-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F4uv3nBpQRwGSgK7Gj/FTgH6Dfe8yfSYITLBoOprYJrJTafI8NlDzbpSCjxdIMkE Ox6k4xyW/UlGbvBCOBcI3w== 0000890566-96-000646.txt : 19960617 0000890566-96-000646.hdr.sgml : 19960617 ACCESSION NUMBER: 0000890566-96-000646 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960614 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STERILE CONCEPTS HOLDINGS INC CENTRAL INDEX KEY: 0000925966 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 541193603 STATE OF INCORPORATION: VA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-43931 FILM NUMBER: 96581547 BUSINESS ADDRESS: STREET 1: 5100 COMMERCE RD CITY: RICHMOND STATE: VA ZIP: 23234 BUSINESS PHONE: 8042750200 MAIL ADDRESS: STREET 1: 5100 COMMERCE RD CITY: RICHMOND STATE: VA ZIP: 23234 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MAXXIM MEDICAL INC CENTRAL INDEX KEY: 0000858660 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 760291634 STATE OF INCORPORATION: TX FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 104 INDUSTRIAL BLVD CITY: SUGAR LAND STATE: TX ZIP: 77478 BUSINESS PHONE: 7132405588 SC 14D1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ STERILE CONCEPTS HOLDINGS, INC. (NAME OF SUBJECT COMPANY) MAXXIM ACQUISITION CO. (VIRGINIA) MAXXIM MEDICAL, INC. (TEXAS) MAXXIM MEDICAL, INC. (DELAWARE) (BIDDERS) ------------------------ COMMON STOCK, NO PAR VALUE (TITLE OF CLASS OF SECURITIES) 85915P 10 9 (CUSIP Number of Class of Securities) ------------------------ KENNETH W. DAVIDSON MAXXIM MEDICAL, INC. 104 INDUSTRIAL BLVD. SUGAR LAND, TEXAS 77478 (713) 240-5588 WITH A COPY TO: JOHN R. BOYER, JR. BOYER, EWING & HARRIS INCORPORATED 9 GREENWAY PLAZA, SUITE 3100 HOUSTON, TEXAS 77046 (713) 871-2025 (Names, Addresses and Telephone Numbers of Persons Authorized to Receive Notices and Communications on Behalf of Bidders) ------------------------ CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- TRANSACTION VALUE: $110,527,680* AMOUNT OF FILING FEE: $22,105.54 ** - -------------------------------------------------------------------------------- * For purposes of calculating fee only. The amount assumes the purchase of the outstanding Shares (as defined herein) at $20 per share, net to the seller in cash, based on the number of Shares represented by the subject Company in the Agreement and Plan of Merger, dated as of June 10, 1996, outstanding as of such date. ** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of the aggregate of the cash offered for such number of Shares. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: N/A Filing Party: N/A Form or Registration No.: N/A Date Filed: N/A Page 1 of ______ pages Exhibit Index on page ______ This Tender Offer Statement on Schedule 14D-1(the "Schedule 14D-1") relates to the offer by Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation ("Parent"), to purchase all outstanding shares of common stock, no par value (the "Common Stock"), of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), including the associated share purchase rights, if any (the "Rights" and, together with the Common Stock, the "Shares"), issued pursuant to the Shareholder Protection Rights Agreement, dated as of March 6, 1996, between the Company and First Union National Bank of North Carolina, as Rights Agent, at a price of $20.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal which are annexed to and filed with this Schedule 14D-1 as Exhibits (a)(1) and (a)(2), respectively. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), which has its principal executive offices at 5100 Commerce Road, Richmond, Virginia 23234. (b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase all outstanding Shares at a price of $20.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments and supplements thereto, collectively constitute the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The information set forth in "Introduction" of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of the Shares; Dividends on the Shares") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a) - (d) This Schedule 14D-1 is being filed by the Purchaser, Maxxim Medical, Inc., a Delaware corporation ("Maxxim") and a wholly owned subsidiary of Parent, and Parent. The Purchaser is a wholly owned subsidiary of Maxxim. The information set forth in Section 9 ("Certain Information Concerning the Purchaser, Maxxim and Parent") of the Offer to Purchase is incorporated herein by reference. (e) - (f) During the last five years, neither the Purchaser, Parent nor Maxxim, nor to the best of their knowledge, any of the executive officers or directors of the Purchaser, Parent or Maxxim (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting activities subject to federal or state securities laws or finding any violation with respect to such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) - (b) The information set forth in Section 9 ("Certain Information Concerning the Purchaser, Maxxim and Parent") and Section 12 ("Purpose of the Offer; The Merger Agreement; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a ) - (b) The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable Page 2 of ______ pages Exhibit Index on page ______ ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a) - (e) The information set forth in Section 12 ("Purpose of the Offer; The Merger Agreement; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. (f) and (g) The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; Stock Exchange Listing; Exchange Act Registration; Margin Regulations") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) - (b) The information set forth in "Introduction", Section 9 ("Certain Information Concerning the Purchaser, Maxxim and Parent"), Section 11 ("Contacts and Transactions with the Company; Background of the Offer") and Section 12 ("Purpose of the Offer; The Merger Agreement; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in "Introduction," Section 9 ("Certain Information Concerning the Purchaser, Maxxim, and Parent"), Section 10 ("Source and Amount of Funds"), Section 11 ("Contacts and Transactions with the Company; Background of the Offer") and Section 12 ("Purpose of the Offer; The Merger Agreement; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in "Introduction" and in Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 ("Certain Information Concerning the Purchaser, Maxxim and Parent") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of financial information does not constitute an admission that such information is material to a decision by a security holder of the Company whether to sell, tender or hold securities being sought in the Offer. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 12 ("Purpose of the Offer; The Merger Agreement; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. (b) and (c) The information set forth in Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; Stock Exchange Listings; Exchange Act Registration; Margin Regulations") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, to the extent not otherwise incorporated herein by reference, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. Page 3 of ______ pages Exhibit Index on page ______ (a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Form of Summary Advertisement dated June 14, 1996. (a)(8) Text of Press Release dated June 10, 1996, issued by the Company and Parent. (b)(i) Commitment Letter dated as of June 8, 1996, addressed to Maxxim, executed by NationsBank of Texas, N.A., as Agent for a syndicate of lenders, and NationsBanc Capital Markets, Inc., as Arranger and Syndication Agent, for a $165,000,000 Senior Credit Facility. (b)(ii) Commitment Letter dated as of June 8, 1996, addressed to Maxxim, executed by NationsBridge, L.L.C. and NationsBanc Capital Markets, Inc., with respect to a $75,000,000 Bridge Facility. (c) Agreement and Plan of Merger dated as of June 10, 1996, by and among the Purchaser, Maxxim and the Company. (d) None. (e) Not applicable. (f) None. Page 4 of ______ pages Exhibit Index on page ______ SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 14, 1996 MAXXIM ACQUISITION CO. By: /s/ KENNETH W. DAVIDSON, PRESIDENT MAXXIM MEDICAL, INC., A TEXAS CORPORATION By: /s/ KENNETH W. DAVIDSON, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER MAXXIM MEDICAL, INC., A DELAWARE CORPORATION By: /s/ KENNETH W. DAVIDSON, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER Page 5 of ______ pages Exhibit Index on page ______ EXHIBIT INDEX
EXHIBIT PAGE NUMBER EXHIBIT NAME NUMBER - ------------------ --------------------------------------------------------------------------------- ------ (a)(1) Offer to Purchase................................................................ (a)(2) Letter of Transmittal............................................................ (a)(3) Notice of Guaranteed Delivery.................................................... (a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees......................................................................... (a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees......................................................................... (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.............................................................. (a)(7) Form of Summary Advertisement dated June 14, 1996................................ (a)(8) Text of Press Release dated June 10, 1996, issued by the Company and Parent...... (b)(i) Commitment Letter dated as of June 8, 1996, addressed to Maxxim, executed by NationsBank of Texas, N.A., as Agent for a syndicate of lenders, and NationsBanc Capital Markets, Inc., as Arranger and Syndication Agent, for a $165,000,000 Senior Credit Facility........................................................... (b)(ii) Commitment Letter dated as of June 8, 1996, addressed to Maxxim, executed by NationsBridge, L.L.C., and NationsBanc Capital Markets, Inc., with respect to a $75,000,000 Bridge Facility......................................... (c) Agreement and Plan of Merger dated as of June 10, 1996, by and among the Purchaser, Maxxim and the Company................................................ (d) None............................................................................. (e) Not applicable................................................................... (f) None.............................................................................
EXHIBIT (a)(1) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS) OF STERILE CONCEPTS HOLDINGS, INC. BY MAXXIM ACQUISITION CO. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF MAXXIM MEDICAL, INC. AT $20.00 NET PER SHARE THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 26, 1996, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF STERILE CONCEPTS HOLDINGS, INC. (THE "COMPANY") UNANIMOUSLY HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER REFERRED TO HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, MORE THAN TWO-THIRDS OF THE TOTAL NUMBER OF OUTSTANDING SHARES (ON A FULLY DILUTED BASIS) BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14. ------------------------ IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares should either (1) complete and sign the Letter of Transmittal or a facsimile copy thereof in accordance with the instructions in the Letter of Transmittal and deliver it and any other required documents to the Depositary and either deliver the certificates for such Shares to the Depositary along with the Letter of Transmittal or tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 2 prior to the expiration of the Offer or (2) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, bank, trust company or other nominee if such stockholder desires to tender such Shares. A stockholder who desires to tender Shares and whose certificates for such Shares are not immediately available or who cannot comply in a timely manner with the procedures for book-entry transfer, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 2. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery and other related materials may be obtained at the Purchaser's expense from the Information Agent or from brokers, dealers, commercial banks or trust companies. THE DEALER MANAGER FOR THE OFFER IS: BEAR, STEARNS & CO. INC. June 14, 1996 TABLE OF CONTENTS PAGE ---- Introduction................................ 1 The Tender Offer............................ 2 1. Terms of the Offer................... 2 2. Procedure for Tendering Shares....... 3 3. Withdrawal Rights.................... 6 4. Acceptance for Payment and Payment... 7 5. Certain Federal Income Tax Consequences........................ 8 6. Price Range of the Shares; Dividends on the Shares....................... 8 7. Effect of the Offer on the Market for the Shares; Stock Exchange Listings; Exchange Act Registration; Margin Regulations......................... 9 8. Certain Information Concerning the Company............................. 10 9. Certain Information Concerning the Purchaser, Maxxim and Parent........ 12 10. Source and Amount of Funds........... 14 11. Contacts and Transactions with the Company; Background of the Offer.... 16 12. Purpose of the Offer; The Merger Agreement; Plans for the Company.... 17 13. Dividends and Distributions.......... 25 14. Certain Conditions of the Offer...... 25 15. Certain Legal Matters................ 26 16. Fees and Expenses.................... 28 17. Miscellaneous........................ 29 Schedule I -- Directors and Executive Officers of Parent, Maxxim and the Purchaser.................................. 30 TO THE HOLDERS OF COMMON STOCK OF STERILE CONCEPTS HOLDINGS, INC.: INTRODUCTION Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation ("Parent"), hereby offers to purchase all outstanding shares of Common Stock, no par value (the "Common Stock"), of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), including the associated share purchase rights, if any (the "Rights" and, together with the Common Stock, the "Shares"), issued pursuant to the Shareholder Protection Rights Agreement, dated as of March 6, 1996 (the "Rights Agreement"), between the Company and First Union National Bank of North Carolina as Rights Agent, at a price of $20.00 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The Purchaser will pay all fees and expenses of Bear, Stearns & Co. Inc. ("Bear Stearns"), which is acting as Dealer Manager (the "Dealer Manager"). Corporate Investor Communications, Inc., which is acting as Information Agent (the "Information Agent") and KeyCorp Shareholder Services, Inc., which is acting as the Depositary (the "Depositary"), incurred in connection with the Offer. See Section 16. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, MORE THAN TWO-THIRDS OF THE TOTAL NUMBER OF OUTSTANDING SHARES (ON A FULLY DILUTED BASIS) (THE "MINIMUM CONDITION") BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE. SEE SECTION 14. WHEAT, FIRST SECURITIES, INC. ("WHEAT FIRST"), FINANCIAL ADVISOR TO THE COMPANY, HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE COMPANY ITS WRITTEN OPINION TO THE EFFECT THAT, SUBJECT TO THE QUALIFICATIONS SET FORTH IN SUCH OPINION, THE CASH CONSIDERATION OF $20.00 PER SHARE TO BE RECEIVED BY THE HOLDERS OF THE SHARES IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH HOLDERS. A COPY OF SUCH OPINION IS INCLUDED WITH THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WITH RESPECT TO THE OFFER, WHICH IS BEING MAILED TO SHAREHOLDERS CONCURRENTLY HEREWITH. STOCKHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY FOR A DESCRIPTION OF THE ASSUMPTIONS MADE, FACTORS CONSIDERED AND PROCEDURES FOLLOWED BY WHEAT FIRST. The Offer is being made pursuant to the Agreement and Plan of Merger dated as of June 10, 1996 (the "Merger Agreement"), among Maxxim Medical, Inc., a Delaware corporation ("Maxxim") and a wholly owned subsidiary of Parent, the Purchaser and the Company pursuant to which, following the consummation of the Offer and the satisfaction or waiver of certain conditions, the Purchaser will be merged with and into the Company (the "Merger"), with the Company surviving the Merger (as such, the "Surviving Corporation") as a wholly owned subsidiary of Maxxim. In the Merger, each outstanding Share (other than Shares held by the Company, any subsidiary of the Company, or by Maxxim or any direct or indirect subsidiary of Maxxim), will be converted into the right to receive the price paid per Share pursuant to the Offer in cash, without interest (the "Merger Consideration"). See Section 12. 1 According to the Company, as of June 10, 1996, there were 5,526,384 Shares issued and outstanding and 549,616 Shares reserved for issuance upon the exercise of outstanding options to purchase Shares. Based upon the foregoing and assuming that all outstanding options are exercised, the Purchaser believes that the Minimum Condition will be satisfied if at least 4,050,667 Shares are validly tendered and not withdrawn prior to the Expiration Date. If the Minimum Condition is satisfied and the Purchaser accepts for payment Shares tendered pursuant to the Offer, the Purchaser is entitled under the Merger Agreement to elect more than two-thirds of the members of the Company's Board of Directors. In addition, if the Minimum Condition is satisfied, the Purchaser will be able to effect the Merger without the affirmative vote of any other stockholder of the Company. Certain Federal income tax consequences of the sale of Shares pursuant to the Offer and the conversion of Shares pursuant to the Merger are described in Section 5. THE TENDER OFFER 1. TERMS OF THE OFFER Upon the terms and subject to the conditions of the Offer the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not theretofore withdrawn in accordance with Section 3. The term "Expiration Date" means 12:00 midnight, New York City time, on Friday, July 26, 1996, unless and until the Purchaser (subject to the terms of the Merger Agreement) shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Consummation of the Offer is conditioned upon satisfaction of the Minimum Condition, the expiration or termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("HSR Act"), and the other conditions set forth in Section 14. Subject to the terms and conditions contained in the Merger Agreement, the Purchaser reserves the right (but shall not be obligated) to waive any or all such conditions. The Merger Agreement provides that the Minimum Condition may not be waived or amended without the consent of the Company. However, if, with the Company's consent, the Purchaser waives or amends the Minimum Condition during the last five business days during which the Offer is open, the Purchaser will be required to extend the Expiration Date so that the Offer will remain open for at least five business days after the announcement of such waiver or amendment is first published, sent or given to holders of Shares and may also be required to extend the Offer if other conditions are waived, depending upon the materiality of the waiver. The Purchaser has agreed in the Merger Agreement that it will not, without the consent of the Company, (a) reduce the number of Shares subject to the Offer, (b) reduce the Offer Price, (c) modify or add to the tender offer conditions set forth in Section 14, (d) change the form of consideration payable in the Offer, (e) waive the Minimum Condition, or (f) extend the Offer beyond the scheduled expiration date (except that the Offer may be extended to the extent required by law or in the event the tender offer conditions described in Section 14 shall not have been satisfied by the scheduled expiration date). Subject to the terms of the Merger Agreement and applicable law, the Purchaser reserves the right (but shall not be obligated), and regardless of whether or not any of the events or facts set forth in Section 14 hereof shall have occurred, (a) to extend the period of time during which the Offer is open, and thereby delay acceptance for payment of and the payment for any Shares, by giving oral or written notice of such extension to the Depositary, and (b) to amend the Offer in any other respect by giving oral or written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER. If by the Expiration Date, any or all of the conditions to the Offer have not been satisfied or waived, the Purchaser reserves the right (but shall not be obligated), subject to the terms and conditions contained in the Merger Agreement and to the applicable rules and regulations of the Commission, to (a) terminate the Offer and not accept for payment or pay for any Shares and return all tendered Shares to tendering stockholders, (b) waive all the unsatisfied conditions and accept for payment and pay for all Shares validly 2 tendered prior to the Expiration Date and not theretofore withdrawn, (c) extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain the Shares that have been tendered during the period or periods for which the Offer is extended, or (d) amend the Offer. There can be no assurance that the Purchaser will exercise its right to extend the Offer. Any extension, waiver, amendment or termination will be followed as promptly as practicable by public announcement. In the case of an extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires that the announcement be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change) and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser will not have any obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If the Purchaser extends the Offer or if the Purchaser is delayed in its acceptance for payment of or payment (whether before or after its acceptance for payment of Shares) for Shares or it is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 3. However, the ability of the Purchaser to delay the payment for Shares that the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of holders of securities promptly after the termination or withdrawal of such bidder's offer. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer (including, with the Company's consent, a waiver of the Minimum Condition), the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in the percentage of securities sought or the dealers soliciting fee, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information. With respect to a change in price or a change in the percentage of securities sought or the dealers soliciting fee, a minimum period of 10 business days is generally required to allow for adequate dissemination to stockholders. If, prior to the Expiration Date, the Purchaser should decide to increase the price per Share being offered in the Offer, such increase will be applicable to all stockholders whose Shares are accepted for payment pursuant to the Offer. The Company has provided the Purchaser with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed by the Purchaser to record holders of Shares, and will be furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder lists, or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. PROCEDURE FOR TENDERING SHARES VALID TENDER. For a stockholder validly to tender Shares pursuant to the Offer, either (a) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined below), and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either certificates for tendered Shares 3 must be received by the Depositary at one of such addresses or such Shares must be delivered pursuant to the procedures for book-entry transfer set forth below and a Book-Entry Confirmation (as defined below) received by the Depositary, in each case prior to the Expiration Date, or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth below. The Depositary will establish accounts with respect to the Shares at The Depository Trust Company, the Midwest Securities Trust Company and the Philadelphia Depository Trust Company (the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in any of the Book-Entry Transfer Facilities' systems may make book-entry delivery of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, and any other required documents, must, in any case, be transmitted to, and received by, the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of Shares into the Depositary's account at a Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against the participant. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of Transmittal (a) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in any of the Book-Entry Transfer Facilities' systems whose name appears on a security position listing as the owner of the Shares) of Shares tendered therewith and such registered holder has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (such participant, an "Eligible Institution"). In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the certificates for Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not tendered or not accepted for payment are to be returned to a person other than the registered holder of the certificates surrendered, then the tendered certificates for such Shares must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates for Shares are not immediately available or the procedure for book-entry transfer 4 cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such stockholder's tender may be effected if all the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to all such Shares), together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the New York Stock Exchange is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. The acceptance for payment by the Purchaser of Shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. APPOINTMENT. By executing the Letter of Transmittal as set forth above, the tendering stockholder will irrevocably appoint designees of the Purchaser, and each of them, as such stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares on or after June 10, 1996. All such proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts for payment Shares tendered by such stockholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will not be deemed effective). The designees of the Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of the Company's stockholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting and other rights with respect to such Shares and other securities or rights, including voting at any meeting of stockholders then scheduled. 5 DETERMINATION OF VALIDITY. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by the Purchaser in its sole discretion, which determination will be final and binding. The Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or the acceptance for payment of, or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects or irregularities relating thereto have been cured or waived. None of the Purchaser, Parent, Maxxim, the Depositary, the Information Agent, the Dealer Manager or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal income tax on payments of cash pursuant to the Offer, a stockholder tendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide such stockholder's correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the "IRS") may impose a penalty on such stockholder and the payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Purchaser and the Depositary). Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 to the Letter of Transmittal. 3. WITHDRAWAL RIGHTS Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment and paid for by the Purchaser pursuant to the Offer, may also be withdrawn at any time after August 13, 1996. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and, if Share certificates have been tendered, the name of the registered holder of the Shares as set forth in the Share certificate, if different from that of the person who tendered the Shares. If Share certificates have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the tendering stockholder must submit serial numbers shown on such particular certificates evidencing the Shares to be withdrawn and, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution except in the case of Shares tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 2, the notice of withdrawal must also specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in this section. 6 Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be tendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 2. ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF NOTICES OF WITHDRAWAL WILL BE DETERMINED BY THE PURCHASER, IN ITS SOLE DISCRETION, WHICH DETERMINATION WILL BE FINAL AND BINDING. NONE OF THE PURCHASER, MAXXIM, PARENT, THE DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION. 4. ACCEPTANCE FOR PAYMENT AND PAYMENT Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and will pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn in accordance with Section 3 promptly after the Expiration Date. All determinations concerning the satisfaction of such terms and conditions will be within the Purchaser's sole discretion, which determinations will be final and binding. See Sections 1 and 14. The Purchaser expressly reserves the right to delay acceptance for payment of or payment for Shares in order to comply in whole or in part with any applicable law, including, without limitation, the HSR Act. Any such delays will be effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay for or return tendered securities promptly after the termination or withdrawal of such bidder's offer). In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. The per Share consideration paid to any stockholder pursuant to the Offer will be the highest per Share consideration paid to any other stockholder pursuant to the Offer. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to the Purchaser and not withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. If the Purchaser is delayed in its acceptance for payment of, or payment for, Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, including such rights as are set forth in Sections 1 and 14 (but subject to compliance with Rule 14e-1(c) under the Exchange Act, which requires that a tender offeror pay the consideration offered or return the tendered securities promptly after termination or withdrawal of a tender offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to exercise, and duly exercise, withdrawal rights as described in Section 3. If any tendered Shares are not purchased pursuant to the Offer for any reason, certificates for any such Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares delivered by book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure set forth in Section 2, such Shares will be credited to an account maintained at the appropriate Book-Entry Transfer Facility), as promptly as practicable after the expiration or termination of the Offer. 7 The Purchaser reserves the right, subject to the terms of the Merger Agreement, to transfer or assign, in whole or from time to time in part, to Maxxim, Parent, or to one or more direct or indirect wholly owned subsidiaries of Maxxim or Parent, the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The receipt of cash for Shares pursuant to the Offer or the Merger will be a taxable transaction for Federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Generally, for Federal income tax purposes, a tendering stockholder will recognize gain or loss equal to the difference between the amount of cash received by the stockholder pursuant to the Offer or the Merger and the aggregate tax basis in the Shares tendered by the stockholder and purchased pursuant to the Offer or converted in the Merger, as the case may be. If Shares are held by a stockholder as capital assets, any gain or loss recognized by the stockholder will be capital gain or loss, which will be long-term capital gain or loss if the stockholder's holding period for the Shares exceeds one year. Under present law, long-term capital gains recognized by an individual stockholder will generally be subject to a maximum Federal marginal tax rate of 28%, and long-term capital gains recognized by a corporate stockholder will be subject to a maximum Federal marginal tax rate of 35%. In addition, under present law the ability to use capital losses to offset ordinary income is limited. A stockholder that tenders Shares may be subject to 31% backup withholding unless the stockholder provides its TIN and certifies that such number is correct or properly certifies that it is awaiting a TIN, or unless an exemption applies. Exemptions are available for stockholders that are corporations and for certain foreign individuals and entities. A stockholder that does not furnish a required TIN may be subject to a penalty imposed by the IRS. See "Backup Withholding" under Section 2. If backup withholding applies to a stockholder, the Depositary is required to withhold 31% from payments to such stockholder. Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A PARTICULAR HOLDER IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER. 6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES The Shares are listed and principally traded on the New York Stock Exchange ("NYSE") under the symbol "SYS," and on the Chicago Stock Exchange ("CSE") and Philadelphia Stock Exchange. See Section 7. The Shares commenced trading on the NYSE on September 27, 1994. The following table sets forth, for each of the periods indicated, the high and low sales prices per Share on the NYSE Composite Tape, beginning September 27, 1994 as reported in published financial sources. 8 HIGH LOW --------- --------- Fiscal 1994 Fourth Quarter (from September 27, 1994)...................... 17 3/8 17 Fiscal 1995 First Quarter................... 17 3/8 15 1/8 Second Quarter.................. 17 5/8 11 3/4 Third Quarter................... 13 3/8 10 3/4 Fourth Quarter.................. 15 11 7/8 Fiscal 1996 First Quarter................... 15 1/2 12 7/8 Second Quarter.................. 21 3/8 12 Third Quarter (through June 13, 1996).......................... 23 19 5/8 On June 7, 1996, the last full trading day before the public announcement of the execution of the Merger Agreement, the reported closing sales price of the Shares on the NYSE Composite Tape was $21 5/8 per Share. On June 13, 1996, the last full trading day before commencement of the Offer, the reported closing sales price of the Shares on the NYSE Composite Tape was $19 7/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. According to publicly available information, the Company has declared a dividend of $0.04 per Share during every quarter since the first quarter of fiscal 1995. The Merger Agreement prohibits the Company from declaring, paying, setting aside or making any future dividend or other distribution or payment on the Shares. 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTINGS; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly and, depending upon the number of Shares so purchased, could adversely affect the liquidity and market value of the remaining Shares held by the public. STOCK EXCHANGE LISTINGS. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the NYSE, CSE and PSE for continued listing and may, therefore, be delisted from such exchanges. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things, the number of publicly-held Shares (excluding Shares held by officers, directors, their immediate families and holders of 10% or more of the Shares) were less than 600,000, there were fewer than 1,200 holders of at least 100 Shares, or the aggregate market value of publicly held Shares were less than $5 million. The CSE and PSE have similar guidelines based upon the number of holders and the number and market value of publicly held Shares. According to the Company's Schedule 14D-9, as of June 12, 1996, there were approximately 112 record holders of Shares. The Company represented in the Merger Agreement, as of June 10, 1996, that there were 5,526,384 shares outstanding. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the requirements of the NYSE, the CSE and the PSE for continued listing, and the listing of the Shares is discontinued, the market for the Shares could be adversely affected. The Purchaser intends to cause the Company to seek the delisting of the Shares if it purchases Shares pursuant to the Offer and the Shares no longer meet the listing requirements of the exchanges. MARGIN REGULATIONS. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit secured by a pledge of the Shares. Depending upon factors similar to those described above regarding listing and market quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board, and therefore could no longer be used as collateral for loans made by brokers. 9 EXCHANGE ACT REGISTRATION. The Shares are currently registered under the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application of the Company to the Commission if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or 144A promulgated under the Securities Act of 1933 may be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or be eligible for listing on the NYSE. The Purchaser intends to seek to cause the Company to apply for termination of registration of the Shares under the Exchange Act as soon after the completion of the Offer as the requirements for such termination are met. 8. CERTAIN INFORMATION CONCERNING THE COMPANY The Company is a Virginia corporation with its principal offices at 5100 Commerce Road, Richmond, Virginia 23234. The business of the Company is holding all of the stock of its subsidiaries, which conduct the Company business. According to the Company, the Company is the second largest producer of custom procedure trays in the United States, with a national market share, based on industry studies, of approximately 19%. The Company assembles, packages and distributes sterile ready-to-use custom procedure trays for hospitals, outpatient surgery centers and medical clinics. The Company does not manufacture any medical products. Set forth below is a summary of certain selected consolidated financial information with respect to the Company and its subsidiaries excerpted or derived from the information contained in the Company 1995 10-K, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the "March 31, 1996 10-Q"). More comprehensive financial information is included in the Company 1995 10-K, the March 31, 1996 10-Q and other documents filed by the Company with the Commission, and the following summary is qualified in its entirety by reference to the Company 1995 10-K, the March 31, 1996 10-Q and such other documents and all the financial information (including any related notes) contained therein. The Company 1995 10-K, the March 31, 1996 10-Q and such other documents may be available for inspection and copies thereof may be obtainable from the Commission in the manner set forth below. 10 STERILE CONCEPTS HOLDINGS, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS YEARS ENDED SEPTEMBER 30, ENDED MARCH 31, ---------------------------------- -------------------- 1995 1994 1993 1996 1995 ---------- ---------- ---------- --------- --------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: Net sales.......................... $ 146,833 $ 132,098 $ 121,131 $ 94,929 $ 70,981 Operating income................... 13,506 8,872 11,865 5,347 6,683 Net earnings....................... 8,192 5,738 6,484 2,527 4,076 Earnings per share................. $ 1.48 (1) (1) $ 0.24 $ 0.31 BALANCE SHEET DATA(2): Working capital.................... $ 29,195 $ 21,573 $ 29,476 $ 45,682 $ 27,684 Total assets....................... 57,638 52,214 50,266 89,772 47,289 Stockholders' equity............... 34,012 26,699 32,525 36,098 30,333
- ------------ (1) Actual earnings per Share data for the years ended September 30, 1994 and 1993 is unavailable as the Company was not public prior to September 27, 1994. (2) At period end. The Company is subject to the informational requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, options granted to them and other matters, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in proxy statements distributed to the Company's stockholders and filed with the Commission. Such information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661-2511. Copies of such information are obtainable, by mail, upon payment of the Commission's customary charges, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, DC 20549. Such material should also be available for inspection at the library of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Except as otherwise stated in this Offer to Purchase, the information concerning the Company contained herein has been taken from or based upon publicly available documents on file with the Commission and other publicly available information. ALTHOUGH THE PURCHASER, MAXXIM AND PARENT DO NOT HAVE ANY KNOWLEDGE THAT ANY SUCH INFORMATION IS UNTRUE, NONE OF THE PURCHASER, MAXXIM OR PARENT TAKES ANY RESPONSIBILITY FOR, OR MAKES ANY REPRESENTATION WITH RESPECT TO, THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION OR FOR ANY FAILURE BY THE COMPANY TO DISCLOSE EVENTS THAT MAY HAVE OCCURRED AND MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION BUT WHICH ARE UNKNOWN TO THE PURCHASER, MAXXIM OR PARENT. In the course of the discussions between representatives of Parent and the Company (see Section 11), the Company provided Parent with certain projections of future operating performance. THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS, AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THEY WERE PROVIDED TO PARENT. THE COMPANY'S INDEPENDENT AUDITORS HAVE NOT EXAMINED, COMPLIED WITH OR APPLIED ANY PROCEDURES WITH RESPECT TO THESE PROJECTIONS AND EXPRESS NO OPINION OR ANY KIND OF ASSURANCE THEREON. 11 NONE OF PARENT, MAXXIM, THE PURCHASER OR THE COMPANY, OR ANY OF THEIR RESPECTIVE FINANCIAL ADVISORS OR THE DEALER MANAGER ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THESE PROJECTIONS AND THE COMPANY HAS MADE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO PARENT, MAXXIM OR THE PURCHASER REGARDING THESE PROJECTIONS. THESE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS RELATING TO THE BUSINESS OF THE COMPANY WHICH MAY NOT BE REALIZED AND ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY AND, THEREFORE, THESE PROJECTIONS ARE INHERENTLY IMPRECISE, AND THERE CAN BE NO ASSURANCE THAT THESE PROJECTIONS WILL BE REALIZED. IT IS EXPECTED THAT THERE WILL BE A DIFFERENCE BETWEEN THE COMPANY'S ACTUAL AND ESTIMATED OR PROJECTED RESULTS SET FORTH BELOW AND ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. THE INCLUSION OF THESE PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION THAT PARENT, MAXXIM, THE PURCHASER, THE COMPANY, THE DEALER MANAGER OR ANYONE WHO RECEIVED THESE PROJECTIONS CONSIDERED THIS INFORMATION A RELIABLE PREDICTION OF FUTURE EVENTS, AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. THE COMPANY DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THESE PROJECTIONS PRIOR TO THE CONSUMMATION OF THE MERGER. SET FORTH BELOW IS A SUMMARY OF THE PROJECTIONS. THE PROJECTIONS SHOULD BE READ TOGETHER WITH THE COMPANY'S SELECTED CONSOLIDATED FINANCIAL INFORMATION REFERRED TO ABOVE. STERILE CONCEPTS HOLDINGS, INC. PROJECTED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
YEARS ENDING SEPTEMBER 30, ---------------------------------------------------------- 1996 1997 1998 1999 2000 ---------- ---------- ---------- ---------- ---------- Net sales............................ $ 196,981 $ 232,350 $ 266,715 $ 299,765 $ 331,040 Operating income..................... 13,556 18,680 22,540 25,543 28,377 Net earnings......................... 6,976 10,541 12,932 15,066 17,423 Earnings per Share................... $ 1.26 $ 1.91 $ 2.34 $ 2.73 $ 3.15
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, MAXXIM AND PARENT The Purchaser, a Virginia corporation and a wholly owned subsidiary of Maxxim, was organized to acquire the Company and has not conducted any unrelated activities since its organization. The principal office of the Purchaser is located at the principal office of Maxxim. All outstanding shares of capital stock of the Purchaser are owned by Maxxim. The Parent is a Texas corporation which is a holding corporation, the stock of which is listed on the NYSE and the sole asset of which is the stock of Maxxim. The principal office of the Parent is located at the principal office of Maxxim. Maxxim is a Delaware corporation with its principal office located at 104 Industrial Blvd., Sugar Land, Texas 77478. Maxxim, through its wholly-owned subsidiaries, develops, manufactures and markets a diversified range of specialty medical products, and supplies single use sterile procedure trays to hospitals, clinics and outpatient surgery centers. Maxxim operates three divisions: Case Management, Argon Medical, and MAXXIM Medical Europe. Maxxim's Case Management division manufactures, assembles and sells custom procedure trays for a wide variety of operating room procedures, infection control apparel for operating room personnel, patient draping systems, electrosurgical generators and disposables, and a complete line of surgical and hospital exam gloves. The Argon Medical division manufactures and markets guide wires, needles, introducers, catheters, manifolds, high pressure syringes and certain other sterilized, single use medical and surgical specialty products, which are used in Maxxim's procedure trays or are sold separately. This Division also assembles and markets procedure trays for the use primarily in cardiology and radiology procedures. Many of the products manufactured by Maxxim are included in the Argon and Case Management procedure trays. MAXXIM Medical Europe serves as Maxxim's European distributor of Case Management, Argon, and Medica products. Medica products consist of various self-manufactured and 12 assembled disposable hospital supply products and custom procedure kits for transfusion, infusion and patient monitoring. Set forth below is a summary of certain consolidated financial information with respect to Parent and its subsidiaries, excerpted or derived from audited financial statements presented in Parent's Annual Report on Form 10-K for the fiscal year ended October 30, 1995 (the "Parent 1995 10-K") and from the unaudited financial information for the six months ended May 5, 1996 publicly discussed in Parent's earning release of June 11, 1996 and to be included in the Parent's Report on Form 10-Q for the fiscal quarter ended May 5, 1996 to be filed with the Commission. More comprehensive financial information is included in the Parent 1995 10-K and other documents filed by Parent with the Commission. The financial information summary set forth below is qualified in its entirety by reference to the Parent 1995 10-K and other documents, financial information and related notes contained therein which have been filed with the Commission, which are hereby incorporated herein by reference. The Parent 1995 10-K and such other documents may be inspected and copies may be obtained from the Commission or NYSE in the manner set forth below. MAXXIM MEDICAL, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS)
YEARS ENDED SIX MONTHS ENDED -------------------------------------------- ---------------------- OCTOBER 29, OCTOBER 30, OCTOBER 31, MAY 5, APRIL 30, 1995 1994 1993 1996 1995 ------------ ------------ ------------ -------- ---------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: Net sales....................... $265,726 $191,382 $129,740 $177,459 $ 116,878 Cost of sales................... 186,495 129,569 85,247 126,714 80,508 ------------ ------------ ------------ -------- ---------- Gross profit.................... 79,231 61,813 44,493 50,745 36,370 Operating expenses.............. 59,493 48,349 35,606 37,553 27,894 Nonrecurring charges............ 10,845 -- -- -- -- ------------ ------------ ------------ -------- ---------- Income from operations.......... 8,893 13,464 8,887 13,192 8,476 Interest expense and other, net........................... 4,060 1,641 768 4,186 1,076 ------------ ------------ ------------ -------- ---------- Income before income taxes...... 4,833 11,823 8,119 9,006 7,400 Income taxes.................... 1,904 4,138 2,582 3,329 2,620 Change in accounting for income taxes......................... -- 380 -- -- -- ------------ ------------ ------------ -------- ---------- Net income...................... $ 2,929 $ 8,065 $ 5,537 $ 5,677 $ 4,780 ============ ============ ============ ======== ========== BALANCE SHEET DATA(1): Working capital................. $ 73,286 $ 82,886 $ 52,722 $ 66,505 $ 65,890 Total assets.................... 264,490 165,416 114,040 257,123 176,186 Long-term obligations(2): Bank debt and other........ 67,412 1,267 2,086 58,588 2,122 6 3/4% Convertible subordinated debentures.............. 28,750 28,750 28,750 28,750 28,750 Shareholders' equity............ 116,351 111,470 68,458 119,077 117,116
- ------------ (1) At period end. (2) Excludes current maturities of long-term debt. Parent is subject to the informational requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning Parent's directors and officers, their remuneration, options granted to them and other matters, the principal holders of 13 Parent's securities and any material interest of such persons in transactions with Parent is required to be disclosed in the proxy statements distributed to the Company's stockholders and filed with the Commission. Such information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of such information should be obtainable, by mail, upon payment of the Commission's customary charges, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, DC 20549. Such material should also be available for inspection at the library of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. DIRECTORS AND OFFICERS. The name, business address, present principal occupation or employment, five-year employment history and citizenship of each of the directors and executive officer of Parent, Maxxim and Purchaser is set forth on Schedule I hereto. Except as described in this Offer to Purchase, none of the Purchaser, Maxxim, Parent or, to the best knowledge of the Purchaser, any of the persons listed in Schedule I hereto, or any associate or majority-owned subsidiary of the Purchaser, Maxxim, Parent or any of the persons so listed, beneficially owns any equity security of the Company, and none of the Purchaser, Maxxim, Parent or, to the best knowledge of the Purchaser, any of the other persons referred to above, or any of the respective directors, executive officers or subsidiaries of any of the foregoing, has effected any transaction in any equity security of the Company during the past 60 days. Except as described in this Offer to Purchase, since October 1, 1993, there have not been any contacts, transactions or negotiations between the Purchaser, Maxxim or Parent, any of their respective subsidiaries or, to the best knowledge of the Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and the Company or any of its directors, officers or affiliates, on the other hand, that are required to be disclosed pursuant to the rules and regulations of the Commission. Maxxim made sales of its medical products to the Company estimated at $4.6 million, $4.3 million and $3.8 million during its fiscal years ended October 29, 1995, October 30, 1994 and October 31, 1993, respectively. Thereafter, except as described in this Offer to Purchase, none of the Purchaser, Maxxim, Parent or, to the best knowledge of the Purchaser, any of the persons listed in Schedule I hereto, has any contract, arrangement, understanding or relationship with any person with respect to any securities of the Company. 10. SOURCE AND AMOUNT OF FUNDS The Purchaser estimates that the total amount of funds required to purchase all of the Shares pursuant to the Offer, and to pay fees and expenses related to the Offer and the Merger, will be approximately $123.5 million. The Purchaser plans to obtain all funds needed for the Offer and the Merger through a capital contribution. Maxxim intends to borrow the cash necessary to make this capital contribution under the terms of the credit facilities (collectively, the "Credit Facilities") to be provided to Maxxim on the terms and conditions set forth in the Commitment Letters (collectively, the "Commitment Letters"). Maxxim also intends to pursue the sale of the Refinancing Securities as described in the final paragraph of this Section. The existing line of credit of Maxxim will be replaced by the Credit Facilities. Set forth below is a summary description of the Credit Facilities. Consummation of each of the Credit Facilities is subject to, among other things, the conditions described below and in the Commitment Letters, and the negotiation and execution of definitive financing agreements on terms satisfactory to Maxxim, the Purchaser and the other parties to the Commitment Letters. This summary description does not purport to be complete, and there can be no assurance that the terms set forth below will be contained in such agreements or that such agreements will not contain additional provisions. $165,000,000 SENIOR CREDIT FACILITY. NationsBank of Texas, N.A. ("NationsBank") has offered to extend to Maxxim a $165,000,000 Senior Credit Facility (the "Senior Facility") under the terms of a commitment letter dated June 8, 1996 (the "Senior Facility Commitment Letter"); NationsBanc Capital Markets, Inc. ("NCMI") has committed to act as Arranger and Syndication Agent for the Senior Facility, to 14 form a syndicate of financial institutions (collectively, the "Lenders") reasonably acceptable to Maxxim for the Senior Facility, with a corresponding reduction in the initial commitment of NationsBank. The Senior Facility will consist of a $75,000,000 revolving credit facility, which will include a $15,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $90,000,000 term loan facility. The proceeds of the Senior Facility will be used to finance a portion of the acquisition of the Shares, as well as for working capital, capital expenditures, refinancing the existing credit facilities of Maxxim and the Company, and other lawful purposes. Maxxim has agreed to pay to NCMI an upfront fee, a commitment fee, certain letter of credit fees and administrative agency fees as set forth in the Senior Facility Commitment Letter. The Senior Facility will bear interest at a rate equal to LIBOR or the Alternate Base Rate (defined as the higher of (1) the NationsBank prime rate and (ii) the Federal Funds rate plus .50%) plus a margin (which will depend on the ratio of total Funded Debt to EBIDTA). The principal of the term loan portion of the Senior Facility is to be repaid in quarterly installments, and the entire Senior Facility will mature and become due and payable five years from the closing thereof; however, Maxxim may prepay the Senior Facility in whole or in part at any time without penalty or premium (subject to reimbursement of Lender breakage and redeployment costs actually incurred in the case of prepayment of LIBOR borrowings), and must be prepaid with the proceeds of certain asset sales, and permitted debt and equity issuances. Repayment of the Senior Facility will be secured by a first priority perfected security interest in all of the capital stock of Maxxim and each of its domestic subsidiaries, and sixty-five percent of the capital stock of each of its foreign subsidiaries, which capital stock shall not be subject to any other lien or encumbrance. In addition, repayment will be guaranteed by all existing or newly created subsidiaries of Maxxim, as well as Parent. The initial funding of the Senior Facility will be subject to satisfaction of various conditions precedent similar to those set forth in Maxxim's existing credit facilities, including consummation of the Offer, and receipt by Borrower of at least $75,000,000 in net proceeds from a bridge notes facility on terms and conditions reasonably satisfactory to NationsBank and the other Lenders. The definitive loan documents will also contain representations and warranties, events of default, financial and other covenants, cost and yield protections, indemnification and other provisions which are usual and customary for transactions of this type. $75,000,000 BRIDGE FACILITY. Maxxim has received a commitment (the "Bridge Commitment Letter") from NationsBridge, L.L.C. ("NationsBridge"), that it or one or more of its affiliates will purchase up to $75,000,000 in aggregate principal amount of senior subordinated unsecured bridge notes (the "Bridge Notes") of Maxxim, the proceeds of which, together with the proceeds of the Senior Facility, will be used to effect the consummation of the Offer and the Merger. The Bridge Notes will be subordinated to the Senior Facility and senior to all other subordinated obligations of Parent. Interest on the Bridge Notes will be payable quarterly in arrears, at the "Base Rate" plus the "Applicable Margin" per annum. The "Base Rate" will mean the prime rate of interest publicly announced from time to time by NationsBank, N.A. The "Applicable Margin" shall initially be 2.00%, increasing an additional 0.50% at the end of each subsequent 3 month period; provided that such rate shall not exceed 15.50% per annum, and provided further that cash interest will be capped at 13.50% and any interest payment in excess of 13.50% will be paid in additional Bridge Notes. The Bridge Notes will become due and payable twelve months from the date of issuance, or upon any change of control of Parent, provided that at maturity, Parent has agreed to issue Senior Subordinated Rollover Notes (the "Rollover Notes") with a maturity date five years thereafter. Repayment of the Bridge Notes will be unsecured, but guaranteed on a senior subordinated unsecured basis by Parent, and any subsidiaries or other affiliates of Maxxim that guarantee the Senior Facility. Funding of the Bridge Facility will be subject to conditions precedent usual and customary for transactions of this type, including completion of the Offer with at least two-thirds of the Shares tendered. The loan documents will also contain covenants, representations and warranties usual and customary for 15 transactions of this type, but in no event more restrictive than those set forth in the Senior Facility. In addition to its obligation to pay all reasonable costs and expenses incurred by NationsBridge in connection with the issuance of the Bridge Notes, Maxxim has agreed to pay a commitment fee of 1.00% of the aggregate principal amount of the Bridge Notes upon execution of the Merger Agreement, and a funding fee in the same amount upon issuance of the Bridge Notes. Further, Maxxim has agreed that if on the date exactly nine months after issuance the Bridge Notes are still outstanding, it will immediately place in escrow warrants to purchase 5.00% of the fully diluted common stock of Parent exercisable at a nominal price for a period of seven years. In the event any of the Bridge Notes are exchanged for any Rollover Notes, NationsBridge shall be entitled to retain 100% of such warrants. The Bridge Notes are subject to prepayment, in whole or in part, upon written notice, at the option of Maxxim, at any time at par plus accrued interest to the prepayment; subject to the terms of the engagement letter between Maxxim and NCMI referenced below. Parent must also redeem the Bridge Notes, subject to certain exceptions, with the net proceeds from the issuance of any subordinated debt or equity securities, or any other debt issuance to the extent permitted by the Senior Facility, or the net proceeds from asset sales in excess of the amount thereof required to be paid to Lenders under the terms of the Senior Facility. Parent intends to proceed with the issuance of $100,000,000 of senior subordinated unsecured notes (the "Refinancing Securities"), the proceeds of which are to be utilized in lieu of the issuance of the Bridge Notes, or to refinance the Bridge Notes. Parent has executed a separate letter of engagement designating NCMI as the sole or lead underwriter or placement agent for the Refinancing Securities. Parent, Maxxim and Purchaser have not conditioned the Offer on obtaining financing. It is anticipated that borrowings under the Credit Facilities will be repaid from funds generated internally by Parent and its subsidiaries (including, if the Merger is consummated, the Company) or other sources, which may include the proceeds of debt or equity financings of Parent. No decision has been made concerning these matters, and such decisions will be made based upon Parent's review from time to time of the advisability of particular transactions as well as on prevailing interest rates and other financial conditions. Copies of the Commitment Letters have been filed as an exhibit to the Tender Offer Statement on Schedule 14D-1 filed by Parent, Maxxim and Purchaser with the Commission in connection with the Offer. When the loan agreements for the Credit Facilities have been executed, they will also be filed as exhibits thereto. References are made to such exhibits for a more complete description of the terms and conditions of such documents. 11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER In July 1994, representatives of Parent and representatives of the Company first met to discuss a possible acquisition of the Company. Parent was advised that the Company was in the process of pursuing an initial public offering of the Shares and that it did not have an interest in pursuing discussions. As the Company completed such initial public offering in September 1994 at a price to the public of $17.00 per share of Common Stock, no further discussions took place at that time. Following such termination of discussions, Parent monitored the Company's progress and the price of the Common Stock. On January 30, 1996, the Company's Common Stock closed at $12.75 per share. Shortly thereafter, the Parent determined to again explore the possibility of pursing an acquisition of the Company. In early February 1996, Kenneth W. Davidson, the Chairman, Chief Executive Officer and President of Parent, conducted various informal discussions with Paul Woo, President and Chief Executive Officer of the Company, regarding a potential acquisition of the Company by Parent. During such period, Mr. Woo indicated that at that time the Company did not have any interest in combining with Parent. Notwithstanding, Mr. Davidson felt it was in the interest of Parent to continue to pursue an acquisition of the Company. In a letter dated February 14, 1996, Parent offered to purchase all of the outstanding shares of capital stock of the Company for a price of $16.00 per Share, for consideration consisting of cash, Parent stock, or a combination of both. On February 26, 1996, Parent publicly announced its offer to the Company. 16 The Company rejected that offer in a letter dated March 7, 1996. Additionally, the board of directors of the Company adopted a shareholder protection rights plan. By letter dated March 11, 1996, Parent made a revised offer of $17.75 per Share, for consideration consisting of cash, Parent stock or a combination of both. The Company rejected that offer in a letter dated March 14, 1996. On March 25, 1996, Parent made a revised bid of $19.00 per Share, for consideration consisting of cash, Parent stock or a combination of both, and set a deadline of April 1, 1996 for the Company's acceptance. On March 27, 1996, the Company announced that it had retained Wheat First, as its investment banking firm, for the purpose of helping the Company explore its strategic alternatives, including a possible business combination. On April 1, 1996, Parent's offer expired without a response from the Company. On April 3, 1996, the Company delivered and the Parent executed a Confidentiality Agreement with the Company. Thereafter, Parent and its financial advisor conducted certain due diligence and held preliminary discussions with representatives of the Company. On May 7, 1996, Wheat First delivered a letter to Parent inviting a final written proposal for the acquisition of the Company. The deadline for any such proposal was set at 5:00 p.m. on Friday, May 17, 1996. On May 17, 1996, Parent delivered an offer to Wheat First for the acquisition of all the Shares for a price of $20.00 per Share to be paid entirely in cash. On May 22, 1996, Mr. Woo contacted Mr. Davidson to indicate that the Company would be willing to pursue a transaction with Parent at a price of $23.00 per Share. On May 28, 1996, Mr. Davidson advised Mr. Woo that Parent was unwilling to increase its offer. Mr. Woo indicated that the Company desired to proceed with serious discussions notwithstanding the Parent's unwillingness to increase its offer. Thereafter, representatives of Parent met with representatives of the Company to continue Parent's due diligence review of the Company, and the respective legal advisors of Parent and the Company met and negotiated documentation for the contemplated transactions. Following approval by Parent's Board of Directors on June 3, 1996, the transactions were presented to and approved by the Board of Directors of the Company on June 8, 1996. Following approval by the Boards of Directors of the Company, Parent, Maxxim and the Purchaser, the Merger Agreement was executed on June 9, 1996 and delivered effective June 10, 1996. 12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; PLANS FOR THE COMPANY PURPOSE. The purpose of the Offer is to enable Maxxim to acquire control of, and the entire equity interest in, the Company. The purpose of the Merger is to acquire all Shares not tendered and purchased pursuant to the Offer. The acquisition of the entire equity interest in the Company has been structured as a cash tender offer followed by a cash merger in order to provide a prompt and orderly transfer of ownership of the Company from the Company's public shareholders to Maxxim, and to provide such shareholders with cash for all their Shares. The purchase of Shares pursuant to the Offer will increase the likelihood that the Merger will be effected. THE MERGER AGREEMENT The following summary of certain provisions of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement, a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1 filed by Parent, Maxxim and the Purchaser with the Commission. The Merger Agreement may be examined and copies may be obtained at the place and in the manner set forth in Section 8. 17 THE OFFER. The Merger Agreement provides for the making of the Offer by the Purchaser. The obligation of the Purchaser to accept for payment and pay for the Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 14 hereof. The Merger Agreement provides that the Purchaser expressly reserves the right to modify the terms of the Offer, except that, without the consent of the Company, the Purchaser will not reduce the number of Shares to be purchased in the Offer, reduce the purchase price of the Shares in the Offer, modify or add to the conditions of the Offer, extend the Offer beyond the scheduled expiration date (except that the Offer may be extended to the extent required by law or in the event the conditions to the Offer have not been satisfied by the scheduled expiration date), or change the form of consideration payable in the Offer. In addition, without the consent of the Company, Maxxim and the Purchaser will not waive the Minimum Condition. THE MERGER. The Merger Agreement provides that following the satisfaction or waiver of the conditions described below under "Conditions to the Merger," the Purchaser will be merged with and into the Company, and each then outstanding Share (other than Shares owned by the Company, any subsidiary of the Company, Maxxim, the Purchaser, or any other subsidiary of Maxxim) will be converted into the right to receive an amount in cash equal to the price per Share paid pursuant to the Offer, without interest. VOTE REQUIRED TO APPROVE MERGER. The Virginia Stock Corporation Act ("VSCA") requires, among other things, that the adoption of any plan of merger or consolidation of the Company must be approved by the Board of Directors and generally by the holders of more than two-thirds of the Company's outstanding voting securities. The Board of Directors of the Company has approved the Offer and the Merger; consequently, the only additional action of the Company that may be necessary to effect the Merger is approval by the Company's stockholders if the "short-form" merger procedure described below is not available. If the Purchaser acquires, through the Offer or otherwise, voting power with respect to more than two-thirds of the outstanding Shares, on a fully diluted basis (which would be the case if the Minimum Condition were satisfied and the Purchaser were to accept for payment Shares tendered pursuant to the Offer), it would have sufficient voting power to effect the Merger without the vote of any other stockholder of the Company. The VSCA also provides that if a parent company owns at least 90% of each class of stock of a subsidiary, the parent company can effect a short-form merger with that subsidiary without the action of the other stockholders of the subsidiary. Accordingly, if, as a result of the Offer or otherwise, the Purchaser owns at least 90% of the outstanding Shares, the Purchaser could, and intends to, effect the Merger without prior notice to, or any action by, any other stockholder of the Company. CONDITIONS TO THE MERGER. The Merger Agreement provides that the Merger is subject to the satisfaction or waiver (subject to applicable law) of certain conditions, including the following: (a) to the extent required by applicable law, the Merger Agreement and the Merger shall have been approved and adopted by the holders of more than two-thirds of the Shares in accordance with applicable law and the Company's Articles of Incorporation and Bylaws; (b) any waiting period (and any extension thereof) under the HSR Act applicable to the Merger shall have expired or been terminated; (c) no preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Offer or the Merger and the transactions contemplated by the Merger Agreement and which is in effect at the Effective Time, provided, however, that in the case of a decree, injunction or other order, each of the parties to the Merger Agreement shall have used reasonable efforts to prevent the entry of any such injunction or other order and to appeal as promptly as possible any decree, injunction or other order that may be entered; (d) the Purchaser shall have accepted for payment and paid for the Shares tendered pursuant to the Offer; and (e) no statute, rule, regulation, executive order, decree, or order of any kind shall have been enacted, entered, promulgated, or enforced by any court or governmental authority which prohibits the consummation of the Offer or the Merger or has the effect of making the purchase of the Shares illegal. Further, each of Maxxim and Purchaser shall have performed in all material respects all obligations and agreements contained in the Merger Agreement to be performed or complied with by it prior to the closing of the Merger. 18 TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated and the transactions contemplated thereby may be abandoned at any time prior to the effective time of the Merger (the "Effective Time"), whether before or after approval of the Merger by the stockholders of the Company: (1) by mutual consent of the Company, on the one hand, and of Maxxim and Purchaser, on the other hand; (2) by either Maxxim, on the one hand, or the Company, on the other hand, if any governmental entity or regulatory agency shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the acceptance for payment of, or payment for, Shares pursuant to the Offer or the Merger and such order, decree or ruling or other action shall have become final and nonappealable; (3) by either Maxxim, on the one hand, or the Company, on the other hand, if the Purchaser has not accepted for payment, and paid in accordance with the terms of the Offer, greater than two-thirds of the outstanding Shares (the "Offer Closing") within six months after commencement of the Offer, unless the Offer Closing shall not have occurred because of a material breach of any representation, warranty, obligation, covenant, agreement or condition set forth in the Merger Agreement on the part of the party seeking to terminate the Merger Agreement; (4) by Maxxim, if the Offer is terminated or expires in accordance with its terms without Purchaser having purchased any Shares thereunder due to failure to satisfy any of the conditions to the Offer set forth in Annex A to the Merger Agreement, unless such termination or expiration has been caused by or results from the failure of Maxxim or Purchaser to perform in any material respect any of their respective covenants or agreements contained in the Merger Agreement; (5) by Maxxim, on the one hand, or the Company, on the other hand, if the Board of Directors of the Company determines that an Acquisition Proposal (as defined below) will result in a Superior Proposal (as defined below) and the Board believes (and has been advised in writing by counsel) that a failure to terminate the Merger Agreement and enter into an agreement to effect the Superior Proposal would constitute a breach of its fiduciary duties; (6) by the Company, if Maxxim or Purchaser shall have failed to comply in any material respect with any of the covenants or agreements contained in the Merger Agreement to be complied with or performed by Maxxim or Purchaser at or prior to the Offer Closing, or if Maxxim or Purchaser shall have failed to commence the Offer no later than the fifth business day after the date of the Merger Agreement; or (7) by the Company, if (i) prior to the Offer Closing any of the representations and warranties of Maxxim or Purchaser contained in the Merger Agreement were untrue or incorrect in any material respect when made, or (ii) Maxxim or Purchaser shall have terminated the Offer prior to the Offer Closing or the Offer is terminated or expires in accordance with its terms. ACQUISITION PROPOSALS. The Merger Agreement provides that neither the Company nor any of its subsidiaries will, directly or indirectly, take (and the Company will not authorize or permit its or its subsidiaries' officers, directors, employees, representatives, consultants, investment bankers, attorneys, accountants or other agents or affiliates to so take) any action (1) to solicit, encourage, facilitate or initiate the submission of any Acquisition Proposal (as defined below) or (2) to participate in any way in any discussions or negotiations with, or furnish any information to, any person (other than Maxxim or Purchaser) in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, provided, however, that the Company may participate in discussions or negotiations with or furnish information to any third party which makes an unsolicited, bona fide noncollusive proposal in writing with respect to a transaction which the Board of Directors of the Company believes is likely to result in an Acquisition Proposal if the Board of Directors believes (and has been advised by counsel) that failing to take such action would constitute a breach of its fiduciary duties. In addition, neither the Board of Directors of the Company nor any Committee thereof shall withdraw or modify, or propose to withdraw or modify, in a manner 19 adverse to Maxxim the approval and recommendation of the Offer and the Merger Agreement or approve or recommend any Acquisition Proposal, provided that the Board of Directors (or a Committee thereof) may recommend to the Company's stockholders an Acquisition Proposal and in connection therewith withdraw or modify its approval or recommendation of the Offer or the Merger if (1) the Board of Directors of the Company has determined that the Acquisition Proposal is a Superior Proposal (as defined below), and (2) simultaneously with such withdrawal, modification or recommendation, the Merger Agreement is terminated in accordance with the terms thereof. The Merger Agreement defines "Acquisition Proposal" as any proposed merger, consolidation, share exchange or other business combination, sale or other disposition of any material amount of assets, sale or issuance of shares of capital stock, tender offer or exchange offer or similar transaction involving the Company or any of its subsidiaries and a third party. The Merger Agreement defines "Superior Proposal" as an unsolicited, bona fide noncollusive Acquisition Proposal on terms which a majority of the members of the Special Committee and Board of Directors of the Company determines in its good faith judgment (based on the advice of independent financial and legal advisors) to be more favorable to the Company and its shareholders than the transactions contemplated by the Merger Agreement. In addition to the obligations of the Company described above, the Company must advise Maxxim immediately of any request for information or of any Acquisition Proposal, or any proposal with respect to any Acquisition Proposal, the material terms and conditions of such request or Acquisition Proposal, and the identity of the person making any such Acquisition Proposal or inquiry. The Company will promptly inform Maxxim of the status and details both orally and in writing (including amendments or proposed amendments) of any such request, takeover proposal or inquiry, and will promptly provide Maxxim with copies of all such written requests, proposals and inquiries. FEES AND EXPENSES. The Merger Agreement provides that the Company will pay $3,500,000 to Maxxim if the Merger Agreement is terminated by Maxxim (i) by reason of the Board of Directors of the Company determining an Acquisition Proposal will result in a Superior Proposal, and that a failure to terminate the Merger Agreement and enter into an agreement to effect the Superior Proposal would constitute a breach of its fiduciary duties, or (ii) due to the termination or expiration of the Offer without Purchaser having purchased any Shares thereunder due to (a) the Company's Board of Directors having withdrawn, modified or amended in any respect adverse to Maxxim or Purchaser its recommendation of the Offer or the Merger or shall have resolved to do so, (b) breach by the Company of any of its covenants or agreements in any material respect contained in the Merger Agreement, or (c) prior to the Offer Closing, there being any material representation or warranty made by the Company in the Merger Agreement which proves to have been untrue or incorrect in any material respect when made. Except as described above, all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby shall be paid by the party incurring such costs and expenses. REDEMPTION OF RIGHTS. The Company represented in the Merger Agreement that it has taken all action necessary to render the Rights Agreement inapplicable to the Offer, the Merger and the other transactions contemplated by the Merger Agreement. As a result, the Rights will not become exercisable in connection with the Offer, the consummation of the Offer or the Merger. CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that, except as permitted, required or specifically contemplated by or otherwise described in the Merger Agreement or otherwise consented to or approved in writing by Maxxim, during the period commencing on the date of the Merger Agreement and ending on the date of closing of the Merger: (1) The Company and each of its subsidiaries will conduct their respective operations only according to their ordinary and usual course of business consistent with past practice and will use their reasonable efforts to preserve intact their respective business organizations, keep available the services of their officers and employees and maintain satisfactory relationships with licensors, suppliers, distributors, clients and others having business relationships with them; (2) Neither the Company nor any of its subsidiaries shall (i) make any change in or amendment to its Articles of Incorporation or By-Laws (or comparable governing documents), each as amended; 20 (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of certain options outstanding on the date of the Merger Agreement in accordance with the terms and conditions in effect on the date of the Merger Agreement) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries; (iv) declare, pay, set aside or make any dividend or other distribution or payment with respect to, or split, combine, redeem or reclassify, any shares of its capital stock; (v) except as set forth in the Merger Agreement, enter into any contract or commitment with respect to capital expenditures in excess of $150,000 or enter into any other material contract except contracts in the ordinary course of business; (vi) acquire a material amount of assets or securities or release or relinquish any material contract rights other than in the ordinary course of business; (vii) adopt or amend any employee benefit plan or non-employee benefit plan or program, employment agreement, license agreement or retirement agreement, or, except in the ordinary course of business and consistent with past practice, pay any bonus or contingent or other extraordinary compensation; (viii) other than in the ordinary course of business transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien, any assets or incur or modify any indebtedness or other liability or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for the obligations of any person; (ix) agree to the settlement of any material claim or litigation; (x) make any material tax election or settle or compromise any material tax liability; (xi) make any material change in its method of accounting or (xii) agree, in writing or otherwise, to take any of the foregoing actions; and (3) Except as set forth in the Merger Agreement, the Company shall not, and shall not permit any of its subsidiaries to, (i) take any action, engage in any transaction or enter into any agreement which would cause any of the Company's representations or warranties set forth in the Merger Agreement to be untrue as of the date of the closing of the Merger, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company. BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the Offer Closing, the Purchaser is entitled to designate such number of directors on the Board of Directors of the Company, rounded up to the next whole number, as will give Purchaser, subject to compliance with Section 14(f) of the Exchange Act, representation on such Board of Directors equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors (giving effect to the directors elected pursuant to the provisions described above) multiplied by the percentage that such number of Shares so accepted for payment and paid for or otherwise acquired or owned by Purchaser or Maxxim bears to the number of Shares outstanding, and the Company and its Board of Directors shall, at such time, take any and all such action needed to cause the Purchaser's designees to be appointed to the Company's Board of Directors (including to cause directors to resign). Notwithstanding the foregoing, neither Maxxim, Purchaser nor the Company is permitted to take any action to remove or replace any member of the Special Committee after consummation of the Offer and prior to the Effective Time. If at any time prior to the Effective Time there are less than two members of the Special Committee, as constituted on the date of the Merger Agreement, on the Company's Board of Directors, Maxxim, Purchaser and the Company have agreed to use their reasonable efforts to ensure that two members (the "Continuing Directors") of the Company's Board of Directors are either (a) members of the Special Committee (as constituted on the date of the Merger Agreement) or (b) persons who are neither (i) officers or employees of the Company nor (ii) associated with or affiliated with, or designated by, Maxxim. In the event that both Continuing Directors resign from the Special Committee, Maxxim, Purchaser and the Company shall permit the resigning Continuing Directors to appoint their successors in their reasonable discretion. The Company has agreed to increase the size of the Company's Board of Directors, or use its reasonable efforts to secure the resignation of directors, or both, as is necessary to permit Purchaser's designees to be elected to the Company's Board of Directors. The Merger Agreement further provides that immediately following the Offer Closing, the Company, if so requested, will use its reasonable efforts to cause persons designated by Purchaser to 21 constitute the same percentage of each committee of such board, each board of directors of each subsidiary of the Company and each committee of each such board (in each case to the extent of the Company's ability to elect such persons). At all times prior to the termination of the Option Exercise Period (as defined below), the composition of the Executive Compensation Committee of the Board of Directors of the Company shall remain the same as the Special Committee and the Board of Directors of the Company shall not take any action to limit or impair the authority of the Executive Compensation Committee to administer the Plan (as defined below); provided, however, that the Executive Compensation Committee shall not (i) make any additional grants or awards of any type pursuant to the Plan, (ii) amend the terms and conditions of any award made pursuant to the Plan prior to the date of the Merger Agreement, except as contemplated by the Merger Agreement, nor (iii) have any authority to act with respect to any matters other than those relating to stock options previously granted under the Plan. STOCK OPTION AND OTHER PLANS. Pursuant to the Merger Agreement, during the period (the "Option Exercise Period") commencing on the date of payment by Purchaser in accordance with the Offer and ending on the date that is two business days prior to the Effective Time (provided that the Option Exercise Period shall not be less than three business days in duration), the Company shall permit holders of stock options issued pursuant to the Company's Stock Incentive Plan (the "Plan") which shall have become exercisable to exercise such stock options in accordance with the provisions of the Plan, including without limitation those provisions relating to (i) the payment of the exercise price of stock options by the execution of a recourse note (an "Option Note") providing for the payment of all amounts due under such note through deductions from the Merger Consideration which shall become due to the maker of the note at earlier of the Effective Time or the day that is 120 days from the date of the Offer Closing, and (ii) the payment of the exercise price of stock options by the delivery of Shares. After the termination of the Option Exercise Period and prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any Committee thereof) is to adopt appropriate resolutions and take all other actions necessary to provide for the cancellation, effective at the Effective Time, of all the outstanding stock options to purchase common stock (the "Options") granted prior to execution of the Merger Agreement under any stock option plan of the Company (the "Stock Plans"). Under the terms of the Merger Agreement, immediately prior to the Effective Time, (i) each Option, whether or not then vested or exercisable, shall no longer be exercisable for the purchase of Shares but shall entitle each holder thereof, in cancellation and settlement therefor, to payments in cash (subject to any applicable withholding taxes and repayment of any outstanding Option Note, the "Cash Payment"), at the Effective Time, equal to the product of (x) the total number of Shares subject to such Option, whether or not then vested or exercisable, and (y) the excess of the Merger Consideration over the exercise price per Share subject to such Option, and (ii) each share of Common Stock previously issued in the form of grants of restricted stock or grants of contingent shares shall fully vest in accordance with their respective terms. Any then outstanding stock appreciation rights or limited stock appreciation rights are to be canceled as of immediately prior to the Effective Time without any payment therefor. As provided in the Merger Agreement, the Stock Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of the Effective Time. The Company has agreed to take all steps to ensure that neither the Company nor any of its subsidiaries is or will be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than Maxxim or its affiliates, to purchase or own any capital stock of the Surviving Corporation or any of its subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that, after the Effective Time, the only rights of the holders of Options to purchase Shares in respect of such Options will be to receive the Cash Payment in cancellation and settlement thereof. DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. The Merger Agreement provides that the Articles of Incorporation and the By-laws of the Surviving Corporation shall contain the provisions with respect to indemnification and exculpation from liability set forth in the Company's Articles of Incorporation and By-laws on the date of the Merger Agreement, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely 22 affect the rights thereunder of individuals who on or prior to the Effective Time were directors, officers, employees or agents of the Company ("Indemnified Parties"), unless such modification is required by law. Further, Maxxim has agreed that from and after the purchase of the Shares pursuant to the Offer, it will indemnify all Indemnified Parties to the fullest extent permitted by applicable law with respect to all acts and omissions arising out of such individuals' services as officers, directors, employees or agents of the Company or any of its subsidiaries or as trustees or fiduciaries of any plan for the benefit of employees, or otherwise on behalf of, the Company or any of its subsidiaries, occurring prior to the Effective Time including, without limitation, the transactions contemplated by the Merger Agreement. Without limitation of the foregoing, in the event any such Indemnified Party is or becomes involved in any capacity in any action, proceeding or investigation in connection with any matter, including without limitation, the transactions contemplated by the Merger Agreement, occurring prior to, and including, the Effective Time, Maxxim, from and after the purchase of Shares pursuant to the Offer, will pay as incurred such Indemnified Party's legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. Maxxim is also obligated to pay all expenses, including attorneys' fees, that may be incurred by any Indemnified Party in enforcing the indemnification provisions of the Merger Agreement, or any action involving an Indemnified Party resulting from the transactions contemplated by the Merger Agreement. If for any reason the indemnification provided for in the Merger Agreement is unavailable with respect to any Indemnified Party or is insufficient to hold him or her harmless with respect to any such loss, claim, damage or liability, then Maxxim must contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect (i) the relative economic interests of the Company and its affiliates on the one hand and Maxxim on the other in connection with the Offer and the Merger to which such loss, claim, damage or liability relates, (ii) the relative fault of the Company and its affiliates on the one hand and Maxxim on the other with respect to such loss, claim, damage or liability and (iii) any other relevant equitable considerations. The Merger Agreement also requires that for six years from the Effective Time, Maxxim shall either (x) maintain in effect the Company's current directors' and officers' liability insurance covering those persons who are currently covered on the date of the Merger Agreement by the Company's directors' and officers' liability insurance policy; PROVIDED, HOWEVER, that in no event shall Maxxim be required to expend in any one year an amount in excess of 150% of the annual premiums currently paid by the Company for such insurance for the twelve month period ended September 30, 1996). In the event the annual premiums of such insurance coverage exceed such amount, Maxxim shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount and to give prompt written notice of any reduction in the amount or scope of coverage resulting therefrom to the directors and officers affected thereby. In addition, Maxxim may substitute for such Company policies, policies with at least the same coverage containing terms and conditions which are no less advantageous and provided that said substitution does not result in any gaps or lapses in coverage with respect to matters occurring prior to the Effective Time or cause Maxxim's directors' and officers' liability insurance then in effect to cover those persons who are covered on the date of the Merger Agreement by the Company's directors' and officers' liability insurance policy with respect to those matters covered by the Company's directors' and officers' liability policy. REASONABLE EFFORTS. The Merger Agreement provides that subject to the terms and conditions provided therein and to the fiduciary duties of the Board of Directors of the Company under applicable law, each of the parties will, and the Company will cause each of its subsidiaries to, cooperate and use reasonable efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Merger Agreement, including, without limitation, their respective reasonable efforts to obtain, prior to the closing of the Merger, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its subsidiaries as are necessary for consummation of the transactions contemplated by the Merger Agreement and to fulfill the conditions to the Offer and the Merger. Each of the Company and Maxxim has agreed to use its reasonable efforts to consummate the Merger as promptly as practicable. 23 NOTIFICATION OF CERTAIN MATTERS. Pursuant to the terms of the Merger Agreement, the Company must give prompt notice to Maxxim of: (1) any notice of, or other communication relating to, a material default or event that, with notice or lapse of time or both, might reasonably be expected to become a material default, received by the Company or any of its subsidiaries subsequent to the date of the Merger Agreement and prior to the Effective Time, under any material contract to which the Company or any of its subsidiaries is a party or is subject; and (2) any material adverse change in the condition of the Company and its subsidiaries taken as a whole or the occurrence of any event which is reasonably likely to result in any such change. Each of the Company and Maxxim have agreed to give prompt notice to the other party of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by the Merger Agreement. EMPLOYEE BENEFITS. Maxxim has agreed that during the period commencing at the Effective Time and ending on the second anniversary thereof, the employees of the Company and its subsidiaries will continue to be provided with employee benefit plans (other than stock option or other plans involving the potential issuance of securities of the Company or of Maxxim) that are in the aggregate substantially comparable to those currently provided by the Company and its subsidiaries to such employees. Maxxim will, and will cause the corporation surviving the Merger to, honor employee (or former employee) benefit obligations and contractual rights existing as of the Effective Time, and all employment or severance agreements, plans or policies adopted by the Board of Directors of the Company (or any committee thereof) prior to the date of the Merger Agreement and disclosed to Maxxim under the Merger Agreement in accordance with its terms. REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has made customary representations and warranties to Maxxim and the Purchaser with respect to, among other things, its organization, capitalization, financial statements, public filings, employee benefit plans, compliance with laws, litigation, tax matters, action with respect to certain state takeover laws, environmental matters, consents and approvals, material contracts, opinions of financial advisors, undisclosed liabilities and the absence of certain changes with respect to the Company since March 31, 1996. APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights in connection with either the Offer or the Merger. GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions. The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger unless the Merger is consummated more than one year after the termination of the Offer. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the fairness of the Merger and the consideration offered to minority stockholders in such transaction be filed with the Commission and disclosed to stockholders prior to the consummation of the Merger. PLANS FOR THE COMPANY Following the Merger, it is Maxxim's current intention to maintain certain administrative offices of the Company in Richmond, Virginia, and to relocate the Company's executive offices to Sugar Land, Texas. It is currently anticipated that the existing officers of the Company will retain substantially the same operational duties as they currently have, but that most if not all of their executive responsibilities will be assumed by current officers of Maxxim. Maxxim anticipates that the Company will initially be maintained as a separate entity. The Company, however, is engaged in substantially the same business as Maxxim's Case Management division. Maxxim, therefore, intends to eventually combine the operations of the Case Management division and the Company. Maxxim has not yet determined exactly how it will effect such combination and whether the Company will ultimately be maintained as a separate corporation. Maxxim does contemplate that most if not all of the Company's business operations are likely to be maintained intact, and that the Company's principal operating facilities will continue in operations conducting their current business for the foreseeable future. 24 Except as otherwise described immediately above, the Purchaser, Parent and Maxxim have no current plans or proposals that would relate to, or result in, any extraordinary corporate transaction involving the Company, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries, a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, any change in the Company's capitalization or dividend policy, or any other material change in the Company's business, corporate structure or composition of its management or personnel. 13. DIVIDENDS AND DISTRIBUTIONS Pursuant to the terms of the Merger Agreement, the Company has agreed that except as consented to or approved in writing by Parent, during the period commencing on the date of the Merger Agreement and ending upon the closing of the Merger, the Company will not declare, pay, set aside or make any dividend or other distribution or payment with respect to, or split, combine, redeem or reclassify, any shares of its capital stock. 14. CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, the Purchaser is not required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares after the termination or withdrawal of the Offer), to pay for any Shares tendered, and may terminate or amend the Offer in accordance with the Merger Agreement and may postpone the acceptance of, and payment for, Shares if (i) the Minimum Condition shall not have been satisfied, (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated, or (iii) at any time on or after the date of the Merger Agreement and at or before the time of payment for any such Shares (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer) any of the following shall occur: (a) any court or domestic government or governmental authority or agency shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree or injunction or other order which (i) makes illegal, materially delays or otherwise directly or indirectly materially restrains or prohibits the Offer or the Merger, (ii) prohibits or materially limits the ownership or operation by Maxxim or Purchaser of all or any material portion of the business or assets of the Company or compels Maxxim or Purchaser to dispose of all or any material portion of the business or assets of Maxxim or Purchaser or the Company, or imposes any limitations on the ability of Maxxim or Purchaser to conduct its business or own such assets, (iii) imposes limitations on the ability of Maxxim or Purchaser effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Shares acquired or owned by Purchaser or Maxxim on all matters properly presented to the Company's stockholders, (iv) requires divestiture by Maxxim or Purchaser of any Shares, or (v) otherwise materially adversely affects the condition of the Company and its subsidiaries taken as a whole; (b) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (ii) any material change in United States or any other currency exchange rates or a suspension of, or limitation on, the markets therefor, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iv) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States and having a material adverse effect on the Company or materially adversely affecting (or materially delaying) the consummation of the Offer, (v) from the date of the Merger Agreement through the date of termination or expiration of the Offer, a decline of at least 25% in the Standard & Poor's 500 Index, or (vi) in the case of any of the situations described in clauses (i) through (v) inclusive existing at the date of commencement of the Offer, a material acceleration or worsening thereof; (c) all consents, registrations, approvals, permits, authorizations, notices, reports or other filings required to be obtained or made by the Company, Maxxim or Purchaser with or from any governmental or regulatory entity in connection with the execution, delivery and performance of the Merger 25 Agreement, the Offer and the consummation of the transactions contemplated by the Merger Agreement shall not have been made or obtained and such failure could reasonably be expected to have a material adverse effect on the condition of the Company and its subsidiaries taken as a whole or could be reasonably likely to prevent or materially delay consummation of the transactions contemplated by the Merger Agreement; (d) the Company's Board of Directors shall have withdrawn, modified or amended in any respect adverse to Maxxim or Purchaser its recommendation of the Offer or the Merger or shall have resolved to do so; (e) any representations or warranty made by the Company in the Merger Agreement shall be untrue or incorrect in any material respect; (f) there shall have been a breach by the Company of any of its covenants or agreements in any material respect contained in the Merger Agreement; (g) it shall have been publicly disclosed that any person (which includes a "person" as such term is defined in Section 13(d)(3) of the Exchange Act) other than Purchaser, any of its affiliates, or any group in which any of them is a member shall have acquired beneficial ownership of more than 30% of the outstanding Shares or shall have entered into a definitive agreement or an agreement in principle with the Company with respect to a tender offer or exchange offer for any Shares or a merger, consolidation or other business combination with or involving the Company; or (h) the Merger Agreement shall have been terminated in accordance with its terms; which, in the reasonable judgment of Purchaser, in any such case and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment. The foregoing conditions are for the sole benefit of Maxxim or Purchaser, and may be asserted by them or waived in whole or in part at any time and from time to time in their sole discretion; provided, however, that, without the consent of the Company, Maxxim and Purchaser may not waive the Minimum Condition. 15. CERTAIN LEGAL MATTERS Except as described in this Section 15, based on a review of publicly available filings made by the Company with the Commission and other publicly available information concerning the Company and discussions of representatives of Parent with representatives of the Company, none of the Purchaser, Maxxim or Parent is aware of any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the Purchaser's acquisition of Shares (and the indirect acquisition of the stock of the Company's subsidiaries) as contemplated herein or of any approval or other action by any governmental entity or regulatory agency that would be required for the acquisition and ownership of Shares by the Purchaser as contemplated herein. Should any such approval or other action be required, the Purchaser, Maxxim and Parent currently contemplate that such approval or other action will be sought, except as described below under "State Takeover Laws". While the Purchaser does not presently intend to delay the acceptance for payment of or payment for Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that failure to obtain any such approval or other action might not result in consequences adverse to the Company's business or that certain parts of the Company's business might not have to be disposed of if such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, the Purchaser could decline to accept for payment or pay for any Shares tendered. See Section 14 for certain conditions to the Offer. STATE TAKEOVER LAWS. A number of states throughout the United States have enacted takeover statutes that purport, in varying degrees, to be applicable to attempts to acquire securities of corporations that are incorporated or have assets, stockholders, executive offices or places of business in such states. In EDGAR V. 26 MITE CORP., the Supreme Court of the United States held that the Illinois Business Takeover Act, which involved state securities laws that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and therefore was unconstitutional. In CTS CORP. V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions, in particular, that the corporation has a substantial number of shareholders in the state and is incorporated there. Subsequently, a number of Federal courts ruled that various state takeover statutes were unconstitutional insofar as they apply to corporations incorporated outside the state of enactment. ARTICLES 14 AND 14.1 OF THE VSCA. The "affiliated transaction" provisions and the "control share acquisitions" provisions of the VSCA could adversely impact the ability of an acquiring company to acquire control of a Virginia corporation such as the Company. The Company is subject to the "affiliated transactions" provisions of the VSCA which restrict certain transactions ("Affiliated Transactions") between the Company and any person (an "Interested Shareholder") who beneficially owns more than 10% of any class of the Company's voting securities. These restrictions, which are described below, do not apply to any Affiliated Transaction with an Interested Shareholder who has been such continuously since the date the Company first had 300 shareholders of record or whose acquisition of shares making such person an Interested Shareholder was previously approved by a majority of the Company's Disinterested Directors then on the Board of Directors. The term "Affiliated Transactions" includes mergers of the type contemplated in the Merger Agreement. The term "Disinterested Director" means with respect to a particular Interested Shareholder, a member of the Company's Board of Directors who was (i) a member on the date on which an Interested Shareholder became an Interested Shareholder or (ii) recommended for election by, or was elected to fill a vacancy and received the affirmative vote of a majority of the Disinterested Directors then on the Board of Directors. All of the Company's Disinterested Directors have approved the Offer, the Merger and the Merger Agreement, therefore, the "affiliated transactions" provisions of the VSCA will not apply to the Merger. The Company is also subject to the "control share acquisitions" provisions of the VSCA, which provides that shares of the Company's voting securities which are acquired in a "Control Share Acquisition" have no voting rights unless such rights are granted by a shareholders' resolution approved by the holders of a majority of the votes entitled to be cast on the election of directors by persons other than the acquiring person or any officer or employee-director of the Company. A "Control Share Acquisition" is generally an acquisition of voting shares which, when added to all other voting shares beneficially owned by the acquiring person, would cause such person's voting strength with respect to the election of directors to meet or exceed any of the following thresholds: (i) one-fifth, (ii) one-third or (iii) a majority; however, the acquisition of shares of an issuing public corporation is not subject to the "control share acquisition provisions" of the VSCA if the acquisition is made pursuant to a tender offer that is made pursuant to an agreement to which the issuing public corporation is a party. The Offer and the Merger are therefore not subject to the "control share acquisitions" provisions of the Act, because the Offer is being made pursuant to the Merger Agreement, to which the Company is a party. As set forth above, Articles 14 and 14.1 of the VCSA are inapplicable to the Merger. The Purchaser does not know whether any other state takeover statutes purport to apply to the Offer or the Merger and has not complied with any state takeover statute or regulation other than those adopted by the Commonwealth of Virginia. The Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer or the Merger and nothing in this Offer to Purchase or any action taken in connection with the Offer or the Merger is intended as a waiver of such right. If it is asserted that any state takeover statute is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, the Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in 27 continuing consummating the Offer or the Merger. In such case, the Purchaser may not be obligated to accept payment or pay for any Shares tendered pursuant to the Offer. See Section 14. ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the acquisition of Shares under the Offer may be consummated following the expiration of a 15-calendar day waiting period following the filing by Parent and the Company of a Notification and Report Form with respect to the Offer, unless Parent or the Company receives a request for additional information or documentary material from the Antitrust Division or the FTC or unless early termination of the waiting period is granted. Parent expects to file its Notification and Report Form on or prior to June 19, 1996. Accordingly, the waiting period with respect to the Offer will expire at 11:59 p.m., New York City time, on July 4, 1996, unless the Antitrust Division and the FTC terminate the waiting period prior thereto. If, within the initial 15-day waiting period, either the Antitrust Division or the FTC requests additional information or material from Parent or the Company concerning the Offer, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Parent or the Company with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of Parent and the Company. In practice, complying with a request for additional information or material can take a significant amount of time. In addition, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay consummation of the transaction while such negotiations continue. Expiration or termination of the applicable waiting period under the HSR Act is a condition to the Purchaser's obligation to accept for payment and pay for Shares tendered pursuant to the Offer. The Merger would not require an additional filing under the HSR Act if the Purchaser owns 50% or more of the outstanding Shares at the time of the Merger or if the Merger occurs within one year after the HSR Act waiting period applicable to the Offer expires or is terminated. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the Purchaser's proposed acquisition of the Company. At any time before or after the Purchaser's acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or the consummation of the Merger or seeking the divestiture of Shares acquired by the Purchaser or the divestiture of substantial assets of the Company or its subsidiaries or Parent or its subsidiaries. Private parties may also bring legal action under the antitrust laws under certain circumstances. Based upon the examination of publicly available information relating to the businesses in which Parent and the Company are engaged, Parent, Maxxim and the Purchaser believe that the acquisition of Shares by the Purchaser on antitrust grounds will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, the result thereof. See Section 14. 16. FEES AND EXPENSES Parent has engaged Bear Stearns to act as financial advisor to Parent in connection with the proposed acquisition of the Company and as Dealer Manager in connection with the Offer. Parent has agreed to pay Bear Stearns $550,000 as compensation for its services to date as financial advisor and Dealer Manager and a fee of $825,000 that will be payable to Bear Stearns upon consummation of the Offer. Parent has also agreed to pay Bear Stearns for all reasonable out-of-pocket expenses, including fees and expenses of legal counsel and other consultants and advisors, and to indemnify Bear Stearns and certain related persons against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. The Purchaser and Parent have retained Corporate Investor Communications, Inc. to act as the Information Agent and KeyCorp Shareholder Services, Inc. to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, facsimile, telegraph 28 and personal interview and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer material to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the Federal securities laws. Neither the Information Agent nor the Depositary has been retained to make solicitations or recommendations in connection with the Offer. None of the Purchaser, Maxxim or Parent will pay any fees or commissions to any broker or dealer or other person (other than the Dealer Manager) in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust companies will be reimbursed by the Purchaser upon request for customary mailing and handling expenses incurred by them in forwarding material to their customers. 17. MISCELLANEOUS The Purchaser is not aware of any jurisdiction in which the making of the Offer or the tender of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. If the Purchaser becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, the Purchaser will make a good faith effort to comply with any such law. If, after such good faith effort, the Purchaser cannot comply with any such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. Purchaser, Maxxim and Parent have filed with the Commission a Tender Offer Statement on Schedule 14D-1 pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits, furnishing certain additional information with respect to the Offer, and may file amendments thereto. Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected and copies may be obtained in the manner set forth in Section 9 (except that such material will not be available at the regional offices of the Commission). MAXXIM ACQUISITION CO. MAXXIM MEDICAL, INC., A TEXAS CORPORATION MAXXIM MEDICAL, INC., A DELAWARE CORPORATION 29 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, MAXXIM AND THE PURCHASER 1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business address, present principal occupation or employment and five-year employment history of each of the directors and executive officers of Parent are set forth below. All such directors and executive officers listed below are citizens of the United States except Messrs. Davidson, Graham and Lamont, each of whom is a citizen of Canada, and Mr. Wafelman, who is a citizen of the Netherlands. Unless otherwise indicated, the principal business address of each director or executive officer is Maxxim Medical, Inc., 104 Industrial Blvd., Sugar Land, Texas 77478. KENNETH W. DAVIDSON has served as a director of Parent since 1982, and as Chairman of the Board of Directors, Chief Executive Officer and President of Parent since November 1986. PETER M. GRAHAM has served Parent as Executive Vice President since January 1986, Treasurer since April 1987, and Chief Operating Officer since January 1987. DAVID L. LAMONT has been Vice President of Parent since March 1988, and Group Vice President since July 1993. From January 1992 to July 1993 Mr. Lamont also served as President of the Argon Medical division of Parent. ALAN S. BLAZEI has served Parent as Vice President, Controller since December 1990. THOMAS O. CRAIG was elected as an executive officer of Parent in September 1991. From January 1992 through the present he has served as Executive Vice President -- International Sales and Marketing. From February 1987 through January 1992 he was Vice President -- Sales and Marketing for Parent's Henley Healthcare division, which was sold in May 1996, or predecessors thereof. JOSEPH D. DAILEY was elected Vice President -- Information Services in August 1994. From January 1991 until such election he had been Director of Information Services for Parent. Previously, Mr. Dailey was Executive Vice President for Ferrell Information Systems, Inc., a Denver, Colorado-based consulting firm. HENRY T. DEHART became a Vice President of Parent in November 1993. From June 1995 through the present he has served as Executive Vice President Operations, Case Management. From December 1992 through July 1995 he served as President of the Boundary Healthcare division of Parent. He was Chief Operating Officer of Boundary Healthcare Products Corp. for more than five years prior to that time. Mr. DeHart's principal business address is 549 Yorkville Park Square, Columbus, Mississippi 39702. JACK F. CAHILL was elected as a Vice President of Parent in May 1995. From June 1995 through the present he has served as Executive Vice President Sales and Marketing, Case Management. From May 1994 through June 1995 he served as President of the Sterile Design division. From July 1993 to May 1994 he served as Executive Vice President of Sterile Design. For over five years prior to July 1993 he served in various capacities on behalf of Johnson & Johnson Medical, Inc., the latest of which was Business Director. DONALD R. DEPRIEST became a director of Parent, effective December 1992, pursuant to the terms of the agreement between Parent and Boundary Healthcare Products Corp. ("Boundary") under which Parent acquired Boundary. Since July 1987, Mr. DePriest has been the President of MedCom Development Corporation, a Delaware corporation, which is the General Partner of MCT Investors, L.P., a Delaware 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 Parent. Mr. DePriest is also Chairman of the Board of American Telecasting, Inc. Mr. DePriest's principal business address is P. O. Box 1076, 206 8th Street North, Columbus, Mississippi 39701-4724. PETER G. DORFLINGER has served as a director of Parent since 1986 and as Secretary since 1992. Since November 1986, he has been Vice President, General Counsel and Secretary of Intermedics, Inc. ("Intermedics"), a principal shareholder of Parent. Intermedics is owned by SULZERmedica, a Swiss 30 medical device manufacturer that is an operating division of SULZER limited, another Swiss entity. Since February 1990, Mr. Dorflinger has concurrently been serving as Group Vice President and General Counsel of SULZERmedica. Mr. Dorflinger is also a member of the Board of Directors of Benchmark Electronics Inc. Mr. Dorflinger's principal business address is 4000 Technology Boulevard, Angleton, Texas 77515. MARTIN GRABOIS, M.D. has served as a director of Parent since February 1991. Dr. Grabois has been a Professor and Chairman of the Department of Physical Medicine and Rehabilitation at Baylor College of Medicine in Houston, Texas since 1978. Since 1978, he has also served as the Senior Attending and Medical Director in the Department of Physical Medicine at the Methodist Hospital, Houston, Texas, Consultant Physiatrist to the Texas Institute for Rehabilitation and Research, Houston, Texas, and the Physician-in-Chief for the Physical Medicine and Rehabilitation Services of the Harris County Hospital District, Houston, Texas. In 1994, Dr. Grabois was elected President of the Academy of Physical Rehabilitation. His principal business address is 1333 Moursund Avenue, Houston, Texas 77030. ERNEST J. HENLEY, PH.D. has been a director and consultant to Parent since 1976. 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. RICHARD O. MARTIN, PH.D. has served as a director of Parent since November 1989. Dr. Martin has, since April 1, 1991, been President and Chief Executive Officer of Physio-Control Corp., a manufacturer of cardiac defibrillators and monitoring equipment. His principal business address is 11811 Willows Road NE, Redmond, Washington 98073-9706. HENK R. WAFELMAN, ING. became a director of Parent in 1987. Since 1990, Mr. Wafelman has been the executive chairman of the Dutch Society of Enterprises in Medical Technology, a Netherlands based technological society, and holds the position of chairman of an advisory committee for standardization of medical aids. Mr. Wafelman's principal business address is Taksteeg 3, 1012 PB, Amsterdam, The Netherlands. 2. DIRECTORS AND EXECUTIVE OFFICERS OF MAXXIM. Each of the directors and executive officers of Maxxim are set forth below. The principal occupation of each of such persons is that of an executive officer of Parent as described under "Directors and Executive Officers of Parent. All such directors and executive officers listed below are citizens of the United States except Messrs. Davidson, Graham and Lamont, each of whom is a citizen of Canada. The principal business address of each director or executive officer is Maxxim Medical, Inc., 104 Industrial Blvd., Sugar Land, Texas 77478. KENNETH W. DAVIDSON has served as sole director, Chief Executive Officer and President of Maxxim for over five years. PETER M. GRAHAM has served as Executive Vice President, Treasurer, and Chief Operating Officer of Maxxim for over five years. DAVID L. LAMONT has been Vice President of Maxxim for over five years. ALAN S. BLAZEI has served as Vice President, Controller of Maxxim for over five years. 3. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Each of the directors and executive officers of Purchaser are as set forth below. The principal occupation of each of such persons is that of an executive officer of Parent as described under "Directors and Executive Officers of Parent. All such directors and executive officers listed below are citizens of the United States except Messrs. Davidson, Graham and Lamont, each of whom is a citizen of Canada. The principal business address of each director or executive officer is Maxxim Medical, Inc., 104 Industrial Blvd., Sugar Land, Texas 77478. KENNETH W. DAVIDSON has served as sole director and President of the Purchaser since its organization in June 1996. PETER M. GRAHAM has served as Executive Vice President, Treasurer, and Chief Operating Officer of the Purchaser since its organization in June 1996. DAVID L. LAMONT has been Vice President of the Purchaser since its organization in June 1996. ALAN S. BLAZEI has served as Vice President, Controller of the Purchaser since its organization in June 1996. 31 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or such stockholder's broker, dealer, bank, trust company or other nominee to the Depositary at one of its addresses set forth below. THE DEPOSITORARY FOR THE OFFER IS: KEYCORP SHAREHOLDER SERVICES, INC. DELIVERY ADDRESSES BY MAIL: BY HAND: Key Services Corporation KeyCorp Shareholder Services, Inc. P.O. Box 6477 700 Louisiana Street, Suite 2620 Cleveland, Ohio 44101-1477 Houston, Texas 77002 OH-01-49-0120 Attn: Lorraine Rodewald Attn: Reorganization Department - or - Key Services Corporation 4900 Tiedeman Road Brooklyn, Ohio 44114-2302 Attn: Reorganization Department OTHER INFORMATION TELEPHONE NUMBERS: BY FACSIMILE: (For Information) (800) 539-6549 (216) 813-4559 or Confirm by telephone: (713) 546-5500 (216) 813-4554 Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at its telephone number and location listed below. You may also contact your broker, dealer, bank, trust company or other nominee for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: CORPORATE INVESTOR COMMUNICATIONS, INC. 111 Commerce Road Carlstadt, New Jersey 07072 CALL TOLL FREE: (800) 805-9135 COLLECT: (201) 896-1900 THE DEALER MANAGER FOR THE OFFER IS: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, NY 10167 CALL TOLL FREE: (888) 280-1390 EXHIBIT (A)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS) OF STERILE CONCEPTS HOLDINGS, INC. BY MAXXIM ACQUISITION CO. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF MAXXIM MEDICAL, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 26, 1996, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- THE DEPOSITARY FOR THE OFFER IS: KEYCORP SHAREHOLDER SERVICES, INC. DELIVERY ADDRESSES BY MAIL: BY HAND: Key Services Corporation KeyCorp Shareholder Services, Inc. P.O. Box 6477 700 Louisiana Street, Suite 2620 Cleveland, Ohio 44101-1477 Houston, Texas 77002 OH-01-49-0120 Attn: Lorraine Rodewald Attn: Reorganization Department - or - Key Services Corporation 4900 Tiedeman Road Brooklyn, Ohio 44114-2302 Attn: Reorganization Department OTHER INFORMATION TELEPHONE NUMBERS: BY FACSIMILE: (For Information) (800) 539-6549 (216) 813-4559 or Confirm by telephone: (713) 546-5500 (216) 813-4554 - -------------------------------------------------------------------------------- DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used either if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase (as defined below)) is utilized, if a tender of Shares is to be made by book-entry transfer to an account maintained by the Depositary at The Depositary Trust Company, the Midwest Securities Trust Company or the Philadelphia Depositary Trust Company (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 2 of the Offer to Purchase. Stockholders who deliver Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders" and other stockholders are referred to herein as "Certificate Stockholders." Stockholders whose certificates for Shares are not immediately available or who cannot deliver either the certificates for, or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase) with respect to, their Shares and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares in accordance with the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. [ ]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution _______________________________________________ Check Box of Book-Entry Transfer Facility: [ ]The Depository Trust Company [ ]Midwest Securities Trust Company [ ]Philadelphia Depository Trust Company Account Number ______________________________________________________________ Transaction Code Number _____________________________________________________ [ ]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s) ______________________________________________ Window Ticket Number (if any) _______________________________________________ Date of Execution of Notice of Guaranteed Delivery __________________________ Name of Institution that Guaranteed Delivery ________________________________ Check Box of Applicable Book-Entry Transfer Facility, if Delivered by Book-Entry Transfer: [ ]The Depository Trust Company [ ]Midwest Securities Trust Company [ ]Philadelphia Depository Trust Company Account Number ______________________________________________________________ Transaction Code Number _____________________________________________________
BOXES FOR USE BY ELIGIBLE INSTITUTIONS ONLY - ------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) (PLEASE FILL IN, IF BLANK, EXACTLY SHARES TENDERED AS NAME(S) APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL LIST IF NECESSARY) - ------------------------------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2) -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- TOTAL SHARES - --------------------------------------------------------------------------------------------------------------------------- (1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS. (2) UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES EVIDENCED BY ANY CERTIFICATE DELIVERED TO THE DEPOSITARY ARE BEING TENDERED. SEE INSTRUCTION 4. - -------------------------------------------------------------------------------------------------------------
2 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation ("Parent"), the above-described shares of Common Stock, no par value (the "Common Stock"), including the associated share purchase rights, if any (the "Rights" and together with the Common Stock, the "Shares,") of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and this Letter of Transmittal (which, together with any amendments or supplements thereto or hereto, collectively constitute the "Offer"), receipt of which is hereby acknowledged. The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or in part from time to time, to one or more direct or indirect wholly owned subsidiaries of Parent, the right to purchase Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), subject to, and effective upon, acceptance for payment of, and payment for, the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after June 10, 1996 (collectively "Distributions")), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to the full extent of the undersigned's rights with respect to such Shares (and any such other Shares or securities or rights), to (a) deliver certificates for such Shares and/or transfer ownership of such Shares and all Distributions on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser upon receipt by the Depositary, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase), (b) present such Shares and all Distributions for cancellation and transfers on the Company's books and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the tendered Shares and all Distributions and, when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, claims, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned will, upon request, execute any signature guarantees or additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the tendered Shares and all Distributions. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any such Distributions issued to the undersigned, in respect of the tendered Shares, accompanied by documentation of transfer, and pending such remittance or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and, subject to the terms of the Merger Agreement (as defined in the Offer to Purchase), may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. All authority conferred or agreed to be conferred pursuant to this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. 3 The undersigned hereby irrevocably appoints Kenneth W. Davidson, Peter M. Graham, and David L. Lamont, and each of them, and any other designees of the Purchaser, the attorneys and proxies of the undersigned, each with full power of substitution, to vote at any annual, special or adjourned meeting of the Company's stockholders or otherwise act (including pursuant to written consent) in such manner as each such attorney and proxy or his substitute shall in his sole discretion deem proper, to execute any written consent concerning any matter as each such attorney and proxy or his substitute shall in his sole discretion deem proper with respect to, and to otherwise act with respect to all the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time any such vote or action is taken (and any and all Distributions issued or issuable in respect thereof) and with respect to which the undersigned is entitled to vote. This appointment is effective when, and only to the extent that, the Purchaser accepts for payment such Shares as provided in the Offer to Purchase. This power of attorney and proxy is coupled with an interest in the tendered shares, is irrevocable and is granted in consideration of the acceptance for payment of such Shares in accordance with the terms of the Offer. Such acceptance for payment shall revoke all prior powers of attorney and proxies given by the undersigned at any time with respect to such Shares and no subsequent powers of attorney or proxies may be given by the undersigned (and, if given, will not be deemed effective). The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting and other rights with respect to such Shares including voting at any meeting of stockholders then scheduled. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the tendered Shares. The acceptance for payment by the Purchaser of Shares tendered pursuant to the Offer will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price of any Shares purchased and/or return any certificates for Shares not tendered or accepted for payment, in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of any Shares purchased and/or return any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and Special Payment Instructions are completed, please issue the check for the purchase price of any Shares purchased and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of, and mail such check and/or return such certificates to, the person or persons so indicated. In the case of a book-entry delivery of Shares, please credit the account maintained at the Book-Entry Transfer Facility indicated above with any Shares not accepted for payment. The undersigned recognizes that the Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered holders thereof if the Purchaser does not accept for payment any of the Shares so tendered. 4 - ------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be issued in the name of someone other than the undersigned. Issue [ ] Check [ ] Certificates to: Name.................................................. (PLEASE PRINT) Address............................................... ...................................................... (INCLUDE ZIP CODE) ...................................................... (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN) ...................................................... (ACCOUNT NUMBER) - ------------------------------------------------------ - ------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be delivered to someone other than the undersigned, or to the undersigned at an address other than that appearing under "Description of Shares Tendered." Mail [ ] Check [ ] Certificates to: Name.................................................. (PLEASE PRINT) Address............................................... ...................................................... (INCLUDE ZIP CODE) ...................................................... (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN) - ------------------------------------------------------ - -------------------------------------------------------------------------------- STOCKHOLDERS SIGN HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (SIGNATURE(S) OF OWNER(S)) (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustee, executor, administrator, guardian, attorneys-in- fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title below. (See Instruction 5.) Dated ______________________________________________, 1996 Name(s)___________________________________________________ (PLEASE PRINT) Capacity (Full Title)_____________________________________ Address___________________________________________________ (INCLUDE ZIP CODE) Daytime Area Code and Telephone No.________________________ Tax Identification or Social Security Number_____________________________________ (SEE SUBSTITUTE FORM W-9) GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) AUTHORIZED SIGNATURE_______________________________________ NAME_______________________________________________________ (PLEASE PRINT) NAME OF FIRM_______________________________________________ ADDRESS____________________________________________________ (INCLUDE ZIP CODE) DAYTIME AREA CODE AND TELEPHONE NO.________________________ Dated ______________________________________________ , 1996 - -------------------------------------------------------------------------------- 5 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURE. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in any of the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith, unless such registered holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (such participant, an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES, GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by stockholders either if certificates for Shares are to be forwarded herewith or, unless an Agent's Message (as defined below) is utilized, if a tender of Shares is to be made pursuant to the procedures for book-entry transfer set forth in Section 2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant to the Offer, either (a) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date and either certificates for tendered Shares must be received by the Depositary at one of the Depositary's addresses or Shares must be delivered pursuant to the procedures for book-entry transfer set forth herein (and a Book-Entry Confirmation received by the Depositary), in each case prior to the Expiration Date as defined in the Offer to Purchase, or (b) the tendering stockholder must comply with the guaranteed delivery procedure set forth below. Stockholders whose certificates for Shares are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary or complete the procedures for book-entry transfer prior to the Expiration Date may tender their Shares by properly completing and duly executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such procedures, (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery provided by the Purchaser or Facsimile thereof must be received by the Depositary prior to the Expiration Date and (c) the certificates for all tendered Shares, a Book-Entry Confirmation with respect to all such Shares, together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other by this Letter of Transmittal required documents, must be received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of the Offer to Purchase. A "trading day" is any day on which the New York Stock Exchange is open for business. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, that states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against the participant. THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 6 4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer than all the Shares evidenced by any certificate submitted are to be tendered, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In any such case, new certificate(s) for the remainder of the Shares that were evidenced by the old certificate(s) will be sent to the registered holder, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. When this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment or certificates for Shares not tendered or accepted for payment are to be issued to a person other than the registered owner(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Shares tendered hereby, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificates. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. 6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its assignee pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if the certificates for Shares not tendered or accepted for payment are to be registered in the name of, any person(s) other than the registered owner(s), or if tendered certificates are registered in the name(s) of any person(s) other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered owner(s) or such person(s)) payable on account of the transfer to such person(s) will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificates listed in this letter of transmittal. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares not accepted for payment are to be returned to a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such certificates are to be returned to a person other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Any stockholder tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such stockholder at the Book-Entry Transfer Facility from which such transfer was made. 8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to Purchase, the Purchaser reserves the absolute right in its sole discretion to waive any of the specified conditions of the Offer, or any defect or irregularity in Tender with regard to any Shares tendered. 9. SUBSTITUTE FORM W-9. In order to avoid backup withholding of Federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below in this Letter of Transmittal and certify under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide such stockholder's correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. 7 Backup withholding is not an additional income tax. Rather, the amount of the backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return. The stockholder is required to give the Depositary the TIN (i.e., social security number or employer identification number) of the record owner of the Shares. If the Shares are held in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% on all payments made prior to the time a properly certified TIN is provided to the Depositary. However, such amounts will be refunded to such stockholder if a TIN is provided to the Depositary within 60 days. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. 10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. 11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be directed to the Information Agent. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES FOR SHARES, OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTY DELIVERY (OR A FACSIMILE THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE. 8 - ---------------------------------------------------------------------------------------------------------------------------- | PAYOR'S NAME: KEYCORP SHAREHOLDER SERVICES, INC. SUBSTITUTE | Part I -- PLEASE PROVIDE YOUR TIN IN THE ______________________ FORM W-9 | BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security number | DATING BELOW. OR________________________________ | Employer Identification Number(s) | If awaiting TIN write "Applied for" | -------------------------------------------------------------------------------------- DEPARTMENT OF THE TREASURY | Part II -- For payees not subject to backup withholding, see Guidelines for INTERNAL REVENUE SERVICE | Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as PAYER'S REQUEST FOR TAXPAYER | instructed therein. IDENTIFICATION NUMBER ("TIN") | - ---------------------------------------------------------------------------------------------------------------------------- CERTIFICATION -- Under penalties of perjury, I certify that: (1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding. - ---------------------------------------------------------------------------------------------------------------------------- CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax returns. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that stating that you are no longer subject to backup withholding, do not cross out such item (2). - ---------------------------------------------------------------------------------------------------------------------------- SIGNATURE __________________________________________________ DATE _____________________________________ - ----------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that, if I do not provide a taxpayer identification number to the Depositary, 31% of all reportable payments made to me will be withheld, but will be refunded if I provide a certified taxpayer identification number within 60 days. Signature ____________________________ Date _________________________ , 1996 Questions and requests for assistance or additional copies of the Offer to Purchase, Letter of Transmittal and other tender offer materials may be directed to the Information Agent. THE INFORMATION AGENT FOR THE OFFER IS: CORPORATE INVESTOR COMMUNICATIONS, INC. 111 Commerce Road Carlstadt, New Jersey 07072 CALL TOLL FREE: (800) 805-9135 COLLECT: (201) 896-1900 THE DEALER MANAGER FOR THE OFFER IS: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, NY 10167 CALL TOLL FREE: (888) 280-1390 9 EXHIBIT (A)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS) OF STERILE CONCEPTS HOLDINGS, INC. As set forth in Section 2 of the Offer to Purchase (as defined below), this form or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates for shares of Common Stock, no par value ("Common Stock"), including the associated share purchase rights, if any (the "Rights" and, together with the Common Stock, the "Shares"), of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary at the address set forth below prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). This form may be delivered by hand to the Depositary or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution (as defined in Section 2 of the Offer to Purchase). See Section 2 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: KEYCORP SHAREHOLDER SERVICES, INC. DELIVERY ADDRESSES BY MAIL: BY HAND: Key Services Corporation KeyCorp Shareholder Services, Inc. P.O. Box 6477 700 Louisiana Street, Suite 2620 Cleveland, Ohio 44101-1477 Houston, Texas 77002 OH-01-49-0120 Attn: Lorraine Rodewald Attn: Reorganization Department - or - Key Services Corporation 4900 Tiedeman Road Brooklyn, Ohio 44114-2302 Attn: Reorganization Department OTHER INFORMATION TELEPHONE NUMBERS: BY FACSIMILE: (For Information) (800) 539-6549 (216) 813-4559 or Confirm by telephone: (713) 546-5500 (216) 813-4554 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares set forth below, all pursuant to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. Please Print Number of Shares Certificate Nos. (if available): (Check one box if shares will be tendered by book-entry transfer) [ ] The Depository Trust Company [ ] Midwest Securities Trust Company [ ] Philadelphia Depository Trust Company Account Number Dated: Name(s) of Record Holder(s): PLEASE PRINT Address(es): Zip Code Area Code and Tel. No.: Signature(s): GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby guarantees to deliver to the Depositary either the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, in any such case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), and any other required documents, within three trading days after the date hereof. The Eligible Institution that completes this form must communicate this guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. All capitalized terms used herein have the meanings set forth in the Offer to Purchase. Name of Firm: Authorized Signature: Address: Name: PLEASE PRINT Zip Code: Title: Area Code and Tel No.: Dated: NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 2 EXHIBIT (A)(4) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS) OF STERILE CONCEPTS HOLDINGS, INC. BY MAXXIM ACQUISITION CO. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF MAXXIM MEDICAL, INC. AT $20.00 NET PER SHARE - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 26, 1996, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- June 14, 1996 To Brokers, Dealers, Banks, Trust Companies and other Nominees: We have been engaged by Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation ("Parent"), to act as Dealer Manager in connection with the Purchaser's Offer to Purchase all outstanding shares of Common Stock, no par value ("Common Stock"), including the associated share purchase rights, if any (the "Rights" and, together with the Common Stock, the "Shares") of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), at $20.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee. Enclosed herewith are copies of the following documents: 1. Offer to Purchase dated June 14, 1996; 2. Letter of Transmittal for your use in accepting the Offer and for the information of your clients; 3. The Letter to Stockholders of the Company from the Company accompanied by the Company's Solicitation / Recommendation Statement on Schedule 14D-9; 4. A printed form of letter that may be sent to your clients for whose account you hold Shares in your name or in the name of a nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Notice of Guaranteed Delivery to be used to accept the Offer if Shares and all other required documents cannot be delivered to the Depository by The Expiration Date (as hereinafter defined in the Offer to Purchase); 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal tax withholding; and 7. Return envelope addressed to KeyCorp Shareholder Services, Inc., the Depositary. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, MORE THAN TWO-THIRDS OF THE TOTAL NUMBER OF OUTSTANDING SHARES (ON A FULLY DILUTED BASIS) BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER. THE OFFER ALSO IS SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and will pay promptly after the Expiration Date (as defined in the Offer to Purchase) for all Shares validly tendered prior to the Expiration Date and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of such Shares. If holders of Shares wish to tender their Shares, but it is impracticable for them to deliver their certificates on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 2 of the Offer to Purchase. Your prompt action is requested. WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 26, 1996, UNLESS THE OFFER IS EXTENDED BY THE PURCHASER. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. Payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer effected pursuant to the procedure set forth in Section 2 of the Offer to Purchase, an Agent's Message (as defined in the Offer to Purchase), and (c) any other documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Neither the Purchaser nor Maxxim will pay any fees or commissions to any broker or dealer or other person (other than the Dealer Manager and Information Agent as described in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed upon request for customary mailing and handling expenses incurred by you in forwarding the enclosed offering materials to your customers. The Purchaser will pay all stock transfer taxes applicable to its purchase of shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. Questions and requests for additional copies of the enclosed material may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of the enclosed Offer to Purchase. Very truly yours, BEAR, STEARNS & CO. INC. as Dealer Manager 245 Park Avenue New York, New York 10167 Call Toll Free: (888) 280-1390 - -------------------------------------------------------------------------------- NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE DEPOSITARY, THE INFORMATION AGENT, OR THE DEALER MANAGER, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION, TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT OR REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER, NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL. - -------------------------------------------------------------------------------- 2 EXHIBIT (A)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS) OF STERILE CONCEPTS HOLDINGS, INC. BY MAXXIM ACQUISITION CO. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF MAXXIM MEDICAL, INC. AT $20.00 NET PER SHARE - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 26, 1996, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- To Our Clients: Enclosed for your consideration is an Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the offer by Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc. (the "Parent"), to purchase for cash all outstanding shares of Common Stock, no par value ("Common Stock"), including the associated share purchase rights, if any (the "Rights" and together with the Common Stock, the "Shares") of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), upon the terms and subject to the conditions set forth in the Offer. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to tender any of or all the Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is directed to the following: 1. The offer price is $20.00 per Share, net to the seller in cash, without interest thereon. 2. The Offer is being made for all outstanding Shares. 3. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTEREST OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. 4. The offer and withdrawal rights expire at 12:00 midnight, New York City time, on Friday, July 26, 1996, unless the offer is extended by the Purchaser (the "Expiration Date"). 5. The Offer is conditioned upon, among other things, more than two-thirds of the total number of outstanding Shares (on a fully diluted basis) being validly tendered and not withdrawn prior to the expiration of the Offer. The Offer is also subject to other terms and conditions contained in the Offer to Purchase. 6. Any stock transfer taxes applicable to a sale of Shares to the Purchaser will be borne by the Purchaser, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer effected pursuant to the procedure set forth in Section 2 of the Offer to Purchase, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. The Offer is not being made to, nor will tenders be accepted from, or on behalf of, holders of Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of the Purchaser by Bear, Stearns & Co. Inc., the Dealer Manager for the Offer, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. Your instructions to us should be forwarded promptly to permit us to submit a tender on your behalf prior to the Expiration Date. If you wish to have us tender any of or all the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS) OF STERILE CONCEPTS HOLDINGS, INC. The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal relating to the Offer by Maxxim Acquisition Co., a Virginia corporation and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation, to purchase for cash all outstanding shares of Common Stock, no par value ("Common Stock"), including the associated share purchase rights, if any (the "Rights" and together with the Common Stock, the "Shares"), of Sterile Concepts Holdings, Inc., a Virginia corporation. This will instruct you to tender the number of Shares indicated below (or if no number is indicated below, all Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and related Letter of Transmittal. Dated ............., 1996 NUMBER OF SHARES TO BE TENDERED* __________________ SHARES I (we) understand that if I (we) sign the instruction form without indicating the number of Shares to be tendered in the space above, all Shares held by you for my (our) account will be tendered. _______________________________________________________ _______________________________________________________ Signature(s) ______________________________________________________ ______________________________________________________ Print Name(s) ______________________________________________________ ______________________________________________________ Print Address(es) ______________________________________________________ Daytime Area Code and Telephone Number ______________________________________________________ Tax ID or Social Security Number - ------------ * Unless otherwise indicated, it will be assumed that all Shares held by your firm for my (our) account are to be tendered. 2 EXHIBIT (A)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.
GIVE THE SOCIAL SECURITY GIVE THE EMPLOYER FOR THIS TYPE OF ACCOUNT: NUMBER OF FOR THIS TYPE OF ACCOUNT: NUMBER OF - ------------------------- ---------------- ------------------------- ------------------------------ 1. An individual's account The individual 9. A valid trust, estate or The legal entity (Do not pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 2. Two or more individuals (joint The actual owner of the 10. Corporate account The corporation account) account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint account) The actual owner of the 11. Religious, charitable, or The organization account or, if joint funds, educational organization either person(1) account 4. Custodian account of a minor The minor(2) 12. Partnership account held The partnership (Uniform Gift to Minors Act) in the name of the business 5. Adult and minor (joint account) The adult, or if the minor is 13. Association, club, or The organization the only contributor, the other tax-exempt minor(1) organization 6. Account in the name of guardian or The ward, minor, or 14. A broker or registered The broker or nominee committee for a designated ward, incompetent person(3) nominee minor, or incompetent person 7. A. The usual revocable savings The grantor-trustee(1) 15. Account with the THE PUBLIC ENTITY trust account (grantor is also Department of Agriculture trustee) in the name of a public B. So-called trust account that is The actual owner(1) entity (such as a state or not a legal or valid trust local government, school under State law district, or prison) that receives agricultural program payments 8. Sole proprietorship account The Owner(4)
- -------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS") and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: o A corporation. o A financial institution. o An organization exempt from tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or an individual retirement plan. o The United States or any agency or instrumentality thereof. o A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. o A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. o An international organization or any agency or instrumentality thereof. o A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. o A real estate investment trust. o A common trust fund operated by a bank under section 584(a) of the Code. o An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1) of the Code. o An entity registered at all times during the tax year under the Investment Company Act of 1940. o A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: o Payments to nonresident aliens subject to withholding under section 1441 of the Code. o Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. o Payments of patronage dividends where the amount received is not paid in money. o Payments made by certain foreign organizations. o Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: o Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. o Payments of tax-exempt interest (including exempt-interest dividends under section 852 of the Code). o Payments described in section 6049(b)(5) of the Code to nonresident aliens. o Payments on tax-free covenant bonds under section 1451 of the Code. o Payments made by certain foreign organizations. o Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF YOU 2 ARE A NON-RESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS). Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6045, and 6050A and 6050N of the Code and the regulations promulgated thereunder.. PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. 3 EXHIBIT (a)(7) THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED JUNE 14, 1996, AND THE RELATED LETTER OF TRANSMITTAL, AND IS BEING MADE TO ALL HOLDERS OF SHARES. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF MAXXIM ACQUISITION CO. BY BEAR, STEARNS & CO. INC. OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (Including the Associated Share Purchase Rights) of STERILE CONCEPTS HOLDINGS, INC. by Maxxim Acquisition Co. an indirect wholly owned subsidiary of MAXXIM MEDICAL, INC. at $20.00 NET PER SHARE Maxxim Acquisition Co., a Virginia corporation (the "Purchaser") and an indirect wholly owned subsidiary of Maxxim Medical, Inc., a Texas corporation ("Parent"), is offering to purchase all outstanding shares of Common Stock, no par value (the "Common Stock"), of Sterile Concepts Holdings, Inc., a Virginia corporation (the "Company"), including the associated share purchase rights, if any (the "Rights" and, together with the Common Stock, the "Shares"), issued pursuant to the Shareholder Protection Rights Agreement, dated as of March 6, 1996, between the Company and First Union National Bank of North Carolina, as Rights Agent, at a price of $20.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 14, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). --------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 26, 1996, UNLESS THE OFFER IS EXTENDED ---------------------------------------------------------------------------- The Offer is conditioned upon, among other things, more than two-thirds of the total number of outstanding Shares (on a fully diluted basis) being validly tendered and not withdrawn prior to the expiration of the Offer. The Offer also is subject to other terms and conditions contained in the Offer to Purchase. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 10, 1996 (the "Merger Agreement"), by and among the Company, the Purchaser and Maxxim Medical, Inc., a Delaware corporation ("Maxxim") and a wholly owned subsidiary of Parent. Pursuant to the Merger Agreement, following the consummation of the Offer and the satisfaction or waiver of certain conditions, the Purchaser will be merged with and into the Company (the "Merger"). Following the consummation of the Merger, the Company will continue as the surviving corporation and will be a wholly owned subsidiary of Maxxim. At the effective time of the Merger, each outstanding Share (other than any Shares held by the Company or any subsidiary of the Company, or held directly or indirectly, by Maxxim or any direct or indirect subsidiary of Maxxim, including the Purchaser) will be converted into the right to receive an amount in cash equal to the price per Share paid pursuant to the Offer (without interest). THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when the Purchaser gives oral or written notice to KeyCorp Shareholder Services, Inc. (the "Depositary") of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all cases, upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to validly tendering stockholders. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing Shares (the "Share Certificates") for such Shares or timely conformation of the book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in the Offer to Purchase), (ii) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer of Shares and (iii) any other documents required by the Letter of Transmittal. Under no circumstances will interest on the purchase price for Shares be paid by the Purchaser. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time subject to applicable law and the terms of the Merger Agreement, to extend the period during which the Offer is open by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date (as defined below). Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment and paid for by the Purchaser as provided in the Offer to Purchase, may also be withdrawn at any time after August 13, 1996. The term "Expiration Date" means 12:00 midnight, New York City time, on Friday, July 26, 1996, unless and until the Purchaser, subject to the terms of the Offer and the Merger Agreement, shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. In order for a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and if Share Certificates have been tendered the name of the registered holder of the Shares as set forth in the Share Certificate, if different from that of the person who tendered such Shares. If Share Certificates have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the tendering stockholder must submit the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), except in the case of Shares tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 2 of the Offer to Purchase, the notice of withdrawal must specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in this paragraph. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding. Withdrawal of Shares may not be rescinded and any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be tendered at any subsequent time prior to the Expiration Date by following any of the procedures described in the Offer to Purchase. The information required to be disclosed pursuant to Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase, and is incorporated herein by reference. The Company is providing the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained at the Purchaser's expense from the Information Agent or from brokers, dealers, commercial banks and trust companies. None of Parent, Maxxim or the Purchaser will pay any fees or commissions to any broker, dealer or other person (other than the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. THE INFORMATION AGENT FOR THE OFFER IS: CORPORATE INVESTOR COMMUNICATIONS, INC. 111 Commerce Road Carlstadt, New Jersey 07072 Call Toll Free: (800) 805-9135 Collect: (201) 896-1900 THE DEALER MANAGER FOR THE OFFER IS: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, New York 10167 June 14, 1996 Call Toll Free: (888) 280-1390 EXHIBIT (A)(8) FOR: MAXXIM MEDICAL, INC. APPROVED BY: Peter M. Graham Executive Vice President 713/240-5588 CONTACT: Morgan-Walke Associates Naomi Rosenfeld/Andrea Mabel Press: Michelle Zawrotny 212/850-5600 Kenneth E. Pieper 214/663-9390 FOR IMMEDIATE RELEASE MAXXIM MEDICAL SIGNS MERGER AGREEMENT WITH STERILE CONCEPTS SUGAR LAND, Texas, June 10, 1996 -- Maxxim Medical, Inc. (NYSE:MAM) and Sterile Concepts Holdings, Inc. (NYSE:SYS) today jointly announced the signing of an Agreement of Merger. Under this Agreement, Maxxim will commence a formal tender offer to the shareholders of Sterile Concepts on June 14, 1996, wherein Maxxim will offer to purchase all outstanding shares of common stock of Sterile Concepts for $20 per share. The completion of the tender offer will be contingent on, among other conditions, receipt of appropriate regulatory approvals and the valid tender of more than two-thirds of the outstanding shares of common stock. Following successful completion of the tender offer, Maxxim is required, subject to certain conditions of the Merger Agreement, to merge Sterile Concepts with a subsidiary of Maxxim, resulting in the payment of $20 per share for any remaining outstanding shares of Sterile Concepts stock. "This merger will create a strong force in the medical supply market," commented Kenneth W. Davidson, Chairman, Chief Executive Officer and President of Maxxim Medical. "With the increasing consolidation in the provider side of the market and the formation of the new "super buying groups," it is extremely important for a supplier to be in a position to provide nationwide support on a large scale. The combination of Sterile Concepts with our Sterile Design custom procedure packs, together with our fluid management systems and protection products, would place Maxxim in just such a position." Paul J. Woo, Jr., President and Chief Executive Officer of Sterile Concepts, commented, "After thoroughly reviewing alternatives available to the company, we have concluded that combining our operations with Maxxim Medical would create an organization with the critical mass needed to effectively compete in the consolidating healthcare marketplace. This merger provides Sterile Concepts with the opportunity to join forces with a proven leader in the medical supply market." Maxxim will finance the transaction through NationsBank. The transaction cost is estimated to be approximately $147 million, including the assumption of existing Sterile Concepts debt. Bear, Stearns & Co. advised Maxxim Medical and Wheat First Butcher Singer advised Sterile Concepts Holdings, Inc. Sterile Concepts is a leading provider of surgical and clinical custom procedure trays to hospitals and surgery centers in the United States. The Company is headquartered in Richmond, Virginia and has production facilities in Richmond, Temecula, CA and Minnetonka, MN. Maxxim Medical is a major, diversified medical products manufacturer and supplier. EXHIBIT (b)(i) June 8, 1996 Maxxim Medical, Inc. 104 Industrial Boulevard Sugar Land, Texas 77478 Attn.: Peter Graham Re: $165,000,000 Credit Facility Dear Peter: NationsBank of Texas, N.A. ("NationsBank") is pleased to offer to be the agent (in such capacity, the "Agent") for a $165,000,000 Senior Credit Facility (the "Credit Facility") to Maxxim Medical, Inc. ("Borrower") and to offer its commitment to lend $165,000,000 of the Credit Facility upon and subject to the terms and conditions of this letter and the Summary of Terms and Conditions (herein so called) attached hereto as Exhibit A. All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Summary of Terms and Conditions. NationsBanc Capital Markets, Inc. ("NCMI") is pleased to advise you of its commitment, as Arranger and Syndication Agent for the Credit Facility, to form a syndicate of financial institutions (the "Lenders") reasonably acceptable to you for the Facility. This commitment shall become effective upon the execution of the Merger Agreement by the parties thereto. In connection with the Credit Facility, the Agent and NCMI intend to invite other Lenders to participate in the Credit Facility with a corresponding reduction in the initial commitment of NationsBank. The Agent and NCMI will manage all aspects of the syndication (in consultation with Borrower), including the selection of potential Lenders, the timing of all offers to potential Lenders and the acceptance of commitments from Lenders, the amounts offered to potential Lenders, the compensation provided to Lenders and the allocation of titles to Lenders. In connection with such syndication, you agree to take such action as the Agent or NCMI may reasonably request to assist in syndicating the Credit Facility, including participating in the preparation of an information memorandum and the holding of a meeting of potential Lenders. In addition to the fees described in the Summary of Terms and Conditions, Borrower agrees to pay all fees separately agreed upon in writing with the Agent, NationsBank or NCMI. By acceptance of this letter, Borrower represents and warrants to NationsBank and NCMI that all historical financial statements and other information regarding Borrower and its subsidiaries, if any, or any guarantor heretofore delivered to NationsBank or NCMI in connection with the Credit Facility, are true, correct, and not misleading in any material respect and that any projections heretofore delivered to NationsBank or NCMI in connection with the Credit Facility have been prepared in good faith and based on information believed to be true, correct and not misleading in any material respect. By acceptance of this offer, Borrower agrees to pay the reasonable out-of-pocket costs and expenses, including reasonable attorneys' fees and expenses and reasonable expenses of due diligence, incurred before or after the date hereof by the Agent or NCMI in connection with the Credit Facility, whether or not the Credit Facility is ever closed or a funding ever occurs under the Credit Facility. In addition, Borrower agrees to indemnify and hold harmless the Agent, NCMI, each Lender and their respective affiliates, officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, fees and disbursements of counsel) which may be incurred by or asserted or awarded against any Indemnified Party (including any of the foregoing arising from the negligence of any Indemnified Party), in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with the Credit Facility, including, without limitation, any transaction in which the proceeds of any borrowing under the Credit Facility are or are to be applied, whether or not an Indemnified Party is a party thereto, and whether or not the transactions contemplated herein are consummated, unless resulting from the gross negligence or willful misconduct of the Indemnified Party. Borrower will not settle or consent to judgment with respect to any such investigation, litigation, or proceeding without the prior written consent of the Agent and NCMI (which consent shall not be unreasonably withheld), unless such settlement or consent includes an unconditional release of each Indemnified Party. To ensure an orderly and effective syndication of the Credit Facility, Borrower agrees that from the date of its acceptance of this letter until the completion of the primary syndication of the Credit Facility (as determined by the Agent and NCMI but in no event later than 90 days from the date of acceptance of this letter), Borrower will not, and will not permit any of its subsidiaries to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or enter into discussions concerning the syndication or issuance of, any debt facility or debt security, except with the prior written approval of the Agent and NCMI. Neither this offer nor the undertaking contained herein may be disclosed to or relied upon by any other person or entity other than your accountants, attorneys and other advisors and the Target (as defined in the attached Exhibit A), without the prior written consent of the Agent, except that following your acceptance hereof you may make public disclosure hereof as required by law. This letter shall be governed by and construed in accordance with the laws of the State of Texas. This letter may be modified or amended only in writing. This offer will automatically expire on JUNE 8, 1996 unless Borrower executes this letter. Very truly yours, NATIONSBANK OF TEXAS, N.A., Individually and as Agent By:____________________________ Name: Frank T. Hundley Title: Senior Vice President NATIONSBANC CAPITAL MARKETS, INC. By:____________________________ Name: Gary L. Kahn Title: Senior Vice President & Director Accepted and agreed to as of the date first written above: MAXXIM MEDICAL, INC. ____________________________ Name: Title: EXHIBIT (b)(ii) June 8, 1996 Maxxim Medical, Inc. 104 Industrial Boulevard Sugar Land, Texas 77478 Attn.: Mr. Kenneth Davidson Dear Mr. Davidson: You have advised NationsBridge, L.L.C. ("NationsBridge") and NationsBanc Capital Markets, Inc. ("NCMI") that Maxxim Medical, Inc. or one of its affiliates ("Maxxim" or the "Company") proposes to acquire Sterile Concepts Holdings, Inc. ("Sterile Concepts"). The proposed transaction calls for Maxxim to effect a tender offer (the "Tender Offer") for the purpose of acquiring at least two-thirds of the outstanding common stock of Sterile Concepts Holdings, Inc. ("Sterile Concepts") for a per share price of $20.00, net to the seller in cash. Concurrently with or immediately after completion of the Tender Offer, Sterile Concepts is to be merged with and into Maxxim, with Sterile Concepts being the surviving entity and becoming a wholly-owned subsidiary of Maxxim. These series of transactions are collectively referred to as the "Acquisition Transaction," and the signing of any purchase, merger, acquisition, or other combination agreement between Maxxim and Sterile Concepts will hereafter be referred to as the "Merger Agreement." In connection with the foregoing, we are pleased to advise you that NationsBridge hereby commits (the "Commitment"), subject to the terms and conditions set out below, that it and/or one or more of its affiliates will purchase up to $75 million in aggregate principal amount of bridge notes (the "Bridge Notes"), the proceeds of which, together with $165 million in senior bank financing (the "Senior Bank Facilities") will be used to effect the Acquisition Transaction. You have advised us that the Commitment is a condition precedent to the execution of the Merger Agreement and commencement of the Tender Offer. You have also advised us that a copy of this letter (the "Bridge Commitment Letter"), and the attached Summary of Indicative Terms and Conditions (exhibits A, B, C and D), which is incorporated into and made a part of this Bridge Commitment Letter, will be provided to Sterile Concepts, but that you understand that our obligation to make any monies available to Maxxim is subject expressly to the execution and delivery of definitive documentation, including without limitation, a definitive securities purchase agreement (the "Securities Purchase 1 Agreement"), reasonably satisfactory to us and covering the matters expressly referred to herein and covering such other matters as we may reasonably request, and a warrant agreement (the "Warrant Agreement") (together the "Definitive Documents") and satisfaction of the other conditions precedent set out in the Summary of Indicative Terms and Conditions. The Company agrees to pay to NationsBridge and NCMI the fees and expenses as set forth. We understand that the Company intends to proceed with the issuance of $100 million of senior subordinated notes (the "Refinancing Securities"), the proceeds of which are to be utilized in lieu of the Bridge Note issuance, or to refinance the Bridge Notes. The Company has agreed to execute a separate letter of engagement and indemnity designating NCMI as the sole or lead underwriter or placement agent for the Refinancing Securities. The Commitment is not assignable by you. Nothing in this Bridge Commitment Letter, express or implied, shall give any person, other than the parties hereto, any benefit or any legal or equitable right, remedy or claim under this Bridge Commitment Letter. The Company agrees to indemnify and hold NationsBridge, NCMI and their affiliates harmless to the extent set forth in Exhibit D to this Bridge Commitment Letter and, upon demand from time to time, to reimburse NationsBridge and/or NCMI for all reasonable out-of-pocket costs, expenses and other payments, including but not limited to reasonable legal fees and disbursements incurred or made in connection with the Commitment, the Refinancing Securities, and the preparation, execution and delivery of the Definitive Documents, regardless of whether or not the Definitive Documents are executed. Additionally, subject to applicable securities laws, you agree to allow NationsBridge, NCMI or any of their affiliates to reference this Commitment for the benefit of promoting NationsBridge, NCMI or one of their affiliates. This Bridge Commitment Letter and the attached Summary of Indicative Terms and Conditions in Exhibit A, B, C and D set forth the entire understanding of the parties as to the scope of the Commitment and NationsBridge's obligations thereunder. This Commitment will expire upon the earliest of (i) the closing of the Acquisition Transaction without the execution of a commitment letter between NationsBridge and Maxxim; (ii) the closing of the Acquisition Transaction without the use of the Bridge Notes; or (iii) at 5:00 AM Charlotte, North Carolina time on June 8, 1996 unless accepted prior to such time. This Bridge Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York as applied to contracts made 2 and performed within such state, without giving effect to the principles of conflicts of laws thereof. To the fullest extent permitted by applicable law, each of NationsBridge, NCMI and the Company hereby irrevocably submit to the jurisdiction of any New York State court or Federal court sitting in the Borough of Manhattan in New York City in respect of any suit, action or proceeding arising out of or relating to the provisions of the Commitment and irrevocably agree that all claims in respect of any such suit, action, or proceeding may be heard and determined in any such court. Each of NationsBridge, NCMI and the Company waive, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceedings brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Please indicate your acceptance of our Commitment and your agreement to the matters contained in this Bridge Commitment Letter by executing this document and returning it to us prior to the time of expiration set forth above. Sincerely, NATIONSBRIDGE, L.L.C. By: ____________________________ Name: Title: Accepted and Agreed to as of the date first hereunder written. MAXXIM MEDICAL, INC. By: ____________________________ Name: Title: 3 EXHIBIT A MAXXIM MEDICAL, INC. SENIOR SUBORDINATED UNSECURED BRIDGE NOTES SUMMARY OF INDICATIVE TERMS AND CONDITIONS ISSUER: Maxxim Medical, Inc., a Delaware corporation, or one of its affiliates ("Maxxim" or the "Company"), which is to acquire (the "Acquisition Transaction") 100% of the outstanding common stock of Sterile Concepts Holdings, Inc. ("Sterile Concepts"). It is a condition to the financing that Sterile Concepts be merged with and into Maxxim concurrently with, or immediately after, the Acquisition Transaction, with Sterile Concepts being the surviving entity and becoming a wholly-owned subsidiary of Maxxim. INITIAL PURCHASER: NationsBridge, L.L.C. or an affiliate thereof ("NationsBridge"), and other purchasers arranged by NationsBridge. ISSUE: Senior Subordinated Bridge Notes (the "Bridge Notes"). PRINCIPAL AMOUNT: Up to $75,000,000, provided that Total Debt/ LTM adjusted EBITDA may not exceed 4.5 to 1.0. PRICE: 100% of principal amount. MATURITY: 12 months from issuance. RANKING: The Bridge Notes will be subordinated to the Company's Senior Bank Facilities and senior to all other subordinated obligations of the Company to include the Company's 6 3/4% convertible subordinated debentures due 3/1/2003. INTEREST RATE: Interest shall be payable at the "Base Rate" plus the Applicable Margin per annum. The Applicable Margin shall initially be 2.00% increasing an additional .50% at the end of each subsequent 3 month period; provided that such rate shall not exceed 15.50% per annum; provided further that cash interest will be capped at 13.50% and any interest payment in excess of 13.50% will be paid in additional Bridge Notes. The "Base Rate" will mean the Prime Rate of interest publicly announced from time to time by NationsBank, N.A. INTEREST PAYMENTS: Quarterly in arrears. 4 GUARANTORS: The Bridge Notes will be guaranteed on a senior subordinated unsecured basis by Maxxim Medical, Inc., a Texas corporation, and any subsidiaries or other affiliates of the Company that guarantee the Senior Bank Facilities. MANDATORY EXCHANGE: At maturity (the "Rollover Date") through the issuance and delivery of Senior Subordinated Rollover Notes with a maturity of 5 years from the Rollover Date (the "Rollover Notes" and together with the Bridge Notes, the "Bridge Securities"). OPTIONAL PREPAYMENT: The Bridge Notes are subject to prepayment, in whole or in part, upon written notice, at the option of the Company, at any time at par plus accrued interest to the prepayment date; subject to the terms of the engagement letter between Maxxim and NCMI of even date herewith. MANDATORY REDEMPTION: The Company will redeem the Bridge Notes with, subject to certain agreed exceptions, (i) the net proceeds from the issuance of any subordinated debt or equity securities, (ii) the net proceeds from the issuance of any other debt to the extent permitted by the Company's Senior Bank Facilities, or (iii) the net proceeds from asset sales in excess of the amount thereof required to be paid to the banks under the Company's Senior Bank Facilities. MANDATORY DEBT REFINANCING: Upon notice (a "Refinancing Securities Notice") by NationsBanc Capital Markets, Inc. ("NCMI") as sole or lead underwriter or placement agent of up to $100,000,000 in senior subordinated unsecured notes ("Refinancing Securities"), the Company will issue and sell Refinancing Securities; provided however, that the interest rates (whether fixed or floating) shall be determined by NCMI in light of the then prevailing market conditions but in no event shall the yield on the Refinancing Securities issued to refinance the Bridge Notes exceed 13.00% per annum (exclusive of any reasonable underwriting fees incurred in connection therewith). CHANGE OF CONTROL: In the event of a Change of Control each Bridge Note holder will have the right to require the Company to repurchase the Bridge Notes at 100% of principal amount plus accrued and unpaid interest thereon. CONDITIONS 5 PRECEDENT: Conditions precedent to initial funding will be usual and customary for transactions of this type including: (i) a signed merger agreement reasonably satisfactory to NationsBridge in addition to the consummation of the merger on terms reasonably satisfactory to NationsBridge; (ii) no material adverse change in the business, operations, prospects, financial or other conditions of Maxxim, Sterile Concepts or their subsidiaries taken as a whole; (iii) completion of the Tender Offer with at least 662/3% of the shares tendered; (iv) no material adverse change in the financial markets which, in the reasonable judgment of NationsBridge, would make it impractical or inadvisable to proceed with the funding of the Bridge Notes; (v) the completion of Senior Bank Facilities in the amount of $165 million on terms satisfactory to NationsBridge; (vi) the completion of a legal review which includes, but is not limited to, all suits and actions, material contracts, insurance, pension liabilities, tax liabilities, accounting issues, labor issues, leases, property ownership, contingent liabilities and compliance with all applicable laws, the results of which do not reveal any adverse circumstances which materially and adversely impact the business and operations of the Issuer, its affiliates and Sterile Concepts, taken as a whole, in the reasonable judgment of NationsBridge; (vii) a review by NationsBridge of environmental due diligence reports including phase I reports on all property sites if deemed necessary by NationsBridge the results of which do not reveal any adverse circumstances which materially and adversely impact the business and operations of the Issuer, its affiliates and Sterile Concepts, taken as a whole, in the reasonable judgment of NationsBridge; (viii) the receipt of legal opinions reasonably requested by NationsBridge; (ix) letters from the appropriate audit/accounting firms acknowledging NationsBridge's right to rely upon such auditors' certification of the financial statements of Maxxim and Sterile Concepts or their predecessors; (x) the receipt of all fees due and payable to NationsBridge and/or NCMI; (xi) Shareholder approval from Maxxim and Sterile Concepts and any other consents required for the merger; (xii) all material permits, licenses etc. shall remain in full force and effect after giving effect to the tender and merger. COVENANTS, REPS & WARRANTIES, EVENTS OF DEFAULT: Usual and customary for a transaction of this type, but in no event more restrictive than the Senior Bank Facilities. RIGHT TO RESELL 6 BRIDGE NOTES: NationsBridge shall have the absolute and unconditional right to resell the Bridge Notes in compliance with applicable law to any third parties. In addition, NationsBridge may share its commitment with any third party. GOVERNING LAW: New York. EXPIRATION DATE: The obligation of NationsBridge to purchase the Bridge Notes will expire upon the earliest of (i) the completion of the Acquisition Transaction without the use of the Bridge Notes, (ii) termination of the Merger Agreement between Maxxim and Sterile Concepts, unless NationsBridge has breached its Commitment hereunder, or (iii) acceptance by Sterile Concepts of an offer other than Maxxim's, or (iv) July 31, 1996. FEES AND EXPENSES: COMMITMENT FEE: 1.00% of the aggregate principal amount of the Bridge Notes, due and payable upon the signing of the Merger Agreement. FUNDING FEE: 1.00% of the aggregate principal amount of the Bridge Notes, due and payable upon issuance of the Bridge Notes. EXPENSES: Maxxim will pay all reasonable costs and expenses incurred by NationsBridge in connection with the issuance of the Bridge Notes and Refinancing Securities, including fees and expenses of counsel. EQUITY ESCROWED: As defined in "Exhibit C". 7 EXHIBIT B MAXXIM MEDICAL, INC. SENIOR SUBORDINATED ROLLOVER NOTES SUMMARY OF INDICATIVE TERMS AND CONDITIONS ISSUER: Maxxim Medical, Inc., a Delaware corporation, or one of its affiliates ("Maxxim" or the "Company"). ISSUE: Senior Subordinated Rollover Notes (the "Rollover Notes"). PRINCIPAL AMOUNT: Up to 100% of the then outstanding Bridge Notes. MATURITY: 5 years from the Rollover Date. INTEREST RATE: At the date of issuance of the Rollover Notes (the "Rollover Date") the interest rate on the Rollover Notes will be set at the greater of (a) 12.5%, (b) the Applicable Treasury Rate plus 6.50% (the "Treasury Spread") and (c) the Base Rate plus the Applicable Margin on the Bridge Notes in effect on the Rollover Date (i.e., the Applicable Margin would be 4.00%). Each 3 month period after the Rollover Date the interest rate shall be reset (the "Interest Reset Date") to the greatest of (a), (b), or (c) as adjusted in the manner set out below. In the case of (a) above the rate set on the Rollover Date shall increase by .50% each 3 month period, in the case of (b) above the Treasury Spread shall increase by .50% each 3 month period and in the case of (c) above the Applicable Margin shall increase by .50% each 3 month period. Both the interest rate set at the Rollover Date and on the Interest Reset Date shall be subject to a cash interest cap of 13.50%. Additional interest, if any shall be paid in additional Bridge Notes or accrue subject to a second total interest cap of 15.50%. The Interest Reset Date to establish the interest rate for a given 3 month period shall be 10 business days prior to the conclusion of the previous period. INTEREST PAYMENTS: Quarterly in arrears. GUARANTORS: The Rollover Notes will be guaranteed on a senior subordinated basis by Maxxim Medical, Inc., a Texas corporation, and any subsidiaries or other affiliates of the Company that guarantee the Senior Bank Facilities. 8 OPTIONAL REDEMPTION: The Rollover Notes will be redeemable at the option of the Company, in whole or in part, at any time, at par plus accrued and unpaid interest to the redemption date, provided, however, that if the Rollover Notes are sold to third party purchasers on a fixed rate basis no less favorable to the Company than the then applicable rate of interest (it being understood that NationsBridge shall have the right to unilaterally fix the interest rate on the Rollover Notes in conjunction with such third party sales and it also being understood that no such third party sales shall take place unless the Company has been given 30 days prior notice), the Rollover Notes will be non-callable for two (2) years from the date of issuance and will be callable thereafter at par plus accrued interest plus a premium equal to the coupon in effect on the date of issuance of the Rollover Notes declining ratably to par one year prior to the maturity of the Rollover Notes. REGISTRATION RIGHTS: Holders of the Rollover Notes will be entitled to registration rights which will require that the Company file a registration statement prior to issuance of the Rollover Notes with a requirement for effectiveness upon issuance of the Rollover Notes. GOVERNING LAW: New York. FEES: FUNDING FEE: 2.00% of the aggregate principal amount of the Rollover Notes, due and payable upon issuance of the Rollover Notes. EXPENSES: Maxxim will pay all reasonable costs and expenses incurred by NationsBridge in connection with the issuance of the Rollover Notes, including fees and expenses of counsel. RANKING, MANDATORY REDEMPTION, MANDATORY REFINANCING, COVENANTS, RIGHT TO SELL ROLLOVER NOTES: Same as the Bridge Notes. 9 CONDITIONS PRECEDENT TO ISSUANCE OF ROLLOVER NOTES: The ability of the Company to issue any Rollover Notes to redeem any Bridge Notes is subject to the following conditions being satisfied: (i) At the time of the issuance of the Rollover Notes, (x) there shall exist no Event of Default or event which with notice and/or lapse of time could become an Event of Default, (y) the representations and warranties shall be true and correct, (z) no material adverse change (to be defined) shall have occurred and be continuing. (ii) all fees due to NationsBridge and/or NCMI shall have been paid in full; and (iii)no order, decree, injunction or judgment enjoining the issuance of any Rollover Notes shall be in effect. EVENTS OF DEFAULT: Usual and customary for this type of transaction. 10 EXHIBIT C MAXXIM MEDICAL, INC. EQUITY AMOUNT ESCROWED If on the date exactly nine months after the Bridge Notes are issued, the Bridge Notes are still outstanding, the Company agrees to immediately place in escrow warrants ("Rollover Warrants") to purchase 5.00% of the fully diluted common stock of the Company exercisable at a nominal price for a period of 7 years. In the event that any of the Bridge Notes are exchanged for any Rollover Notes, NationsBridge shall be entitled to retain 100% of the Rollover Warrants. Any Rollover Warrants to which NationsBridge is not entitled as set forth above shall be returned to the Company for cancellation following a determination thereof. 11 EXHIBIT D MAXXIM MEDICAL, INC. INDEMNIFICATION PROVISIONS In the event that NationsBridge or NCMI becomes involved in any capacity in any action, proceeding or investigation in connection with any matter contemplated by this Commitment, the Company will reimburse NationsBridge and/or NCMI for its reasonable legal and other expenses (including the cost of any investigation and preparation) as they are incurred by NationsBridge or NCMI. The Company also agrees to indemnify and hold harmless NationsBridge or NCMI and their affiliates and their respective directors, officers, employees and agents (the "Indemnified Parties") from and against any and all losses, claims, damages and liabilities, joint or several, related to or arising out of any matters contemplated by this engagement, unless and only to the extent that it shall be finally judicially determined that such losses, claims, damages or liabilities resulted primarily from the gross negligence or willful misconduct of NationsBridge or NCMI. The Indemnified Parties will promptly notify the Company upon receipt of written notice of any claim or threat to institute a claim; provided that any failure by the Indemnified Parties to give such notice shall not relieve the Company from the obligation to indemnify the Indemnified Parties, if the Company is otherwise notified of the claim. In addition, the Company shall only be relieved of its indemnity obligations to the extent the Company is materially prejudiced by the failure to notify it. If any action, claim, investigation or other proceeding is instituted or threatened against any Indemnified Parties in respect of which indemnity may be sought hereunder, the Company shall be entitled to assume the defense thereof with counsel selected by the Company (which counsel shall be reasonably satisfactory to such Indemnified Parties) and after notice from the Company to such Indemnified Parties of its election so to assume the defense thereof, the Company will not be liable to such Indemnified Parties hereunder for any legal or other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof other than reasonable costs of investigation and such other expenses as have been approved in advance; provided that (i) if counsel for such Indemnified Parties determines in good faith that there is a conflict which requires separate representation for the Company and such Indemnified Parties, or (ii) the Company fails to assume or proceed in a timely and reasonable manner with the defense of such action or fails to employ counsel reasonably satisfactory to such Indemnified Parties in any such action, then in either such event such Indemnified Parties shall be entitled, subject to prior approval by the Company, such approval not to be unreasonably withheld, to select one primary counsel and, if necessary, one local counsel, of their own choice to represent such Indemnified Parties and the Company shall not, or no longer, be entitled to assume the defense thereof on behalf of such Indemnified Parties and such Indemnified Parties shall be entitled to indemnification for the reasonable expenses (including reasonable fees and expenses of such counsel) to the extent provided in the preceding paragraph. Such counsel shall, to the fullest extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. Nothing contained herein shall preclude any Indemnified Parties, at their own expense, from retaining additional counsel to represent such Indemnified Parties in any action with respect to which indemnity may be sought from the Company hereunder. The Company shall not be liable under this agreement for any settlement made by any Indemnified Parties without the Company's prior written consent, and the Company agrees to indemnify and hold harmless any Indemnified Parties from and against any loss or liability by reason of the settlement of any claim or action with the consent of the Company. The Company 12 shall not settle any such claim or action without the prior written consent of the Indemnified Parties unless such settlement provides for a full release of claims against the Indemnified Parties. If the indemnification provided for herein is unavailable to an Indemnified Party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then the Company, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities and expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and NationsBridge or NCMI on the other from the Commitment or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and NationsBridge or NCMI on the other in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. 13 EXHIBIT (c) ----------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER BY AND AMONG MAXXIM MEDICAL, INC. MAXXIM ACQUISITION CO. AND STERILE CONCEPTS HOLDINGS, INC. Dated as of June 10, 1996 ----------------------------------------------------------------- TABLE OF CONTENTS ARTICLE I THE OFFER 1.1 The Offer.........................................................2 1.2 Company Actions...................................................3 1.3 Composition of the Board of Directors.............................5 1.4 Action By Directors...............................................8 ARTICLE II THE MERGER AND RELATED MATTERS 2.1 The Merger........................................................9 2.2 Conversion of Stock..............................................10 2.3 Surrender of Certificates........................................11 2.4 Payment..........................................................13 2.5 No Further Rights to Transfers...................................15 2.6 Stock Option and Other Plans.....................................15 2.7 Articles of Incorporation of the Surviving Corporation.....................................................18 2.8 By-Laws of the Surviving Corporation.............................18 2.9 Directors and Officers of the Surviving Corporation.....................................................18 2.10 Closing.........................................................19 ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of the Company....................19 3.2 Representations and Warranties of Parent and Sub.................37 ARTICLE IV TRANSACTIONS PRIOR TO AND AFTER THE CLOSING DATE 4.1 Access to Information Concerning Properties and Records.....................................................41 4.2 Confidentiality..................................................42 4.3 Conduct of the Business of the Company Pending the Closing Date........................................42 4.4 Proxy Statement.................................................45 4.5 Stockholder Approval............................................46 4.6 Reasonable Efforts..............................................46 4.7 No Solicitation of Other Offers.................................47 -i- 4.8 Notification of Certain Matters.................................50 4.9 HSR Act.........................................................50 4.10 Employee Benefits...............................................50 4.11 Directors' and Officers' Insurance; Indemnification................................................51 4.12 Financing.......................................................54 4.13 Additional Reports and Filings..................................54 ARTICLE V CONDITIONS PRECEDENT TO MERGER 5.1 Conditions Precedent to Obligations of Parent, Sub and the Company.............................................55 5.2 Conditions Precedent to Obligations of the Company.........................................................56 ARTICLE VI TERMINATION AND ABANDONMENT 6.1 Termination......................................................56 6.2 Effect of Termination............................................58 ARTICLE VII MISCELLANEOUS 7.1 Fees and Expenses................................................59 7.2 Representations and Warranties...................................59 7.3 Extension; Waiver................................................60 7.4 Public Announcements.............................................60 7.5 Notices..........................................................61 7.6 Entire Agreement.................................................62 7.7 Binding Effect; Benefit; Assignment..............................62 7.8 Applicable Law...................................................63 7.9 Severability.....................................................63 7.10 "Person" Defined................................................63 -ii- AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of June 10, 1996 (this "Agreement"), by and among MAXXIM MEDICAL, INC., a Delaware corporation ("Parent"), MAXXIM ACQUISITION CO., a Virginia corporation and a wholly-owned subsidiary of Parent ("Sub"), and STERILE CONCEPTS HOLDINGS, INC., a Virginia corporation (the "Company"). WHEREAS, the respective Boards of Directors of Parent, Sub and the Company (in the case of the Company, based upon the recommendation of a special committee of independent directors (the "Special Committee")) have approved the acquisition of the Company by Parent; WHEREAS, in contemplation thereof it is proposed that Sub will make a tender offer (the "Offer") to purchase all the issued and outstanding shares of common stock, no par value, of the Company ("Common Stock"), subject to the terms and conditions of this Agreement, at a price of $20.00 per share net to the seller in cash (the "Offer Price"); WHEREAS, to complete such acquisition, the respective Boards of Directors of Parent, Sub and the Company have approved the merger of Sub into the Company (the "Merger"), pursuant to and subject to the terms and conditions of this Agreement; and WHEREAS, the directors of the Company have unanimously determined that each of the Offer and the Merger are fair to, and -1- in the best interests of, the holders of Common Stock, approved the Offer and the Merger and recommended the acceptance of the Offer and approval and adoption of this Agreement by the stockholders of the Company. NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE OFFER 1.1 THE OFFER. Provided that this Agreement shall not have been terminated in accordance with Article VI hereof and none of the events set forth in Annex A hereto (the "Tender Offer Conditions") shall have occurred and be existing, as promptly as practicable, but in no event later than the fifth business day after the date of this Agreement, Sub shall commence the Offer in compliance in all material respects with all applicable laws, rules and regulations. The obligations of Sub to accept for payment and promptly to pay for any shares of Common Stock tendered shall be subject only to the Tender Offer Conditions, any of which may be waived; provided, however, that, without the consent of the Company, Sub shall not waive the condition that there shall have been validly tendered and not withdrawn prior to the expiration of the Offer a number of shares of Common Stock which represent greater than two-thirds of the total voting power -2- of all shares of capital stock of the Company outstanding on a fully diluted basis. The Tender Offer Conditions are for the sole benefit of Parent and Sub and may be asserted by Parent and Sub regardless of the circumstances giving rise to any such Tender Offer Conditions and, subject to the preceding sentence, may be waived by Parent and Sub in whole or in part. Sub expressly reserves the right to modify the terms of the Offer, except that, without the consent of the Company, Sub shall not (i) reduce the number of shares of Common Stock to be purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or add to the Tender Offer Conditions, (iv) extend the Offer beyond the scheduled expiration date (except that the Offer may be extended to the extent required by law or in the event the Tender Offer Conditions shall not have been satisfied by the scheduled expiration date) or (v) change the form of consideration payable in the Offer. 1.2 COMPANY ACTIONS. The Company hereby consents to the Offer and the Merger and represents that (a) its Board of Directors (at a meeting duly called and held), based upon the recommendation of the Special Committee, has (i) determined by the unanimous vote of the directors that each of the Offer and the Merger is fair to, and in the best interests of, the holders of Common Stock, (ii) approved the Offer and the Merger, (iii) recommended acceptance of the Offer and approval and adoption of this Agreement by the stockholders of the Company, (iv) taken all -3- other action necessary to render the Shareholder Protection Rights Agreement dated as of March 6, 1996 (the "Rights Agreement") and Articles 14 and 14.1 of the Virginia Stock Corporation Act inapplicable to the Offer and the Merger; and (b) Wheat First Butcher Singer has delivered to the Board of Directors of the Company its opinion that the consideration to be received by the holders of Common Stock pursuant to the Offer and the Merger is fair to the holders of Common Stock from a financial point of view, subject to the assumptions and qualifications contained in such opinion. The Company shall file with the Securities and Exchange Commission (the "Commission"), as soon as practicable on the date of the commencement of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") containing the recommendations referred to in clause (a) of the preceding sentence; provided, however, that such recommendations may be withdrawn, modified or amended at any time or from time-to-time to the extent required for the Board of Directors of the Company to comply with its fiduciary obligations under applicable law. Parent and Sub and their counsel shall be given the opportunity to review the Schedule 14D-9 prior to its filing with the Commission. The Company agrees to provide Parent and its counsel with any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments and shall provide Parent and its counsel an opportunity to participate, including by way of discussions with the SEC or its staff, in the -4- response of the Company to such comments. The Schedule 14D-9 will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the Commission and on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Company with respect to information supplied by Parent or Sub in writing for inclusion in the Schedule 14D-9. The Company, Parent and Sub each agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the Commission and disseminated to the stockholders, in each case as and to the extent required by applicable federal securities laws. In connection with the Offer, the Company will promptly furnish Sub with mailing labels, security position listings and any available listings or computer lists containing the names and addresses of the record holders of the Common Stock as of the most recent practicable date and shall furnish Sub with such additional information (including, but not limited to, updated lists of holders of Common Stock and their addresses, mailing labels and lists of security positions) and such other -5- assistance as Sub or its agents may reasonably request in communicating the Offer to the Company's stockholders. 1.3 COMPOSITION OF THE BOARD OF DIRECTORS. Promptly upon the acceptance for payment of, and payment by Sub in accordance with the Offer for, greater than two-thirds of the outstanding shares of Common Stock pursuant to the Offer (the "Offer Closing"), Sub shall be entitled to designate such number of directors on the Board of Directors of the Company, rounded up to the next whole number, as will give Sub, subject to compliance with Section 14(f) of the Securities Exchange Act of 1934 (the "Exchange Act"), representation on such Board of Directors equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that such number of shares of Common Stock so accepted for payment and paid for or otherwise acquired or owned by Sub or Parent bears to the number of shares of Common Stock outstanding and the Company and its Board of Directors shall, at such time, take any and all such action needed to cause Sub's designees to be appointed to the Company's Board of Directors (including to cause directors to resign). Notwithstanding the foregoing, neither Parent, Sub nor the Company shall take any action to remove or replace any member of the Special Committee after consummation of the Offer and prior to the Effective Time (as hereinafter defined). If at any time -6- prior to the Effective Time there are less than two members of the Special Committee, as constituted on the date hereof, on the Company's Board of Directors, Parent, Sub and the Company shall use their reasonable efforts to ensure that two members (the "Continuing Directors") of the Company's Board of Directors are either (a) members of the Special Committee (as constituted on the date hereof) or (b) persons who are neither (i) officers or employees of the Company nor (ii) associated with or affiliated with, or designated by, Parent. In the event that both Continuing Directors resign from the Special Committee, Parent, Sub and the Company shall permit the resigning Continuing Directors to appoint their successors in their reasonable discretion. The Company shall take all action requested by Parent which is reasonably necessary to effect any such election of Parent's designees to the Board of Directors, including mailing to its stockholders the Information Statement containing the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing with the mailing of the Schedule 14D-9 so long as Sub shall have provided to the Company on a timely basis all information required to be included in the Information Statement with respect to Sub's designees. The Company shall take all action required pursuant to such Section and Rule to fulfill its obligations under this Section 1.3 and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under such Section and -7- Rule to fulfill its obligations under this Section 1.3. Parent and Sub will supply to the Company in writing and be responsible for any information with respect to Parent and Sub and their respective nominees, officers, directors and affiliates required by such Section and Rule. In furtherance thereof, the Company will increase the size of the Company's Board of Directors, or use its reasonable efforts to secure the resignation of directors, or both, as is necessary to permit Sub's designees to be elected to the Company's Board of Directors. Immediately following the Offer Closing, the Company, if so requested, will use its reasonable efforts to cause persons designated by Sub to constitute the same percentage of each committee of such board, each board of directors of each subsidiary of the Company and each committee of each such board (in each case to the extent of the Company's ability to elect such persons). At all times prior to the termination of the Option Exercise Period (as defined in Section 2.6), the composition of the Executive Compensation Committee of the Board of Directors of the Company shall remain the same as the Special Committee and the Board of Directors of the Company shall not take any action to limit or impair the authority of the Executive Compensation Committee to administer the Plan (as defined in Section 2.6); provided, however, that the Executive Compensation Committee shall not (i) make any additional grants or awards of any type pursuant to the Plan, (ii) amend the terms and conditions of any award made pursuant to the Plan prior to the date of this Agreement, except as -8- contemplated by this Agreement, or (iii) have any authority to act with respect to any matters other than those relating to stock options previously granted under the Plan. 1.4 ACTION BY DIRECTORS. Following the election or appointment of Parent's designees pursuant to Section 1.3 and prior to the Effective Time, and, so long as there shall be at least one Continuing Director, if requested by a majority of the Continuing Directors, such designees shall abstain from acting upon, and the approval of a majority of the Continuing Directors shall be required to authorize any termination of this Agreement by the Company, any amendment of this Agreement requiring action by the Board of Directors of the Company, any extension of time for the performance of any of the obligations or other acts of Parent or Sub under this Agreement and any waiver of compliance with any of the covenants, agreements or conditions under this Agreement for the benefit of the Company. ARTICLE II THE MERGER AND RELATED MATTERS 2.1 THE MERGER. (a) Subject to the terms and conditions of this Agreement, at the time of the Closing (as defined in Section 2.11 hereof), Articles of Merger (the "Articles of Merger") shall be duly prepared, executed and acknowledged by Sub and the Company in accordance with the Virginia Stock Corporation Act and shall be filed on the Closing Date (as defined in Section -9- 2.10 hereof). The Merger shall become effective upon the issuance by the State Corporation Commission of the Commonwealth of Virginia of a certificate of merger with respect to the Merger in accordance with the provisions and requirements of the Virginia Stock Corporation Act. The date and time when the Merger shall become effective is hereinafter referred to as the "Effective Time." (b) At the Effective Time, Sub shall be merged with and into the Company and the separate corporate existence of Sub shall cease, and the Company shall continue as the surviving corporation under the laws of the Commonwealth of Virginia under the name of "Sterile Concepts Holdings, Inc." (the "Surviving Corporation"). (c) From and after the Effective Time, the Merger shall have the effects set forth in Section 13.1-721 of the Virginia Stock Corporation Act. 2.2 CONVERSION OF STOCK. At the Effective Time: (a) Each share of Common Stock then issued and outstanding (other than any shares of Common Stock which are held by the Company or any subsidiary of the Company, or which are held, directly or indirectly, by Parent or any direct or indirect subsidiary of Parent (including Sub), all of which shall be canceled and none of which shall receive any payment with respect thereto) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and represent -10- the right to receive an amount in cash, without interest, equal to the price paid for each share of Common Stock pursuant to the offer (the "Merger Consideration"); and (b) Each share of common stock, no par value, of Sub then issued and outstanding shall, by virtue of the Merger and without any action on the part of the holder thereof, become one fully paid and nonassessable share of common stock, no par value, of the Surviving Corporation. 2.3 SURRENDER OF CERTIFICATES. (a) Concurrently with or prior to the Effective Time, Parent shall designate a bank or trust company located in the United States to act as paying agent (the "Paying Agent") for purposes of making the cash payments contemplated hereby. As soon as practicable after the Effective Time, Parent shall cause the Paying Agent to mail or otherwise make available to each holder of a certificate theretofore evidencing shares of Common Stock (other than those which are held by any subsidiary of the Company or which are held directly or indirectly by Parent or any direct or indirect subsidiary of Parent (including Sub) a notice and letter of transmittal advising such holder of the effectiveness of the Merger and the procedure for surrendering to the Paying Agent such certificate or certificates which immediately prior to the Effective Time represented outstanding Common Stock (the "Certificates") in exchange for the Merger Consideration deliverable in respect thereof pursuant to this Article II. Upon the surrender for -11- cancellation to the Paying Agent of such Certificates, together with a letter of transmittal, duly executed and completed in accordance with the instructions thereon, and any other items specified by the letter of transmittal, the Paying Agent shall promptly pay to the Person (as defined in Section 7.10 hereof) entitled thereto the Merger Consideration deliverable in respect thereof. Until so surrendered, each Certificate shall be deemed, for all corporate purposes, to evidence only the right to receive upon such surrender the Merger Consideration deliverable in respect thereof to which such Person is entitled pursuant to this Article II. No interest shall be paid or accrued in respect of such cash payments. (b) If the Merger Consideration (or any portion thereof) is to be delivered to a Person other than the Person in whose name the Certificates surrendered in exchange therefor are registered, it shall be a condition to the payment of the Merger Consideration that the Certificates so surrendered shall be properly endorsed or accompanied by appropriate stock powers and otherwise in proper form for transfer, that such transfer otherwise be proper and that the Person requesting such transfer pay to the Paying Agent any transfer or other taxes payable by reason of the foregoing or establish to the satisfaction of the Paying Agent that such taxes have been paid or are not required to be paid. (c) In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact -12- by the Person claiming such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof as determined in accordance with this Article II, provided that, the Person to whom the Merger Consideration is paid shall, as a condition precedent to the payment thereof, give the Surviving Corporation a bond in such sum as it may direct or otherwise indemnify the Surviving Corporation in a manner satisfactory to it against any claim that may be made against the Surviving Corporation with respect to the Certificate claimed to have been lost, stolen or destroyed. 2.4 PAYMENT. Concurrently with or immediately prior to the Effective Time, Parent or Sub shall deposit in trust with the Paying Agent cash in United States dollars in an aggregate amount equal to the product of (i) the number of shares of Common Stock outstanding immediately prior to the Effective Time (other than shares of Common Stock which are held by any subsidiary of the Company or which are held directly or indirectly by Parent or any direct or indirect subsidiary of Parent (including Sub)) and (ii) the Merger Consideration (such amount being hereinafter referred to as the "Payment Fund"). The Payment Fund shall be invested by the Paying Agent as directed by Parent in direct obligations of the United States; obligations for which the full faith and credit of the United States is pledged to provide for the payment of principal and interest; obligations of the Federal -13- Intermediate Liquidity Banks, Federal Home Loan Banks, National Bank for Cooperatives, Federal Land Banks, The Government National Mortgage Association or The Federal National Mortgage Association; commercial paper or finance company paper which is rated not less than P-1, A-1 or F-1 by Moody's Investors Services, Inc., Standard & Poor's Ratings Services or Fitch Investors Services, Inc., as the case may be; certificates of deposit or bankers' acceptances of a bank or trust company having at least $20,000,000 of combined capital and surplus; or repurchase agreements secured by any one or more of the foregoing (collectively, "Permitted Investments"); or in money market funds which are invested in Permitted Investments, and any net earnings with respect thereto shall be paid to Parent as and when requested by Parent. The Paying Agent shall, pursuant to irrevocable instructions, make the payments referred to in Section 2.2(a) hereof out of the Payment Fund. The Payment Fund shall not be used for any other purpose except as otherwise agreed to by Parent. Promptly following the date which is three months after the Effective Time, the Paying Agent shall return to Parent all cash, certificates and other instruments in its possession that constitute any portion of the Payment Fund (other than net earnings on the Payment Fund which shall be paid to Parent), and the Paying Agent's duties shall terminate. Thereafter, each holder of a Certificate may surrender such Certificate to the Surviving Corporation and (subject to applicable abandoned property, escheat and similar laws) receive -14- in exchange therefor the Merger Consideration, without interest, but shall have no greater rights against the Surviving Corporation or Parent than may be accorded to general creditors of the Surviving Corporation or Parent under applicable law. Notwithstanding the foregoing, neither the Paying Agent nor any party hereto shall be liable to a holder of shares of Common Stock for any Merger Consideration delivered to a public official pursuant to applicable abandoned property, escheat and similar laws. 2.5 NO FURTHER RIGHTS TO TRANSFERS. At and after the Effective Time, each holder of a Certificate shall cease to have any rights as a stockholder of the Company, except for, in the case of a holder of a Certificate (other than shares to be canceled pursuant to Section 2.2(a) hereof), the right to surrender his or her Certificate in exchange for payment of the Merger Consideration, and no transfer of shares of Common Stock shall be made on the stock transfer books of the Surviving Corporation. Certificates presented to the Surviving Corporation after the Effective Time shall be canceled and exchanged for cash as provided in this Article II. At the close of business on the day of the Effective Time the stock ledger of the Company with respect to Common Stock shall be closed. 2.6 STOCK OPTION AND OTHER PLANS. During the period (the "Option Exercise Period") commencing on the date of payment by Sub in accordance with the Offer and ending on the date that is -15- two business days prior to the Effective Time (provided that the Option Exercise Period shall not be less than three business days in duration), the Company shall permit holders of stock options issued pursuant to the Company's Stock Incentive Plan (the "Plan") which shall have become exercisable to exercise such stock options in accordance with the provisions of the Plan, including without limitation those provisions relating to (i) the payment of the exercise price of stock options by the execution of a recourse note (an "Option Note") providing for the payment of all amounts due under such note through deductions from the Merger Consideration which shall become due to the maker of the note at the earlier of the Effective Time or the day that is 120 days from the date of the Offer Closing and (ii) the payment of the exercise price of stock options by the delivery of shares of Common Stock. After the termination of the Option Exercise Period and prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any Committee thereof) shall adopt appropriate resolutions and take all other actions necessary to provide for the cancellation, effective at the Effective Time, of all the outstanding stock options to purchase Common Stock (the "Options") heretofore granted under any stock option plan of the Company (the "Stock Plans"). Immediately prior to the Effective Time, (i) each Option, whether or not then vested or exercisable, shall no longer be exercisable for the purchase of shares of Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments in -16- cash (subject to any applicable withholding taxes and repayment of any outstanding Option Note, the "Cash Payment"), at the Effective Time, equal to the product of (x) the total number of shares of Common Stock subject to such Option, whether or not then vested or exercisable, and (y) the excess of the Merger Consideration over the exercise price per share of Common Stock subject to such Option, if any, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time; provided, however, that with respect to any person subject to Section 16 of the Exchange Act, any such amount shall be paid as soon as practicable after the first date payment can be made without liability to such person subject to Section 16(b) of the Exchange Act, and (ii) each share of Common Stock previously issued in the form of grants of restricted stock or grants of contingent shares shall fully vest in accordance with their respective terms. Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Effective Time without any payment therefor. As provided herein, the Stock Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of the Effective Time. The Company will take all steps to ensure that neither the Company nor any of its subsidiaries is or will be bound by any Options, other options, warrants, rights or -17- agreements which would entitle any Person, other than Parent or its affiliates, to purchase or own any capital stock of the Surviving Corporation or any of its subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that, after the Effective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Cash Payment in cancellation and settlement thereof. 2.7 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation and shall be amended so that Article III reads in its entirety as follows: "The total number of shares of stock of all classes which the Corporation has authority to issue is 1,000 shares of Common Stock, no par value." 2.8 BY-LAWS OF THE SURVIVING CORPORATION. The By-Laws of Sub, as in effect immediately prior to the Effective Time, shall be the By-Laws of the Surviving Corporation. 2.9 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At the Effective Time, the directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each of such directors to hold office, subject to the applicable provisions of the Articles of Incorporation and By-Laws of the Surviving Corporation, until the next annual stockholders' meeting of the Surviving Corporation and until their respective successors shall be duly elected or appointed and qualified. At the Effective Time, the officers of the Company immediately prior to the Effective Time shall, subject to the applicable provisions of the Articles of Incorporation and -18- By-Laws of the Surviving Corporation, be the officers of the Surviving Corporation until their respective successors shall be duly elected or appointed and qualified. 2.10 CLOSING. The closing of the Merger (the "Closing") shall take place at the offices of McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia, as soon as practicable after the last of the conditions set forth in Article V hereof is fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as Parent and the Company shall mutually agree (the "Closing Date"). ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Parent and Sub as follows: (a) DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Each of the Company and its subsidiaries is a corporation -19- duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of the Company and its subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations or condition (financial or otherwise) (the "Condition") of the Company and its subsidiaries taken as a whole. The Company has made available to Parent and Sub complete and correct copies of the Articles of Incorporation and By-Laws of the Company and its subsidiaries, in each case as amended to the date of this Agreement. The respective Articles of Incorporation and By-laws or other organizational documents of the subsidiaries of the Company do not contain any provision limiting or otherwise restricting the ability of the Company to control such subsidiaries. (b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has the corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The -20- execution, delivery and performance of this Agreement by the Company, and the consummation by it of the transactions contemplated hereby, have been duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby (other than the approval of this Agreement by the holders of more than two-thirds of the shares of Common Stock). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and general equitable principles. (c) CAPITALIZATION. (i) The authorized capital stock of the Company consists of 25,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, no par value (the "Preferred Stock"). As of the date hereof, (1) 5,526,384 shares of Common Stock are issued and outstanding, (2) 549,616 shares of Common Stock are reserved for issuance pursuant to outstanding Options granted under the Stock Incentive Plans, (3) no shares of Preferred Stock are issued and outstanding and (4) -21- no shares of Common Stock are held in the Company's treasury. All issued and outstanding shares of Common Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.1(c) or on Schedule 3.1(c) hereto, (i) there are no shares of capital stock of the Company authorized, issued or outstanding, (ii) there are not as of the date hereof, and at the Effective Time there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Common Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Common Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. The Company has no authorized or outstanding bonds, debentures, notes or other indebtedness the holders of which have the right to vote (or convertible or exchangeable into or exercisable for securities having the right to vote) with the stockholders of the Company or any of its -22- subsidiaries on any matter ("Voting Debt"). After the Effective time, the Surviving Corporation will have no obligation to issue, transfer or sell any Shares of common stock of the Surviving Corporation pursuant to any Employee Plan (as defined in Section 3.1(i)). (ii) Schedule 3.1(c)(ii) hereto lists all of the Company's subsidiaries. All of the outstanding shares of capital stock of each of the Company's subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. Except as set forth on Schedule 3.1(c)(ii) hereto, no shares of capital stock of any of the Company's subsidiaries are reserved for issuance and there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any subsidiary of the Company, pursuant to which such subsidiary is or may become obligated to issue any shares of capital stock of such subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe -23- for, any shares of such subsidiary. Except for the subsidiaries listed on Schedule 3.1(c)(ii), the Company does not own, directly or indirectly, any capital stock or other equity interest in any Person or have any direct or indirect equity or ownership interest in any Person and neither the Company nor any of its subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. The Company's subsidiaries have no Voting Debt. (d) CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i) the filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), are made and the waiting period thereunder has been terminated or has expired, (ii) the requirements of the Exchange Act relating to the Proxy Statement and the Offer are met, (iii) the filing of the Articles of Merger and other appropriate merger documents, if any, as required by the Virginia Stock Corporation Act, is made and (iv) approval of the Merger by the holders of more than two-thirds of the outstanding shares of Common Stock, if required by the Virginia Stock Corporation Act, is obtained, the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not: (1) violate any provision of the Articles of Incorporation or By-Laws of the Company or of any of its -24- subsidiaries, each as amended; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to the Company or any of its subsidiaries or by which any of their respective properties or assets may be bound; (3) require any filing with, or the procurement of any permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority or consent of any other Person; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Company or any of its subsidiaries is a party, or by which it or any of their respective properties or assets may be bound except, in the case of clauses (2), (3) and (4) above, for such filing, permit, consent, approval or violation, which could not reasonably be expected to have a material adverse effect on the Condition of the Company and its subsidiaries, taken as a whole, or could be reasonably likely to prevent or materially delay consummation of the transactions contemplated by this Agreement. -25- (e) COMPANY REPORTS AND FINANCIAL STATEMENTS. The Company has, prior to the date of this Agreement, made available to Parent true and complete copies of all registration statements and periodic reports filed by the Company with the Commission under the Securities Act of 1933, as amended, and the Exchange Act since the date of filing with the SEC of Amendment No. 4 to the Company's Registration Statement on Form S-1 (No. 33-80736) relating to the initial public offering of shares of its Common Stock (such periodic reports and registration statements, together with any exhibits, any amendments thereto and information incorporated by reference therein, are sometimes collectively referred to as the "Commission Filings"). As of their respective dates, the Commission Filings did not contain any untrue statement of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the audited consolidated balance sheets of the Company as of the end of the fiscal years ended September 30, 1995, 1994 and 1993 and the audited consolidated statements of earnings, audited consolidated statements of changes in stockholders' equity and audited consolidated statements of cash flows included in the Commission Filings, were prepared in accordance with generally accepted accounting principles (as in effect from time to time) applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and fairly present the consolidated financial position of the Company and its -26- consolidated subsidiaries as of the dates thereof and the results of their operations and changes in financial position for the periods then ended. In addition, the Company has previously furnished to Parent a true and complete copy of the unaudited consolidated balance sheet as of March 31, 1996 and the unaudited consolidated statements of earnings, unaudited consolidated statements of changes in stockholders' equity and unaudited consolidated statements of cash flows for the fiscal quarter ended March 31, 1996 (the "Interim Statements"), all of which were prepared in accordance with generally accepted accounting principles (as in effect from time to time) applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and fairly present the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the results of their operations and changes in financial positions for the periods then ended. (f) ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 3.1(f) hereto or as otherwise contemplated by this Agreement, since March 31, 1996 (i) there has not been any material adverse change in the Condition of the Company and its subsidiaries taken as a whole; (ii) the businesses of the Company and each of its subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction -27- or entered into any material agreement outside the ordinary course of business; (iv) there has been no declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company except for the normal quarterly cash dividend of $.04 per share paid within approximately 10 days after the end of the March 31, 1996 quarter; and (v) there has been no change by the Company in accounting principles, practices or methods. (g) COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.1(g) hereto, the Company and its subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its subsidiaries taken as a whole or could be reasonably likely to prevent or materially delay consummation of the transactions contemplated by this Agreement. (h) LITIGATION. Except as disclosed in the Commission Filings or as set forth on Schedule 3.1(h) hereto, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the knowledge of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of -28- the Company and its subsidiaries taken as a whole. Except as disclosed in the Commission Filings or as set forth on Schedule 3.1(h) hereto, neither the Company nor any of its subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its subsidiaries taken as a whole or on the ability of the Company or any subsidiary to conduct its business as presently conducted. (i) EMPLOYEE BENEFIT PLANS. (i) Schedule 3.1(i) hereto lists all employee benefit plans and programs, including, without limitation, (w) all retirement, savings and other pension plans; (x) all health, severance, insurance, disability and other employee welfare plans; (y) all incentive, vacation, bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, other similar employee plans, programs or arrangements; and (z) all employment, compensation or severance agreements, that are maintained by the Company for the benefit of which, or relate to, current employees and former employees of the Company and its subsidiaries (collectively, the "Employee Plans"). (ii) None of the Employee Plans is a "multiemployer plan" as defined in Section 3(37) of ERISA. -29- (iii) Except as set forth on Schedule 3.1(i) hereto, all Employee Plans are in compliance in all material respects with the requirements prescribed by applicable statutes, orders or governmental rules or regulations currently in effect with respect thereto, and the Company has performed all material obligations required to be performed by it under, and is not in any material respect in default under or in violation of, any of the Employee Plans. (iv) Except as set forth on Schedule 3.1(i) hereto, each Employee Plan intended to be qualified under Section 401(a) of the Internal Revenue Code ("Code") has heretofore been determined by the Internal Revenue Service to so qualify, and each trust created thereunder has heretofore been determined by the Internal Revenue Service to so qualify, and each trust created thereunder has heretofore been determined by the Internal Revenue Service to be exempt from tax under the provisions of Section 501(a) of the Code and, to the knowledge of the Company, nothing has occurred since the date of the most recent determination that would be reasonably likely to cause any such Employee Plan or trust to fail to qualify under Section 401(a) or 501(a) of the Code. (v) The Company has not incurred any material liability to the Pension Benefit Guaranty -30- Corporation ("PBGC") under Section 4001 ET SEQ. of ERISA, except for premiums required under Section 4007 of ERISA which are not yet due, and no condition exists that could reasonably be expected to result in the Company incurring material liability under Title IV of ERISA, either singly or as a member of any trade or business, whether or not incorporated, under common control of or affiliated with the Company, within the meaning of Section 414(b), (c), (m) or (o) of the Code. All premiums payable to the PBGC have been paid when due. (vi) The Company has made available to Parent copies of all Employee Plans and, where applicable, summary plan descriptions, the most recent Internal Revenue Service determination letters, if applicable, and annual reports required to be filed within the last year pursuant to ERISA or the Code with respect to the Employee Plans. (vii) No prohibited transaction, as defined in Section 4975 of the Code, has occurred with respect to any Employee Plan that is a pension plan as defined in Section 3(2) of ERISA. (viii) Except as set forth on Schedule 3.1(i) hereto, the Company does not maintain and has not at any time in the past maintained any plan which constitutes a defined benefit pension plan subject to -31- Title IV of ERISA. (ix) There are no actions, suits or claims pending, threatened or anticipated (other than routine claims for benefits) with respect to any Employee Plan. (x) Except as set forth on Schedule 3.1(i) hereto, no compensation or benefit that is or will be payable in connection with the transactions contemplated by this Agreement will be characterized as an "excess parachute payment" within the meaning of Section 280G of the Code. (xi) The Company has not made any commitment to establish any new Employee Plan, to modify any Employee Plan or to increase benefits or compensation of employees or former employees of the Company (except for normal increases in compensation consistent with past practices or as disclosed in Schedule 3.1(i) hereto), nor has any intention to do so been communicated to employees or former employees of the Company. (xii) All material employment or compensation agreements contained within the Employee Plans are in full force and effect, and neither the Company nor any subsidiary, nor, to the best of the Company's knowledge, any other party, is in default under any of them. There have been no claims of default and, to the best knowledge of the Company and its subsidiaries, there are no facts or -32- conditions which if continued, or on notice, will result in a material default under any of such employment or compensation agreements. (xiii) Except for severance payment obligations contained in those certain employment, severance or compensation agreements specified on Schedule 3.1(i), neither the Company nor any of its subsidiaries will owe a severance payment or similar obligation to any of their respective employees, officers or directors as a result of the Offer or the Merger or the other transactions contemplated by this Agreement. (j) LIABILITIES. Except as set forth in the Commission Filings, as set forth on Schedule 3.1(j) hereto or as otherwise contemplated by this Agreement, neither the Company nor any of its subsidiaries has any material outstanding claims, liabilities or indebtedness, whether accrued, absolute, contingent or otherwise, other than liabilities incurred subsequent to March 31, 1996 in the ordinary course of business. Neither the Company nor any of its subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement, which default might reasonably be expected to have a material adverse effect on the Condition of the Company and its subsidiaries taken as a whole. (k) BROKER'S OR FINDER'S FEES. Except for Wheat First Butcher Singer (whose fees and expenses will be paid by the Company in accordance with the Company's agreement with such -33- firm, a true and correct copy of which has been previously delivered to Parent by the Company), no agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the transactions contemplated hereby. (l) ENVIRONMENTAL LAWS AND REGULATIONS. Except as disclosed in the Commission Filings, or as set forth on Schedule 3.1(l) hereto or as would not individually or in the aggregate have a material adverse affect on the Condition of the Company or its subsidiaries taken as a whole; (i) the Company and its subsidiaries are not in violation of any Environmental Law; (ii) no real property currently or formerly owned, occupied or operated by the Company or any Subsidiary is contaminated with any Hazardous Substances requiring remediation under any Environmental Law; (iii) the Company and its subsidiaries are not subject to liability for any off-site disposal or contamination; (iv) the Company and its subsidiaries have not received any claims or notices alleging liability under any Environmental Law; and (v) there are no circumstances involving the Company or its subsidiaries that could reasonably be expected to result in any claims, liabilities, costs or restrictions on the ownership, use, or transfer of any property pursuant to any Environmental Law. "Environmental Law" means any law, regulation, order, decree, -34- opinion or agency requirement relating to noise, odor, Hazardous Substance or the protection of the environment or human health and safety. "Hazardous Substance" means any substance that is listed, classified or regulated by any government authority or any Environmental Law, in any concentration, including any petroleum products, asbestos or polychlorinated biphenyls. (m) RIGHTS AGREEMENT; STATE TAKEOVER LAWS. (i) The Company and the Board of Directors of the Company have taken all necessary action to (i) render the Rights Agreement and Articles 14 and 14.1 of the Virginia Stock Corporation Act as well as any other applicable affiliated transaction, control share acquisition or similar state takeover laws inapplicable with respect to the Offer, the Merger and the other transactions contemplated by this Agreement and (ii) ensure that (y) neither Parent nor Sub nor any of their Affiliates (as defined in the Rights Agreement) or Associates (as defined in the Rights Agreement) is considered to be an Acquiring Person (as defined in the Rights Agreement) and (z) the provisions of the Rights Agreement, including the occurrence of a Separation Time (as defined in the Rights Agreement), are not and shall not be triggered by reason of the announcement or consummation of the Offer, the Merger or the consummation of any of the other transactions contemplated by this Agreement. The Board of Directors of the Company, at a meeting duly called and held, will take such actions, if any, that may be necessary for the Rights to be redeemed immediately prior to the acceptance for payment -35- and purchase of any of the outstanding Shares pursuant to the Offer in accordance with the terms of this Agreement provided that this Agreement shall not have been terminated in accordance with its terms. The Company has delivered to Parent a complete and correct copy of the Rights Agreement as amended and supplemented to the date of this Agreement. (n) OPINION OF FINANCIAL ADVISOR. The Company has received the opinion of Wheat First Butcher Singer, to the effect that, as of the date of this Agreement, the consideration to be received in the Offer and the Merger by the Company's stockholders is fair to the Company's stockholders from a financial point of view, and a complete and correct signed copy of such opinion has been, or promptly upon receipt thereof will be, delivered to Parent. (o) TAX RETURNS. Except as set forth on Schedule 3.1(o), within the times and in the manner prescribed by law, the Company and each subsidiary has filed all material foreign country, federal, state and local tax returns required by law, and has paid all material taxes, assessments and penalties due and payable. Except as set forth on Schedule 3.1(o), all such tax returns, when filed, were correct and complete in all material respects. Except as set forth on Schedule 3.1(o), each of the Company and its subsidiaries has withheld and paid all material taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party. The provisions for -36- taxes reflected in the Interim Statements are adequate for any and all material foreign, federal, state, county and local taxes for the period ending on March 31, 1996, and for all prior periods, whether or not disputed. There are no present disputes as to material taxes of any nature allegedly due or payable by the Company or any of its subsidiaries. (p) MATERIAL CONTRACTS. Except as set forth on Schedule 3.1(p), the Company has filed as exhibits to the Commission Filings all material contracts and agreements required to be filed as exhibits to periodic reports under the Exchange Act, including without limitation the Asset Purchase Agreement dated October 2, 1995 by and among the Company, Medical Design Concepts, Inc. and John W. Hoffee, II (collectively, the "Contracts"). To the best knowledge of the Company, each of the Contracts is in full force and effect. The Company has complied in all material respects with its obligations under the Contracts and, except as set forth on Schedule 3.1(p), to the best knowledge of the Company, there is no default or event which with notice or lapse of time, or both, would constitute a default by any party to any of the Contracts the cumulative effect of which might reasonably be expected to have a material adverse effect on the Condition of the Company and its subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries has received notice that any party to any of the Contracts intends to cancel or terminate any of the Contracts or to exercise or not exercise any options under any of the Contracts. -37- 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Each of Parent and Sub represents and warrants to the Company as follows: (a) DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and the Commonwealth of Virginia, respectively. (b) AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of Parent and Sub has the corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and Sub, and the consummation by each of them of the transactions contemplated hereby, have been duly authorized by the Boards of Directors of Parent and Sub. No other corporate action on the part of either of Parent or Sub is necessary to authorize the execution, delivery and performance of this Agreement by each of Parent or Sub and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Sub and is a valid and binding obligation of each of Parent and Sub, enforceable against each of Parent and Sub in accordance with its terms, except that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equitable principles. -38- (c) CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i) the filings required under the HSR Act are made and the waiting period thereunder has been terminated or has expired, (ii) the requirements of the Exchange Act relating to the Proxy Statement and the Offer are met and (iii) the filing of the Articles of Merger and other appropriate merger documents, if any, as required by the laws of the Commonwealth of Virginia is made, the execution and delivery of this Agreement by Parent and Sub and the consummation by Parent and Sub of the transactions contemplated hereby will not: (1) violate any provision of the Articles of Incorporation or By-Laws of Parent or Sub; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to Parent or Sub or by which either of their respective properties or assets may be bound; (3) require any filing with, or permit, the procurement of any consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority or any other Person; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right or termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Parent, Sub or any of their subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, -39- agreement, lease or other instrument or obligation to which Parent or Sub or any of their subsidiaries is a party, or by which they or their respective properties or assets may be bound except, in the case of clauses (3) and (4) above for any such filing, permit, consent, approval or violation, which could not reasonably be expected to have a material adverse effect on the Condition of the Parent and Sub, taken as a whole, or could be reasonably likely to prevent or materially delay consummation of the transactions contemplated by this Agreement. (d) OFFER DOCUMENTS, SCHEDULE 14D-9 AND PROXY STATEMENT. The documents pursuant to which the Offer will be made, including a Tender Offer Statement on Schedule 14D-1 and Offer to Purchase and related letter of transmittal (the "Offer Documents"), will comply in all material respects with the Exchange Act and the rules and regulations thereunder and any other applicable laws. If at any time prior to the expiration or termination of the Offer any event occurs which should be described in an amendment or supplement thereto, Sub will file and disseminate, as required, an amendment or supplement which complies in all material respects with the Exchange Act and the rules and regulations thereunder and any other applicable laws. Prior to the filing with the Commission, the amendment or supplement shall be delivered to the Company and its counsel. The written information supplied or to be supplied by Parent and Sub for inclusion in the Proxy Statement and the Schedule 14D-9 of the Company will not contain any untrue statement of a -40- material fact or omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, no representation or warranty is made with respect to any information with respect to the Company or its officers, directors and affiliates provided to Parent or Sub by the Company in writing for inclusion in the Offer Documents or amendments or supplements thereto. (e) BROKER'S OR FINDER'S FEES. Except for Bear Stearns & Co., Inc. (whose fees and expenses as financial advisor to Parent and Sub will be paid by Parent or Sub in accordance with Parent's agreement with such firm, a true and correct copy of which has been previously delivered to the Company by Parent), no agent, broker, Person or firm acting on behalf of Parent or Sub is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by or under common control with any of the parties hereto, in connection with this Agreement or any of the transactions contemplated hereby. (f) COMMON STOCK OWNERSHIP. As of the date hereof, none of Parent, Sub or their affiliates beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) any shares of Common Stock. -41- ARTICLE IV TRANSACTIONS PRIOR TO AND AFTER THE CLOSING DATE 4.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, the Company shall, and shall cause each of its subsidiaries to, upon reasonable notice, afford Parent and Sub, and their respective counsel, accountants, consultants and other authorized representatives, reasonable access during normal business hours to the officers, accountants, counsel, consultants, employees, properties, books and records of the Company and its subsidiaries in order that they may have the opportunity to make such investigations as they shall desire of the affairs of the Company and its subsidiaries. The Company shall furnish promptly to Parent and Sub (a) a copy of each report, schedule, registration statement and other document filed by it or its subsidiaries during such period pursuant to the requirements of federal or state securities laws and (b) all other information concerning its or its subsidiaries' business, properties and personnel as Parent and Sub may reasonably request. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as Parent and Sub shall from time to time reasonably request. 4.2 CONFIDENTIALITY. Information obtained by Parent and Sub pursuant to Section 4.1 hereof shall be subject to the -42- provisions of the Confidentiality Agreement between the Company and Parent dated March 28, 1996. 4.3 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by Parent, during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its subsidiaries will conduct their respective operations only according to their ordinary and usual course of business consistent with past practice and will use their reasonable efforts to preserve intact their respective business organizations, keep available the services of their officers and employees and maintain satisfactory relationships with licensors, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its subsidiaries shall (i) make any change in or amendment to its Articles of Incorporation or By-Laws (or comparable governing documents), each as amended; (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Options outstanding on the date hereof in accordance with the terms and conditions in effect on the date hereof) or any of its other securities, or issue any securities convertible into, or options, -43- warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries; (iv) declare, pay, set aside or make any dividend or other distribution or payment with respect to, or split, combine, redeem or reclassify, any shares of its capital stock; (v) except as set forth on Schedule 4.3(b), enter into any contract or commitment with respect to capital expenditures in excess of $150,000 or enter into any other material contract except contracts in the ordinary course of business; (vi) acquire a material amount of assets or securities or release or relinquish any material contract rights other than in the ordinary course of business; (vii) adopt or amend any Employee Benefit Plan or non-employee benefit plan or program, employment agreement, license agreement or retirement agreement, or, except in the ordinary course of business and consistent with past practice, pay any bonus or contingent or other extraordinary compensation; (viii) other than in the ordinary course of business transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien, any assets or incur or modify any indebtedness or other liability or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for the obligations of any person; (ix) agree to the settlement of any material claim or -44- litigation; (x) make any material tax election or settle or compromise any material tax liability; (xi) make any material change in its method of accounting or (xii) agree, in writing or otherwise, to take any of the foregoing actions; and (c) Except as set forth on Schedule 4.3(c), the Company shall not, and shall not permit any of its subsidiaries to, (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Section 3.1 hereof to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company. 4.4 PROXY STATEMENT. If stockholder approval of the Merger is required by law, as promptly as practicable, the Company will prepare and file a preliminary Proxy Statement with the Commission and will use its reasonable efforts to respond to the comments of the Commission in connection therewith and to furnish all information required to prepare the definitive Proxy Statement (including, without limitation, financial statements and supporting schedules and certificates and reports of independent certified public accountants). Promptly after the expiration or termination of the Offer, if required by the Virginia Stock Corporation Act in order to consummate the Merger, the Company will cause the definitive Proxy Statement to be mailed to the stockholders of the Company and, if necessary, after the definitive Proxy Statement shall have been so mailed, -45- promptly circulate amended, supplemental or supplemented proxy material and, if required in connection therewith, resolicit proxies. The Company will not use any proxy material in connection with the meeting of its stockholders without Parent's prior approval. Prior to filing the preliminary Proxy Statement with the Commission and mailing the definitive Proxy Statement to the stockholders of the Company, the Company shall forward copies of such Proxy Statements to Parent for Parent's review and comment, and otherwise cooperate with Parent in the preparation, filing and/or distribution of such Proxy Statements. 4.5 STOCKHOLDER APPROVAL. Promptly after the expiration or termination of the Offer, if required by the Virginia Stock Corporation Act in order to consummate the Merger, the Company, acting through its Board of Directors, shall in accordance with applicable law, promptly call a special meeting of the holders of Common Stock for the purpose of voting upon this Agreement and the Merger and the Company agrees that this Agreement and the Merger shall be submitted at such special meeting. The Company shall use its reasonable efforts to solicit from its stockholders proxies, and shall take all other action necessary and advisable, to secure the vote of stockholders required by applicable law to obtain the approval for this Agreement. Subject to Section 4.7 of this Agreement, the Company agrees that it will include in the Proxy Statement the recommendation of its Board of Directors that holders of Common Stock approve and adopt this Agreement and -46- approve the Merger. Parent will cause all shares of Common Stock owned by Parent and its affiliates to be voted in favor of the Merger. 4.6 REASONABLE EFFORTS. Subject to the terms and conditions provided herein and to the fiduciary duties of the Board of Directors of the Company under applicable law, each of the Company, Parent and Sub shall, and the Company shall cause each of its subsidiaries to, cooperate and use reasonable efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, their respective reasonable efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its subsidiaries as are necessary for consummation of the transactions contemplated by this Agreement and to fulfill the conditions to the Offer and the Merger. The Company and Parent shall use their reasonable efforts to consummate the Merger as promptly as practicable. 4.7 NO SOLICITATION OF OTHER OFFERS. (a) Neither the Company nor any of its subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its subsidiaries officers, directors, employees, -47- representatives, consultants, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to (i) solicit, encourage, facilitate or initiate the submission of any Acquisition Proposal or (ii) participate in any way in discussions or negotiations with, or, furnish any information to, any Person (other than Parent or Sub) in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, PROVIDED, HOWEVER, that the Company may participate in discussions or negotiations with or furnish information to any third party which makes an unsolicited, bona fide noncollusive proposal in writing with respect to a transaction which the Board of Directors of the Company believes is likely to result in an Acquisition Proposal if the Board of Directors believes (and has been advised by counsel) that failing to take such action would constitute a breach of its fiduciary duties. In addition, neither the Board of Directors of the Company nor any Committee thereof shall withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent the approval and recommendation of the Offer and this Agreement or approve or recommend any Acquisition Proposal, provided that the Board of Directors (or a Committee thereof) may recommend to the Company's stockholders an Acquisition Proposal and in connection therewith withdraw or modify its approval or recommendation of the Offer or the Merger if (i) the Board of Directors of the Company has determined that the Acquisition Proposal is a -48- Superior Proposal and (ii) simultaneously with such withdrawal, modification or recommendation, this Agreement is terminated in accordance with Section 6.1(e). Any actions permitted under, and taken in compliance with, this Section 4.7 shall not be deemed a breach of any other covenant or agreement of such party contained in this Agreement. "Acquisition Proposal" shall mean any proposed merger, consolidation, share exchange or other business combination, sale or other disposition of any material amount of assets, sale or issuance of shares of capital stock, tender offer or exchange offer or similar transaction involving the Company or any of its subsidiaries and a third party. "Superior Proposal" shall mean an unsolicited, bona fide noncollusive Acquisition Proposal on terms which a majority of the members of the Special Committee and Board of Directors of the Company determines in its good faith judgment (based on the advice of independent financial and legal advisors) to be more favorable to the Company and its shareholders than the transactions contemplated hereby. (b) In addition to the obligations of the Company set forth in paragraph (a), the Company shall advise Parent immediately of any request for information or of any Acquisition Proposal, or any proposal with respect to any Acquisition Proposal, the material terms and conditions of such request or Acquisition Proposal, and the identity of the person making any such Acquisition Proposal or inquiry. The Company will promptly inform Parent of the status and details both orally and in -49- writing (including amendments or proposed amendments) of any such request, takeover proposal or inquiry, and will promptly provide Parent with copies of all such written requests, proposals and inquiries. (c) Immediately following the purchase of Shares pursuant to the Offer, the Company will request each person which has heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company or any portion thereof (the "Confidentiality Agreements") other than Parent to return all confidential information heretofore furnished to such person by or on behalf of the Company. 4.8 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to Parent of: (a) any notice of, or other communication relating to, a material default or event that, with notice or lapse of time or both, might reasonably be expected to become a material default, received by the Company or any of its subsidiaries subsequent to the date of this Agreement and prior to the Effective Time, under any material contract to which the Company or any of its subsidiaries is a party or is subject; and (b) any material adverse change in the Condition of the Company and its subsidiaries taken as a whole or the occurrence of any event which is reasonably likely to result in any such change. Each of the Company and Parent shall give prompt notice to the other party of any notice or other communication from any third party alleging that the consent of such third party is or may be -50- required in connection with the transactions contemplated by this Agreement. 4.9 HSR ACT. The Company and Parent shall file, within eight business days from the date of this Agreement, Notification and Report Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") and shall use their reasonable efforts to respond as promptly as practicable to all inquiries received from the FTC or the Antitrust Division for additional information or documentation. 4.10 EMPLOYEE BENEFITS. Parent agrees that, during the period commencing at the Effective Time and ending on the second anniversary thereof, the employees of the Company and its subsidiaries will continue to be provided with employee benefit plans (other than stock option or other plans involving the potential issuance of securities of the Company or of Parent) that are in the aggregate substantially comparable to those currently provided by the Company and its subsidiaries to such employees. Parent will, and will cause the Surviving Corporation to, honor employee (or former employee) benefit obligations and contractual rights existing as of the Effective Time and all employment or severance agreements, plans or policies adopted by the Board of Directors of the Company (or any committee thereof) prior to the date hereof and disclosed to Parent under this Agreement in accordance with their terms. -51- 4.11 DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. (a) The Articles of Incorporation and the By-laws of the Surviving Corporation shall contain the provisions with respect to indemnification and exculpation from liability set forth in the Company's Articles of Incorporation and By-laws on the date of this Agreement, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who on or prior to the Effective Time were directors, officers, employees or agents of the Company ("Indemnified Parties"), unless such modification is required by law. (b) (i) Parent agrees, from and after the purchase of shares of Common Stock pursuant to the Offer, to indemnify all Indemnified Parties to the fullest extent permitted by applicable law with respect to all acts and omissions arising out of such individuals' services as officers, directors, employees or agents of the Company or any of its subsidiaries or as trustees or fiduciaries of any plan for the benefit of employees, or otherwise on behalf of, the Company or any of its subsidiaries, occurring prior to the Effective Time including, without limitation, the transactions contemplated by this Agreement. Without limitation of the foregoing, in the event any such Indemnified Party is or becomes involved in any capacity in any action, proceeding or investigation in connection with any -52- matter, including without limitation, the transactions contemplated by this Agreement, occurring prior to, and including, the Effective Time, Parent, from and after the purchase of shares of Common Stock pursuant to the Offer, will pay as incurred such Indemnified Party's legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. Parent shall pay all expenses, including attorneys' fees, that may be incurred by any Indemnified Party in enforcing this Section 4.11 or any action involving an Indemnified Party resulting from the transactions contemplated by this Agreement. If for any reason the indemnification provided for in this Section 4.11 is unavailable with respect to any Indemnified Party or insufficient to hold him or her harmless with respect to any such loss, claim, damage or liability, then Parent shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect (i) the relative economic interests of the Company and its affiliates on the one hand and Parent on the other in connection with the Offer and the Merger to which such loss, claim, damage or liability relates, (ii) the relative fault of the Company and its affiliates on the one hand and Parent on the other with respect to such loss, claim, damage or liability and (iii) any other relevant equitable considerations. (c) For six years from the Effective Time, Parent shall either (x) maintain in effect the Company's current -53- directors' and officers' liability insurance covering those persons who are currently covered on the date of this Agreement by the Company's directors' and officers' liability insurance policy (a copy of which has been heretofore delivered to Parent); PROVIDED, HOWEVER, that in no event shall Parent be required to expend in any one year an amount in excess of 150% of the annual premiums currently paid by the Company for such insurance, which the Company represents to be $153,000 (exclusive of related commissions) for the twelve month period ended September 30, 1996; and PROVIDED FURTHER that if the annual premiums of such insurance coverage exceed such amount, Parent shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount and to give prompt written notice of any reduction in the amount or scope of coverage resulting therefrom to the directors and officers affected thereby; PROVIDED FURTHER that Parent may substitute for such Company policies, policies with at least the same coverage containing terms and conditions which are no less advantageous and provided that said substitution does not result in any gaps or lapses in coverage with respect to matters occurring prior to the Effective Time, or (y) cause the Parent's directors' and officers' liability insurance then in effect to cover those persons who are covered on the date of this Agreement by the Company's directors' and officers' liability insurance policy with respect to those matters covered by the Company's directors' and officers' liability policy. -54- 4.12 FINANCING. On or before the day on which Sub accepts for payment the shares of Common Stock pursuant to the Offer, Parent shall have the funds necessary to consummate the Offer, the Merger and the transactions contemplated hereby and shall promptly provide Sub with such funds at the times necessary to discharge the obligations of Parent and Sub in accordance with the terms hereof. 4.13 ADDITIONAL REPORTS AND FILINGS. Prior to the Effective Time, the Company shall promptly furnish to Parent a copy of any Form 10-Q or other reports or other filings filed by the Company under the Exchange Act after the date hereof. ARTICLE V CONDITIONS PRECEDENT TO MERGER 5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT, SUB AND THE COMPANY. The respective obligations of Parent and Sub, on the one hand, and the Company, on the other hand, to effect the Merger are subject to the satisfaction or waiver (subject to applicable law) at or prior to the Effective Time of each of the following conditions: (a) APPROVAL OF COMPANY'S STOCKHOLDERS. To the extent required by applicable law, this Agreement and the Merger shall have been approved and adopted by holders of more than two-thirds of the shares of Common Stock of the Company in accordance with applicable law (if required by applicable law) and the Company's Articles of Incorporation and By-Laws; -55- (b) HSR ACT. Any waiting period (and any extension thereof) under the HSR Act applicable to the Merger shall have expired or been terminated; (c) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Offer or the Merger and the transactions contemplated by this Agreement and which is in effect at the Effective Time, PROVIDED, HOWEVER, that, in the case of a decree, injunction or other order, each of the parties shall have used reasonable efforts to prevent the entry of any such injunction or other order and to appeal as promptly as possible any decree, injunction or other order that may be entered; (d) PAYMENT FOR COMMON STOCK. Sub shall have accepted for payment and paid for the shares of Common Stock tendered pursuant to the Offer; and (e) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Offer or the Merger or has the effect or making the purchase of the Common Stock illegal. 5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The obligation of the Company to effect the Merger is also -56- subject to the satisfaction or waiver, at or prior to the Effective Time, of each of the following conditions: (a) PERFORMANCE BY PARENT AND SUB. Each of Parent and Sub shall have performed in all material respects all obligations and agreements contained in Sections 1.3 and 2.4 of this Agreement to be performed or complied with by it prior to the Closing Date. ARTICLE VI TERMINATION AND ABANDONMENT 6.1 TERMINATION. This Agreement may be terminated and the transactions contemplated hereby may be abandoned, at any time prior to the Effective Time, whether before or after approval of the Merger by the Company's stockholders: (a) by mutual consent of the Company, on the one hand, and of Parent and Sub, on the other hand; (b) by either Parent, on the one hand, or the Company, on the other hand, if any governmental or regulatory agency shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the acceptance for payment of, or payment for, shares of Common Stock pursuant to the Offer or the Merger and such order, decree or ruling or other action shall have become final and nonappealable; (c) by either Parent, on the one hand, or the Company, on the other hand, if the Offer shall not have been consummated within six months after commencement of the Offer unless the Offer Closing shall not have occurred because of a material -57- breach of any representation, warranty, obligation, covenant, agreement or condition set forth in this Agreement on the part of the party seeking to terminate this Agreement; (d) by Parent, if the Offer is terminated or expires in accordance with its terms without Sub having purchased any Common Stock thereunder due to failure to satisfy any of the conditions set forth in Annex A hereto, unless such termination or expiration has been caused by or results from the failure of Parent or Sub to perform in any material respect any of their respective covenants or agreements contained in this Agreement; (e) by either Parent, on the one hand, or the Company, on the other hand, if the Board of Directors of the Company determines that an Acquisition Proposal will result in a Superior Proposal and the Board believes (and has been advised in writing by counsel) that a failure to terminate this Agreement and enter into an agreement to effect the Superior Proposal would constitute a breach of its fiduciary duties; (f) by the Company, if Parent or Sub shall have failed to comply in any material respect with any of the covenants or agreements contained in this Agreement to be complied with or performed by Parent or Sub at or prior to the Offer Closing or if Parent or Sub shall have failed to commence the Offer within the time required by Section 1.1; or (g) by the Company, if (i) prior to the Offer Closing, any of the representations and warranties of Parent or Sub contained in this Agreement were untrue or incorrect in any -58- material respect when made or (ii) Parent or Sub shall have terminated the Offer prior to the Offer Closing or the Offer is terminated or expires in accordance with its terms. 6.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 6.1 hereof by Parent or Sub, on the one hand, or the Company, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of Parent, Sub or the Company, except that Sections 4.2, 7.1 and this Section 6.2 hereof shall survive any termination of this Agreement. Nothing in this Section 6.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VII MISCELLANEOUS 7.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated hereby shall be paid by the party incurring such costs and expenses. (b) If this Agreement is terminated by Parent pursuant to Section 6.1(e) hereof or pursuant to Section 6.1(d) hereof by -59- reason of paragraphs (d) or (f) of Annex A hereof or if, prior to the Offer Closing, any material representation or warranty made by the Company herein shall prove to have been untrue or incorrect in any material respect when made and as a result thereof this Agreement is terminated by Parent pursuant to Section 6.1(d) hereof by reason of paragraph (e) of Annex A hereof, the Company shall pay to Parent, within one business day thereafter, the amount of $3,500,000. 7.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company, on the one hand, and Parent and Sub, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. Each and every such representation and warranty shall expire with, and be terminated and extinguished by, the Closing and thereafter none of the Company, Parent or Sub shall be under any liability whatsoever with respect to any such representation or warranty. This Section 7.2 shall have no effect upon any other obligation of the parties hereto, whether to be performed hereunder or after the Effective Time. 7.3 EXTENSION; WAIVER. Subject to the provisions of Section 1.1, at any time prior to the Effective Time, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, Parent or Sub, may (i) extend the -60- time for the performance of any of the obligations or acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any documents, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 7.4 PUBLIC ANNOUNCEMENTS. The Company, on the one hand, and Parent and Sub, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the transactions contemplated hereby, and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 7.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: -61- (a) If to the Company, to it at: Sterile Concepts Holdings, Inc. 5100 Commerce Road Richmond, Virginia 23234 Attention: Paul J. Woo, Jr., President and Chief Executive Officer with copies to: McGuire, Woods, Battle, & Boothe, L.L.P. One James Center 901 East Cary Street Richmond, Virginia 23219 Attention: Wellford L. Sanders, Jr., Esq. and Joseph C. Carter, III, Esq. LeClair Ryan 707 East Main Street 11th Floor Richmond, Virginia 23219 Attention: J. Benjamin English, Esq. (b) If to either Parent or Sub, to it at: Maxxim Medical, Inc. 104 Industrial Boulevard Sugar Land, Texas 77478 Attention: Kenneth W. Davidson, Chairman of the Board, President and Chief Executive Officer with a copy to: Boyer, Ewing & Harris Incorporated 9 Greenway Plaza, Suite 3100 Houston, Texas 77046 Attention: John R. Boyer, Jr., Esq. and J. Randolph Ewing, Esq. or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing -62- thereof, except for a notice of a change of address, which shall be effective only upon receipt thereof. 7.6 ENTIRE AGREEMENT. This Agreement and the Annex, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 7.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except for Section 4.10 and 4.11, which are intended to be for the benefit of the persons referred to therein, and may be enforced by such persons. 7.8 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to the conflict of laws rules thereof. -63- 7.9 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 7.10 "PERSON" DEFINED. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of Parent, Sub and the Company have caused this Agreement to be executed by their respective officers thereunto duly authorized, all as of the date first above written. MAXXIM MEDICAL, INC. BY:_____________________________________ NAME: TITLE: MAXXIM ACQUISITION CO. BY:_____________________________________ NAME: TITLE: -64- STERILE CONCEPTS HOLDINGS, INC. BY:_____________________________________ NAME: TITLE: -65- ANNEX A TO AGREEMENT AND PLAN OF MERGER THE CAPITALIZED TERMS IN THIS ANNEX A SHALL HAVE THE MEANINGS SET FORTH IN THE AGREEMENT TO WHICH IT IS ANNEXED, EXCEPT THAT THE TERM "MERGER AGREEMENT" SHALL BE DEEMED TO REFER TO THE AGREEMENT TO WHICH THIS ANNEX A IS APPENDED AND "PURCHASER" SHALL BE DEEMED TO REFER TO SUB. Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1c under the Exchange Act, pay for any shares of Common Stock tendered and may terminate or amend the Offer in accordance with the Agreement and may postpone the acceptance of, and payment for, shares of Common Stock, if (i) there shall not have been validly tendered and not withdrawn prior to the expiration of the Offer a number of shares of Common Stock which represent more than two-thirds of the total voting power of all shares of capital stock of the Company outstanding on a fully diluted basis (the "Minimum Condition"), (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated or (iii) at any time on or after the date of the Merger Agreement and at or before the time of payment for any such shares of Common Stock (whether or not any shares of Common Stock have A-1 theretofore been accepted for payment or paid for pursuant to the Offer) any of the following shall occur: (a) any court or domestic government or governmental authority or agency shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree or injunction or other order which (i) makes illegal, materially delays or otherwise directly or indirectly materially restrains or prohibits the Offer or the Merger, (ii) prohibits or materially limits the ownership or operation by Parent or Purchaser of all or any material portion of the business or assets of the Company or compels Parent or Sub to dispose of all or any material portion of the business or assets of Parent or Purchaser or the Company, or imposes any limitations on the ability of Parent or Purchaser to conduct its business or own such assets, (iii) imposes limitations on the ability of Parent or Sub effectively to exercise full rights of ownership of the shares of Common Stock, including, without limitation, the right to vote any shares of Common Stock acquired or owned by Purchaser or Parent on all matters properly presented to the Company's stockholders, (iv) requires divestiture by Parent or Purchaser of any shares of Common Stock, or (v) otherwise materially adversely affects the A-2 Condition of the Company and its subsidiaries taken as a whole; (b) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (ii) any material change in United States or any other currency exchange rates or a suspension of, or limitation on, the markets therefor, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iv) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States and having a material adverse effect on the Company or materially adversely affecting (or materially delaying) the consummation of the Offer, (v) from the date of the Merger Agreement through the date of termination or expiration of the Offer, a decline of at least 25% in the Standard & Poor's 500 Index or (vi) in the case of any of the situations described in clauses (i) through (v) inclusive existing at the date of commencement of the Offer, a material acceleration or worsening thereof; (c) all consents, registrations, approvals, permits, authorizations, notices, reports or other A-3 filings required to be obtained or made by the Company, Parent or Purchaser with or from any governmental or regulatory entity in connection with the execution, delivery and performance of the Merger Agreement, the Offer and the consummation of the transactions contemplated by the Merger Agreement shall not have been made or obtained and such failure could reasonably be expected to have a material adverse effect on the Condition of the Company and its subsidiaries taken as a whole or could be reasonably likely to prevent or materially delay consummation of the transactions contemplated by the Merger Agreement; (d) the Company's Board of Directors shall have withdrawn, modified or amended in any respect adverse to Parent or Purchaser its recommendation of the Offer or the Merger or shall have resolved to do so; (e) any representation or warranty made by the Company in the Merger Agreement shall be untrue or incorrect in any material respect; (f) there shall have been a breach by the Company of any of its covenants or agreements in any material respect contained in the Merger Agreement; (g) it shall have been publicly disclosed that any Person (which includes a "person" as such term is A-4 defined in Section 13(d)(3) of the Exchange Act) other than Purchaser, any of its affiliates, or any group in which any of them is a member shall have acquired beneficial ownership of more than 30% of the outstanding Common Stock or shall have entered into a definitive agreement or an agreement in principle with the Company with respect to a tender offer or exchange offer for any Common Stock or a merger, consolidation or other business combination with or involving the Company; or (h) the Merger Agreement shall have been terminated in accordance with its terms; which, in the reasonable judgment of Purchaser, in any such case and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment. The foregoing conditions are for the sole benefit of Parent or Purchaser, and may be asserted by them or waived in whole or in part at any time and from time to time in their sole discretion; provided, however, that, without the consent of the Company, Parent and Sub shall not waive the Minimum Condition. A-5 Schedules to the Agreement and Plan of Merger have been omitted pursuant to Item 601(b)(2) of Regulation S-K, are as described therein and will be furnished to the Commission upon request. -----END PRIVACY-ENHANCED MESSAGE-----