<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SUNRISE MEDICAL, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF SUNRISE MEDICAL]
2382 FARADAY AVENUE, SUITE 200
CARLSBAD, CALIFORNIA 92008
----------------
NOTICE OF ANNUAL MEETING TO BE HELD ON APRIL 30, 1996
----------------
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend the
Annual Meeting of Stockholders of Sunrise Medical, Inc. to be held at the Del
Mar Hilton, 15575 Jimmy Durante Boulevard, Del Mar, California, on Tuesday,
April 30, 1996, commencing at 2:00 p.m. We look forward to the opportunity of
greeting personally those stockholders who are able to attend.
At the meeting, you are being asked to:
1. Elect members of the Board of Directors;
2. Transact such other business as may properly come before the meeting
or any adjournments thereof.
During the course of the meeting, management will report on the current
activities of Sunrise and comment on its future plans. A discussion period is
planned so that stockholders will have an opportunity to ask questions and
present their comments.
The Board of Directors fixed the close of business on March 15, 1996 as the
record date for the determination of stockholders entitled to notice of and to
vote at this Annual Meeting and at any continuation or adjournment thereof. If
you plan to be present, please notify our director of corporate
communications, Marcia Vaughan, (at 619/930-1500), so that identification can
be prepared for you. Thank you for your interest and consideration.
Sincerely,
/s/ S.A. Jaye
Steven A. Jaye
Vice president, general counsel
and secretary
March 29, 1996
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.
ACCORDINGLY, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF
YOU ATTEND THE MEETING.
<PAGE>
[LOGO OF SUNRISE MEDICAL]
2382 FARADAY AVENUE, SUITE 200
CARLSBAD, CALIFORNIA 92008
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sunrise Medical, Inc., a Delaware
corporation (the "company" or "Sunrise"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Del Mar Hilton, 15575
Jimmy Durante Boulevard, Del Mar, California, on Tuesday, April 30, 1996,
commencing at 2:00 p.m., and any postponement or adjournment thereof. It is
anticipated that this Proxy Statement, together with the proxy and the revised
1995 Annual Report to Stockholders, will first be mailed to the company's
stockholders on or about March 29, 1996.
Any stockholder of record giving a proxy has the power to revoke it at any
time before it is voted by filing with the secretary of the company a notice
in writing revoking it, by duly executing a proxy bearing a later date, or by
attending the Annual Meeting and, prior to the voting of the proxy, indicating
to the secretary of the meeting a desire to vote his or her shares in person.
Holders whose shares are in street name should consult with their brokers
concerning procedures for revocation. Subject to such revocation, all shares
represented by a properly executed proxy will be voted as directed by the
holder on the proxy card. If no choice is specified, proxies will be voted FOR
the directors nominated by the Board of Directors.
The affirmative vote of the holders of a plurality of the shares of the
company's Common Stock, $1.00 par value (the "Common Stock"), represented in
person or by proxy and entitled to vote at the Annual Meeting will be required
to elect each director to be elected at the Annual Meeting. The affirmative
vote of the holders of a majority of the shares of the company's Common Stock
represented in person or by proxy and entitled to vote at the Annual Meeting
will be required for the approval of any other matter presented at the Annual
Meeting for approval.
The election inspector will treat shares represented by properly signed and
returned proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions do not constitute a vote "for" or "against" any matter and thus
will be disregarded in the calculation of votes cast for or against a matter.
For the purposes of determining the outcome of any matter, "broker non-votes"
(i.e., shares held by brokers or nominees that are represented at the meeting
by properly signed and returned proxies but with respect to which the broker
or nominee is not empowered to vote on a particular matter) will be treated by
the election inspector as not present and not entitled to vote with respect to
that matter (although such shares may be entitled to vote on other matters),
but will be deemed to be present and entitled to vote for quorum purposes.
The company will bear the entire expense of this proxy solicitation. Copies
of solicitation material may be furnished to brokerage houses, fiduciaries,
and custodians to forward to their principals, and the company may reimburse
them for their reasonable expenses in connection therewith. Solicitation may
be made by telephone or otherwise by officers, directors or employees of the
company (who will receive no compensation therefor other than their regular
compensation).
1
<PAGE>
The close of business on March 15, 1996 was fixed as the record date for
determination of holders of the company's Common Stock entitled to notice of
and to vote at the Annual Meeting. On that date, there were outstanding and
entitled to vote 18,825,449 shares of Common Stock. Subject to cumulative
voting rights in the election of directors (see "Proposal 1, Election of
Directors"), holders of Common Stock are entitled to one vote per share on
each matter submitted to or acted upon by the stockholders at the Annual
Meeting. The presence, either in person or by proxy, of persons entitled to
cast a majority of such votes constitutes a quorum for the transaction of
business at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Eight directors, comprising the entire membership of the Board of Directors
of the company, are to be elected at the Annual Meeting. Unless otherwise
instructed, the proxy holders intend to vote the shares represented by the
proxies received by them for the eight nominees shown below for a term of one
year and until their successors are duly elected and qualified.
If at the time of the Annual Meeting any of such nominees should be unable
or decline to serve, the authority provided in the proxy to vote for the
election of directors may be exercised to vote for a substitute or
substitutes. Management has no reason to believe that any substitute nominee
or nominees will be required.
Stockholders are entitled to cumulative voting rights in the election of
directors. Under cumulative voting, each stockholder is entitled to a number
of votes equal to the number of directors to be elected multiplied by the
number of shares of Common Stock the stockholder is entitled to vote. Such
votes may be cast for one nominee or distributed among two or more candidates.
The proxy solicited by the Board of Directors confers discretionary authority
on the proxy holders to cumulate votes so as to elect the maximum number of
nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NAMED NOMINEE
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
CURRENT POSITIONS DIRECTOR OF THE
NAME AGE WITH THE COMPANY COMPANY SINCE
---- --- -------------------------------- ---------------
<S> <C> <C> <C>
Richard H. Chandler..... 53 Chairman of the board, president
and chief executive officer 1983
Lee A. Ault III......... 59 Director 1988
Lloyd E. Cotsen......... 67 Director 1989
Babette Heimbuch........ 48 Director 1994
Murray H. Hutchison..... 56 Director 1983
William L. Pierpoint.... 57 Director 1985
Joseph Stemler.......... 65 Director 1989
John R. Woodhull........ 62 Director 1986
</TABLE>
The business experience, principal occupations and employment of each of the
nominees for at least the past five years are as follows:
RICHARD H. CHANDLER has served as chairman of the Board of Directors and
chief executive officer of the company since its inception in January 1983
through the present. In January 1996 he also became president of the company,
a position he previously held from January 1983 until July 1993. From 1982 to
1983, he was President of the Richard H. Chandler Company, a management
consulting firm, during which period he planned the formation of the company.
From 1977 to 1982, he was president and chief executive officer of Abbey
Medical, Inc., except for six months in 1979 when he was group vice president
of Sara Lee Corporation. Mr. Chandler participated in the leveraged buy-out of
Abbey Medical from Sara Lee Corporation in June 1979 and arranged for its sale
to American Hospital Supply Corporation in April 1981.
2
<PAGE>
LEE A. AULT III was elected a director of the company on January 28, 1988.
From 1968 until January 1992, Mr. Ault was chief executive officer of
Telecredit, Inc., a payment services company, serving as its president from
1968 until 1983 and as chairman from 1983 until January 1992. Following the
acquisition of Telecredit by Equifax Inc., a New York Stock Exchange ("NYSE")
listed information services company in December 1990, Telecredit became a
subsidiary of Equifax, and Mr. Ault was also named senior vice president and a
director of Equifax. He has since retired as an executive of Equifax, but is
still a member of the Board of Directors of Equifax, as well as the Board of
Directors of Alex. Brown & Sons Incorporated and Viking Office Products, Inc.
LLOYD E. COTSEN was elected a director of the company on August 30, 1989.
Mr. Cotsen served as chief executive officer of Neutrogena Corporation, a
publicly-owned skin care and hair care products company from 1973 to 1995. He
also served as president and chairman of the Board of Directors of Neutrogena
for portions of this time. He retired from all positions with Neutrogena in
July 1995. Mr. Cotsen is currently a private investor and also a director of
Darwin Molecular Corporation, a privately held company.
BABETTE HEIMBUCH was elected a director of the company on January 21, 1994.
Since 1982 Ms. Heimbuch has held positions of increasing responsibility with
First Federal Bank of California and its parent company, FirstFed Financial
Corporation, a NYSE-listed company, and currently serves as president and
chief operating officer of both companies. She has been a director of FirstFed
Financial since 1987 and a director of First Federal Bank since 1986. Ms.
Heimbuch also serves on the Board of Trustees of the Santa Monica--UCLA
Medical Center and the Board of Directors of the Western League of Savings
Institutions.
MURRAY H. HUTCHISON was elected a director of the company on May 10, 1983.
Mr. Hutchison was chairman of International Technology Corporation, a NYSE-
listed environmental management company, from 1976 to 1994, and was its chief
executive officer from 1976 to 1992. Mr. Hutchison is currently a private
investor and is chairman of the Board of Directors for Advanced Access Inc.
and also serves on the Board of Directors of the Winston Tire Company and the
Olson Company.
WILLIAM L. PIERPOINT was elected a director of the company on October 30,
1985. From 1977 to 1988, he was president and chief executive officer of
Summit Health Ltd., a publicly-owned, integrated health care company. Mr.
Pierpoint is a certified public accountant, and since 1988 has been a private
investor. In 1995 he became vice chairman of Strategic Partners Inc. (dba
Cherokee Uniforms), a privately held company.
JOSEPH STEMLER was elected a director of the company on January 26, 1989.
From 1989 through July 1995, Mr. Stemler served as chairman, president, chief
executive officer and a director of La Jolla Pharmaceutical Company, a
biotechnology and genetic engineering concern involved in the development of
drugs to treat autoimmune diseases. He currently serves as chairman of the
Board of Directors of La Jolla Pharmaceutical Company. Mr. Stemler became
president and chief executive officer of Quidel Corporation in 1985, chairman
and chief executive officer in 1988, chairman in 1990 and vice chairman in
1991. Mr. Stemler was president and chief executive officer of Bentley
Laboratories, Inc. from 1978 to 1985. Mr. Stemler also serves on the Board of
Directors of the Scholle Corporation and Safeskin Corporation, a publicly
traded company.
JOHN R. WOODHULL was elected a director of the company on September 29,
1986. Mr. Woodhull is chairman, president and chief executive officer of
Logicon, Inc., a NYSE-listed company which provides electronic systems and
high-technology services to industry and government. Mr. Woodhull joined
Logicon in 1964, was elected to the Board of Directors a year later, and
attained the position of president and chief executive officer in 1969. Mr.
Woodhull also serves on the Board of Directors of Adams Business Forms, Inc.,
FirstFed Financial Corporation, First Federal Bank of California and YMCA of
Metropolitan Los Angeles.
3
<PAGE>
MEETINGS AND ATTENDANCE
The Board of Directors met six times during the fiscal year ended June 30,
1995. Of the four standing committees, the Executive Committee did not meet in
1995, while the Audit Committee met three times, the Compensation Committee
met three times, and the Stock Option Committee met six times. All directors
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board and (ii) the total number of meetings of the committees of the Board
on which such directors served, except for Mr. Cotsen, whose attendance was
66.7% (6 out of 9 meetings).
COMMITTEES
Audit Committee. The Audit Committee, comprised solely of outside directors,
meets with the company's independent and internal auditors and makes
recommendations to the Board of Directors concerning acceptance of the reports
of such auditors and reviews and makes recommendations to the Board concerning
the accounting policies of the company and the selection of the company's
independent auditors. The Audit Committee chair is Mr. Pierpoint. Other
members are Messrs. Cotsen and Stemler and Ms. Heimbuch.
Compensation, Stock Option and Nominating Committees. The Compensation
Committee, consisting solely of outside directors, meets with management and
makes recommendations to the Board concerning executive officer and key
employee compensation and concerning payments to be made under the Management
Incentive Bonus Plan and the Special Bonus Plan, as well as company
contributions to be made under the Profit Sharing/Savings Plan. The
Compensation Committee also functions as the Stock Option Committee,
administering the Amended and Restated Stock Option Plan for Key Associates
(the "1983 Stock Option Plan") and the 1993 Stock Option Plan. In addition,
this committee functions as a nominating committee regarding vacancies in the
Board of Directors. Members of the Compensation Committee are Messrs. Ault,
Hutchison and Woodhull, with Mr. Hutchison serving as chair.
Executive Committee. The Executive Committee, consisting of Messrs.
Chandler, Hutchison and Pierpoint, meets on an as-needed basis with the
authority to make Board-level decisions between regularly scheduled Board
meetings. The Executive Committee did not meet in fiscal 1995. Mr. Chandler is
chair of this committee.
Special Committee. The Special Committee, comprised of all of the outside
directors of the company, was formed in October 1995 to direct an
investigation into financial reporting irregularities at the company's Bio
Clinic subsidiary, and to take action with respect to the results of such
investigation. Ms. Heimbuch is chair of this committee.
COMPENSATION
Compensation of the outside directors is determined by action of the entire
Board after receiving the recommendations of the chief executive officer.
Currently, outside directors are paid a $2,000 per year retainer and $1,000
for each Board meeting attended. In addition, committee members are paid $500
per meeting, if a separate committee meeting is held the same day as a Board
meeting, and $750 if a committee meeting is held on a day other than a
scheduled Board meeting ($500 if a committee meeting is telephonic). Committee
chairs also receive a $1,500 annual retainer. Each outside director is granted
an option under the company's 1993 Stock Option Plan to purchase 5,000 shares
of Common Stock upon his or her initial election to the Board and every four
years thereafter if still a director. The company has no other contracts or
other arrangements pursuant to which any non-employee director was compensated
during the year.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing and overseeing the policies that govern company
compensation and benefit practices. As part of these functions, the Committee
evaluates the performance of the chief executive officer, reviews with senior
management the performance of executive officers generally, and determines
their respective compensation levels in terms of salary, bonuses and related
benefits. All determinations of the Compensation Committee are subject to
Board approval, other than stock and option based compensation, which is
determined solely by the Stock Option Committee. The Committee has established
a number of objectives which serve as guidelines in making all compensation
decisions, including:
. The integration of compensation programs with the company's strategic
focus in order to achieve its long-term competitive objectives and
strategic intent;
. The reward of annual financial performance through group bonus incentives
that pay for performance and treat each divisional team independently,
reinforcing the company's corporate culture;
. The encouragement of consistent, long-term enhancement of stockholder
value by providing multi-year performance incentives through a contingent
long-term bonus plan and equity ownership through stock options; and
. The development and implementation of a competitive total compensation
program which enables the company to attract and retain high-caliber
employees ("Associates") at all levels.
COMPENSATION PHILOSOPHY
The company's compensation philosophy rewards individual and team
performance on the basis of both quantitative and qualitative factors.
Associates at all levels participate in one or more of the company's various
incentive plans. Of the eight plans currently in effect, two apply to senior
executives; the other six are aimed more broadly at different groups,
including middle managers, engineers, sales Associates and hourly factory and
office Associates.
The company is comprised of a group of operating subsidiaries (referred to
by the company as "divisions"), each led by its own management team. Some
divisions are devoted to manufacturing a particular product line, while others
focus on distributing the company's products in a specific country or
geographic region. Each division's performance is measured and rewarded with
year-end bonuses computed independently of the others, while the company's
stock option program encourages key managers at all divisions to focus on the
company's performance as a whole.
The company's compensation philosophy and programs require that bonuses be
based on achievement of both team financial goals (i.e., corporate or
division) and individual performance objectives. However, no bonus is paid
unless that division delivers a profit increase for the year. Similarly,
corporate office executives receive no bonus unless earnings per share have
increased over the prior year. Even if a bonus is earned based on profit
performance, the executive must still accomplish his or her personal
objectives for the year in order to qualify for the designated amount.
Since the discovery of divisional accounting irregularities in the second
quarter of fiscal 1996, the Committee has reviewed again the company's
compensation philosophy and programs, while utilizing the assistance of an
outside executive compensation expert. The Committee reaffirmed its belief in
the company's philosophy of paying for performance. Given the company's
decentralized structure, the Committee continues to support a compensation
system that rewards divisional executives based on the operating performance
of their respective divisions, as properly reported and audited. The
alternative, tying divisional executives to corporate results, would penalize
the above average divisions while allowing poor performers to receive a bonus
they did not earn based on their own division's results.
5
<PAGE>
In applying this compensation philosophy, the Committee continues to believe
that the components of executive compensation should include base salary,
annual and long-term incentive compensation, stock option grants and other
benefits. A brief summary of each component follows.
BASE SALARY
Base salaries are competitive with market rates and are based on an internal
evaluation of the responsibilities required for each position. The Committee
relies on outside industry surveys to assess salary competitiveness, as well
as reviewing hiring and turnover patterns within the company. Salary increases
are based on annual supervisor reviews and are intended to reflect individual
as well as group performance. Annual increases for salaried Associates are all
awarded on the same day (the Monday closest to September 1) so as to ensure
fairness across the company and to incorporate both the previous fiscal year's
operating results and individual performances. The company provides
opportunities for compensation above the base salary level through its annual
and long-term incentive compensation programs.
ANNUAL INCENTIVE COMPENSATION
The company has used throughout its history a Management Incentive Bonus
Plan (the "MIB Plan") pursuant to which members of management are eligible to
receive annual cash bonuses. Generally, each bonus will be based on both the
achievement of individual objectives agreed upon by the manager and his or her
immediate supervisor, and upon attainment of certain earnings targets by the
company as a whole (in the case of corporate management), or by the division
(in the case of division management). With regard to the company's
performance, the two primary measures used for determining bonuses are the
company's earnings per share ("EPS") growth and its return on equity, both of
which influence stockholder value. A division's performance is measured
against goals for earnings growth (after a capital charge on any cash drawn),
and with penalties for failure to achieve certain levels of return on net
assets. No bonus is paid at either the corporate or divisional level unless
earnings exceed prior year results. Earnings goals are approved annually by
the Board of Directors and are tied to the company's operating plan. The
maximum payout that can currently be earned under the MIB Plan ranges from 10%
to 80% of a person's annual salary, depending upon his or her position.
LONG-TERM INCENTIVE COMPENSATION
The company adopted a Special Bonus Plan (the "SBP" or "SB Plan") in 1990
for the purpose of providing incentive cash bonuses to certain executives of
the company and its divisions, contingent upon their unit's consistently
exceeding its earnings targets over a moving three-year performance period. In
such cases, the awards are calculated based on a percentage of the amount by
which actual base year earnings exceed the target, without a ceiling. After
the close of each of the two succeeding fiscal years, cash payouts equal to
50% of the bonus previously accrued will be made to eligible executives still
employed on such dates, but only if the earnings goals for that year have been
attained. Any incentive bonus not so earned by an executive will be forfeited
and used to help make up the profit shortfall. The SBP supplements the yearly
rewards of the MIB Plan and is designed to encourage multi-year, sustained
growth. Because the SBP is uncapped and rewards performance over a three-year
period, the SBP provides complementary incentives to the annual MIB Plan. In
practice, the SBP has provided supplemental income of up to 27% of annual
salary for executives at units achieving over-target performance three years
in a row, with the average percentage earned being much lower than that.
STOCK OPTIONS
Certain management Associates of the company are eligible to receive
periodic grants of non-qualified and incentive stock options pursuant to (i)
the company's 1983 Stock Option Plan, and (ii) the 1993 Stock Option Plan. The
Stock Option Committee of the Board of Directors establishes the terms of
options granted under both plans. Options which have been granted under both
the 1983 and 1993 Plans become exercisable in four equal annual increments
beginning on the first anniversary date of the grant. The option price, which
is determined by the Stock Option Committee, must, for incentive stock
options, be equal to at least 100% of the fair market value
6
<PAGE>
of the shares covered by the option on the date of grant. Options are granted
to certain management Associates and are intended to retain them and motivate
them to improve the company's long-term stock market performance, aligning
their interests with those of stockholders. In determining the number of
options to be granted to an Associate, the Stock Option Committee takes into
account a number of factors, including the individual's level and scope of
responsibility, job performance, and the overall competitiveness of his or her
compensation package compared to outside industry surveys.
PROFIT SHARING CONTRIBUTION
The company contributes to a Profit Sharing/Savings Plan in which all
domestic Associates (except those under certain collective bargaining
agreements) may participate. It is a deferred 401(k) plan which serves as the
company's only form of retirement plan for Associates in the United States.
Annual awards for Associates under the profit sharing portion of the plan can
vary from 4% to 6% of compensation, contingent upon attainment of certain
earnings targets by the company as a whole in the case of corporate office
Associates, or by the division, in the case of division Associates. The
savings portion of the plan provides Associates with a company matching
contribution which matches their voluntary savings on a dollar-for-dollar
basis up to a maximum of $400. Associates employed outside the United States
have a defined contribution plan in effect which generally mirrors the United
States plan, to the extent appropriate in view of local laws and practices.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing the fiscal 1995 compensation for the company's chairman,
president and chief executive officer, Mr. Richard H. Chandler, the Committee
at its August 1995 meeting followed its established guidelines as outlined
above. Thus, the Committee concluded in good faith that the leadership of Mr.
Chandler during fiscal 1995 produced a net income growth of 19% and EPS growth
of 16%, based on the company's audited results as originally reported, and a
payout was made under the MIB Plan totaling $124,800, or 31.2% of his base
salary. In addition, $64,805 (accrued in prior years) was paid out under the
SBP in 1995 for over-target profit performance during each of the two
preceding years, providing an SBP payout of 16.2% of his base salary. His
combined bonus under both plans in fiscal 1995 was thus 47.4% of his base
salary. The company also contributed $7,300 to Mr. Chandler's 401(k) account,
which was below the 4.6% of compensation he otherwise would have earned under
the plan because of the Internal Revenue Service ceiling imposed on profit
sharing plan contributions.
Pursuant to the company's SBP, the amounts initially accrued against
earnings in fiscal years 1994 and 1995 as Mr. Chandler's contingent award for
the company's performance in those years as originally reported have been
adjusted to zero to reflect the subsequent restatement of financial results
for fiscal years 1994 and 1995.
The Compensation Committee retained an outside management compensation
consultant to prepare a study (described below), which indicated that Mr.
Chandler's salary and total compensation package were below the median level
for a group of "Comparable Employers." As a result, the Committee increased
Mr. Chandler's base salary by $75,000 on September 1, 1995. This increase
brought Mr. Chandler's base salary to approximately the median of the
Comparable Employers group. In addition, the Committee approved a non-
qualified stock option grant effective August 21, 1995 to purchase 22,000
shares of company Common Stock contingent upon stockholder approval of certain
amendments to the 1993 Stock Option Plan. The company subsequently withdrew
the proposed amendments, so the options were not and will not be issued. In
view of the company's financial restatement, the Committee has decided not to
award Mr. Chandler any stock options in fiscal 1996.
1996 EXECUTIVE COMPENSATION PLANS
On August 23, 1994, the Committee commissioned a report from an independent
consulting firm regarding executive compensation paid by other companies
having similar revenues and businesses ("Comparable Employers"). In
determining the group of Comparable Employers, the independent consultant
assembled market data on medical device manufacturers with similar revenues.
The Comparable Employers group is similar in composition to the S&P Medical
Products & Supplies Index included in Five Year Cumulative Total Return
Comparison graph included in this proxy statement. The Committee believes that
total cash compensation for company executives should be targeted within the
25th to 75th percentile of executives at Comparable Employers
7
<PAGE>
when the company meets commensurately challenging financial goals. Where
executives fall within that range will depend on their seniority and their
consistency in performance. This approach is consistent with the Committee's
responsibility to link executive compensation with the company's financial
performance while also reflecting competitive market data.
A report was presented to the Committee on June 26, 1995 by the independent
consultant. The Committee adopted recommendations from the consulting firm on
various facets of the company's executive compensation plan. Overall,
executive base salaries were found to be within the 25th to 75th percentile
range and at appropriate levels for Comparable Employers, with the primary
exception being the chief executive officer, whose salary was considerably
below the median. Additionally, the opportunity for management to earn higher
compensation based on company and individual performance was not as
competitive. The independent consultant therefore recommended changes to the
Management Incentive Bonus Plan (the "MIB Plan"), the Special Bonus Plan (the
"SBP") and the 1993 Stock Option Plan. The Compensation Committee approved at
its August 21, 1995 meeting, the implementation of the MIB and SBP
recommendations for fiscal 1996, as summarized below, but subsequently decided
to withdraw its proposed amendment to the 1993 Stock Option Plan after
learning that prior year financial results would have to be restated.
MIB Plan. The independent consultant recommended amending the company's two
executive bonus plans to bring total cash compensation up to competitive
levels. The Committee concluded that payout percentages under the MIB Plan
were low, and increases should be implemented at the senior corporate officer
level. The chief executive officer's MIB Plan payout percentages were changed
to a 0/40/80% payout range (increased from 0/25/50%) of 1995 base salary
(i.e., 0% of the base salary for earnings below prior year earnings; 40% of
base salary payment for achieving "on-target" earnings; and 80% of base salary
payment for achieving "maximum" earnings as set by the board). MIB Plan payout
percentages for the three senior vice presidents of the company were changed
to 0/30/60% of 1996 base salary (increased from 0/25/50%). The MIB payout
levels for other managers were judged by the consultant to be competitive and
were left unchanged. Bonus earnings targets for fiscal 1996 were set by the
Board prior to discovery of the financial reporting irregularities, and the
Board will not reduce these targets, which makes it unlikely that any MIB or
SBP bonus payments will be earned by corporate officers in fiscal 1996.
SB Plan. The Committee decided to broaden the eligibility of this program to
include corporate officers, division presidents, division vice presidents and
country general managers. Awards under this program for the chief executive
officer, chief financial officer, senior vice presidents of operations and
division presidents will be calculated at 10% of their base salary when on-
target earnings are reached and 20% of their base salary if maximum earnings
are achieved. All other executives listed above will receive awards based on a
calculation of 5% of their base salary when on-target earnings are reached and
10% of their base salary if maximum earnings are achieved. If earnings exceed
the maximum, 15% of such earnings excess will be shared with the management
team that delivered it, in the form of an additional contingent SBP award.
(The previous plan provided for 30% of the earnings excess to be so awarded.)
The goal of these SBP changes was to shift a greater portion of executive
compensation from annual to longer term performance incentives and to broaden
participation in the plan, while improving the overall competitiveness of the
company's compensation programs.
Stock Option Plan. The company originally proposed for shareholder approval
an amendment to the 1993 Stock Option Plan which would have changed a number
of its features while also increasing the number of additional options
becoming available for grant each year from 1.5% to 2.0% of shares
outstanding. In view of the financial restatement, the company has decided not
to propose any amendments to the 1993 Stock Option Plan at this time.
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1993 or under the
Securities Exchange Act of 1934, except to the extent the company specifically
incorporates this report by reference, and shall not otherwise be deemed filed
under such Acts.
Lee A. Ault III Murray M. Hutchison John R. Woodhull
Chairman
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
services in all capacities to the company for the fiscal years ended June 30,
1995, July 1, 1994 and July 2, 1993, of those persons who were at June 30,
1995 the company's chief executive officer and the four other most highly-
compensated executive officers (the "Named Officers").
SUMMARY COMPENSATION TABLE
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ------ --------
OTHER STOCK LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL BONUS ANNUAL OPTION PAYOUTS COMPENSATION
POSITION YEAR SALARY (1) COMPENSATION GRANTS (2) (3)
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard H. Chandler..... 1995 $400,000 $124,800 -- 20,000 $ 64,805 $10,509
Chairman of the board 1994 370,000 92,593 -- 25,000 102,150 13,919
and chief executive 1993 325,000 160,875 -- 20,000 84,300 17,883
officer (4)
Larry C. Buckelew....... 1995 300,000 93,600 -- 15,000 15,377 8,028
President and chief 1994 275,000 69,575 -- 20,000 18,650 11,054
operating officer (4) 1993 210,000 100,837 -- 40,000 26,600 14,765
Thomas H. O'Donnell..... 1995 240,000 102,538 -- 5,000 65,528 8,480
President, Quickie 1994 232,000 82,347 -- 5,000 74,998 13,946
Designs Inc. (5) 1993 222,000 105,450 -- 10,000 47,550 16,339
Barrie Payne............ 1995 209,000 102,177 -- 5,000 38,834 9,841
Managing director, 1994 200,000 52,805 -- 5,000 41,800 13,833
Sunrise Medical Ltd. (6) 1993 191,000 88,443 -- 10,000 5,650 17,628
Richard Kollisch (7).... 1995 212,738 104,242 -- 5,000 -- 10,637
President, Sopur 1994 184,220 15,443 -- 5,000 -- --
Medizintechnik GmbH. 1993 178,581 -- -- 10,000 -- --
</TABLE>
- - -------------------------------------------------------------------------------
(1) The amounts reflect the bonuses accrued under the Management Incentive
Bonus Plan in the designated fiscal years. See the Compensation Committee
Report to Stockholders for a description of this plan.
(2) The amounts reflect contingent bonuses accrued in prior years under the
Special Bonus Plan which were earned based on performance attained in the
designated fiscal years. See the Compensation Committee Report to
Stockholders for a description of this plan.
(3) Reflects the amount of cash contributions by the company to the Profit
Sharing/Savings Plan on behalf of the Named Officers. This amount reflects
both matching contributions and profit sharing portions. Also included are
certain life insurance premiums paid for by the company. The company has
no defined benefit or other actuarial plan covering the Named Officers.
(4) During fiscal 1993, Mr. Chandler was chairman of the board, chief
executive officer and president of the company, while Mr. Buckelew was
president of Bio Clinic Corporation, a company subsidiary. On July 1,
1993, Mr. Buckelew became president of the company while Mr. Chandler
continued to serve as chairman and chief executive officer of the company.
On August 23, 1994, Mr. Buckelew was also elected a director and chief
operating officer of the company. Mr. Buckelew resigned as an officer,
director and employee of the company on January 2, 1996, and Mr. Chandler
again became chairman, president and chief executive officer of the
company. See "Certain Transactions" below.
(5) During fiscal 1993, 1994, 1995 and the first half of fiscal 1996, Mr.
O'Donnell was president of Quickie Designs Inc., a company subsidiary. In
January 1996 he was elected senior vice president--North America for the
company.
(6) During fiscal 1993, 1994, 1995 and the first half of fiscal 1996, Mr.
Payne was managing director of Sunrise Medical Ltd., a company subsidiary.
In January 1996 Mr. Payne was elected senior vice president--Europe for
the company.
(footnotes continued on next page)
9
<PAGE>
(7) Mr. Kollisch's compensation is denominated in German deutsche marks. For
purposes of this table, all amounts have been converted to dollars at the
exchange rate in effect as of June 30, 1995. Mr. Kollisch and the company
entered into an employment agreement as of March 31, 1992, pursuant to
which Mr. Kollisch is entitled, under certain circumstances, to receive a
severance payment in the event of the termination of his employment by the
company equal to eight months of salary plus one additional month of
salary for each year he is employed by the company after fiscal 1996.
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information concerning options granted under
the 1993 Stock Option Plan to the Named Officers during the 1995 fiscal year.
OPTION GRANTS IN FISCAL YEAR 1995
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - ---------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATE OF
STOCK PRICE APPRECIATION
FOR OPTION TERM (2)
---------------------------
PERCENT
OF TOTAL
OPTIONS OPTIONS EXERCISE
GRANTED GRANTED IN PRICE EXPIRATION
NAME (1) FISCAL YEAR PER SHARE DATE 5% 10%
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Chandler..... 20,000 7.1% $23.50 8/23/2004 $307,797 $ 768,512
Larry C. Buckelew(3).... 15,000 5.4 23.50 8/23/2004 230,848 576,384
Thomas H. O'Donnell..... 5,000 1.8 23.50 8/23/2004 76,949 192,128
Barrie Payne............ 5,000 1.8 23.50 8/23/2004 76,949 192,128
Richard Kollisch........ 5,000 1.8 23.50 8/23/2004 76,949 192,128
-------- ----------
Totals........................................................... $769,492 $1,921,280
Increase in Total Stock Market Capitalization of the company
(under same assumptions) (4).................................... $364 million $922.5 million
</TABLE>
- - -------------------------------------------------------------------------------
(1) All grants were in the form of non-qualified stock options.
(2) Potential realizable value is calculated as the aggregate difference
between the market price of the Common Stock and the option exercise price
assuming that the stock price appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the option
term. These amounts are calculated based on the requirements promulgated
by the Securities and Exchange Commission and are not an estimate of
future stock price growth.
(3) In connection with Mr. Buckelew's resignation as an officer, director and
employee of the company on January 2, 1996, all vested and unvested
options held by Mr. Buckelew were terminated. See "Certain Transactions"
below.
(4) This line is presented for comparative purposes and reflects, for all
outstanding shares as of June 30, 1995, the aggregate potential realizable
increase in value that would result if the company's stock price were to
increase from the market price on June 30, 1995 ($31.125 per share) by the
same compound annual rates set forth in the table over a 10-year period
ending June 30, 2005. These amounts are not an estimate of future stock
price growth.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during fiscal 1995 and unexercised
options held as of the end of fiscal 1995.
OPTION EXERCISES IN FISCAL 1995 AND VALUE OF OPTIONS AT END OF FISCAL 1995
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT JUNE 30, 1995 AT JUNE 30, 1995 (2)
UPON REALIZED ------------------------- -------------------------
NAME EXERCISE (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Chandler..... 92,500 $2,020,582 16,250 66,250 $189,663 $772,788
Larry C. Buckelew(3).... 22,500 566,573 55,000 60,000 781,550 628,425
Thomas H. O'Donnell..... -- -- 47,250 23,750 899,973 318,738
Barrie Payne............ 2,450 69,185 33,800 18,750 666,303 228,738
Richard Kollisch........ -- -- 21,250 18,750 364,363 234,363
- - ------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the market value of the underlying shares on the exercise date
minus the option exercise price per share.
(2) Calculated on the basis of the fair market value of the underlying shares
as of June 30, 1995 ($31.125 per share) minus the exercise price.
(3) In connection with Mr. Buckelew's resignation as an officer, director and
employee of the company on January 2, 1996 all vested and unvested options
held by Mr. Buckelew were terminated. See "Certain Transactions" below.
LONG-TERM INCENTIVE PLAN
The following table sets forth information with respect to the Named
Officers concerning the awards made under the company's Special Bonus Plan
during fiscal 1994 and 1995. See the Compensation Committee's Report to
Stockholders for a description of this plan.
LONG-TERM INCENTIVE PLAN TABLE
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER
OTHER PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
MATURATION OR FROM 1994 AND 1995 ACCRUALS
PAYOUT ---------------------------
NAME (FISCAL YEAR) THRESHOLD TARGET MAXIMUM(1)
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard H. Chandler.............. 1996 -- -- $ 0
1997 -- -- 0
Larry C. Buckelew(2)............. 1996 -- -- 0
1997 -- -- 0
Thomas H. O'Donnell.............. 1996 -- -- 14,700
1997 -- -- 3,921
Barrie Payne..................... 1996 -- -- 23,434
1997 -- -- 22,300
Richard Kollisch................. 1996 -- -- 39,880
1997 -- -- 39,880
</TABLE>
- - -------------------------------------------------------------------------------
(1) Represents accruals for fiscal 1994 and 1995 that would be earned assuming
applicable financial performance goals are achieved. Under the Special
Bonus Plan, the designated amounts will be paid in full if the performance
goals for the designated fiscal year are achieved, or forfeited if
performance falls short of the goals for that fiscal year. Amounts
reflected for fiscal 1997 may increase by additional accruals in fiscal
1996 if certain fiscal 1996 performance targets are exceeded. Amounts
previously accrued for corporate office executives during fiscal years
1994 and 1995 were adjusted to zero to reflect the restatement of
financial results for these prior years.
(2) Mr. Buckelew resigned as an officer, director and employee of the company
on January 2, 1996. See "Certain Transactions" below.
11
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total returns
for the company, the S&P 500 Index and the S&P Medical Products and Supplies
Index. The graph assumes that the value of the investment in the company's
Common Stock and each index was $100 at June 30, 1990, and that all dividends
were reinvested.
FIVE-YEAR CUMULATIVE TOTAL RETURN COMPARISON (1)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
JUNE 30,
-----------------------------------------------
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Sunrise Medical, Inc........... $100.00 $158.73 $182.54 $307.94 $277.78 $395.24
S&P 500 Index.................. 100.00 107.40 121.81 138.44 140.39 176.99
S&P Medical Products & Supplies
Index......................... 100.00 132.92 151.78 124.49 120.01 184.12
</TABLE>
(1) The graph covers the period from June 30, 1990 to June 30, 1995.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 15, 1996, the number and
percentage of shares of the company's Common Stock beneficially owned,
directly or indirectly, by each of the company's directors and Named Officers,
and by the directors and executive officers of the company as a group. The
address for each person listed below is 2382 Faraday Avenue, Suite 200,
Carlsbad, California 92008. Management knows of no person, except for Mr.
Chandler (who serves as the company's chairman of the Board of Directors,
president and chief executive officer) who owns beneficially or of record as
much as five percent of the outstanding shares of the company's Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AT MARCH 15, 1996(1)
--------------------------
NUMBER PERCENT
NAME OF BENEFICIAL OWNER OF SHARES OF CLASS
------------------------ --------------- ------------
<S> <C> <C>
DIRECTORS
Richard H. Chandler(2).................... 1,925,958 10.2%
Lee A. Ault III........................... 26,000 *
Larry C. Buckelew(3)...................... 60 *
Lloyd E. Cotsen........................... 13,250 *
Babette Heimbuch.......................... 2,900 *
Murray H. Hutchison....................... 23,750 *
William L. Pierpoint...................... 22,970 *
Joseph Stemler............................ 32,118 *
John R. Woodhull.......................... 20,750 *
NAMED OFFICERS(4)
Thomas H. O'Donnell....................... 65,253 *
Barrie Payne.............................. 60,090 *
Richard Kollisch.......................... 31,250 *
ALL DIRECTORS & EXECUTIVE OFFICERS
AS A GROUP (22 PERSONS).................... 2,383,348 12.7%
</TABLE>
- - --------
*Less than 1%
(1) Includes shares held for the benefit of the named person as of March 15,
1996 under the Sunrise 401(k) plan, as well as shares deemed to be
outstanding pursuant to stock options presently exercisable or exercisable
within 60 days after March 15, 1996. On the record date, March 15, 1996,
there were a total of 18,825,449 shares of the company's Common Stock
issued and outstanding.
(2) Does not include 240,000 shares held in trust for the benefit of Mr.
Chandler's children, as to which Mr. Chandler disclaims beneficial
ownership. Also does not include 22,000 shares contributed to a non-profit
foundation of which Mr. Chandler and family members are directors and as
to which Mr. Chandler disclaims beneficial ownership.
(3) Mr. Buckelew resigned as an officer, director and employee of the company
on January 2, 1996.
(4) Excludes Richard H. Chandler and Larry C. Buckelew who are listed in the
table under Directors.
13
<PAGE>
CERTAIN TRANSACTIONS
To assist the company's then president in his relocation, the company loaned
approximately $115,000 to Mr. Buckelew in March 1994. On January 2, 1996, Mr.
Buckelew resigned as an officer, director and employee of the company, and
executed a Resignation Agreement with the company. The Resignation Agreement
provided for: (i) termination of all of Mr. Buckelew's 115,000 options to
purchase company stock (which had a vested market value at that time of
approximately $225,000), (ii) forgiveness of the above referenced relocation
loan, (iii) a general release by Mr. Buckelew in favor of the company, (iv)
certain payments to Mr. Buckelew totaling approximately $200,000 and (v)
certain executive outplacement services. The Resignation Agreement also
included provisions covering confidentiality of company information,
protection of company intellectual property and certain other matters.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected to serve as the company's
independent auditors for the 1996 fiscal year. This firm has audited the
company's financial statements since 1983. One or more representatives of KPMG
Peat Marwick will be present at the Annual Meeting to respond to appropriate
questions and will be given an opportunity to make a statement if they so
desire.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Pursuant to proxy rule 14(a)(3)(i), any proposals of stockholders intended
to be presented at the company's fiscal 1996 Annual Meeting of Stockholders
must be received by the secretary of the company at the address of the company
set forth on the first page of this Proxy Statement on or before June 8, 1996
in order to be considered for inclusion in the company's proxy materials for
that meeting. In addition, under the company's Bylaws, nominations of
candidates for election to the company's Board of Directors and other
stockholder proposals must generally be received by the Secretary of the
company not less than 60 days prior to the Annual Meeting in order to be
considered and acted upon at the Annual Meeting.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of
Directors knows of no other matter which will be acted upon at the Annual
Meeting. If any other matters are presented properly for action at the Annual
Meeting or at any adjournment thereof, it is intended that the proxies will be
voted with respect thereto in accordance with the best judgment and in the
discretion of the proxy holders, insofar as such proxies are not limited to
the contrary.
By Order of the Board of Directors,
/s/ Steven A. Jaye
Steven A. Jaye
Vice president, general counsel
and secretary
14
<PAGE>
- - -------------------------------------------------------------------------------
Please mark
your votes as [X]
indicated in
this example
THE SUNRISE MEDICAL BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2:
Item 1-ELECTION OF DIRECTORS
NOMINEES:
Richard H. Chandler Murray Hutchison WITHHELD
Lee Ault III William L. Pierpoint FOR FOR ALL
Lloyd E. Cotsen Joseph Stemler [ ] [ ]
Babette Heimbuch J. R. Woodhull
WITHHELD FOR ONE OR MORE: (Write that nominee's name in the space provided
below).
- - -----------------------------------
Item 2-APPROVAL OF THE PROXIES TO VOTE IN THEIR DISCRETION UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
WILL ATTEND [ ]
MEETING
SIGNATURE(S) __________________________ DATE _______________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- - -------------------------------------------------------------------------------
PROXY
SUNRISE MEDICAL INC.
The undersigned holder of Common Stock acknowledges receipt of a copy of the
Annual Report and the Proxy Statement dated March 29, 1996 and, revoking any
proxy heretofore given, hereby constitutes and appoints Mr. Richard H.
Chandler and Mr. Steven A. Jaye, and each of them, as proxies, each of them
with the power to appoint his substitute, and hereby authorizes each of them
to represent and to vote, cumulatively or otherwise as designated on the
reverse side, all the shares of Common Stock held of record by the undersigned
on March 15, 1996, at the Annual Meeting of Stockholders to be held on April
30, 1996, at 2:00 P.M. PST at the Del Mar Hilton Hotel and any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
INDICATED, IT WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS AND, IN THE
DISCRETION OF THE PROXY HOLDERS, WITH RESPECT TO ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
