-----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, KuGtU/IE+fqd1dUrNSVul0FgjppFU80atTuzBH0C0PS7F1uadYt1Cmy5RTUMHDK6 AqpEQf5jSKqIaF/KJnEofg== 0000898822-99-000333.txt : 19990624 0000898822-99-000333.hdr.sgml : 19990624 ACCESSION NUMBER: 0000898822-99-000333 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990623 GROUP MEMBERS: FOX PAINE & COMPANY, LLC GROUP MEMBERS: FOX PAINE CAPITAL FUND, L.P. GROUP MEMBERS: FOX PAINE CAPITAL, LLC GROUP MEMBERS: FOX PAINE MEDIC ACQUISITION CORP SUBJECT COMPANY: 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 13D SEC ACT: SEC FILE NUMBER: 005-41487 FILM NUMBER: 99651093 BUSINESS ADDRESS: STREET 1: 10300 49TH ST N CITY: CLEARWATER STATE: FL ZIP: 33762 BUSINESS PHONE: 7275612100 MAIL ADDRESS: STREET 1: 10300 49TH STREET NORTH CITY: CLEARWATER STATE: FL ZIP: 33762 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FOX PAINE MEDIC ACQUISITION CORP CENTRAL INDEX KEY: 0001089403 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 950 TOWER LANE, SUITE 1950 STREET 2: 950 TOWER LANE CITY: FOSTER CITY STATE: CA ZIP: 94404 BUSINESS PHONE: 6505251300 MAIL ADDRESS: STREET 1: 950 TOWER LANE STREET 2: SUITE 1950 CITY: FOSTER CITY STATE: CA ZIP: 94404 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- SCHEDULE 13D (RULE 13D-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A) MAXXIM MEDICAL, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, $0.001 PAR VALUE - -------------------------------------------------------------------------------- (Title of Class of Securities) 57777G105 - -------------------------------------------------------------------------------- (CUSIP Number) SAUL A. FOX FOX PAINE & COMPANY, LLC 950 TOWER LANE, SUITE 1950 FOSTER CITY, CALIFORNIA 94404 (650) 525-1300 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JUNE 13, 1999 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) - --------------------------- ----------------------------- CUSIP NO. 57777G105 13D PAGE 2 OF 12 PAGES - --------------------------- ----------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON FOX PAINE MEDIC ACQUISITION CORPORATION I.R.S. IDENTIFICATION NO. OF ABOVE PERSON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO -- SEE ITEM 3 - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES ---------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,145,617 (SEE ITEM 5) EACH ---------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.0% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF PERSON REPORTING* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT - --------------------------- ----------------------------- CUSIP NO. 57777G105 13D PAGE 3 OF 12 PAGES - --------------------------- ----------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON FOX PAINE CAPITAL FUND, L.P. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO -- SEE ITEM 3 - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES ---------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,145,617 (SEE ITEM 5) EACH ---------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.0% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF PERSON REPORTING* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT - --------------------------- ----------------------------- CUSIP NO. 57777G105 13D PAGE 4 OF 12 PAGES - --------------------------- ----------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON FOX PAINE CAPITAL, LLC I.R.S. IDENTIFICATION NO. OF ABOVE PERSON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO -- SEE ITEM 3 - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES ---------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,145,617 (SEE ITEM 5) EACH ---------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.0% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF PERSON REPORTING* HC, OO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT - --------------------------- ----------------------------- CUSIP NO. 57777G105 13D PAGE 5 OF 12 PAGES - --------------------------- ----------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON FOX PAINE & COMPANY, LLC I.R.S. IDENTIFICATION NO. OF ABOVE PERSON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO -- SEE ITEM 3 - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES ---------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,145,617 (SEE ITEM 5) EACH ---------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,145,617 (SEE ITEM 5) - --------------------------------------------- ---------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,145,617 (SEE ITEM 5) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.0% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF PERSON REPORTING* OO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT ITEM 1. SECURITY AND ISSUER. This Statement relates to shares of common stock, par value $0.001 per share ("Common Stock"), of Maxxim Medical, Inc., a Texas corporation ("Maxxim"). The principal executive offices of Maxxim are located at 10300 49th Street North, Clearwater, Florida 33762. ITEM 2. IDENTITY AND BACKGROUND. (a), (b), (c) and (f). This statement is filed by (i) Fox Paine Capital Fund, L.P., a Delaware limited partnership ("FPCF"), (ii) Fox Paine Capital, LLC, a Delaware limited liability company ("FPC") and the general partner of FPCF, (iii) Fox Paine Medic Acquisition Corporation, a Texas corporation ("FPMAC"), a wholly owned subsidiary of FPCF, and (iv) Fox Paine & Company, LLC, a Delaware limited liability company ("Fox Paine", and together with FPMAC, FPCF and FPC, the "Fox Paine Entities"). FPMAC was formed on June 9, 1999 solely for the purpose of engaging in the transactions contemplated by the Merger Agreement, dated as of June 13, 1999, between FPMAC and Maxxim (the "Merger Agreement"). FPCF is an investment fund managed by Fox Paine, and FPC is the general partner of FPCF. FPCF invests equity capital in management-led acquisitions and company expansion programs and restructurings. The principal business of FPC is being the general partner of FPCF. The principal business of Fox Paine is managing FPCF. Saul A. Fox and Dexter W. Paine, III are the sole members of FPC and the managing members of Fox Paine. The principal executive offices of each of the Fox Paine Entities are located at 950 Tower Lane, Suite 1950, Foster City, California 94404. Annex 1, which is incorporated herein by reference, sets forth with respect to each executive officer, director or managing member of each of FPMAC, FPC and Fox Paine such person's name, business address and principal employment, the name and address of any business corporation or other organization in which such employment is conducted and such person's citizenship. (d) and (e) None of the Fox Paine Entities and none of the persons named in Annex 1 as an executive officer, director or managing member of any of the Fox Paine Entities has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years; nor has any of said parties been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. FPMAC has entered into individual Voting Agreements (the "Voting Agreements"), each dated as of June 13, 1999, with each of the following shareholders of Maxxim, each of whom, other than Davis C. Henley, is a member of Maxxim's senior executive management or a director of Maxxim: Kenneth W. Davidson, Peter M. Graham, David L. -6- Lamont, Henry T. DeHart, Jack F. Cahill, Alan S. Blazei, Joseph D. Dailey, Suzanne R. Garon, Ernest J. Henley, and Davis C. Henley (collectively, the "Rollover Shareholders"). Annex 2 sets forth, to the knowledge of the Fox Paine Entities, the number of shares of Common Stock held by each of the Rollover Shareholders and the number of shares subject to options that are exercisable within 60 days, and Annex 2 is incorporated herein by reference. The shares of Common Stock to which this statement relates have not been purchased by FPMAC, and neither FPMAC nor any of the other persons listed in the response to Item 2 has expended any funds in connection with the Voting Agreements. ITEM 4. PURPOSE OF TRANSACTION. On June 13, 1999, FPMAC and Maxxim entered into the Merger Agreement pursuant to which FPCF, together with Rollover Shareholders, will acquire Maxxim in a recapitalization transaction. In connection with the acquisition, the existing debt of Maxxim will be refinanced, with Maxxim making a consent solicitation and tender offer (the "Debt Offer") for all of its outstanding 10 1/2% Senior Subordinated Notes, due 2006. Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), FPMAC will be merged with and into Maxxim, with Maxxim continuing as the surviving corporation (the "Merger"). Pursuant to the Merger, each outstanding share of Common Stock (except for certain shares held by the Rollover Shareholders and those dissenting shareholders who exercise and perfect their appraisal rights) will be converted into the right to receive a cash payment of $26.00 without interest. Shares of FPMAC will be converted into shares of stock of the surviving corporation on a one-for-one basis. Certain shares held by the Rollovers Shareholders will be retained, and the proceeds received in the Merger by the Rollover Shareholders in respect of certain other shares held by them will be used to purchase a proportionate interest in the company that will acquire Circon Corporation (as described below). Completion of the proposed transactions is subject to certain conditions, including shareholder approval, regulatory approvals, the availability of financing under existing equity and debt financing commitments and other customary closing conditions. The Merger Agreement contemplates that unless otherwise requested by FPMAC prior to the Effective Time, immediately prior to the Merger, Maxxim will sell to an affiliate of the Fox Paine Entities all of the outstanding capital stock of Circon Corporation ("Circon"), an indirect wholly-owned subsidiary of Maxxim (the "Circon Sale"). The Circon Sale will not affect the consideration to be paid to holders of Common Stock in the Merger. Upon consummation of the Merger, the Common Stock will be delisted from trading on The New York Stock Exchange, Inc., on which it currently trades under the symbol "MAM" and will become eligible for termination of registration under the Securities Exchange Act of 1934, as amended (the "Act"). Upon consummation of the Merger, the directors of FPMAC immediately prior to the Merger will be the directors of the surviving corporation in the Merger until their respective successors are duly elected or appointed and qualified. It is currently contemplated that the Rollover Investors will appoint three directors and the Fox Paine Entities will appoint four. The -7- officers of Maxxim immediately prior to the Merger are expected to continue as officers of the surviving corporation in the Merger until their respective successors are duly elected or appointed and qualified. The articles of incorporation of Maxxim in effect immediately prior to the Merger will be the articles of incorporation of the surviving corporation in the Merger until amended in accordance with its terms and applicable law. The bylaws of FPMAC in effect immediately prior to the Merger will be the bylaws of the surviving corporation in the Merger until amended in accordance with its terms and applicable law. In connection with the Merger Agreement, on June 13, 1999, FPMAC entered into the Voting Agreements. Pursuant to the Voting Agreements, during the period (the "Agreement Period") beginning on June 13, 1999 and ending on the earlier of (i) the Effective Time (as defined in the Merger Agreement) or (y) the termination of the Merger Agreement in accordance with its terms, each Rollover Shareholder has agreed to vote such Rollover Shareholder's shares of Common Stock (the "Subject Shares") to approve the Merger Agreement and the transactions contemplated by the Merger Agreement at any meeting of shareholders or at any adjournment thereof or in any other circumstances. Each Rollover Shareholder has agreed that during the Agreement Period, at any meeting of Maxxim shareholders or in any other circumstances upon which the Rollover Shareholder's vote, consent or other approval is sought, the Rollover Shareholder shall vote such Rollover Shareholder's Subject Shares against any action or agreement that would interfere with the Debt Offer, the Merger or any other transaction contemplated by the Merger Agreement including, (A) the adoption by Maxxim of a proposal regarding (1) the acquisition of Maxxim by merger, tender offer or otherwise by any person or group, other than FPMAC or any designee thereof (a "Third Party"), or any other merger, business combination or similar transaction with any Third Party; (2) the acquisition by a Third Party of 5% or more of the assets of Maxxim and its subsidiaries, taken as a whole; (3) the acquisition by a Third Party of 5% or more of the outstanding shares of Common Stock or any other class of equity or voting securities of Maxxim; (4) the repurchase by Maxxim or any of its subsidiaries of 5% or more of the outstanding shares of Common Stock or (5) any other Competing Transaction (as defined in the Merger Agreement); (B) any amendment of Maxxim's certificate of incorporation or by-laws or other proposal or transaction involving Maxxim or any of its subsidiaries, which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify the Debt Offer, the Merger, the Merger Agreement or any of the transactions contemplated by the Merger Agreement or change in any manner the voting rights of any class of Maxxim's capital stock; (C) any change in the control of Maxxim or its board of directors, other than as contemplated by the Merger Agreement; (D) any material change in the present capitalization or dividend policy of Maxxim other than as contemplated by the Merger Agreement; or (E) any other material change in Maxxim's corporate structure or business other than as contemplated by the Merger Agreement. Each Rollover Shareholder has agreed that during the Agreement Period, such Rollover Shareholder will not sell, transfer, assign or otherwise dispose of any such Rollover Shareholder's Subject Shares or enter into any voting arrangement or understanding with respect to such Rollover Shareholder's Subject Shares. -8- Each Rollover Shareholder has agreed that, during the Agreement Period, such Rollover Shareholder will not and will not permit such Rollover Shareholder's representatives to solicit, initiate, encourage or facilitate or furnish or disclose non-public information in furtherance of, any inquiries or the making of any proposal with respect to a Competing Transaction (as defined in the Merger Agreement) or enter into any agreement, arrangement or understanding requiring or causing Maxxim to abandon, terminate or fail to consummate any of the transactions contemplated by the Merger Agreement. However, the foregoing restrictions will not (i) prevent any Rollover Shareholder who is a director or officer of the Maxxim from taking any action consistent with his or her fiduciary duties to Maxxim and its shareholders or as may be provided by the Merger Agreement, or (ii) if the Rollover Shareholder is an officer of Maxxim, prohibit such officer from participating in Permitted Discussions (as defined in the Merger Agreement) with any third party at any time during which Maxxim is permitted to engage (and is so engaging) in such discussions with such third party pursuant to Section 5.4(a) of the Merger Agreement. The Voting Agreements will terminate upon the termination of the Agreement Period. To the knowledge of the Fox Paine Entities, the Rollover Shareholders collectively exercise voting power with respect to approximately 8.0% (including shares subject to options exercisable in the next 60 days) of the outstanding shares of Common Stock. In connection with the Merger Agreement, on June 13, 1999, FPMAC entered into an Investor Participation Agreement, dated as of June 13, 1999, with the Rollover Investors (the "IPA"). The IPA, which will have effect only if the Merger is completed, among other things (i) provides for the retention by the Rollover Shareholders of their equity interest in Maxxim, (ii) provides for the purchase by the Rollover Shareholders of equity interests in Circon after the Circon Sale, and (iii) sets forth the terms for employment, compensation and equity incentive compensation for certain of the Rollover Shareholders. The obligations of the Rollover Shareholders under the IPA are several, and not joint and several. A copy of the Merger Agreement, the form of the Voting Agreements, and the Investor Participation Agreement are attached hereto as Exhibits 1, 2 and 3, respectively, and are incorporated herein by reference, and the description herein of such agreements are qualified in their respective entireties by reference to such agreements. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) and (b) 1,126,417 shares of Common Stock, and any shares of Common Stock as to which any Rollover Shareholder acquires beneficial ownership during the term of his or her Voting Agreement, are subject to the Voting Agreements. The Rollover Shareholders collectively hold options exercisable in the next 60 days with respect to 19,200 shares of Common Stock. The 19,200 shares subject to such options, together with the 1,126,417 shares referred to above, total 1,145,617 shares of Common Stock beneficially owned, and represent approximately 8.0% of the outstanding shares of Common Stock, based on the number of shares of Common Stock outstanding as of June 9, 1999, as represented to FPMAC by Maxxim in the Merger Agreement. FPMAC may be deemed, for purposes of Rule 13d-3 promulgated under the Act, to share with -9- the respective Rollover Shareholders party to the Voting Agreements the power to vote or dispose of the shares of Common Stock subject to the Voting Agreements. However, FPMAC (i) is not entitled to any rights as a stockholder of Maxxim as to such shares, and (ii) disclaims beneficial ownership of all of such shares. As the sole stockholder of FPMAC, FPCF may be deemed, for purposes of Rule 13d-3 under the Act, to beneficially own indirectly the subject shares of Common Stock that may be deemed to be owned beneficially by FPMAC. As the general partner of FPCF, FPC may be deemed, for purposes of Rule 13d-3 under the Act, to beneficially own indirectly the subject shares of Common Stock that may be deemed to be beneficially owned by FPCF. Fox Paine has the power, by virtue of certain agreements, to manage the affairs of FPCF, and therefore Fox Paine may be deemed, for purposes of Rule 13d-3 under the Act, to beneficially own indirectly the subject shares of Common Stock that may be deemed to be beneficially owned by FPCF or FPC. FPCF, FPC and Fox Paine disclaim beneficial ownership of any such shares of Common Stock. (c) Except as set forth in this Item 5, to the best knowledge and belief of the Fox Paine Entities, no transactions involving Common Stock have been effected during the past 60 days by any Fox Paine Entity, or by any of their respective directors, executive officers or controlling persons. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The information set forth or incorporated by reference in Items 3 through 5 is hereby incorporated herein by reference. A copy of the Merger Agreement, the form of the Voting Agreements, and the Investor Participation Agreement are attached hereto as Exhibits 1, 2 and 3, respectively, and are incorporated herein by reference, and the description herein of such agreements are qualified in their respective entireties by reference to such agreements. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. The following Exhibits are filed as part of this Schedule 13D: Exhibit 1 - Agreement and Plan of Merger, dated as of June 13, 1999, between Fox Paine Medic Acquisition Corporation and Maxxim Medical, Inc. (incorporated by reference to Exhibit 2.1 of Maxxim Medical, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 16, 1999). Exhibit 2 - Form of individual Voting Agreement, dated as of June 13, 1999, by and between Fox Paine Medic Acquisition Corporation and each of 10 shareholders of Maxxim Medical, Inc. Exhibit 3 - Investor Participation Agreement, dated as of June 13, 1999, by and among Fox Paine Medic Acquisition Corporation and 10 shareholders of Maxxim Medical, Inc., in their individual capacities. -10- SIGNATURE After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete, and correct. FOX PAINE MEDIC ACQUISITION CORPORATION By: /s/ Saul A. Fox -------------------------------------- Name: Saul A. Fox Title: Chief Executive Officer FOX PAINE CAPITAL FUND, L.P. By: Fox Paine Capital, LLC, its general partner By: /s/ Saul A. Fox --------------------------------- Name: Saul A. Fox Title: Member FOX PAINE CAPITAL, LLC By: /s/ Saul A. Fox -------------------------------------- Name: Saul A. Fox Title: Member FOX PAINE & COMPANY, LLC By: /s/ Saul A. Fox -------------------------------------- Name: Saul A. Fox Title: Member June 23, 1999 EXHIBIT INDEX SEQUENTIAL EXHIBIT DESCRIPTION PAGE NO. Exhibit 1- Agreement and Plan of Merger, dated as of June 13, 1999, between Fox Paine Medic Acquisition Corporation and Maxxim Medical, Inc. (incorporated by reference to Exhibit 2.1 of Maxxim Medical, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 16, 1999). Exhibit 2- Form of individual Voting Agreement, dated as of June 13, 1999, by and between Fox Paine Medic Acquisition Corporation and each of 10 shareholders of Maxxim Medical, Inc. Exhibit 3- Investor Participation Agreement, dated as of June 13, 1999, by and among Fox Paine Medic Acquisition Corporation and 10 shareholders of Maxxim Medical, Inc., in their individual capacities. ANNEX 1 (Capitalized terms used in this Annex 1 and not otherwise defined have the meanings ascribed to them in the Schedule 13D to which this Annex 1 is attached) Saul A. Fox is (1) a Director and the President and Chief Executive Officer of FPMAC, (2) a managing member of FPC, and (3) a managing member of Fox Paine. W. Dexter Paine, III is (1) a Director and the Vice President and Secretary of FPMAC, (2) a managing member of FPC, and (3) a managing member of Fox Paine. Jason B. Hurwitz is a Director and the Treasurer of FPMAC. Each of the persons listed above is a citizen of the United States and is principally employed by Fox Paine & Company, LLC. The address of Fox Paine & Company, LLC is 950 Tower Lane, Suite 1950, Foster City, California 94404. ANNEX 2 SHARE OWNERSHIP OF THE ROLLOVER SHAREHOLDERS A B C - -------------------- ----------------- -------------- -------------------------- Shares deemed to be Shares beneficially owned through Percentage (1) Beneficially the ownership of options Name Owned(2) exercisable within 60 days - -------------------- ----------------- -------------- -------------------------- Kenneth W. Davidson 1.7% 241,368 5,000 Peter M. Graham 0.5% 70,500 4,000 David L. Lamont 0.4% 57,250 3,000 Alan S. Blazei 0.3% 41,150 3,000 Henry T. DeHart 0.3% 39,900 3,000 Joseph D. Dailey 0.2% 28,300 1,000 Jack F. Cahill 0.3% 44,000 200 Suzanne R. Garon 0.0% 7,000 0 Ernest Henley 2.3% 321,949 - Davis Henley 1.9% 275,000 - - ----------------------- (1) Does not include shares which may be acquired through the exercise of vested stock options. (2) Excludes shares referenced in column "C". EX-99 2 EXHIBIT 2 -- FORM OF VOTING AGREEMENT FORM OF VOTING AGREEMENT THIS VOTING AGREEMENT (this "Agreement"), dated as of June 13, 1999, is made by and between Fox Paine Medic Acquisition Corporation, a Texas corporation ("Purchaser"), and the undersigned shareholder (the "Shareholder") of Maxxim Medical, Inc., a Texas corporation ("Maxxim" or the "Company"). WHEREAS, concurrently herewith, Purchaser and the Company are entering into an Agreement and Plan of Merger, of even date herewith (the "Merger Agreement"), which provides that, among other things, upon the terms and subject to the conditions thereof, (a) Purchaser will be merged (the "Merger") with and into the Company, with the Company as the surviving corporation, and (b) each outstanding share of common stock, $0.001 par value, of the Company (together with the associated Preferred Share Purchase Rights issued pursuant to the Rights Agreement, dated as of July 10, 1997, by and between the Company and Harris Trust and Savings Bank as rights agent, the "Company Common Stock") shall (except for certain shares of Company Common Stock referred to in Sections 1.8(a), 1.8(b) and 1.8(c) of the Merger Agreement, and except for any Dissenting Shares (as defined in the Merger Agreement)) be converted into the right to receive $26.00 in cash. WHEREAS, the Shareholder beneficially owns a number of shares of Company Common Stock and a number of options to purchase shares of Company Common Stock, in each case as set forth on the signature page to this Agreement; and WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Purchaser has requested and required that the Shareholder enter into this Agreement; NOW, THEREFORE, to induce Purchaser to enter into, and in consideration of its entering into, the Merger Agreement, and in consideration of the promises and the representations, warranties and agreements contained herein, the parties hereto agree as follows: 1. Representations and Warranties of the Shareholder. The Shareholder hereby represents and warrants to Purchaser that, as of the date hereof: (a) Authority; No Conflicts. The Shareholder has the necessary legal capacity, power and authority to execute and deliver this Agreement, to perform the Shareholder's obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by and on behalf of the Shareholder, and, assuming due authorization, execution and delivery by Purchaser, constitutes a legal, valid and binding obligation of the Shareholder, enforceable in accordance with its terms, subject to bankruptcy, fraudulent conveyance, insolvency, moratorium or other similar laws affecting the rights of creditors generally. (b) The Subject Shares. The Shareholder is the beneficial owner of (i) a number of shares of Company Common Stock (such shares, together with any other shares of Company Common Stock of the Company of which the Shareholder has or acquires beneficial ownership after the date hereof and during the term of this Agreement, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution or otherwise, being collectively referred to herein as the "Subject Shares") and (ii) a number of options to purchase shares of Company Common Stock (such options, together with any other options, warrants or rights to purchase shares of Company Common Stock, or other securities convertible into or exchangeable for shares of Company Common Stock of which the Shareholder has or acquires beneficial ownership after the date hereof and during the term of this Agreement, whether by means of grant, purchase, dividend, distribution or otherwise, being collectively referred to herein as the "Subject Options") in each case, as of the date of this Agreement, as are set forth on the signature page to this Agreement. Except as set forth on Schedule 1 hereto: (i) the Shareholder has, and throughout the term of this Agreement will have, good and marketable title to such Subject Shares and Subject Options free and clear of all encumbrances and liens; (ii) other than the Subject Shares and Subject Options indicated on the signature page to this Agreement, the Shareholder does not beneficially own any shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company; and (iii) the Shareholder has the sole right and power to vote and dispose of the Subject Shares and Subject Options, and none of the Subject Shares or Subject Options is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting or transfer (other than the provisions of the Securities Act of 1933, as amended) of such Subject Shares or Subject Options, except as contemplated by this Agreement. 2. Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to the Shareholder that Purchaser is a Texas corporation, and is duly organized, validly existing and in good standing under the laws of the State of Texas. Purchaser has the necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by and on behalf of Purchaser, and, assuming due execution and delivery by the Shareholder, constitutes a legal, valid and binding obligation of Purchaser enforceable in accordance with its terms, subject to bankruptcy, fraudulent conveyance, insolvency, moratorium or other similar laws affecting the rights of creditors generally. -2- 3. Covenants of the Shareholder. The Shareholder agrees as follows: (a) Voting in Favor of the Merger and/or the Circon Sale. At any meeting of shareholders of the Company called to vote upon the Merger, the Merger Agreement or any transaction contemplated thereby (including the Circon Sale (as defined in the Merger Agreement)), or at any adjournment thereof or in any other circumstances (including, without limitation, a solicitation of written consents or proxies) upon which a vote or other approval with respect to the Merger, the Merger Agreement or any of the other transactions contemplated thereby (including the Circon Sale (as defined therein)) is sought, the Shareholder shall vote the Subject Shares in favor of the Merger Agreement, the approval of the terms thereof, the Merger and all other transactions contemplated by the Merger Agreement (including the Circon Sale). (b) Voting Against Competing Transactions. At any meeting of shareholders of the Company or at any adjournment thereof or in any other circumstances upon which the Shareholder's vote, consent or other approval as a shareholder is sought (including, without limitation, a solicitation of written consents or proxies), the Shareholder shall vote the Subject Shares against any action or agreement that would interfere with the Debt Offer, the Merger or any other transaction contemplated by the Merger Agreement (including the Circon Sale), including, but not limited to, (A) the adoption by the Company of a proposal regarding (1) the acquisition of the Company by merger, tender offer or otherwise by any person or group, other than Purchaser or any designee thereof (a "Third Party"), or any other merger, business combination or similar transaction with any Third Party; (2) the acquisition by a Third Party of 5% or more of the assets of the Company and its subsidiaries, taken as a whole; (3) the acquisition by a Third Party of 5% or more of the outstanding shares of Company Common Stock or any other class of equity or voting securities of the Company; (4) the repurchase by the Company or any of its subsidiaries of 5% or more of the outstanding shares of Company Common Stock or (5) any other Competing Transaction (as defined in the Merger Agreement); (B) any amendment of the Company's certificate of incorporation or by-laws or other proposal or transaction involving the Company or any of its subsidiaries, which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify the Debt Offer, the Merger, the Merger Agreement or any of the transactions contemplated by the Merger Agreement (including the Circon Sale) or change in any manner the voting rights of any class of the Company's capital stock; (C) any change in the control of the Company or its board of directors, other than as contemplated by the Merger Agreement; (D) any material change in the present capitalization or dividend policy of the Company other than as contemplated by the Merger Agreement; or (E) any other material change in the Company's corporate structure or business other than as contemplated by the Merger Agreement. The Shareholder further agrees not to commit or agree to take any action in his or her capacity as a shareholder that is inconsistent with the foregoing. -3- (c) Merger Agreement. The Shareholder acknowledges that such Shareholder has read the Merger Agreement, including the exhibits thereto, and has had an opportunity to consult with such Shareholder's counsel concerning the same, and the Shareholder accepts and agrees to the terms and conditions of the Merger Agreement that relate to the treatment of the Subject Shares (including as provided in Section 1.8(b)) and the Subject Options, and the Shareholder hereby irrevocably waives any claim that the Merger Agreement, the Merger or any other transaction contemplated by the Merger Agreement (including the Circon Sale) violates any right of the Shareholder under the Texas Business Corporation Act, any fiduciary obligation owed by the Company or any of its directors or officers to the Shareholder, or any obligation owed by the Company to the Shareholder pursuant to any agreement between the Company and the Shareholder or pursuant to any employee benefit plan or stock option or similar plan of the Company in which the Shareholder participates. (d) Transfer Restrictions. In addition to its obligations under Section 3(a) of this Agreement, the Shareholder further agrees not to (i) sell, transfer, pledge, encumber, assign or otherwise dispose of or hypothecate (including by gift or by contribution or distribution to any trust or similar instrument or to any beneficiaries of such Shareholder (collectively, "Transfer")), or enter into any contract, option or other arrangement or understanding with respect to the Transfer of, any of the Subject Shares or Subject Options for the term of this Agreement, (ii) other than with respect to this Agreement, enter into any voting arrangement or understanding with respect to the Subject Shares, whether by proxy, voting agreement or otherwise, or (iii) take any action that would reasonably be expected to make any of its representations or warranties contained herein untrue or incorrect or could have the effect of preventing or disabling such Shareholder from performing any of its obligations hereunder. Anything in this Section 3(d) to the contrary notwithstanding, nothing in the foregoing shall prohibit or prevent the Shareholder from complying with any of the Shareholder's obligations in respect of the Circon Sale provided for in the Merger Agreement or any document executed by the Shareholder and Purchaser in connection therewith. (e) Appraisal Rights. Each Shareholder hereby irrevocably waives any and all rights that he may have as to appraisal, dissent or any similar or related matter with respect to the Merger, the Merger Agreement or any transaction contemplated thereby, including, without limitation, any rights otherwise available to such Shareholder pursuant to Section 5.11 of the Texas Business Corporation Act. (f) No Solicitation. The Shareholder agrees that, during the term of this Agreement, he shall not, and shall not authorize or permit any of such Shareholder's representatives, agents, affiliates or other persons, directly or indirectly, to solicit, initiate, encourage or facilitate, or furnish or disclose non-public information in furtherance of, any inquiries or the making of any proposal with respect to any recapitalization, merger, consolidation or other business combination involving the Company, or acquisition of -4- any capital stock (other than upon exercise of Stock Options (as defined in the Merger Agreement) which are outstanding as of the date hereof) or any material portion of the assets (except for acquisition of assets in the ordinary course of business consistent with past practice) of the Company and its Subsidiaries (as defined in the Merger Agreement), or any combination of the foregoing (a "Competing Transaction"), or negotiate, explore or otherwise engage in discussions with any person (other than Purchaser, persons controlling Purchaser, or their respective directors, officers, employees, agents and representatives) with respect to any Competing Transaction or enter into any agreement, arrangement or understanding requiring or causing the Company to abandon, terminate or fail to consummate any of the transactions contemplated by the Merger Agreement. Anything herein to the contrary notwithstanding, nothing in this Agreement shall (i) prevent any director or officer of the Company from taking any action consistent with his or her fiduciary duties to the Company and its shareholders or as may be provided by the Merger Agreement, or (ii) if Shareholder is an officer of the Company, prohibit such Shareholder from participating in Permitted Discussions with any third party at any time during which the Company is permitted to engage (and is so engaging) in such discussions with such third party pursuant to Section 5.4(a) of the Merger Agreement. 4. Stop Transfer Order. The Shareholder hereby authorizes and requests the Company's counsel to notify the Company's transfer agent that during the terms of this Agreement there is a stop transfer order with respect to all of the Subject Shares and that this Agreement places limits on the voting of the Subject Shares. 5. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties without the prior written consent of the other party, except that Purchaser may assign, in its sole discretion and without the consent of the Shareholder, any or all of its rights, interests and obligations hereunder to any affiliate of Purchaser. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their permitted assigns and their respective successors, heirs, agents, representatives, trust beneficiaries, attorneys, affiliates and associates and all of their respective predecessors, successors, permitted assigns, heirs, executors and administrators. 6. Termination. This Agreement shall terminate, and no party shall have any rights or obligations hereunder and this Agreement shall become null and void and have no further legal effect immediately following the earlier to occur of (x) the Effective Time (as defined in the Merger Agreement) or (y) the termination of the Merger Agreement in accordance with its terms. Nothing in this Section shall relieve any party of liability for breach of this Agreement. -5- 7. General Provisions. (a) Amendments. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto. (b) Notices. All notices, requests and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (if confirmed), sent by overnight courier (providing proof of delivery) or mailed by registered or certified mail (return receipt requested), (i) if to the Purchaser, in accordance with Section 8.4(a) of the Merger Agreement, and (ii) if to the Shareholder, to the Shareholder's attention c/o of the Company at the address or facsimile number set forth in Section 8.4(b) of the Merger Agreement. (c) Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more of the counterparts have been signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart. (d) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the conflicts of law principles thereof. 8. Enforcement. The parties agree that if any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, the parties would suffer irreparable harm that monetary compensation would be inadequate to remedy. It is accordingly agreed that the parties shall be entitled to an injunction or other forms of equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity. -6- IN WITNESS WHEREOF, Purchaser and the Shareholder have each executed this Agreement as of the date first written above. FOX PAINE MEDIC ACQUISITION CORPORATION By:________________________________ Name: Title: SHAREHOLDER: ----------------------------------- Print Name: Number of shares of Company Common Stock beneficially owned by the Shareholder as of the date hereof: ---------------------- Number of shares of Company Common Stock subject to options to purchase shares of Company Common Stock held by the Shareholder as of the date hereof: ---------------------- [Signature Page to Voting Agreement] EX-99 3 EXHIBIT 3 -- INVESTOR PARTICIPATION AGREEMENT INVESTOR PARTICIPATION AGREEMENT THIS INVESTOR PARTICIPATION AGREEMENT (this "Agreement"), dated June 13, 1999, is made by and among Fox Paine Medic Acquisition Corporation, a Texas corporation ("Purchaser") and the undersigned individuals, whose names are set forth on the signature page below (collectively, the "Investors" and, together with Purchaser, the "Parties"), acting in their individual capacities (other than Kenneth W. Davidson, who is acting in his individual capacity and as general partner of Davidson Management International Limited Partnership). WHEREAS, concurrently herewith, Purchaser and Maxxim Medical, Inc., a Texas corporation (the "Company"), are entering into an Agreement and Plan of Merger, of even date herewith (the "Merger Agreement"), providing for a recapitalization transaction that will result in Purchaser and the Investors owning substantially all of the outstanding capital stock of the Company, as more fully set forth therein; NOW, THEREFORE, in consideration of the promises and the representations, warranties and agreements contained herein, the parties hereto agree as follows: 1. Parties to be Bound by Attached Term Sheet. The Parties, and each of them, severally agree to all of the terms and conditions set forth in the term sheet attached hereto as Annex A and the attachments thereto (the "Term Sheet") and the stock and option treatment provided therein, and, unless and until definitive documentation incorporating the terms set forth in the Term Sheet has been executed and delivered, each of the Parties agrees that the Term Sheet constitutes a binding agreement among the Parties, enforceable against each such Party in accordance with its terms. 2. Execution of Definitive Documentation. Each Party agrees to negotiate in good faith and use all reasonable efforts to prepare, execute and deliver definitive agreements and other instruments implementing the terms set forth in the Term Sheet on reasonable and customary terms; provided, however, that no failure or delay in the delivery and execution of such definitive agreements or instruments shall affect the validity, enforceability or binding nature of the Term Sheet. Without limiting the foregoing, Purchaser agrees that after Closing the Company will prepare, adopt and effectuate any employee benefit plans, including stock option plans, and including issuing options to purchase shares of its capital stock pursuant to such plans, as may be necessary to effectuate the purposes and intent of the Term Sheet. 3. Merger Agreement. Each Investor hereby acknowledges that such Investor has read the Merger Agreement and has had an opportunity to consult with such Investor's counsel concerning the same, and the Investor accepts and agrees to the terms and conditions of the Merger Agreement that relate to the treatment of such Investor's shares of Company common stock (including as provided in Section 1.8(b)) and such Investor's options to purchase shares of Common Stock (including as provided in Section 1.10), and the Investor hereby irrevocably waives any claim that the Merger Agreement, the Merger or any other transaction contemplated by the Merger Agreement (including the Circon Sale (as defined therein)) violates any right of the Investor under the Texas Business Corporation Act, any fiduciary obligation owed by the Company or any of its directors or officers to the Investor, or any obligation owed by the Company to the Investor pursuant to any agreement between the Company and the Investor or pursuant to any employee benefit plan or stock option or similar plan of the Company in which the Investor participates. 4. Miscellaneous. The Parties hereto agree as follows: a) Amendments. This Agreement may not be amended except by an instrument in writing signed by all of the Parties hereto; provided that any Party may waive or amend any right of such Party hereunder. b) Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more of the counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that each Party need not sign the same counterpart. c) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the conflicts of law principles thereof. d) Termination. In the event the Merger Agreement is terminated in accordance with its terms prior to the occurrence of the Effective Time, this Agreement shall terminate, and no party shall have any rights or obligations hereunder and this Agreement shall become null and void and have no further legal effect immediately following the termination of the Merger Agreement in accordance with its terms. Nothing in this Section shall relieve any party of liability for breach of this Agreement. e) Obligations Several. The obligations of the Investors hereunder shall be several and not joint and several. -2- IN WITNESS WHEREOF, Purchaser, the Company, and each of the Investors has executed this Agreement as of the date first written above. FOX PAINE MEDIC ACQUISITION CORPORATION By: /s/ Saul A. Fox -------------------------------- Name: Saul A. Fox Title: Chief Executive Officer (Investor Signatures appear on following page) [Signature Page 1 of 2 to Investor Participation Agreement] INVESTORS: /s/ Kenneth W. Davidson ------------------------------------ Name: Kenneth W. Davidson, in his individual capacity and as general partner of Davidson Management International Limited Partnership /s/ Peter M. Graham ------------------------------------------------- Name: Peter M. Graham /s/ David L. Lamont ------------------------------------------------- Name: David L. Lamont /s/ Henry T. DeHart ------------------------------------------------- Name: Henry T. DeHart /s/ Jack F. Cahill ------------------------------------------------- Name: Jack F. Cahill /s/ Alan Blazei ------------------------------------------------- Name: Alan Blazei /s/ Joseph Dailey ------------------------------------------------- Name: Joseph Dailey /s/ Suzanne Garon ------------------------------------------------- Name: Suzanne Garon /s/ Ernest J. Henley ------------------------------------------------- Name: Ernest J. Henley /s/ Davis C. Henley ------------------------------------------------- Name: Davis C. Henley [Signature Page 2 of 2 to Investor Participation Agreement] ANNEX A PROJECT MEDIC MANAGEMENT/DIRECTOR EQUITY INVESTMENT AND STOCK AND COMPENSATION TERM SHEET This term sheet sets forth the principal terms and conditions under which the executive management team (the "Management Investors") and Ernest J. Henley and Davis C. Henley (the "Other Investors", and together with the Management Investors, the "Rollover Investors") of Maxxim Medical, Inc. ("Medic" or the "Company") are to retain an equity interest in Medic and Circon Corporation ("Citron") upon the recapitalization of the Company and related transactions (the "Recapitalization") by the investment funds managed by Fox Paine & Company, LLC ("Fox Paine") and the Rollover Investors. It also sets forth the principal terms and conditions of the ongoing stock and compensation arrangements. RECAPITALIZATION PRICE: $26 per share. ROLLOVER INVESTORS: The names, share ownership, vested options, and unvested options of each Rollover Investor are summarized in Exhibit A. Exhibit B provides additional detail concerning the split-up of Citron from Medic and its effect on shares and options held by the Rollover Investors. If, in order to facilitate the Recapitalization, Fox Paine reallocates its relative equity contributions between Medic and Citron, the Rollover Investors agree that their respective equity in Medic and Citron will also be equitably adjusted in order to preserve the proportionate ownership between the Rollover Investors and Fox Paine currently reflected in Exhibits A and B. SHARE OWNERSHIP AND ROLLOVER: The Rollover Investors collectively own 927,318 shares of Medic common stock (excluding shares owned by the Other Investors not being rolled over) (see Exhibit A). Each Rollover Investor will retain the number of shares in Medic and acquire with the proceeds of the cashout of Medic shares in the Merger the number of shares in Citron in each case as set forth in Annex III to Exhibit B. VESTED AND UNVESTED OPTIONS: The Management Investors collectively hold options to purchase 1,084,200 shares of Medic common stock (see Exhibit A). Upon the consummation of the transaction, the Management Investors will receive a cash payment in respect of 635,864 options (both vested or unvested) equal to the difference between the Recapitalization Price and the exercise price of each such option (less applicable withholding taxes) on the same basis as other Medic option holders are being cashed out in the transaction (options at various purchase prices to be cashed out proportionately). The after-tax cash proceeds from the cancellation of the 635,864 Medic options will be required to be reinvested in Medic common stock at the Recapitalization Price (the "Medic Additional Shares"). Each Management Investor will receive a new option in respect of the number of shares of Medic common stock set forth on Annex III to Exhibit B at an exercise price equal to the Recapitalization Price (the aggregate being 635,864 less the Medic 1 Additional Shares purchased pursuant to the prior sentence). The remaining 448,336 options in Medic held by the Management Investors will be canceled and each Management Investor will also receive new options in respect of a number of shares of Citron equal to such canceled option shares and with an exercise price equal to the Recapitalization Price. In addition, the Management Investors will be entitled to receive a cash bonus payment of approximately $5.4 million in the aggregate as provided for in item 3 of the "Option Rollover Mechanics" section of Exhibit B hereto. New options will be fully vested and permit cashless exercise with "mature" shares (payment of the exercise price with previously owned shares). CITRON TAX LOAN: In connection with the Citron share rollover from Medic shares, tax loans will be extended to the Rollover Investors in an amount sufficient to cover the taxes due on the Medic shares sold to rollover into the Citron rollover shares. Interest on the loans will be imputed at the minimum allowable rate and will be "bonused" and grossed-up for the tax on any bonus amounts. The Citron tax loans will be mandatorily repayable from the after-tax proceeds of the sale of Citron shares (and not required to be repaid from the proceeds of the sale of Medic shares), and shall not accelerate on termination of employment. EXISTING MANAGEMENT In May 1997, the Company issued 400,000 shares PROMISSORY NOTES: of common stock pursuant to a Senior Management Stock Purchase Plan at $13.00 per share. The stock was issued in exchange for an aggregate of $4,498,000 currently outstanding principal amount in non-interest bearing, full recourse promissory notes (the "Management Promissory Notes") due May 23, 2000 from the participating managers who are Management Investors. The Management Promissory Notes will remain outstanding after the Recapitalization and be extended until the tenth anniversary of the closing (except that (x) Management Promissory Notes from any employee who is not a Management Investor will be required to be repaid by the employee in connection with the cash-out of his or her options provided for in the Merger Agreement and (y) the Management Investors will be required to prepay the Notes with the after-tax proceeds of any sales of stock or options made after the Effective Time). The 50% profit recovery provision currently in place shall be amended out of the documents. The Management Promissory Notes will not accelerate on termination of employment. The Management Promissory Notes and related security arrangements will be split pro rata between Medic and Citron. NEW MANAGEMENT EQUITY The Company and Citron each will provide a New INCENTIVE PLAN: Management Equity Incentive Plan (the "New Incentive Plan") which will grant to the Management Investors, as of the Effective Time, options (the "Option Pool") to purchase up to 10% of the common equity of the Company and Citron (in each case on a fully diluted basis) at a 2 strike price equal to the Recapitalization Price. The New Incentive Plan will generally provide for a ten year option term and will permit cashless exercise with "mature" shares (payment of the exercise price with previously owned shares). EBITDA Targets will be adjusted equitably to reflect acquisitions and dispositions. The Option Pool will consist of (x) half performance-based options ("Pool A Options") that vest according to the schedule below and (y) half time-based options that vest in equal increments on each of the first through fifth anniversaries of the closing (the "Time Based Options").
VESTING SCHEDULE FOR POOL A COMPANY OPTIONS ---------------------------------------------------------------------------------- FISCAL EBITDA % OF OPTION POOL VESTING THROUGH ACHIEVEMENT YEAR TARGET OF EBITDA TARGET 1999 $80.9 20% 2000 $84.3 20% 2001 $88.5 20% 2002 $92.9 20% 2003 $97.6 20% VESTING SCHEDULE FOR POOL A CITRON OPTIONS ---------------------------------------------------------------------------------- FISCAL EBITDA % OF OPTION POOL VESTING THROUGH ACHIEVEMENT YEAR TARGET OF EBITDA TARGET 1999 $24.6 20% 2000 $37.4 20% 2001 $38.9 20% 2002 $40.5 20% 2003 $42.1 20%
Pool A Options that do not vest will become "Pool B Options" and will vest at the earliest of: (i) the next fiscal year in which the EBITDA Target is achieved, (ii) Fox Paine's realization of its investment in the Company or Citron, as the case may be, provided that such realization yields an IRR to Fox Paine of at least 30.0% after giving effect to the vesting and exercise of the Pool B Options pursuant to this clause (ii), or (iii) the ninth anniversary of the date of grant. For the purposes of the Pool B Options, a primary initial public offering of the Company's or Citron's stock, as the case may be (an "Initial Public Offering"), shall not constitute a realization of Fox Paine's investment in the Company or Citron, respectively. The Time Based Options and the Pool A Options will also vest and be exercisable, regardless of the passage of time, upon Fox Paine's realization of an IRR of at least 30.0%. ALLOCATION OF OPTION POOL: The total Option Pool will be granted to the Management Investors, based on the recommendation of Kenneth W. Davidson for approval by the Compensation Committee of the Board of Directors. 3 TERMINATION OF NEW INCENTIVE Stock options granted under the New Incentive PLAN OPTIONS: Plans that are unvested as of the date of a Management Investor's termination of employment with the Company, Citron and/or their respective subsidiaries for any reason will be forfeited upon the date of termination. Stock options (under old and new plans) that are vested as of the date of termination may be exercised for one year following the termination of employment. Vested stock options that are not exercised within one year of the date of termination will be forfeited. BONUSES: The Management Investors will receive aggregate bonus compensation, as specified in Exhibit C. EXISTING SEVERANCE Existing employment agreements and severance AGREEMENTS/NEW EMPLOYMENT agreements for the Management Investors will be AGREEMENTS: terminated without payment and superseded by new employment agreements that will become effective upon the consummation of the transaction. The material terms of the new agreements are set forth on Exhibit D. TAG-ALONG RIGHT: If, at any time prior to an Initial Public Offering, Fox Paine or a Rollover Investor (as the case may be) accepts a third party offer to sell any or all of its common stock in either company (other than to a permitted transferee), Fox Paine and each other Rollover Investor (as the case may be) will be able to participate on a proportionate basis, based on ownership, at the same price and on the same terms in the sale of shares of such company. DRAG-ALONG RIGHTS: Prior to an Initial Public Offering, if Fox Paine sells at least 50% of its common stock in either company in a bona fide arm's length transaction or series of related transactions, Fox Paine may require the Rollover Investors to sell a proportional number (on an as-converted basis) of their shares of common stock in that same company in the same transaction (at the same price and on the same terms, with appropriate adjustments for warrants or options). REGISTRATION RIGHTS: After an Initial Public Offering, the Rollover Investors will have one demand in Citron and two in Medic, and Fox Paine will have five in each. All such parties will have full piggybacks in each other's demands, with no relative priority as to cutbacks; cutbacks will be proportional based on ownership among the parties, no matter who initiated the demand. Fox Paine and Rollover Investors will also have customary "piggyback" registration rights. Expenses, in both demands and piggybacks, to be borne by Medic or Citron, as the case may be. Other customary registration rights provisions will apply, including holdbacks, indemnification and contribution provisions. If Fox Paine is permitted to sell secondary shares in an Initial Public Offering, the Rollover Investors will get a proportionate opportunity. 4 RIGHT OF FIRST OFFER: Fox Paine and the Rollover Investors will have reciprocal proportional rights of first offer (seller to propose minimum sale price) on transfers of shares (acceptance must be all shares offered or none as to the group), other than transfers to customary permitted transferees (including with respect to Fox Paine, its investors and affiliates, and including with respect to Rollover Investors, family members and trusts for them), prior to an Initial Public Offering. Permitted transferees step into shoes of transferor for transfer restriction and registration rights provisions. LIQUIDITY UPON DEATH OR Citron Shares: The Management Investors will have DISABILITY AND CERTAIN the right to "put" all of their Citron shares to TERMINATIONS: Citron at fair market value, upon death or disability or termination of employment for Good Reason, or by the companies without Cause (each as defined in the Employment Agreement). Medic Shares: The Management Investors will have the right to "put" their shares of Medic which were acquired upon the exercise of stock options (provided that the shares have been held for at least six months), less the number of shares used to exercise in cashless exercises, but including the Medic Additional Shares (the governing objective being to preserve recapitalization accounting) to Medic at fair market value, upon death or disability or termination of employment for Good Reason or by the companies without Cause. Notwithstanding the above, the put rights described above will be subject to each company's available cash flow, debt restrictions and any legal restrictions on distributions of cash from the relevant company. In the event the payments with respect to put rights are not satisfied in whole or in part immediately, the payments will be a continuing obligation of the relevant company and such rights will be satisfied before the payment of any dividends or distributions to shareholders. Any unpaid amounts upon exercise of a put right will accrue interest at applicable "afr" rate. The put rights terminate upon an Initial Public Offering. CALL RIGHT: Prior to an Initial Public Offering, Citron will have call rights at fair market value with respect to Citron stock only, upon a termination of employment by the companies for Cause or by the Management Investor voluntarily (without Good Reason). 5 BOARD OF DIRECTORS: Each Company's Board of Directors will initially consist of Kenneth W. Davidson (Chairman), Ernest J. Henley, Ph.D. and one other member to be appointed by the Rollover Investors and four members designated by Fox Paine (not limiting Fox Paine or the companies' rights to add additional directors). The right to appoint Board members will terminate upon an Initial Public Offering or significant reduction in ownership percentage. While Ken Davidson is CEO or Chairman of the Board, all three Rollover Investor representatives will be designated by him; thereafter, by plurality vote of shares held by the Rollover Investors. INDEMNITY: Following the consummation of the transaction, the Board of Directors of each Company will adopt a customary mandatory indemnification and expense advancement policy for officers, subject to any limitations imposed by applicable law. 6 [Exhibits A, B, C and D and the annexes thereto are omitted] -----END PRIVACY-ENHANCED MESSAGE-----