sell a proportional number
(on an as-converted basis) of their shares of common
stock in that same company in the same transaction
(at the same price and on the same terms, with
appropriate adjustments for warrants or options).
REGISTRATION RIGHTS: After an Initial Public Offering, the Rollover
Investors will have one demand in Citron and two in
Medic, and Fox Paine will have five in each. All such
parties will have full piggybacks in each other's
demands, with no relative priority as to cutbacks;
cutbacks will be proportional based on ownership
among the parties, no matter who initiated the
demand. Fox Paine and Rollover Investors will also
have customary "piggyback" registration rights.
Expenses, in both demands and piggybacks, to be borne
by Medic or Citron, as the case may be. Other
customary registration rights provisions will apply,
including holdbacks, indemnification and contribution
provisions. If Fox Paine is permitted to sell
secondary shares in an Initial Public Offering, the
Rollover Investors will get a proportionate
opportunity.
RIGHT OF FIRST OFFER: Fox Paine and the Rollover Investors will have
reciprocal proportional rights of first offer (seller
to propose minimum sale price) on transfers of shares
(acceptance must be all shares offered or none as to
the group), other than transfers to customary
permitted transferees (including with respect to Fox
Paine, its investors and affiliates, and including
with respect to Rollover Investors, family members
and trusts for them), prior to an Initial Public
Offering. Permitted transferees step into shoes of
transferor for transfer restriction and registration
rights provisions.
LIQUIDITY UPON DEATH
OR DISABILITY
AND CERTAIN TERMINATIONS: Citron Shares: The Management Investors will have
the right to "put" all of their Citron shares to
Citron at fair market value, upon death or disability
or termination of employment for Good Reason, or by
the companies without Cause (each as defined in the
Employment Agreement).
Medic Shares: The Management Investors will have the
right to "put" their shares of Medic which were
acquired upon the exercise of stock options (provided
that the shares have been held for at least six
months), less the number of shares used to exercise
in cashless exercises, but including the Medic
Additional Shares (the governing objective being to
preserve recapitalization accounting) to Medic at
<PAGE> 10
fair market value, upon death or disability or
termination of employment for Good Reason or by the
companies without Cause.
Notwithstanding the above, the put rights described
above will be subject to each company's available
cash flow, debt restrictions and any legal
restrictions on distributions of cash from the
relevant company. In the event the payments with
respect to put rights are not satisfied in whole or
in part immediately, the payments will be a
continuing obligation of the relevant company and
such rights will be satisfied before the payment of
any dividends or distributions to shareholders. Any
unpaid amounts upon exercise of a put right will
accrue interest at applicable "afr" rate. The put
rights terminate upon an Initial Public Offering.
CALL RIGHT: Prior to an Initial Public Offering, Citron will
have call rights at fair market value with respect to
Citron stock only, upon a termination of employment
by the companies for Cause or by the Management
Investor voluntarily (without Good Reason).
BOARD OF DIRECTORS: Each Company's Board of Directors will initially
consist of Kenneth W. Davidson (Chairman), Ernest J.
Henley, Ph.D. and one other member to be appointed by
the Rollover Investors and four members designated by
Fox Paine (not limiting Fox Paine or the companies'
rights to add additional directors). The right to
appoint Board members will terminate upon an Initial
Public Offering or significant reduction in ownership
percentage. While Ken Davidson is CEO or Chairman of
the Board, all three Rollover Investor
representatives will be designated by him;
thereafter, by plurality vote of shares held by the
Rollover Investors.
INDEMNITY: Following the consummation of the transaction, the
Board of Directors of each Company will adopt a
customary mandatory indemnification and expense
advancement policy for officers, subject to any
limitations imposed by applicable law.
[Exhibits A, B, C and D and the annexes thereto are omitted]
