<PAGE>
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:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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 filing fee required
[_] Fee computed on table below per Exchange Act Rule 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:
-------------------
(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:
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<PAGE>
MAXXIM MEDICAL, INC.
10300 49th Street North
Clearwater, Florida 33762
[LOGO OF MAXXIM MEDICAL APPEARS HERE]
March 1, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Maxxim Medical, Inc. (the "Company"). The Meeting will be held at the St.
Petersburg Yacht Club, 11 Central Avenue, St. Petersburg, Florida, on Friday,
April 9, 1999 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 1999 Non-Employee Directors' Stock
Option Plan and the issuance to non-employee Directors of options to purchase an
aggregate of 60,000 shares of Common Stock of the Company thereunder, (iii) a
proposal to approve the 1999 Employee Stock Option Plan 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,
Kenneth W. Davidson,
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 9, 1999
To the Shareholders of
Maxxim Medical, Inc.
Notice is hereby given that the 1999 Annual Meeting of Shareholders of Maxxim
Medical, Inc. (the "Company") will be held at the St. Petersburg Yacht Club, 11
Central Avenue, St. Petersburg, Florida on Friday, April 9, 1999 at 10:00 a.m.
Eastern time, for the following purposes:
(1) To elect seven Directors;
(2) To approve the adoption of the 1999 Non-Employee Directors' Stock Option
Plan and the issuance to non-employee Directors of options to purchase an
aggregate of 60,000 shares of Common Stock of the Company;
(3) To approve the adoption of the 1999 Employee Stock Option Plan;
(4) To ratify the appointment of KPMG LLP as the Company's independent auditors
for fiscal year 1998; 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
1998 Annual Report of the Company is also enclosed. Shareholders of record at
the close of business on February 12, 1999 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.
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
Peter M. Graham,
Secretary
March 1, 1999
<PAGE>
MAXXIM MEDICAL, INC.
10300 49th Street North
Clearwater, Florida 33762
PROXY STATEMENT
1999 Annual Meeting of Shareholders
of Maxxim Medical, Inc.
SOLICITATION, EXERCISE AND REVOCATION OF PROXIES
The accompanying proxy is solicited on behalf on the Board of Directors (the
"Board") of Maxxim Medical, Inc. (the "Company"), to be voted at the 1999 Annual
Meeting of Shareholders of the Company (the "Meeting"). The Meeting will be
held at the St. Petersburg Yacht Club, 11 Central Avenue, St. Petersburg,
Florida, on Friday, April 9, 1999 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 service will be
approximately $4,000. 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 your proxy. This Proxy Statement and the accompanying proxy
are being mailed to shareholders beginning on or about March 4, 1999.
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 12, 1999. As of such date, the Company had outstanding
14,275,472 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. 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
<PAGE>
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................ 52 Chairman of the Board, President and Chief Executive
Officer
Peter M. Graham.................... 52 Senior Executive Vice President, Chief Operating
Officer and Secretary
David L. Lamont.................... 52 Executive Vice President, Research and Development
Alan S. Blazei..................... 43 Executive Vice President, Controller and Treasurer
Henry T. DeHart.................... 52 Executive Vice President, Manufacturing Operations
Joseph D. Dailey................... 50 Executive Vice President, Information Services
Jack F. Cahill..................... 49 Executive Vice President, Sales and Marketing
Suzanne R. Garon................... 46 Executive Vice President, Human Resources
Rob W. Beek........................ 54 Executive Vice President, Managing Director, Maxxim
Medical Europe
Ernest J. Henley, Ph.D............. 72 Director
Peter G. Dorflinger................ 47 Director
Henk R. Wafelman, Ing.............. 68 Director
Richard O. Martin, Ph.D............ 59 Director
Martin Grabois, M.D................ 59 Director
Donald R. DePriest................. 59 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, Encore
Orthopedics, Inc., a designer and manufacturer of implantable orthopedic
devices, and of Bovie Medical Corporation, a manufacturer and marketer of
electrosurgical medical devices.
Peter M. Graham has served as Senior Executive Vice President since January
1999, and 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 Executive Vice President, Research and
Development since January 1999, and as Vice President since March 1988. Mr.
Lamont was Group Vice President from July 1993 through December 1998, and
President of the Argon Medical division from January 1992 through July 1993.
Alan S. Blazei has served as Executive Vice President since January 1999 and
Vice President and Controller since December 1990. In July 1997, Mr. Blazei was
elected Treasurer of the Company.
2
<PAGE>
Henry T. DeHart has served as Executive Vice President, Manufacturing
Operations since January 1999 and as Vice President since November 1993. Mr.
DeHart was Executive Vice President Manufacturing Operations, Case Management
from June 1995 through December 1998, and President of Boundary Healthcare
division from December 1992 through July 1995.
Joseph D. Dailey has served as Executive Vice President, Information Services
since January 1999 and Vice President, Information Services since August 1994.
Previously, he had served as Director of Information Services since January
1991.
Jack F. Cahill has served as Executive Vice President, Sales and Marketing
since January 1999 and as Vice President since May 1995. Mr. Cahill was
Executive Vice President Sales and Marketing, Case Management from June 1995
through December 1998, President of the Sterile Design division from May 1994
through June 1995, and Executive Vice President, Sterile Design from July 1993
through May 1994.
Suzanne R. Garon has served as Executive Vice President, Human Resources since
January 1999 and as Vice President since January 1997. Previously, she had
served as Vice President Human Resources, Case Management since August 1995.
Ms. Garon was Manager of Human Resources, Sterile Design from July 1993 through
August 1995.
Rob W. Beek has served as Executive Vice President since January 1999 and 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.
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.
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 January 1998 through October 1998, Mr. Dorflinger
was President and Chief Operating Officer of Physicians Resource Group, Inc., a
physicians practice management company. Since November 1998, Mr. Dorflinger has
been President of GlasTech, Inc., a manufacturer of dental products. Mr.
Dorflinger is also a director of Benchmark Electronics, Inc.
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.
Richard O. Martin, Ph.D. has served as a Director of the Company since
November 1989. Dr. Martin served from April 1991 until February 1997, as
President and Chief Executive Officer, and since February 1997, as Chairman and
Chief Executive Officer, of Physio-Control International Corp., a manufacturer
of external cardiac defibrillators and monitoring equipment. As of September
1998, Physio-Control has merged with Medtronic, Inc. and is now known as
Medtronic Physio-Control where Dr. Martin continues as President. Dr. Martin
also serves as a director of Sea MED Corporation, which engages in contract
engineering and manufacturing for medical and other industries, CardioDynamics
International Corporation, a manufacturer of noninvasive cardiac output monitors
and Encore Orthopedics, Inc., a manufacturer of implantable orthopedic devices.
Dr. Martin also serves as Chairman of the Northwest Affiliate of the American
Heart Association and currently chairs the Washington Council of the American
Electronics Association.
3
<PAGE>
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 of
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.
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.
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 review, 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 1998 (the year ended November 1, 1998), the Board held
fourteen 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. During
fiscal year 1998, the Compensation Committee held four meetings, the Nominating
Committee held one meeting and the Audit Committee held four meetings. Each of
the incumbent Directors who was a Director during fiscal year 1998 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.
4
<PAGE>
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. This year, the
Company intends to issue to each non-employee Director an option to purchase
10,000 shares of Common Stock, as further described under "APPROVAL OF 1999 NON-
EMPLOYEE DIRECTORS' STOCK OPTION PLAN," subject to shareholder approval of such
plan at the Meeting. In 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.
In February 1998, the Board approved the 1998 Non-Employee Directors' Stock
Option Plan (the "1998 Directors' Plan"). In March of 1997 and 1996,
respectively, the Board approved the 1997 Non-Employee Directors' Stock Option
Plan (the "1997 Directors' Plan) and the 1996 Non-Employee Directors' Stock
Option Plan (the "1996 Directors' Plan"). 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"). The terms of all Directors'
Plans are substantially identical, except for share grant, exercise price and
relevant dates, set forth below.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993
Directors' Directors' Directors' Directors' Directors' Directors'
Plan Plan Plan Plan Plan Plan
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total Shares Reserved.................. 40,000 40,000 30,000 30,000 30,000 30,000
Individual Director Share Grants....... 5,000 5,000 3,000 3,000 3,000 3,000
Exercise Price......................... $ 19.02 $ 11.48 $ 11.48 $ 10.73 $ 15.40 $ 13.39
Opening Price Discount................. 15% 15% 15% 15% 15% 15%
Pricing Date........................... 11/1/97 11/1/96 11/1/95 11/1/94 11/1/93 11/1/92
Pricing Exchange....................... NYSE NYSE NYSE NYSE ASE ASE
Date Exercisable....................... 3/12/99 11/4/97 1/12/97 1/12/96 1/12/95 1/12/94
Expiration Date........................ 3/12/02 11/4/00 1/12/00 1/12/99 1/12/98 1/12/97
Exercised as of February 12, 1999...... - 25,000 15,000 18,000 18,000 3,000
Forfeited as of February 12, 1999...... - - - - - 15,000
Remaining as of February 12, 1999...... 30,000 5,000 3,000 - - -
</TABLE>
In the case of each Directors' 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 expiration date or the first anniversary of the date
on which the Director ceased to serve as a Director. Additionally, each of the
Directors' Plans 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 an equal number of shares of
Common Stock under the applicable Directors' Plan 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 Directors'
Plans described above as a result of any additional Directors being elected at
an Annual Meeting.
5
<PAGE>
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 1998 ("Named Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
(a) (b) (c) (d) (e) (g) (i)
- ----------------------------------- ---- --------- --------- ----------- ---------- ---------
Long
Term
Compen-
sation
Annual Compensation Awards
--------------------------------------- ----------
Other Securities Other
Annual Underlying Annual
Compen- Options Compen-
Name and Principal Position Year Salary(1) Bonus(1) sation(2) (#) (3) sation(4)
- --------------------------- ---- --------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Davidson 1998 $350,000 $192,500 $109,305 40,000 $4,750
Chief Executive Officer 1997 320,000 160,000 70,525 40,000 4,750
1996 320,000 160,000 22,853 50,000 4,750
Peter M. Graham 1998 200,000 110,000 44,349 25,000 3,001
Senior Executive Vice President 1997 140,000 68,750 23,343 25,000 4,750
1996 135,000 67,500 - 35,000 5,471
Alan S. Blazei 1998 175,000 96,250 35,329 20,000 2,913
Executive Vice President 1997 125,000 60,000 18,208 20,000 4,750
1996 99,500 28,750 - 30,000 4,065
Jack F. Cahill 1998 165,000 90,750 35,631 20,000 2,475
Executive Vice President 1997 140,000 68,750 20,542 20,000 4,750
1996 135,000 67,500 - 30,000 5,091
David L. Lamont 1998 150,000 82,500 34,359 20,000 2,526
Executive Vice President 1997 125,000 61,250 18,208 20,000 4,750
1996 120,000 60,000 - 30,000 4,109
Henry T. DeHart 1998 150,000 82,500 34,359 20,000 2,526
Executive Vice President 1997 125,000 61,250 18,208 20,000 4,750
1996 120,000 60,000 - 17,000 4,572
</TABLE>
_________________
(1) Compensation deferred at the election of a named officer is included in the
category (e.g., salary or bonus) and year it would have otherwise been
reported had it not been deferred.
(2) Includes the value of the interest imputed on non-interest bearing loans
made by the Company and the Company's matching contributions on
compensation deferred by the named executive officers. See "Deferred
Compensation Plan".
(3) Fiscal 1998 includes options granted effective as of January 8, 1999, with
respect to the performances of the named executive officers during fiscal
1998. Fiscal 1997 includes options granted effective as of November 3,
1997, with respect to the performances of the named executive officers
during fiscal 1997. Fiscal 1996 includes options granted effective as of
November 4, 1996, with respect to the performances of the named executive
officers during fiscal 1996.
6
<PAGE>
(4) 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 15%
of his or her salary (up to a maximum of $9,500), and to have such deferred
amounts invested in the plan. The Company may, but is not required to, make
a matching contribution to the plan of up to the first 6% of the salary of
such participating employee. All employee contributions are fully vested.
Company contributions vest over a six-year period.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
-----------------------------------------------------------------
Number of % of Total Market Potential Realizable Value
Securities Options Value of at Assumed Annual Rates
Underlying Granted to Exercise Stock on of Stock Price Appreciation
Options Employees or Base Date of for Option Term
Granted in Fiscal Price Grant Expiration ----------------------------------
Name (#) (1) Year ($/sh)(2) ($/sh) Date 5%($) 10%($) 0%($)
- ---- ---------- ----------- --------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth W. Davidson.... 40,000 16.1% $22.10 $26.00 1/8/05 $443,333 $790,930 $156,000
Peter M. Graham........ 25,000 10.1 22.10 26.00 1/8/05 277,083 494,332 97,500
Alan S. Blazei......... 20,000 8.1 22.10 26.00 1/8/05 221,666 395,465 78,000
Jack F. Cahill......... 20,000 8.1 22.10 26.00 1/8/05 221,666 395,465 78,000
David L. Lamont........ 20,000 8.1 22.10 26.00 1/8/05 221,666 395,465 78,000
Henry T. DeHart........ 20,000 8.1 22.10 26.00 1/8/05 221,666 395,465 78,000
</TABLE>
- -------------
(1) Comprised of options granted effective as of January 8, 1999, with respect
to the respective performances of the named executive officers during
fiscal year 1998.
(2) The options granted are exercisable as to twenty percent of the underlying
shares on January 8 of each year beginning in 2000 and ending in 2004.
The Company has not granted any stock appreciation rights.
Set forth in the following table is summary information regarding the stock
option exercises in fiscal 1998 and the value of all unexercised options as of
the end of fiscal 1998 for each of the executive officers included in the
Summary Compensation Table:
<TABLE>
<CAPTION>
Aggregated Options Exercised in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End at Fiscal Year-End
Acquired Value (#) Exercisable / ($) Exercisable /
Name On Exercise (#) Realized Unexercisable (1) Unexercisable (1)
- ---- --------------- -------- --------------------- -----------------------
<S> <C> <C> <C> <C>
Kenneth W. Davidson... 5,000 $13,675 147,000 / 103,000 $2,007,270 / $1,192,780
Peter M. Graham....... 4,000 46,440 114,200 / 73,800 1,569,554 / 878,026
Alan S. Blazei........ 3,000 48,330 76,400 / 54,600 1,041,908 / 639,152
Jack F. Cahill........ 2,600 38,566 35,160 / 46,240 453,929 / 516,265
David L. Lamont....... 3,000 8,205 87,400 / 58,600 1,199,378 / 695,732
Henry T. DeHart....... 0 0 41,200 / 36,800 539,204 / 389,546
</TABLE>
- -----------
(1) Excludes options to purchase 40,000, 25,000, 20,000, 20,000, 20,000 and
20,000 shares of Common Stock granted to Messrs. Davidson, Graham, Lamont,
Blazei, Cahill, and DeHart, respectively, effective as of January 8, 1999
with respect to their respective performances during fiscal 1998.
7
<PAGE>
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 increases 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 (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 installments due on the
third through twelfth anniversaries of the Loan. In 1998, Mr. Davidson's
employment agreement was amended to provide that the Company would make loans to
Mr. Davidson in an amount up to an aggregate of $500,000. 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
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 him all of the salary, bonuses and other
benefits provided for in the employment agreement for a period of two years
after employment ceases (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 will not be obligated to pay
any amount to Mr. Davidson under the employment agreement if Mr. Davidson's
employment is terminated after a change in control of the Company; in such
event, however, it will be required to pay him certain amounts and provide
certain benefits under his Executive Continuity Agreement, described below.
In August 1998, the Company entered into Executive Continuity Agreements with
Kenneth W. Davidson, President and Chief Executive Officer, Peter M. Graham,
Senior Executive Vice President, Alan S. Blazei, Jack F. Cahill, David L.
Lamont, and Henry T. DeHart, each an Executive Vice President of the Company,
and two other executive officers of the Company. The Executive Continuity
Agreements provide that if, after a change in control of the Company, the
executive suffers a Termination (as defined below), the executive will be
entitled to receive (i) a lump sum payment, within fifteen (15) days following
such termination, equal to a multiple of the highest annual level of total cash
compensation (including bonus) paid to the executive during the three calendar
years ended immediately prior to such Termination, (ii) immediate vesting of all
previously granted but unvested stock options and at least a 180 day period
after the date of such Termination in which to exercise such options, and (iii)
continuing health insurance benefits for the executive and the executive's
family for a period of months after the date of such Termination. Mr. Davidson
will receive three times his highest annual level of total cash compensation and
continuing health insurance benefits for 24 months. The compensation multiple
and length of continuing health insurance benefits will be less for the other
executives. Additionally, Mr. Davidson's agreement provides for the Company to
pay any federal taxes imposed upon any portion of his payment that is deemed to
be an "excess parachute payment" under the Internal Revenue Code. A Termination
8
<PAGE>
will be deemed to have occurred if, within two years after a change in control,
(i) the executive's employment with the Company is terminated other than for
cause, (ii) the executive's base salary, bonus, title or responsibilities are
reduced or there is a change in employment conditions deemed by the executive 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 the executive, (iii) the Company requires the executive to
relocate without his or her 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 the
executive of any material fringe benefit enjoyed by him or her at the time of
the change in control. The voluntary termination by an executive of his or her
employment after a change in control will not constitute a Termination, except
for Mr. Davidson, with respect to whom a voluntary termination of his employment
within 12 months after a change in control also will constitute a Termination.
The Executive Continuity Agreements will remain in effect until two years after
one party has notified the other of its intent to terminate the agreement,
provided that in no event will the agreements terminate prior to December 31,
2004.
Except as described above, the Company has not entered into any employment
agreement, consulting agreement or similar arrangement or agreement with any of
its executive officers or Directors.
Deferred Compensation Plan
During 1998, the Company established a nonqualified deferred compensation plan
(the "Plan") for key employees selected by the Board each year. Under the Plan,
participants may make irrevocable elections to defer a portion of their
compensation for the following year by making an election under the Plan, but no
participant may defer more than 90% of his or her base salary and 100% of
bonuses. The Company will make a matching contribution of 100% of the first 6%
of the participants' deferred compensation. The deferred amounts are deposited
into a grantor trust and invested, and the participants' accounts are credited
with the investment earnings. Vesting in the Plan is immediate for both the
elective deferral and the Company's matching contribution. Each participant is
paid the full value of his or her account at age 55, or upon the earlier
termination of employment with the Company or upon a change in control of the
Company. The participant is not required to pay tax on the deferred
compensation, matching contributions or investment earnings until they are paid
to him or her. In fiscal 1998, nine key employees participated in the Plan,
including Messrs. Davidson, Graham, Blazei, Cahill, Lamont and DeHart, and the
aggregate amount credited as employer matching contributions equaled $50,200.
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 $500,000, 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
1998, the highest amount due to the Company from Mr. Davidson under the
outstanding Loans was $500,000. The total amount outstanding under the Loans at
January 31, 1999 was $500,000. Mr. Davidson was, during fiscal year 1998, and
at January 31, 1999, 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 "Certain Relationships and
Related Party Transactions - 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.
9
<PAGE>
The note is non-interest 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.
The following Report of the Compensation Committee on Executive Compensation
and the Performance Graph shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
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 1998, the Committee held four 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
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. 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 interest of shareholders.
Compensation of Chief Executive Officer. Mr. Davidson's compensation for
fiscal 1998 was based on a three-year employment agreement with the Company,
dated effective November 1, 1997 and expiring October 31, 2000. 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 $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 of his annual salary for each year that 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. In
1998, Mr. Davidson's employment agreement was amended to provide that the
Company would make loans to Mr. Davidson in an amount up to an aggregate of
$500,000, in order to allow Mr. Davidson to exercise additional options that
were set to expire in 1998 and to pay the taxes associated therewith and with
respect to the interest imputed on the loan. As a general rule, the Committee
believes that it is important for Mr. Davidson to be able
10
<PAGE>
to acquire all shares of Common Stock for which he has options without having to
sell shares of Common Stock to pay the exercise price and related taxes. The
Committee believes that this more closely aligns Mr. Davidson's interests with
those of the Company's stockholders.
Mr. Davidson was compensated pursuant to the terms of the employment
agreement, as discussed above, in fiscal 1998. In addition to the annual salary
provided 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 1998 should be $192,500, which is 55% 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)
1997 Top Five Data Service Report on Executive Compensation in the
Medical/Dental Equipment & Supply Industry; (ii) 1997 Management Compensation
Survey Report, Health Industry Manufacturers Association; (iii) 1997 Executive
Compensation Survey, William M. Mercer/American Electronics Association; (iv)
1998 Compensation Survey, Salary Retrieval Information System, Organization
Resources Counselors, Inc.; (v) 1998 High Technology Executive Compensation
Survey, Western Management Group; and (vi) 1997-98 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 1998 base salaries of the
Named Executives other than Mr. Davidson were increased to a level that the
Committee and Mr. Davidson believes is slightly below the median of executive
officers of comparable companies. 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 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.
11
<PAGE>
Deferred Compensation Plan and Executive Continuity Agreements.
In the latter part of fiscal 1998, the Committee approved the adoption of a
nonqualified deferred compensation plan (the "Plan") for senior executives to be
selected by the Board each year, as well as Executive Continuity Agreements
between the Company and certain senior executives. The Committee believed that,
due to the growth of the Company, the associated increase in the
responsibilities of its senior executives, and the consolidation occurring
within the industry, these additional benefits for senior executives were
advisable to keep the Company's benefit package competitive and to provide
incentives to its senior executives to remain in the employ of the Company.
The terms of the Plan are described above under the caption "Deferred
Compensation Plan." The Committee's intent in adopting this Plan was to provide
an additional benefit, which the Committee believes is becoming fairly standard
for companies like the Company, to the Company's senior executives. The
Committee believes that both the tax advantages of the Plan and the Company's
matching contributions provide an incentive to participants to remain in the
employ of the Company and to provide for their retirement.
The terms of the Executive Continuity Agreements are described above under
the caption "Employment Contracts, Termination of Employment and Change-in-
Control Arrangements." The Committee's intent in entering into these agreements
with its senior executives was to ensure that such executives had an incentive
to remain in the Company's employ in the event that a hostile takeover of the
Company were attempted or in the event that the Board of Directors were to
instruct management to enter into negotiations relating to a transaction that
might result in a change in control of the Company, and the loss of such
executives' jobs, which transaction the Board believed to be in the best
interests of the shareholders.
COMPENSATION COMMITTEE
Richard O. Martin, Ph.D., Chairman
Kenneth W. Davidson
Donald R. DePriest
12
<PAGE>
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), the Dow Jones Medical
Supplies Index, the Russell 2000 Index and the Russell 2000 Health Care Index,
assuming $100 investing in each on November 1, 1993. The Company intends to
replace the Dow Jones Indexes with the Russell 2000 Indexes in 1999 due to its
inclusion in the Russell 2000 Index in fiscal 1998 and its belief that Russell
Indexes more closely reflects the Company's peer group.
[GRAPH APPEARS HERE]
MAXXIM MEDICAL, INC.
5-Year Total Returns Ending 10/31
<TABLE>
<CAPTION>
Total Return %
Index 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Russell 2000 100 100 118 138 178 157
Russell 2000 Health Care 100 100 119 124 149 127
Dow Jones Global US 100 103 131 162 215 261
Dow Jones Medical Supplies 100 125 210 234 330 447
Maxxim Medical 100 72 77 77 123 139
</TABLE>
13
<PAGE>
Security Ownership of Management and Others
The following table sets forth, as of February 12, 1999, 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>
Peter G. Dorflinger 419,936 (2) 2.9
Kenneth W. Davidson 388,368 (3) 2.7
Ernest J. Henley, Ph.D. 326,949 (4) 2.3
Peter M. Graham 188,900 (5) 1.3
David L. Lamont 144,650 (6) 1.0
Alan S. Blazei 121,083 (7) *
Henry T. DeHart III 81,100 (8) *
Jack F. Cahill 79,160 (9) *
Richard O. Martin, Ph.D. 20,000 (10) *
Martin Grabois, M.D. 19,000 (11) *
Henk R. Wafelman, Ing 9,000 (12) *
Donald R. DePriest 8,000 (13) *
All executive officers and Directors as a group (15 persons) 1,877,993 12.6
</TABLE>
_________________
* Less than 1%
(1) The address for all executive officers and Directors is 10300 49/th/ Street
North, Clearwater, Florida 33762.
(2) Includes 9,100 shares held of record and 410,836 shares purchasable under
options exercisable within 60 days after February 12, 1999. Mr. Dorflinger
is the former Vice President and General Counsel of Sulzer Intermedics,
Inc., a subsidiary of Sulzer Medica USA, Inc., and holds a fully
exercisable option to purchase all of the 397,836 shares held of record by
Sulzer Medica USA, Inc.
(3) Includes 241,368 shares owned of record by a family limited partnership
controlled by Mr. Davidson and 147,000 shares purchasable under currently
exercisable options.
(4) Includes 321,949 shares owned of record by Dr. Henley and 5,000 shares
purchasable under options exercisable within 60 days after February 12,
1999.
(5) Includes 70,500 shares owned of record by Mr. Graham, 4,200 shares of which
Mr. Graham exercises voting and investment control as trustee and 114,200
shares purchasable under currently exercisable options.
(6) Includes 57,250 shares owned of record by Mr. Lamont and 87,400 shares
purchasable under currently exercisable options.
(7) Includes 44,350 shares owned of record by Mr. Blazei, 333 shares over which
Mr. Blazei's spouse exercises voting and investment control as custodian
and 76,400 shares purchasable under currently exercisable options.
(8) Includes 39,900 shares owned of record by Mr. DeHart and 41,200 shares
purchasable under currently exercisable options.
(9) Includes 44,000 shares owned of record by Mr. Cahill and 35,160 shares
purchasable under currently exercisable options.
(10) Includes 7,000 shares owned of record by Dr. Martin and 13,000 shares
purchasable under options exercisable within 60 days after February 12,
1999.
(11) Includes 6,000 shares owned of record by Dr. Grabois and 13,000 shares
purchasable under options exercisable within 60 days after February 12,
1999.
14
<PAGE>
(12) Includes 4,000 shares owned of record by Mr. Wafelman and 5,000 shares
purchasable under options exercisable within 60 days after February 12,
1999.
(13) Includes 3,000 shares owned of record by Mr. DePriest and 5,000 shares
purchasable under options exercisable within 60 days after February 12,
1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, 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 1998 and thereafter, Form 5 and amendments
thereto furnished to the Company with respect to its fiscal year 1998, 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 Exchange Act of 1934 during the Company's 1998 fiscal year.
Dr. Grabois filed one late report disclosing one exercise of options for Common
Stock. Mr. Davidson filed one late report disclosing one exercise of options
for Common Stock and one late report disclosing a change in ownership from
direct to indirect. Mr. Lamont filed one late report disclosing one exercise
of options for Common Stock. Mr. Wafelman filed two late reports disclosing
three sales of Common Stock and one late report disclosing one exercise of
options for Common Stock.
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 non-interest 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 number of shares set forth in the table below, with the
remaining shares being purchased by other officers and key employees.
<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>
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 as follows: (a) if the Participant's employment with the Company is
terminated for cause, then the due 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
15
<PAGE>
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 due 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 due date under the Promissory Note; and (c) if the Participant's
employment with the Company is terminated voluntarily by the Participant, then
the due 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 due date under the Promissory
Note.
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 Stock Purchase 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.
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. In 1998, Mr. Davidson's
employment agreement was amended to provide that the Company would make loans to
Mr. Davidson in an amount up to an aggregate of $500,000. 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 1998, the highest amount
due to the Company from Mr. Davidson under the outstanding Loans was $500,000.
The total amount outstanding under the Loans at January 31, 1999 was $500,000.
Mr. Davidson was, during fiscal 1998, and at January 31, 1999, current in all of
his repayment obligations under the Loans. See "Employment Contracts" above.
APPROVAL OF 1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(Proposal 2)
On December 9, 1998, the Board approved the 1999 Non-Employee Directors'
Stock Option Plan (the "1999 Directors' Plan"), conditioned upon the approval by
the Company's shareholders at the Meeting. The purpose of the 1999 Directors'
Plan is to assist the Company in attracting and retaining qualified and
competent persons for service as members of the Board. Drs. Henley, Grabois and
Martin and Messrs. DePriest, Dorflinger and Wafelman are currently the only
persons who are eligible to participate in the 1999 Directors' Plan. The grant
of options to non-employee Directors is non-discretionary under the 1999
Directors' Plan, and each non-employee Director of the Company will be granted
an option to purchase 10,000 shares of Common Stock under the Plan effective as
of April 9, 1999, provided that such Director is re-elected at the Annual
Meeting held on such date and provided that the 1999 Directors' Plan is approved
at the Annual Meeting. 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 10,000 shares of Common Stock under the 1999 Directors' Plan. The
1999 Directors' Plan will automatically terminate effective on the date of the
2003 Annual Meeting.
The Board has authorized the reservation of 80,000 shares of Common Stock
of the Company for issuance in accordance with the provisions of the 1999
Directors' Plan. Shares of Common Stock to be delivered under the provisions of
the 1999 Directors' Plan are to be issued by the Company from its authorized but
unissued shares of Common Stock. The 1999 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
16
<PAGE>
included in this Proxy Statement because (i) the grant of such options under the
1999 Directors' Plan remains subject to the approval of the Company's
shareholders at the Meeting and (ii) such options will not be exercisable until
April 9, 2000.
The Options granted under the 1999 Directors' Plan to the six current non-
employee Directors will be exercisable at 85% of the closing price of the
Company's Common Stock on the New York Stock Exchange on April 9, 1999.
Options granted under the 1999 Directors' Plan to new non-employee Directors
will be exercisable at a price per share equal to 85% of the closing 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 1999 Directors' Plan.
All options granted under the 1999 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 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, except that if for any reason a Director ceases to
serve as a Director, the options will terminate on the earlier of their
expiration date or the first anniversary of the date on which the Director
ceased to serve as a Director. Options granted under the 1999 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 1999 Directors'
Plan are not transferable, except by will or by the laws of descent and
distribution.
All options granted under the 1999 Directors' Plan are conditioned upon the
approval of the 1999 Directors' Plan by the shareholders of the Company at the
Meeting and both the Plan and all options intended to be 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 12, 1999 the last reported sales price per share of Common
Stock on the New York Stock Exchange was $26.25.
Federal Income Tax Consequences
All options granted under the 1999 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.
17
<PAGE>
Value of 1999 Director Options Granted
Set forth below is a summary table as to the dollar value of options
granted under the 1999 Non-Employee Directors' Stock Option Plan, subject to
shareholder approval.
1999 Non-Employee Directors' Stock Option Plan
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Underlying 1999
Dollar Value Director Options (2)
------------ --------------------
<S> <C> <C>
Non-Employee Directors as a Group................ (1) 60,000
</TABLE>
________________
(1) Dollar value on the date of grant is presently undeterminable as it will be
valued at 85% of the closing price of the Company's Common Stock on the New
York Stock Exchange on April 9, 1999.
(2) Options to be granted April 9, 1999, subject to shareholder approval.
Board Recommendation
The Board believes that the adoption of the 1999 Directors' Plan is in the
best interest of the Company and its shareholders. The Board therefore
recommends a vote FOR approval of the 1999 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 1999
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.
APPROVAL OF 1999 EMPLOYEE STOCK OPTION PLAN
(Proposal 3)
On October 15, 1998, the Board of Directors approved the 1999 Employee Stock
Option Plan (the "1999 Employee Plan"), conditioned upon approval by the
Company's shareholders. Options may be granted pursuant to the 1999 Employee
Plan only to persons employed by the Company, or any parent or subsidiary of the
Company. There are currently approximately 5,200 persons eligible to
participate in the Employee Plan. The purpose of the 1999 Employee Plan is to
secure for the Company and its shareholders the benefits that flow from
providing certain employees with the incentive to further the business of the
Company inherent in Common Stock ownership.
The Company also maintains the 1992 Employee Stock Option Plan, the 1995
Employee Stock Option Plan and the 1997 Employee Stock Option Plan covering an
aggregate of 1,512,000 shares. Only minimal shares of Common Stock remain
available for option grants under any of these plans. The Board adopted the
1999 Employee Plan to make an additional 500,000 shares of Common Stock
available for the grant of options that the Board expects to make over the next
several years. As of February 12, 1999, no options had been granted under the
1999 Employee Plan.
The 1999 Employee Plan provides for the granting of options to purchase a
total of not more than 500,000 shares of Common Stock, which shares have been
reserved for issuance under the 1999 Employee Plan. Shares to be issued under
the 1999 Employee Plan are to be issued by the Company from its authorized but
unissued shares of Common Stock. All options to be granted under the 1999
Employee Plan are conditioned upon the approval of the 1999 Employee Plan by the
shareholders of the Company and will not be granted if such approval is not
received.
18
<PAGE>
Options granted under the 1999 Employee Plan are required to be exercisable at
a price of not less than 85% of the fair market value per share of Common Stock
on the effective date of the option grant. Options granted are exercisable as
to twenty percent of the underlying shares on each of the first through fifth
anniversaries of the effective date of grant of such option and expire as to any
shares not purchased on or prior to October 15, 2008, as determined by the Board
at the time of grant. Options granted under the 1999 Employee Plan, however,
become exercisable in full automatically upon any change in control of the
Company, as defined, including (but not limited to) an acquisition by any person
of 40% or more of the voting power of the stock 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 1999
Employee Plan are not transferable, except by will, or by the laws of descent
and distribution.
The 1999 Employee Plan is administered by a stock option committee (the
"Committee"), which is required to consist of two or more persons who are
disinterested persons within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934. This Committee currently consists of Dr.
Martin and Mr. DePriest. The Committee has complete discretion in granting
options under the 1999 Employee Plan. The Board of Directors may from time to
time alter, amend, suspend or discontinue the 1999 Employee Plan and make rules
for its administration. The 1999 Employee Plan will automatically terminate
effective October 15, 2003.
On February 12, 1999, the last reported sales price for shares of Common Stock
on the New York Stock Exchange was $26.25.
Federal Income Tax Consequences
All options granted under the 1999 Employee Plan will be non-statutory
options, not entitled to special tax treatment under Section 422A of the Code or
otherwise, subject to the same treatment as the options granted under the 1999
Directors' Plan. See "APPROVAL OF 1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION
PLAN Federal Income Tax Consequences."
Board Recommendation
The Board believes that the adoption of the 1999 Employee Plan is in the best
interest of the Company and its shareholders. The Board of Directors therefore
recommends a vote FOR approval of the 1999 Employee Plan, and it is intended
that 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 1999
Employee 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 THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(Proposal 4)
The Company engaged the firm of KPMG 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 LLP
as the Company's independent certified public accountants to report upon its
1998 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 and it is intended
that proxies not marked to the contrary will be so voted. 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.
19
<PAGE>
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, provided that the Company had not received proper notice of such
matter prior to January 6, 1999.
SHAREHOLDER PROPOSALS FOR
PRESENTATION AT THE 2000 ANNUAL MEETING
The Board of Directors requests that any shareholder proposals intended for
presentation at the 2000 Annual Meeting be submitted to Peter M. Graham,
Secretary, in writing no later than October 31, 1999, for consideration for
inclusion in the Company's proxy materials for such meeting.
Members of the Company's proxy committee will have discretionary voting
authority with respect to all shares represented by proxies held by them at the
2000 Annual Meeting for any matters raised at that meeting about which the
Company does not receive proper notice prior to January 16, 2000.
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
Peter M. Graham,
Secretary
Dated: March 1, 1999
20
<PAGE>
MAXXIM MEDICAL, INC.
10300 49th Street North
Clearwater, Florida 33762
Proxy for the Annual Meeting of Shareholders to be held April 9, 1999.
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 Friday, April 9, 1999, 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.
[_]FOR ALL NOMINEES LISTED [_]WITHHOLD AUTHORITY TO
ABOVE (except as marked VOTE FOR ALL NOMINEES
to the contrary below) LISTED ABOVE
(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 1999 Non-Employee Directors' Stock Option
Plan and the issuance to non-employee directors thereunder of options to
purchase an aggregate of 60,000 shares of Common Stock of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve the adoption of the 1999 Employee Stock Option Plan
[_] FOR [_] AGAINST [_] ABSTAIN
(Please sign and date on reverse side.)
<PAGE>
(Continued from other side)
4. To ratify the appointment of KPMG LLP as the Company's independent auditors
for fiscal year 1998.
[_] 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
------------------------------------
Signature of Shareholder
Please sign Proxy exactly as your
name appears on your stock certifi-
cate(s). JOINT OWNERS SHOULD EACH
SIGN PERSONALLY. When signing as
attorney, executor, administrator,
trustee, guardian, partner or cor-
porate officer, please give your
full title as such.
<PAGE>
MAXXIM MEDICAL, INC.
1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
THIS 1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN (this "Plan") is
adopted by the Board of Directors (the "Board of Directors") of MAXXIM MEDICAL,
INC., a Texas corporation (the "Company"), effective this 9th day of April, 1999
(the "Adoption Date").
W I T N E S S E T H:
WHEREAS, the Company believes that allowing certain non-employee directors
of the Company to obtain shares of common stock, $.001 par value ("Common
Stock"), of the Company by granting stock options as hereinafter provided is
beneficial to the initial and continued success of the Company;
NOW, THEREFORE, the Company agrees to provide for the granting of stock
options to the non-employee directors of the Company, subject to the following
conditions and provisions:
1. Purpose. The purpose of this Plan is to secure for the Company and its
-------
stockholders the benefits that flow from providing its non-employee directors
with the incentive inherent in common stock ownership. The Company recognizes
that a stock option plan may allow the Company to attract and retain qualified
and competent persons for service as members of the Company's Board of Directors
because of the opportunity offered to acquire a proprietary interest in the
business of the Company.
2. Amount of Stock. The total number of shares of Common Stock to be
---------------
subject to options granted pursuant to this Plan shall not exceed 80,000 shares.
This total number of shares shall be subject to appropriate and automatic
increase or decrease under Section 11 of this Plan (without the need for further
action on the part of the Board of Directors of the Company), in the event of a
stock dividend, or upon a subdivision, split-up, combination or reclassification
of, the shares purchasable under such options, as contemplated in Section 11.
3. Eligibility and Participation. Options may be granted pursuant to this
-----------------------------
Plan only to non-employee directors of the Company (such non-employee directors
being hereinafter sometimes called "directors"). Directors who are employees of
the Company or a parent or a subsidiary of the Company shall not be eligible to
participate in this Plan. The holder of any option granted pursuant to this Plan
shall not have any of the rights of a shareholder with respect to the shares
covered by the option until one or more certificates for such shares shall be
delivered to him upon the due exercise of the option.
4. Option Agreement. The terms and provisions of each option granted under
----------------
this Plan shall be as set forth in a Non-Employee Director Stock Option
Agreement (hereinafter called an "Option Agreement"), between the Company and
the director receiving such option in form and content substantially similar to
the Option Agreement attached hereto as EXHIBIT A.
<PAGE>
5. Options Shares. On the Adoption Date, the Company shall grant to each
--------------
director an option to purchase 10,000 shares of Common Stock, subject to the
provisions of Section 16 hereof. In addition, on the date that any new director
is elected at an annual meeting of the shareholders of the Company during the
term of this Plan, the Company shall grant to each such new director an option
to purchase 10,000 shares of Common Stock.
6. Price. The purchase price per share of Common Stock purchasable under
-----
options granted pursuant to this Plan on the Adoption Date shall be eighty-five
percent (85%) of the opening price per share of the Common Stock on the New York
Stock Exchange on the Adoption Date. The purchase price per share of Common
Stock purchasable under options granted pursuant to this Plan after the Adoption
Date shall be eighty-five percent (85%) of the opening price per share of the
Common Stock on the New York Stock Exchange, or such other exchange as the
Common Stock may then be traded, on the day such options are granted. The full
purchase price of shares purchased shall be paid upon exercise of the option.
The purchase price per share shall be subject to adjustment under Section 11 of
this Plan.
7. Exercise Period. All shares of Common Stock purchasable under any
---------------
option granted under this Plan will be purchasable after the first anniversary
of the first annual meeting of the shareholders of the Company held after the
grant of such option, provided that if the option is granted on the date of an
annual shareholders' meeting, such shares will be purchasable after the next
annual shareholders' meeting, and further provided that the director holding
such option must have served as a director of the Company at all times from the
date of grant.
8. Option Period. The period of time within which options granted pursuant
-------------
to this Plan must be exercised shall be a period of three (3) years after such
option first becomes exercisable. The actual expiration date stated in an Option
Agreement is hereinafter called the "Expiration Date."
9. Termination. Each Option Agreement will provide that:
-----------
(a) If the director for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be a
director of the Company, the option may be exercised by the director within
one (1) year after the date of such termination, but in no event later than
the Expiration Date.
(b) If the director becomes permanently and totally disabled, as
hereinafter defined, while serving as a director of the Company, the option
will automatically become exercisable in full and may be exercised by the
director at any time before one (1) year after the date of disability or
the Expiration Date, whichever is earlier.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months. In the absence of any specific requirements
for this determination, the decision of the Board of Directors of the
Company, as aided by any physicians designated by the Board of
-2-
<PAGE>
Directors shall be conclusive, and the Board of Directors shall send
written notice to the director of the determination that he has become
permanently and totally disabled.
(c) In the event that the director dies while serving as a director of
the Company, the option will automatically become exercisable in full and
may be exercised by a legatee or legatees of the director under his will,
or by his personal representatives or distributees, at any time before one
(1) year after the date of death or the Expiration Date, whichever is
earlier.
Nothing in (a), (b) or (c) shall extend the time for exercising any option
granted pursuant to this Plan beyond the Expiration Date.
10. Assignability. Each Option Agreement shall provide that the option
-------------
granted thereby shall not be transferable or assignable by the director in any
form or fashion, and that the option may be exercised only by the director
during his lifetime, or as otherwise expressly set forth in EXHIBIT A hereto.
11. Changes in Capital Structure. Each option granted pursuant to this
----------------------------
Plan shall provide that if the option shall, subject to Section 12, be exercised
subsequent to any share dividend, stock split, reverse stock split, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
reorganization, or liquidation occurring after the date of the grant of the
option, as a result of which shares of any class have been issued in respect of
outstanding Common Stock or Common Stock has been changed into the same or a
different number of shares of the same or another class or classes, then the
director or directors so exercising the option shall receive, for the aggregate
price paid upon such exercise, the aggregate number and class of shares that, if
Common Stock (as authorized at the date of the grant of the option) had been
purchased at the date of the grant of the option for the same aggregate price
(on the basis of the price per share set forth in Section 6 hereof) and had not
been disposed of, such director or directors would be holding, at the time of
such exercise, as a result of such purchase and all such share dividends, stock
split, reverse stock split, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations, or
liquidations; provided, however, that no fractional share shall be issued upon
any such exercise, and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued.
12. Change in Control. Notwithstanding anything in this Plan to the
-----------------
contrary, in the event of a Change in Control (as defined below), the
unexercised options outstanding under this Plan will automatically become
exercisable in full as of the effective date of such Change in Control. In the
event of a dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, any
outstanding options hereunder may be terminated by the Company as of the
effective date of such dissolution, liquidation, merger or consolidation by
giving notice to each holder thereof of its intention to do so not less than ten
(10) days preceding such effective date and permitting the exercise until such
effective date, or the Expiration Date if earlier, of all of such outstanding
options. Notwithstanding the preceding sentence, if the Company is not the
surviving corporation as a result of the Company being reorganized or merged or
consolidated with another corporation while unexercised options are outstanding
under this Plan, the surviving corporation may assume the unexercised options
-3-
<PAGE>
outstanding under this Plan or substitute new options in the surviving
corporation for the outstanding options; provided, however, that the excess of
the aggregate fair market value of the securities subject to the options
immediately after the substitution or assumption over the aggregate option price
of such shares is not less than the excess of the aggregate fair market value of
the Common Stock subject to the outstanding option immediately before such
substitution or assumption over the aggregate option price of such Common Stock.
The existence of this Plan or of options granted hereunder shall not in any way
prevent any Change in Control transaction, and no holder of options granted
under this Plan shall have the right to prevent any such transaction.
"Change in Control" of the Company means and shall be deemed to have
occurred if and when (i) any "person" (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934) becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities; (ii)
individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of directors do not constitute a majority of the Board
of Directors following such election; (iii) the shareholders of the Company
approve the dissolution or liquidation of the Company; (iv) the shareholders of
the Company approve an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not subsidiaries of the
Company, as a result of which less than 50% of the outstanding voting securities
of the surviving or resulting entity are, or are to be, owned by former
shareholders of the Company (excluding from the term "former shareholders" a
shareholder who is, or as a result of the transaction in question becomes, an
"affiliate", as that term is used in the Securities Exchange Act of 1934 and the
Rules promulgated thereunder, of any party to such merger, consolidation or
reorganization); or (v) the shareholders of the Company approve the sale of
substantially all of the Company's business and/or assets to a person or entity
which is not a subsidiary of the Company.
13. Registration Rights. The directors shall have no registration rights
-------------------
with respect to the shares of Common Stock issuable upon exercise of the options
granted under this Plan.
14. Sale of Stock after Exercise of Option. Any director exercising any
--------------------------------------
option under the terms of this Plan will be required to agree that, unless the
shares obtained as a result of such exercise have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or may otherwise be
sold pursuant to an available exemption from such registration under the
Securities Act, such director will not dispose of any such shares thereafter
without the prior approval of the Company.
Unless the Company files a registration statement with respect to the
shares issuable under the Plan, the Company shall require that a legend be
placed on any share certificates issued through the exercise of any option
granted under this Plan with respect to the foregoing restrictions. Such legend
shall be placed either on the front or back of such share certificates and shall
note that the shares are governed by this Plan.
This Plan shall be kept at the registered office of the Company and shall
be available for inspection by any appropriate party.
-4-
<PAGE>
15. Amendment of the Plan. The Board of Directors may from time to time
---------------------
alter, amend, suspend or discontinue this Plan and make rules for its
administration; provided, however, that the Plan may not be amended more than
once every six (6) months, other than to conform to changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
16. Shareholder Approval. This Plan will be submitted to the shareholders
--------------------
of the Corporation for approval at the 1999 Annual Meeting of Shareholders and
shall be approved by the affirmative vote of a majority of the outstanding
shares of Common Stock of the Company voted at the Meeting, in person or by
proxy, provided that the total vote cast on the proposal to adopt the Plan
(including abstentions) represents more than 50% of the total number of shares
of Common Stock outstanding on the record date set for the Meeting. In the
event that the Plan is not so approved, the Plan and all options previously
granted thereunder shall automatically terminate.
17. Termination Of Plan. Unless terminated earlier, this Plan shall
-------------------
terminate effective the date of the 2003 Annual Meeting of Shareholders. Any
option outstanding under this Plan at the time of the termination of this Plan
shall remain in effect until such option shall have been exercised or the
Expiration Date thereof occurs, whichever is earlier.
18. Exhibits. EXHIBIT A (attached) is hereby incorporated into this Plan
--------
by reference.
-5-
<PAGE>
EXHIBIT "A"
MAXXIM MEDICAL, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
THIS NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT (this "Agreement"),
effective as of __________________, _____ (the Effective Date"), by and between
MAXXIM MEDICAL, INC., a Texas corporation (the "Company"), and ______________ ,
an individual residing in ___________________ (the "Optionee");
W I T N E S S E T H:
WHEREAS, the Optionee is a member of the Board of Directors of the Company
but is neither an employee nor an executive officer of the Company on the
effective date hereof; and
WHEREAS, in consideration of the Optionee's past service to the Company and
to provide the Optionee with additional incentive to remain as a director of the
Company, the Company has agreed to grant the Optionee options to purchase shares
of common stock, $.001 par value ("Common Stock"), of the Company; and
WHEREAS, by granting the Optionee options to purchase shares of Common
Stock pursuant to the terms of this Agreement, the Company intends to carry out
the purposes set forth in the 1999 Non-Employee Directors' Stock Option Plan of
the Company (the "Plan") adopted by the Board of Directors of the Company (the
"Board of Directors"); and
WHEREAS, the Company and the Optionee desire to set forth the terms and
conditions of such options to purchase Common Stock;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the option
---------------
(the "Option") to purchase all or any part of an aggregate of Ten Thousand
(10,000) shares of Common Stock (such shares, as increased or decreased in
accordance with Section 8 hereof, being referred to herein as the "Option
Shares") for a purchase price of $_______________ per share (the "Exercise
Price"), upon the additional terms and conditions hereinafter set forth.
2. Availability of Option Shares and Term of Option. The Option shall be
------------------------------------------------
fully exercisable after the first anniversary of the first annual meeting of the
shareholders of the Company held after the grant of such option, provided that
if the option is granted on the date of an annual shareholders' meeting, such
shares will be purchasable after the next annual shareholders' meeting (the
"Vesting Date"), and provided further that such vesting is expressly conditioned
upon the Optionee having served as a director of the Company at all times from
the
<PAGE>
date of grant up to the date preceding the Vesting Date. The Option shall expire
and terminate as to any Option Shares not purchased by the Optionee on or prior
to the expiration of three years from the Vesting Date (the "Expiration Date"),
subject to earlier termination as set forth in Section 13.
3. Method of Exercising the Option. Subject to the limitations contained
-------------------------------
in Section 2, the Option shall be exercised by the Optionee delivering to the
Company, on or prior to the Expiration Date or the date of any earlier
termination pursuant to Section 13 (i) written notice from the Optionee stating
that the Optionee is exercising the Option, and specifying the number of Option
Shares that the Optionee desires to purchase ("Notice"), and (ii) a check
payable to the order of the Company in an amount equal to the then current
Exercise Price multiplied by the number of Option Shares that the Optionee has
indicated he desires to purchase in the Notice (the "Payment"). The Option may
be exercised as to all, or any whole number, of the Option Shares exercisable as
of the date of the Notice. The failure of the Optionee to exercise the Option as
to all of the Option Shares available for exercise as of the date of the Notice
shall not be deemed to be a waiver or forfeiture of the Optionee's right to
later exercise the Option as to any Option Shares not previously purchased. For
purposes of Section 2 hereof, the exercise of the Option to purchase the Option
Shares specified in the Notice shall be deemed to have taken place on the date
that Notice and Payment are actually received by the Company in accordance with
this Section 3.
4. Transferability of Option. The Option shall be exercisable (i) during
-------------------------
the Optionee's lifetime only by the Optionee, or his guardian or legal
representative, or (ii) in the event of his death, by his heirs or legatees in
accordance with his will or the laws of descent and distribution (but only to
the extent the Option would be exercisable by the Optionee under Section 2 or as
set forth in Section 13), and shall not otherwise be transferable or assignable,
in whole or in part.
5. Payment of Taxes upon Exercise. The Optionee understands and
------------------------------
acknowledges that under currently applicable law, the Optionee may be required
to include in his taxable income, at the time of exercise of the Option, the
amount by which the value of the Option Shares purchased (the "Exercise Shares")
exceeds the Exercise Price paid. The Optionee hereby authorizes the Company to
withhold Exercise Shares of a value equivalent to the amount of tax required to
be withheld by the Company out of any taxable income derived by the Optionee
upon exercise of the Option; provided, however, that the Optionee may, in the
alternative, in order to satisfy such withholding requirement, deliver to the
Company cash or other shares of Common Stock owned by the Optionee.
6. Investment Representation/Securities Law Requirements. The Optionee
-----------------------------------------------------
represents that the Option Shares available for purchase by the Optionee under
this Agreement will be acquired only for investment and not with a view toward
resale or distribution. The Optionee agrees and understands that the Option
Shares may be restricted securities as defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and, in such case,
may not be sold, assigned or transferred, unless the sale, assignment or
transfer of such shares is registered under the Securities Act and applicable
blue sky laws, as now in effect or hereafter amended or under applicable
exemptions therefrom. In the case of any sale under
-2-
<PAGE>
such an exemption, the Company will require an opinion of counsel in form and
substance satisfactory to the Company from counsel acceptable to the Company
that such registrations are not required. The Optionee further understands and
agrees that, unless issued pursuant to an effective registration statement under
the Securities Act, the following legend shall be set forth on each certificate
representing Option Shares:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or under the blue sky
laws of any state, and may not be sold, assigned or transferred
except upon such registration or upon receipt by the Company of
an opinion of counsel in form and substance satisfactory to the
Company from counsel acceptable to the Company that such
registrations are not required for such sale, assignment or
transfer."
7. No Rights as Shareholder. The Optionee shall not have any rights as a
------------------------
shareholder with respect to any of the Option Shares until the date of issuance
by the Company of a stock certificate to the Optionee for such shares. Except as
otherwise provided in Section 11 hereof, the Optionee shall not be entitled to
any dividends, cash or otherwise, or any adjustment of the Exercise Price of any
of the Option Shares for such dividends, if the record date therefor is prior to
the date of issuance of such stock certificate. Upon valid exercise of the
Option by the Optionee, the Company agrees to cause a valid stock certificate
for the number of Option Shares then purchased to be issued and delivered to the
Optionee within seven (7) business days.
8. Corporate Proceedings of the Company. Notwithstanding anything in this
------------------------------------
Agreement to the contrary, in the event of a Change in Control (as defined in
the Plan), the Option will automatically become exercisable in full as of the
effective date of such Change in Control. In the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation, the Option may be terminated by the Company as of
the effective date of such dissolution, liquidation, merger or consolidation by
giving notice to Optionee of its intention to do so not less than ten (10) days
preceding such effective date and permitting the exercise until such effective
date, or the Expiration Date if earlier, of the Option. Notwithstanding the
preceding sentence, if the Company is not the surviving corporation as a result
of the Company being reorganized or merged or consolidated with another
corporation while the Option is outstanding, the surviving corporation may
assume the Option or substitute a new option in the surviving corporation for
the Option; provided, however, that the excess of the aggregate fair market
value of the securities subject to the options immediately after the
substitution or assumption over the aggregate option price of such shares is not
less than the excess of the aggregate fair market value of the Option Shares
immediately before such substitution or assumption over the Exercise Price of
Option Shares. The existence of the Option shall not in any way prevent any
Change of Control transaction, and Optionee shall have no right to prevent any
such transaction.
If the Option shall be exercised subsequent to any share dividend, stock
split, reverse stock split, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, reorganization, or liquidation occurring
after the Effective Date, as a result of which shares of any class have been
issued in respect of outstanding Common Stock or Common Stock has been changed
into the same or a different number of shares of the same or another class or
classes
-3-
<PAGE>
without payment of consideration therefor, then the Optionee shall receive, for
the Exercise Price paid upon such exercise, the aggregate number and class of
shares that, if the Option Shares had been purchased at the Effective Date and
had not been disposed of, the Optionee would be holding, at the time of such
exercise, as a result of such purchase and all such share dividends, stock
split, reverse stock split, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations, or
liquidations; provided, however, that no fractional share shall be issued upon
any such exercise, and the Exercise Price shall be appropriately reduced on
account of any fractional share not issued.
The issuance by the Company of shares of stock of any class of securities
convertible into shares of stock of any class, including Common Stock, or the
issuance by the Company of Common Stock, for cash, property or services
rendered, either upon direct sale or upon the exercise of rights, options or
warrants to subscribe therefor, or the conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of shares of Common Stock then subject to the Option.
9. Notices. All notices, demands and other communications required or
-------
permitted hereunder shall be deemed to have been properly given or delivered
when delivered personally or sent by certified or registered mail, return
receipt requested with all postage fully prepaid, addressed to the respective
parties hereto as follows:
If to the Company:
Maxxim Medical, Inc.
10300 49th Street North
Clearwater, FL 33762
Attn: President
If to Optionee: ___________________________
___________________________
___________________________
Any party hereto may change the above designated address by notice to the other
party hereto of such new address given in accordance with this Section 9.
10. Joinder of Spouse. The Optionee's spouse is fully aware of,
-----------------
understands and fully consents and agrees to the provisions of this Agreement
and its binding effect upon any interest, community or otherwise, she may have
in any of the Option Shares or this Agreement, and she hereby evidences such
awareness, understanding, consent and agreement by execution of this Agreement.
11. Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, the Company shall not be required to issue any fractional shares, and
to the extent that the terms hereof would otherwise require such issuance of
fractional shares, the number of shares actually issued shall be rounded down to
the nearest whole share.
-4-
<PAGE>
12. Transferability; Binding Effect. The Option shall be exercisable only
-------------------------------
by the persons described in Section 4. Subject to the foregoing, all covenants,
terms, agreements and conditions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the Company and the Optionee and their
respective heirs, executors, administrators, successors and assigns.
13. Termination.
-----------
(a) If the Optionee for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be a
director of the Company, the option may be exercised by the director within
one (1) year after the date of such termination, but in no event later than
the Expiration Date.
(b) If the Optionee becomes permanently and totally disabled, as
hereinafter defined, while serving as a director of the Company, the Option
will automatically become exercisable in full and may be exercised by the
Optionee at any time before one (1) year after the date of disability or
the Expiration Date, whichever is earlier.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months. In the absence of any specific requirements
for this determination, the decision of the Company, as aided by any
physicians designated by the Company, shall be conclusive and the Company
shall send written notice to the Optionee of the determination that the
Optionee has become permanently and totally disabled.
(c) In the event that the Optionee dies while serving as a director of
the Company, the option will automatically become exercisable in full and
may be exercised by a legatee or legatees of the Optionee under the
Optionee's will, or by the Optionee's personal representatives or
distributees, at any time before one (1) year after the date of death or
the Expiration Date, whichever is earlier, and if not so exercised, the
Option shall thereupon terminate.
Nothing in (a), (b) or (c) shall extend the time for exercising the Option
granted pursuant to this Agreement beyond the Expiration Date.
14. Shareholder Approval. The Option granted pursuant to this Agreement is
--------------------
subject to the approval of the Plan by the shareholders of the Corporation at
the 1999 Annual Meeting of Shareholders, as set forth in the Plan. In the event
that the Plan is not so approved, this Agreement shall automatically terminate
and the Optionee shall have no further rights hereunder.
15. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the Company and the Optionee and their respective heirs,
executors, administrators, successors and assigns.
-5-
<PAGE>
16. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Florida, and the laws of the United States applicable in Florida.
17. Captions. The Section headings in this Agreement are for reference
--------
purposes only and shall not affect in any way the meaning or interpretation of
the Agreement.
18. Counterparts. This Agreement may be executed in multiple original
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first written above, to be effective as of the Effective Date.
COMPANY:
MAXXIM MEDICAL, INC.,
a Texas corporation
By:___________________________________
Kenneth W. Davidson, President
OPTIONEE:
______________________________________
Optionee
______________________________________
Spouse of Optionee
-6-
<PAGE>
MAXXIM MEDICAL, INC.
1999 EMPLOYEE STOCK OPTION PLAN
THIS 1999 EMPLOYEE STOCK OPTION PLAN (this "Plan") is adopted by the Board
of Directors (the "Board of Directors") of MAXXIM MEDICAL, INC., a Texas
corporation (the "Company"), effective the 15th day of October, 1998 (the
"Adoption Date").
W I T N E S S E T H:
WHEREAS, the Company believes that allowing certain employees to obtain
shares of common stock, $.001 par value ("Common Stock"), of the Company by
granting stock options as hereinafter provided is beneficial to the initial and
continued success of the Company;
NOW, THEREFORE, the Company agrees to provide for the granting of stock
options to certain employees of the Company, subject to the following conditions
and provisions:
1. Purpose. The purpose of this Plan is to secure for the Company and its
-------
shareholders the benefits that flow from providing certain employees with the
incentive inherent in common stock ownership. The Company recognizes that an
employee stock option plan may aid in attracting and retaining employees of
exceptional ability because of the opportunity offered to acquire a proprietary
interest in the business of the Company.
2. Amount of Stock. The total number of shares of Common Stock to be
---------------
subject to options granted pursuant to this Plan shall not exceed 500,000
shares. This total number of shares shall be subject to appropriate and
automatic increase or decrease under Section 11 of this Plan (without the need
for further action on the part of the Board of Directors of the Company), in the
event of a stock dividend, or upon a subdivision, split-up, combination or
reclassification of, the shares purchasable under such options, as contemplated
in Section 11. In the event that options granted under this Plan shall lapse or
terminate without being exercised, additional options may be granted covering
the shares not purchased under such options.
3. Stock Option Committee. The Board of Directors shall from time to time
----------------------
appoint a Stock Option Committee (hereinafter called the "Committee") to, among
other duties, serve under this Plan. The Committee shall consist of either:
(i) two or more persons, each of whom are Non-Employee Directors
within the meaning of Paragraph (b)(2)(i) of Rule 16b-3, or any successor
rule ("Rule 16b-3"), promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, as such term is
interpreted from time to time (hereinafter a "Non-Employee Director"); or
(ii) the entire Board of Directors of the Company.
<PAGE>
The Board of Directors shall, in its discretion, establish such rules and
regulations as it may deem appropriate for the proper administration of the Plan
and shall have full authority and power to interpret and construe any provision
of the Plan or the terms and conditions of any option outstanding under the
Plan. Decisions of the Board of Directors shall be final, binding and
conclusive on all persons who have an interest in the Plan or any option
outstanding under the Plan.
4. Eligibility and Participation. Options may be granted pursuant to this
-----------------------------
Plan only to employees employed by the Company or any parent or a subsidiary of
the Company (such employees being hereinafter sometimes collectively called
"employees"). From time to time, the Committee shall select the employees to
whom options may be granted and shall determine the number of shares to be
covered by each option so granted. Future as well as present employees
(including employees who are directors) shall be eligible to participate in this
Plan. Directors who are not employees of the Company or a parent or a
subsidiary of the Company shall not be eligible to participate in this Plan.
The holder of any option granted pursuant to this Plan shall not have any of the
rights of a shareholder with respect to the shares covered by the option until
one or more certificates for such shares shall be delivered to him upon the due
exercise of the option.
5. Option Agreement. The terms and provisions of each option granted
----------------
under this Plan shall be as set forth in an Employee Stock Option Agreement
(hereinafter called an "Option Agreement"), between the Company and the employee
receiving such option in form and content substantially similar to the Option
Agreement attached hereto as Exhibit A. Each employee who is granted an Option
---------
shall be notified promptly of such grant and a written Option Agreement shall be
promptly executed and delivered by the Company and the employee, provided that
such grant of Options shall terminate if such Option Agreement is not signed by
such employee (or his or her attorney) and delivered to the Company within 60
days after the date such Option Agreement is delivered by the Company to such
employee.
6. Price. The purchase price per share of Common Stock purchasable under
-----
options granted pursuant to this Plan shall be determined by the Committee but
shall not be less than eighty-five percent (85%) of the fair market value of a
share of Common Stock at the time the options are granted or effective date of
such grant. Such fair market value shall be determined by the Committee without
regard to any restriction other than a restriction that, by its terms, will
never lapse. The full purchase price of shares purchased shall be paid upon
exercise of the option. The purchase price per share shall be subject to
adjustment under Section 11 of this Plan.
7. Exercise Period. Shares of Common Stock purchasable under any option
---------------
granted under this Plan will be purchasable as to twenty percent (20%) of such
shares one (1) year after the date of grant of such option, and shall become
purchasable as to an additional twenty percent (20%) of the shares upon the
expiration of each additional year thereafter until the fifth anniversary of the
date of grant of such option, at which time the option shall be exercisable in
full.
8. Option Period. The Committee shall determine the maximum period of
-------------
time within which options granted pursuant to this Plan must be exercised after
the granting of such
-2-
<PAGE>
option, which shall be a period of time ending no later than the tenth
anniversary of the Adoption Date. The actual expiration date stated in an Option
Agreement is hereinafter called the "Expiration Date". Notwithstanding any other
provision of this Plan to the contrary, no option shall be granted under this
Plan effective after the fifth anniversary of the Adoption Date.
9. Termination. Each Option Agreement will provide that:
-----------
(a) If the employee for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be employed
by the Company, or a parent or subsidiary corporation of the Company, and prior
to such cessation, the employee was employed at all times from the date of the
granting of such option until the date of such cessation, the option may be
exercised by the employee (to the extent that the employee is entitled to do so
at the date of cessation) within sixty (60) days following the date of cessation
of employment, but in no event later than the Expiration Date; provided,
however, that if the employee is terminated for cause, the option will
immediately terminate.
(b) If the employee becomes permanently and totally disabled, as
hereinafter defined, while employed by the Company or a parent or subsidiary
corporation of the Company, and prior to such disability the employee was
employed at all times from the date of the granting of the option until the date
of disability, the option will automatically become exercisable in full and may
be exercised by the employee at any time within one (1) year after the date of
disability, but in no event later than the Expiration Date.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months. In the absence of any specific requirements for this determination, the
decision of the Committee, as aided by any physicians designated by the
Committee, shall be conclusive, and the Board of Directors shall send written
notice to the employee of the determination that he has become permanently and
totally disabled.
(c) In the event that the employee dies while employed by the Company or a
parent or subsidiary corporation of the Company, and prior to death the employee
was employed at all times from the date of the granting of the option until the
date of death, the option will automatically become exercisable in full and may
be exercised by a legatee or legatees of the employee under his will, or by his
personal representatives or distributees, at any time within one (1) year after
the date of death, but in no event later than the Expiration Date.
10. Assignability. Each Option Agreement shall provide that the option
-------------
granted thereby shall not be transferable or assignable by the employee in any
form or fashion, and that the option may be exercised only by the employee
during his lifetime, or as otherwise expressly set forth in Exhibit A hereto.
---------
11. Changes in Capital Structure. Each option granted pursuant to this
----------------------------
Plan shall provide that if the option shall, subject to Section 12, be exercised
subsequent to any share dividend, stock split, reverse stock split, split-up,
recapitalization, merger, consolidation,
-3-
<PAGE>
combination or exchange of shares, reorganization, or liquidation occurring
after the date of the grant of the option, as a result of which shares of any
class have been issued in respect of outstanding Common Stock or Common Stock
has been changed into the same or a different number of shares of the same or
another class or classes without payment of consideration therefor, then the
employee or employees so exercising the option shall receive, for the aggregate
price paid upon such exercise, the aggregate number and class of shares that, if
Common Stock (as authorized at the date of the grant of the option) had been
purchased at the date of the grant of the option for the same aggregate price
(on the basis of the price per share set forth in Section 6 hereof) and had not
been disposed of, such employee or employees would be holding, at the time of
such exercise, as a result of such purchase and all such share dividends, stock
split, reverse stock split, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations, or
liquidations; provided, however, that no fractional share shall be issued upon
any such exercise, and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued.
12. Change in Control. Notwithstanding anything in this Plan to the
-----------------
contrary, in the event of a Change in Control (as defined below), the
unexercised options outstanding under this Plan will automatically become
exercisable in full as of the effective date of such Change in Control. In the
event of a dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, any
outstanding options hereunder may be terminated by the Company as of the
effective date of such dissolution, liquidation, merger or consolidation by
giving notice to each holder thereof of its intention to do so not less than ten
(10) days preceding such effective date and permitting the exercise until such
effective date, or the Expiration Date if earlier, of all of such outstanding
options. Notwithstanding the preceding sentence, if the Company is not the
surviving corporation as a result of the Company being reorganized or merged or
consolidated with another corporation while unexercised options are outstanding
under this Plan, the surviving corporation may assume the unexercised options
outstanding under this Plan or substitute new options in the surviving
corporation for the outstanding options; provided, however, that the excess of
the aggregate fair market value of the securities subject to the options
immediately after the substitution or assumption over the aggregate option price
of such shares is not less than the excess of the aggregate fair market value of
the Common Stock subject to the outstanding option immediately before such
substitution or assumption over the aggregate option price of such Common Stock.
The existence of this Plan or of options granted hereunder shall not in any way
prevent any Change in Control transaction, and no holder of options granted
under this Plan shall have the right to prevent any such transaction.
"Change in Control" of the Company means and shall be deemed to have
occurred if and when (i) any "person" (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934) becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities; (ii)
individuals who were members of the Board of Directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of directors do not constitute a majority of the Board
of Directors following such election; (iii) the shareholders of the Company
approve the dissolution or liquidation of the Company; (iv) the shareholders of
the Company approve an agreement to merge or consolidate,
-4-
<PAGE>
or otherwise reorganize, with or into one or more entities which are not
subsidiaries of the Company, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are, or are
to be, owned by former shareholders of the Company (excluding from the term
"former shareholders" a shareholder who is, or as a result of the transaction in
question becomes, an "affiliate", as that term is used in the Securities
Exchange Act of 1934 and the Rules promulgated thereunder, of any party to such
merger, consolidation or reorganization); or (v) the shareholders of the Company
approve the sale of all or substantially all of the Company's business and/or
assets to a person or entity which is not a subsidiary of the Company.
13. Registration Rights. The employees shall have no registration rights
-------------------
with respect to the shares of Common Stock issuable upon exercise of the options
granted under this Plan.
14. Sale of Stock After Exercise of Option. Any employee exercising any
-------------------------------------
option under the terms of this Plan will be required to agree that, unless the
shares obtained as a result of such exercise have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or may otherwise be
sold pursuant to an available exemption from such registration under the
Securities Act, such employee will not dispose of any such shares thereafter
without the prior approval of the Company.
Unless the Company files a registration statement with respect to the
shares issuable under the Plan, the Company shall require that a legend be
placed on any share certificates issued through the exercise of any option
granted under this Plan with respect to the foregoing restrictions. Such legend
shall be placed either on the front or back of such share certificates and shall
note that the shares are governed by this Plan.
This Plan shall be kept at the registered office of the Company and shall
be available for inspection by any appropriate party.
15. Amendment of the Plan. The Board of Directors may from time to time
---------------------
alter, amend, suspend or discontinue this Plan and make rules for its
administration.
16. Options Discretionary. The granting of options under this Plan shall
---------------------
be entirely discretionary, and nothing in this Plan shall be deemed to give any
employee of the Company or any parent or subsidiary of the Company any right to
participate in this Plan or to receive options.
No provision of this Plan or any Option Agreement evidencing any options
granted under this Plan shall confer any right upon any employee to be employed
by the Company or any parent or subsidiary of the Company for any period of
specific duration.
17. Shareholder Approval. This Plan will be submitted to the shareholders
--------------------
of the Company (the "Shareholders") for approval and shall be approved by a
majority vote of the shares represented in person or by proxy at a meeting at
which a quorum is present, at the annual meeting held within one year of the
Adoption Date. If the Plan is not approved by the
-5-
<PAGE>
Shareholders by such date, the Plan and all options granted hereunder will
automatically terminate.
18. Termination Of Plan. Unless terminated earlier, this Plan shall
-------------------
terminate effective five (5) years from the Adoption Date. Any option
outstanding under this Plan at the time of the termination of this Plan shall
remain in effect until such option shall have been exercised or the Expiration
Date thereof occurs, whichever is earlier.
19. Exhibits. Exhibit A (attached) is hereby incorporated into this Plan
-------- ---------
by reference.
-6-
<PAGE>
EXHIBIT "A"
MAXXIM MEDICAL, INC.
EMPLOYEE STOCK OPTION AGREEMENT
THIS EMPLOYEE STOCK OPTION AGREEMENT (this "Agreement"), dated to be
effective as of _____________, ______ (the Effective Date"), by and between
MAXXIM MEDICAL, INC., a Texas corporation (the "Company"), and
_______________________, an individual (the "Optionee");
W I T N E S S E T H:
WHEREAS, the Optionee is currently employed by the Company or by a parent
or a subsidiary of the Company;
WHEREAS, in consideration of the Optionee's record of employment or other
service with the Company or any subsidiary or parent and to provide the Optionee
with additional incentive to further the business of the Company, the Company
has agreed to grant the Optionee options to purchase shares of common stock,
$.001 par value ("Common Stock"), of the Company; and
WHEREAS, by granting the Optionee options to purchase shares of Common
Stock pursuant to the terms of this Agreement, the Company intends to carry out
the purposes set forth in the 1999 Employee Stock Option Plan of the Company
(the "Plan") adopted by the Board of Directors of the Company (the "Board of
Directors"); and
WHEREAS, the Company and the Optionee desire to set forth the terms and
conditions of such options to purchase Common Stock;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the option
---------------
(the "Option") to purchase all or any part of an aggregate of __________________
(_____) shares of Common Stock (such shares, as increased or decreased in
accordance with Section 10 hereof, being referred to herein as the "Option
Shares") for a purchase price of ______________ and ___/100 Dollars ($_____) per
share (the "Exercise Price"), upon the additional terms and conditions
hereinafter set forth.
2. Availability of Option Shares and Term of Option. Subject to the
------------------------------------------------
fulfillment by Optionee of the conditions set forth in Sections 6 and 7 hereof
and also subject to the terms of Sections 10 and 15 hereof, the Option shall be
first exercisable as to twenty percent (20%) of the Option Shares one (1) year
after the Effective Date, and shall become exercisable as to an additional
twenty percent (20%) of the Option Shares upon the expiration of each additional
year
<PAGE>
thereafter until the fifth anniversary of the Effective Date, at which time the
Option shall be exercisable in full. The Option shall expire and terminate as to
any Option Shares not purchased by the Optionee on or before the sixth
anniversary of the Effective Date (the "Expiration Date"), subject to earlier
termination as set forth in Section 15.
3. Method of Exercising the Option. Subject to the limitations contained
-------------------------------
in Section 2, the Option shall be exercised by the Optionee delivering to the
Company, on or before to the Expiration Date or the date of any earlier
termination pursuant to Section 15 (i) written notice from the Optionee stating
that the Optionee is exercising the Option and specifying the number of Option
Shares that the Optionee desires to purchase ("Notice"), and (ii) a check
payable to the order of the Company in an amount equal to the then current
Exercise Price multiplied by the number of Option Shares that the Optionee has
indicated he desires to purchase in the Notice (the "Payment"). The Option may
be exercised as to all, or any whole number, of the Option Shares exercisable as
of the date of the Notice. The failure of the Optionee to exercise the Option
as to all of the Option Shares available for exercise as of the date of the
Notice shall not be deemed to be a waiver or forfeiture of the Optionee's right
to later exercise the Option as to any Option Shares not previously purchased.
For purposes of Section 2 hereof, the exercise of the Option to purchase the
Option Shares specified in the Notice shall be deemed to have taken place on the
date that Notice and Payment are actually received by the Company in accordance
with this Section 3.
4. Transferability of Option. The Option shall be exercisable (i) during
-------------------------
the Optionee's lifetime, only by the Optionee, or his guardian or legal
representative, or (ii) in the event of his death, by his heirs or legatees in
accordance with his will or the laws of descent and distribution (but only to
the extent the Option would be exercisable by the Optionee under Section 2 or as
set forth in Section 15), and shall not otherwise be transferable or assignable,
in whole or in part.
5. Payment of Taxes Upon Exercise. The Optionee understands and
------------------------------
acknowledges that under currently applicable law, the Optionee may be required
to include in his taxable income, at the time of exercise of the Option, the
amount by which the value of the Option Shares purchased (the "Exercise Shares")
exceeds the Exercise Price paid. The Optionee hereby authorizes the Company to
withhold Exercise Shares of a value equivalent to the amount of tax required to
be withheld by the Company out of any taxable income derived by the Optionee
upon exercise of the Option; provided, however, that the Optionee may, in the
alternative, in order to satisfy such withholding requirement, deliver to the
Company cash or other shares of Common Stock owned by the Optionee.
6. Covenant Not To Compete. The Optionee agrees that for so long as he is
-----------------------
employed by the Company and for ________ (___) ________ thereafter, he shall
not, directly or indirectly, for his own account or for the account of others
(i) engage, within any market area served by the Company, as principal, agent,
trustee or through the agency of any corporation, partnership, association or
agency, in any business which is a Competitor, as hereinafter defined, or (ii)
own more than five percent (5.0%) of the outstanding capital stock, or be a
member or employee of any partnership which is a Competitor, or an owner or
employee of any Competitor. For purposes of this Section 6, a business will be
deemed to be a "Competitor" if its business
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<PAGE>
involves the manufacture, distribution or marketing of any physical therapy,
home pain management or hospital products of the type, or competitive with, any
such product manufactured or distributed by the Company. The Optionee further
agrees that for so long as he is employed by the Company, and for ________ (___)
________ thereafter, he will not, either directly or indirectly, through any
person, firm, association, or corporation with which he is now or may hereafter
become associated, cause or induce any present or future employee of the Company
to leave the employ of the Company to accept employment with the Optionee or
with any Competitor. The parties understand and agree that if any of the
restrictions placed upon the Optionee herein relating to time, geographical area
or scope of activity are deemed more extensive than is necessary to protect the
good will or other business interests of the Company under the laws of the State
of Florida (or any other jurisdiction in which the employee may be actually
employed and by reason of which the law of such other jurisdiction properly
applies with respect to interpretation of Sections 6 or 7 hereof), then the
parties hereto agree to amend the terms hereof to such time, geographical area
and scope of activity and alter the degree and extent of such provisions by the
minimal amount of amendment or alteration necessary to bring such provisions
within the ambit of enforceability within the State of Florida. For purposes of
Sections 6 or 7 hereof, the term "Company" shall include any parent or
subsidiary of the Company. For purposes of this Agreement, the term "subsidiary"
shall mean any subsidiary corporation, partnership, joint venture or other
similar entity or vehicle of which the Company owns twenty-five percent (25%) or
more of the equity or other ownership interest therein.
7. Nondisclosure of Company Secrets. The Optionee acknowledges that in
--------------------------------
the course of his employment or other relationship with the Company, he has had
and may continue to have access to certain trade secrets and proprietary
information of the Company, know-how, programs, lists of customers, information
regarding inventions, whether patentable or not, tools, machines, mechanisms,
and fixtures which are secret and used in the business of the Company, items and
processes, whether of design, manufacturing or service, information regarding
employee compensation, techniques of production or other information which may
yield greater efficiency or capacity of production, methods, techniques, and
systems concerning design, pricing or manufacturing which are proprietary to the
Company or to the Company's customers or suppliers, or which is developed by the
Optionee in the performance of his duties, and other confidential information
and knowledge concerning the business of the Company (hereinafter collectively
referred to as the "Information") which the Company desires to protect. The
Optionee understands that the Information is confidential and has been or will
be received or learned by him in confidence, and the Optionee agrees that unless
and until such information shall become a matter of public knowledge, he will
not reveal any such Information to any third party for any reason or under any
circumstances, either during or subsequent to his employment by the Company,
other than in the ordinary course of his duties for the benefit of the Company,
or as required by applicable law.
8. Investment Representation/Securities Law Requirements. The Optionee
-----------------------------------------------------
represents that the Option Shares available for purchase by the Optionee under
this Agreement will be acquired only for investment and not with a view toward
resale or distribution. The Optionee agrees and understands that the Option
Shares may be restricted securities as defined in Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and, in such case,
may not be sold, assigned or transferred, unless the sale, assignment or
transfer of
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<PAGE>
such shares is registered under the Securities Act and applicable blue sky laws,
as now in effect or hereafter amended or under applicable exemptions therefrom.
In the case of any sale under such an exemption, the Company will require an
opinion of counsel in form and substance satisfactory to the Company from
counsel acceptable to the Company that such registrations are not required. The
Optionee further understands and agrees that, unless issued pursuant to an
effective registration statement under the Securities Act, the following legend
shall be set forth on each certificate representing Option Shares:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 or under the blue sky laws of any state, and may
not be sold, assigned or transferred except upon such registration or upon
receipt by the Company of an opinion of counsel in form and substance
satisfactory to the Company from counsel acceptable to the Company that
such registrations are not required for such sale, assignment or transfer."
9. No Rights as Shareholder. The Optionee shall not have any rights as a
------------------------
shareholder with respect to any of the Option Shares until the date of issuance
by the Company of a stock certificate to the Optionee for such shares. Except
as otherwise provided in Section 10 hereof, the Optionee shall not be entitled
to any dividends, cash or otherwise, or any adjustment of the Exercise Price of
any of the Option Shares for such dividends, if the record date therefor is
prior to the date of issuance of such stock certificate. Upon valid exercise of
the Option by the Optionee, the Company agrees to cause a valid stock
certificate for the number of Option Shares then purchased to be issued and
delivered to the Optionee within seven (7) business days.
10. Corporate Proceedings of the Company. Notwithstanding anything in
------------------------------------
this Agreement to the contrary, in the event of a Change in Control (as defined
in the Plan), the Option will automatically become exercisable in full as of the
effective date of such Change in Control. In the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation, the Option may be terminated by the Company as of
the effective date of such dissolution, liquidation, merger or consolidation by
giving notice to Optionee of its intention to do so not less than ten (10) days
preceding such effective date and permitting the exercise until such effective
date, or the Expiration Date if earlier, of the Option. Notwithstanding the
preceding sentence, if the Company is not the surviving corporation as a result
of the Company being reorganized or merged or consolidated with another
corporation while the Option is outstanding, the surviving corporation may
assume the Option or substitute a new option in the surviving corporation for
the Option; provided, however, that the excess of the aggregate fair market
value of the securities subject to the options immediately after the
substitution or assumption over the aggregate option price of such shares is not
less than the excess of the aggregate fair market value of the Option Shares
immediately before such substitution or assumption over the Exercise Price of
Option Shares. The existence of the Option shall not in any way prevent any
Change of Control transaction, and Optionee shall have no right to prevent any
such transaction.
If the Option shall be exercised subsequent to any share dividend, stock
split, reverse stock split, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, reorganization, or liquidation occurring
after the Effective Date, as a result of which shares of
-4-
<PAGE>
any class have been issued in respect of outstanding Common Stock or Common
Stock has been changed into the same or a different number of shares of the same
or another class or classes without payment of consideration therefor, then the
Optionee shall receive, for the Exercise Price paid upon such exercise, the
aggregate number and class of shares that, if the Option Shares had been
purchased at the Effective Date and had not been disposed of, the Optionee would
be holding, at the time of such exercise, as a result of such purchase and all
such share dividends, stock split, reverse stock split, split-ups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
reorganizations, or liquidations; provided, however, that no fractional share
shall be issued upon any such exercise, and the Exercise Price shall be
appropriately reduced on account of any fractional share not issued.
The issuance by the Company of shares of stock of any class of securities
convertible into shares of stock of any class, including Common Stock, or the
issuance by the Company of Common Stock for cash, property or services rendered,
either upon direct sale or upon the exercise of rights, options or warrants to
subscribe therefor, or the conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of shares of Common Stock then subject to the Option.
11. Notices. All notices, demands and other communications required or
-------
permitted hereunder, shall be deemed to have been properly given or delivered
when delivered personally or sent by certified or registered mail, return
receipt requested with all postage fully prepaid, addressed to the respective
parties hereto as follows:
If to the Company: Maxxim Medical, Inc.
10300 49th Street North
St. Petersburg, FL 33762
Attn: President
If to Optionee: _________________________
_________________________
_________________________
Any party hereto may change the above designated address by notice to the other
party hereto of such new address given in accordance with this Section 11.
12. Joinder of Spouse. The Optionee's spouse is fully aware of,
-----------------
understands and fully consents and agrees to the provisions of this Agreement
and its binding effect upon any interest, community or otherwise, he or she may
have in any of the Option Shares or this Agreement, and he or she hereby
evidences such awareness, understanding, consent and agreement by execution of
this Agreement.
13. Fractional Shares. Notwithstanding any other provision of this
-----------------
Agreement, the Company shall not be required to issue any fractional shares, and
to the extent that the terms hereof would otherwise require such issuance of
fractional shares, the number of shares actually issued shall be rounded down to
the nearest whole share.
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<PAGE>
14. Transferability; Binding Effect. The Option may be exercised only by
-------------------------------
the persons described in Section 4. Subject to the foregoing, all covenants,
terms, agreements and conditions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the Company and the Optionee and their
respective heirs, executors, administrators, successors and assigns.
15. Termination.
-----------
(a) If the Optionee for any reason whatsoever, other than death or
permanent and total disability, as defined in (b) below, ceases to be employed
by the Company, or a parent or subsidiary corporation of the Company, and prior
to such cessation, the Optionee was employed at all times from the date of the
granting of the Option until the date of such cessation, the Option may be
exercised by the Optionee (to the extent that the Optionee is entitled to do so
at the date of cessation) within sixty (60) days following the date of cessation
of employment, but in no event later than the Expiration Date; provided,
however, that if the Optionee is terminated for cause, the Option will
immediately terminate.
(b) If the Optionee becomes permanently and totally disabled, as
hereinafter defined, while employed by the Company or a parent or subsidiary
corporation of the Company, and prior to such disability the Optionee was
employed at all times from the date of the granting of the Option until the date
of disability, the Option will automatically become exercisable in full and may
be exercised by the Optionee at any time within one (1) year after the date of
disability, but in no event later than the Expiration Date.
"Permanently and totally disabled" means being unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months. In the absence of any specific requirements for this determination, the
decision of the Company, as aided by any physicians designated by the Company,
shall be conclusive, and the Company shall send written notice to the Optionee
of the determination that the Optionee has become permanently and totally
disabled.
(c) In the event that the Optionee dies while employed by the Company or a
parent or subsidiary corporation of the Company, and prior to death the Optionee
was employed at all times from the date of the granting of the Option until the
date of death, the Option will automatically become exercisable in full and may
be exercised by a legatee or legatees of the Optionee under the Optionee's will,
or by the Optionee's personal representatives or distributees, at any time
within one (1) year after the date of death, but in no event later than the
Expiration Date.
16. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the Company and the Optionee and their respective heirs,
executors, administrators, successors and assigns.
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<PAGE>
17. Governing Law. This Agreement shall be governed by the laws of
-------------
Florida, and the laws of the United States applicable in Florida.
18. Captions. The Section headings in this Agreement are for reference
--------
purposes only and shall not affect in any way the meaning or interpretation of
the Agreement.
19. Counterparts. This Agreement may be executed in multiple original
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first written above, to be effective as of the Effective Date.
COMPANY:
MAXXIM MEDICAL, INC.,
a Texas corporation
By:______________________________________
Kenneth W. Davidson, President
OPTIONEE:
_________________________________________
_________________________________________
Spouse of Optionee
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