<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your stock options
are affected by the deal.
Under the terms of the Transaction, the vesting of all of your unvested stock
options is accelerated so that you are 100% vested in all of your stock options
for a period of at least 20 days prior to the closing of the Transaction. As of
the closing date, you are entitled to receive a cash payment for all stock
options that have an exercise price below the offering price of $10 per share.
This payment will equal the amount by which the $10 per share offering price is
greater than the exercise price, multiplied by the number of shares covered by
such stock options (see the table below for details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your stock options or tender the shares you would receive
on exercise to receive this payment. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK
FOR THE OPTION "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER
YOUR EXERCISE PRICE) FOLLOWING THE CLOSING. Any stock options with an exercise
price of $10 or more per share will have no value and you will not receive any
payment for them.
STOCK OPTION TABLE
The attached statement provides details on all of the stock options you hold,
including their exercise prices. The table below shows the number of stock
options for which you are entitled to receive payment and indicates the exercise
price of each grant and the resulting "spread." Your pretax gain is the "spread"
multiplied by the number of shares covered by such options.
[Insert table]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel option summary is as of October 23, 2000. This
letter and the option summary assume that you are a current Associate as of the
close of the Transaction.
<PAGE>
At the closing of the Transaction, all outstanding stock options will be
canceled and all stock option programs will be terminated. Because Sunrise
Medical will no longer be a publicly held company, a new program more
appropriate to a privately held company is being finalized. This new program
will provide cash compensation to eligible Associates (other than those in the
ownership group) if the Company meets specific performance goals, in accordance
with the terms of the program.
If you have any questions about your stock options or the payment you will
receive, or if you wish to exercise your vested stock options, please call Debi
Ward at (760) 930-1547 or Suzanne DeSpain at (760) 930-1542.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR STOCK OPTIONS TO RECEIVE THE PAYMENT
OUTLINED ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your stock options
are affected by the deal.
REGULAR STOCK OPTIONS
"Regular Stock Options" are those stock options that vest solely on the basis of
the passage of time, generally vesting 25% per year on the first, second, third,
and fourth anniversaries of the stock option grant date.
Under the terms of the Transaction, the vesting of all of your unvested Regular
Stock Options is accelerated so that you are 100% vested in all of your Regular
Stock Options for a period of at least 20 days prior to the closing of the
Transaction. As of the closing date, you are entitled to receive a cash payment
for all Regular Stock Options that have an exercise price below the offering
price of $10 per share. This payment will equal the amount by which the $10 per
share offering price is greater than the exercise price, multiplied by the
number of shares covered by such Regular Stock Options (see the tables below for
details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your stock options or tender the shares you would receive
on exercise to receive this payment. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK
FOR THE OPTION "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER
YOUR EXERCISE PRICE) FOLLOWING THE CLOSING. Any Regular Stock Options with an
exercise price of $10 or more per share will have no value and you will not
receive any payment for them.
MEGAGRANT STOCK OPTIONS
"Megagrant Stock Options" are those stock options granted under the Year 2000
Non-Qualified Stock Option Plan, whose vesting occurs in three equal tranches:
(i) One-third (1/3) time vesting (equal time vesting over four years);
(ii) One-third (1/3) performance vesting based on attainment of earnings per
share targets; and
(iii) One-third (1/3) performance vesting based on attainment of stock price
targets.
<PAGE>
As a result of the Transaction, vesting of the first two-thirds (2/3) of your
total Megagrant Stock Options (time vesting and earnings per share performance
vesting) accelerates. The one-third (1/3) of your total Megagrant Stock Options
that vest on the basis of stock price performance do not vest or accelerate as a
result of the Transaction because the offering price of $10 per share does not
exceed the per share stock price performance targets.
Thus, [number of options vested] of your Megagrant Stock Options are 100%
vested as of the closing of the Transaction for a total value of $[Total
Megagrant Spread] before tax. As you previously authorized, 100% of the net
after-tax gain from the acceleration and payout of your vested Megagrant Stock
Options will rollover into an equity investment in the new company.
STOCK OPTION TABLES
The attached statement provides details on all of the stock options you hold,
including their exercise prices. The tables below show the number of stock
options for which you are entitled to receive payment and indicate the exercise
price of each grant and the resulting "spread." Your pretax gain is the "spread"
multiplied by the number of shares covered by such options.
[Insert tables]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel option summary is as of October 23, 2000. This
letter and the option summary assume that you are a current Associate as of the
close of the Transaction.
At the closing of the Transaction, all stock option programs will be
terminated and all outstanding options will be cancelled to the fullest
extent permitted by the applicable plans or as consented to by optionees.
Because Sunrise Medical will no longer be a publicly held company, a new
program more appropriate to a privately held company is being finalized. The
new program will provide cash compensation to eligible Associates (other than
the ownership group) if the Company meets specific performance goals, in
accordance with the terms of the program.
<PAGE>
CONFIDENTIALITY REMINDER
Certain benefits being provided to you are being provided to only a handful
of Associates in the Company and are not being provided to Associates
generally. There is a significant risk of substantial harm to the Company if
the existence or matters discussed in this letter are made known to other
Associates. The Company is therefore relying on your promise to keep this
letter and the matters discussed in this letter confidential. YOU SHOULD NOT
DISCUSS THESE MATTERS WITH OTHER ASSOCIATES, EVEN THOSE IN THE SENIOR
LEADERSHIP GROUP (BUT IT IS ALL RIGHT TO DISCUSS WITH ME AND OTHER MEMBERS OF
THE G7). And, you may discuss the terms of this letter with your spouse (if
any) or any outside legal counsel or financial adviser you may choose to
consult, so long as they agree to be bound by such secrecy obligation and you
remain liable for any breach of such secrecy by them.
If you have any questions about your stock options or the payment you will
receive, or if you wish to exercise your vested stock options, please call Debi
Ward at (760) 930-1547 or Suzanne DeSpain at (760) 930-1542.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR STOCK OPTIONS TO RECEIVE THE PAYMENT
OUTLINED ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your stock options
are affected by the deal.
REGULAR STOCK OPTIONS
"Regular Stock Options" are those stock options that vest solely on the basis of
the passage of time, generally vesting 25% per year on the first, second, third,
and fourth anniversaries of the stock option grant date.
Under the terms of the Transaction, the vesting of all of your unvested Regular
Stock Options is accelerated so that you are 100% vested in all of your Regular
Stock Options for a period of at least 20 days prior to the closing of the
Transaction. As of the closing date, you are entitled to receive a cash payment
for all Regular Stock Options that have an exercise price below the offering
price of $10 per share. This payment will equal the amount by which the $10 per
share offering price is greater than the exercise price, multiplied by the
number of shares covered by such Regular Stock Options (see the tables below for
details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your stock options or tender the shares you would receive
on exercise to receive this payment. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK
FOR THE OPTION "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER
YOUR EXERCISE PRICE) FOLLOWING THE CLOSING. Any Regular Stock Options with an
exercise price of $10 or more per share will have no value and you will not
receive any payment for them.
MEGAGRANT STOCK OPTIONS
"Megagrant Stock Options" are those stock options granted under the Year 2000
Non-Qualified Stock Option Plan, whose vesting occurs in three equal tranches:
(i) One-third (1/3) time vesting (equal time vesting over four years);
(ii) One-third (1/3) performance vesting based on attainment of earnings per
share targets; and
(iii) One-third (1/3) performance vesting based on attainment of stock price
targets.
<PAGE>
As a result of the Transaction, vesting of the first two-thirds (2/3) of your
total Megagrant Stock Options (time vesting and earnings per share performance
vesting) accelerates. The one-third (1/3) of your total Megagrant Stock Options
that vest on the basis of stock price performance do not vest or accelerate as a
result of the Transaction because the offering price of $10 per share does not
exceed the per share stock price performance targets.
Thus, [number of options vested] of your Megagrant Stock Options are 100%
vested as of the closing of the Transaction for a total value of
$[Total Megagrant Spread] before tax. You can roll over 100% of this amount
(less applicable taxes) into an investment in the new company in accordance
with the terms and conditions of an investment agreement to be entered into
with the new company. This is the investment opportunity mentioned during the
Senior Leadership Group meeting in Carlsbad. We will cover the details of
this investment opportunity with you in the near future. As we discussed at
the Senior Leadership Group meeting, this investment opportunity is limited
to a small group of people. If you decide to not be part of the ownership
group going forward, you can elect to receive a cash payment for the vested
two-thirds (2/3).
STOCK OPTION TABLES
The attached statement provides details on all of the stock options you hold,
including their exercise prices. The tables below show the number of stock
options for which you are entitled to receive payment and indicate the exercise
price of each grant and the resulting "spread." Your pretax gain is the "spread"
multiplied by the number of shares covered by such options.
[Insert tables]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel option summary is as of October 23, 2000. This
letter and the option summary assume that you are a current Associate as of the
close of the Transaction.
At the closing of the Transaction, all stock option programs will be
terminated and all outstanding options will be cancelled to the fullest
extent permitted by the applicable plans or as consented to by optionees.
Because Sunrise Medical will no longer be a publicly held company, a new
program more appropriate to a privately held company is being finalized. The
new program will provide cash compensation to eligible Associates (other than
those in the ownership group) if the Company meets specific performance
goals, in accordance with the terms of the program.
<PAGE>
CONFIDENTIALITY REMINDER
Certain benefits being provided to you are being provided to only a handful
of Associates in the Company and are not being provided to Associates
generally. There is a significant risk of substantial harm to the Company if
the existence or matters discussed in this letter are made known to other
Associates. The Company is therefore relying on your promise to keep this
letter and the matters discussed in this letter confidential. YOU SHOULD NOT
DISCUSS THESE MATTERS WITH OTHER ASSOCIATES, EVEN THOSE IN THE SENIOR
LEADERSHIP GROUP (BUT IT IS ALL RIGHT TO DISCUSS WITH ME AND OTHER MEMBERS OF
THE G7). And, you may discuss the terms of this letter with your spouse (if
any) or any outside legal counsel or financial adviser you may choose to
consult, so long as they agree to be bound by such secrecy obligation and you
remain liable for any breach of such secrecy by them.
If you have any questions about your stock options or the payment you will
receive, or if you wish to exercise your vested stock options, please call Debi
Ward at (760) 930-1547 or Suzanne DeSpain at (760) 930-1542. Also, Larry Cagney
at Debevoise & Plimpton has been hired to advise management on the going private
investment plan. We will make Larry available to answer questions you may have
in this regard.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR STOCK OPTIONS TO RECEIVE THE PAYMENT
OUTLINED ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your stock options
are affected by the deal.
REGULAR STOCK OPTIONS
"Regular Stock Options" are those stock options that vest solely on the basis of
the passage of time, generally vesting 25% per year on the first, second, third,
and fourth anniversaries of the stock option grant date.
Under the terms of the Transaction, the vesting of all of your unvested Regular
Stock Options is accelerated so that you are 100% vested in all of your Regular
Stock Options for a period of at least 20 days prior to the closing of the
Transaction. As of the closing date, you are entitled to receive a cash payment
for all Regular Stock Options that have an exercise price below the offering
price of $10 per share. This payment will equal the amount by which the $10 per
share offering price is greater than the exercise price, multiplied by the
number of shares covered by such Regular Stock Options (see the tables below for
details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your stock options or tender the shares you would receive
on exercise to receive this payment. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK
FOR THE OPTION "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER
YOUR EXERCISE PRICE) FOLLOWING THE CLOSING. Any Regular Stock Options with an
exercise price of $10 or more per share will have no value and you will not
receive any payment for them.
MEGAGRANT STOCK OPTIONS
"Megagrant Stock Options" are those stock options granted under the Year 2000
Non-Qualified Stock Option Plan, whose vesting occurs in three equal tranches:
(i) One-third (1/3) time vesting (equal time vesting over four years);
(ii) One-third (1/3) performance vesting based on attainment of earnings per
share targets; and
(iii) One-third (1/3) performance vesting based on attainment of stock price
targets.
<PAGE>
As a result of the Transaction, vesting of the first two-thirds (2/3) of your
total Megagrant Stock Options (time vesting and earnings per share performance
vesting) accelerates. The one-third (1/3) of your total Megagrant Stock Options
that vest on the basis of stock price performance do not vest or accelerate as a
result of the Transaction because the offering price of $10 per share does not
exceed the per share stock price performance targets.
Thus, [number of options vested] of your Megagrant Stock Options are 100%
vested as of the closing of the Transaction for a total value of $[Total
Megagrant Spread] before tax.
STOCK OPTION TABLES
The attached statement provides details on all of the stock options you hold,
including their exercise prices. The tables below show the number of stock
options for which you are entitled to receive payment and indicate the exercise
price of each grant and the resulting "spread." Your pretax gain is the "spread"
multiplied by the number of shares covered by such options.
[Insert tables]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel option summary is as of October 23, 2000.
At the closing of the Transaction, all stock option programs will be terminated
and all outstanding options will be cancelled to the fullest extent permitted by
the applicable plans or as consented to by optionees.
<PAGE>
CONFIDENTIALITY REMINDER
Certain benefits being provided to you are being provided to only a handful
of Associates in the Company and are not being provided to Associates
generally. There is a significant risk of substantial harm to the Company if
the existence or matters discussed in this letter are made known to other
Associates. The Company is therefore relying on your promise to keep this
letter and the matters discussed in this letter confidential. YOU SHOULD NOT
DISCUSS THESE MATTERS WITH OTHER ASSOCIATES, EVEN THOSE IN THE SENIOR
LEADERSHIP GROUP (BUT IT IS ALL RIGHT TO DISCUSS WITH ME AND OTHER MEMBERS OF
THE G7). And, you may discuss the terms of this letter with your spouse (if
any) or any outside legal counsel or financial adviser you may choose to
consult, so long as they agree to be bound by such secrecy obligation and you
remain liable for any breach of such secrecy by them.
If you have any questions about your stock options or the payment you will
receive, or if you wish to exercise your vested stock options, please call Debi
Ward at (760) 930-1547 or Suzanne DeSpain at (760) 930-1542. Also, Larry Cagney
at Debevoise & Plimpton has been hired to advise management on the going private
investment plan. We will make Larry available to answer questions you may have
in this regard.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR STOCK OPTIONS TO RECEIVE THE PAYMENT
OUTLINED ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your PBUs are
affected by the deal.
Under the terms of the Transaction, the vesting of all of your unvested PBUs is
accelerated so that you are 100% vested in all of your PBUs for a period of at
least 20 days prior to the closing of the Transaction. As of the closing date,
you are entitled to receive a cash payment for all PBUs that have an exercise
price below the offering price of $10 per share. This payment will equal the
amount by which the $10 per share offering price is greater than the PBU
exercise price, multiplied by the number of units covered by such PBUs (see the
table below for details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your PBUs. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK FOR
THE PBU "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER YOUR
EXERCISE PRICE) FOLLOWING THE CLOSING. Any PBUs with an exercise price of $10 or
more per unit will have no value and you will not receive any payment for them.
PERFORMANCE BONUS UNIT TABLE
The attached statement provides details on all of the PBUs you hold, including
their exercise prices. The table below shows the number of PBUs for which you
are entitled to receive payment and indicates the exercise price of each grant
and the resulting "spread." Your pretax gain is the "spread" multiplied by the
number of units covered by such PBUs.
[Insert table]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel summary is as of October 23, 2000. This letter and
the PBU summary assume that you are a current Associate as of the close of the
Transaction.
<PAGE>
At the closing of the Transaction, all outstanding PBUs will be canceled and all
PBU programs will be terminated. Because Sunrise Medical will no longer be a
publicly held company, a new program more appropriate to a privately held
company is being finalized. This new program will provide cash compensation to
eligible Associates (other than those in the ownership group) if the Company
meets specific performance goals, in accordance with the terms of the program.
If you have any questions about your PBUs or the payment you will receive, or if
you wish to exercise your vested PBUs, please call Debi Ward at (760) 930-1547
or Suzanne DeSpain at (760) 930-1542.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR PBUS TO RECEIVE THE PAYMENT OUTLINED
ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your PBUs are
affected by the deal.
Under the terms of the Transaction, the vesting of all of your unvested PBUs is
accelerated so that you are 100% vested in all of your PBUs for a period of at
least 20 days prior to the closing of the Transaction. As of the closing date,
you are entitled to receive a cash payment for all PBUs that have an exercise
price below the offering price of $10 per share. This payment will equal the
amount by which the $10 per share offering price is greater than the PBU
exercise price, multiplied by the number of units covered by such PBUs (see the
table below for details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your PBUs. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK FOR
THE PBU "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER YOUR
EXERCISE PRICE) FOLLOWING THE CLOSING. Any PBUs with an exercise price of $10 or
more per unit will have no value and you will not receive any payment for them.
PERFORMANCE BONUS UNIT TABLE
The attached statement provides details on all of the PBUs you hold, including
their exercise prices. The table below shows the number of PBUs for which you
are entitled to receive payment and indicates the exercise price of each grant
and the resulting "spread." Your pretax gain is the "spread" multiplied by the
number of units covered by such PBUs.
[Insert table]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel summary is as of October 23, 2000. This letter and
the PBU summary assume that you are a current Associate as of the close of the
Transaction.
<PAGE>
At the closing of the Transaction, all outstanding PBUs will be canceled and all
PBU programs will be terminated. Because Sunrise Medical will no longer be a
publicly held company, a new program more appropriate to a privately held
company is being finalized. This new program will provide cash compensation to
eligible Associates (other than those in the ownership group) if the Company
meets specific performance goals, in accordance with the terms of the program.
If you have any questions about your PBUs or the payment you will receive, or if
you wish to exercise your vested PBUs, please call Debi Ward at (760) 930-1547
or Suzanne DeSpain at (760) 930-1542.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR PBUS TO RECEIVE THE PAYMENT OUTLINED
ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your PBUs are
affected by the deal.
REGULAR PBU PROGRAM
"Regular PBUs" are those PBUs that vest solely on the basis of the passage of
time, generally vesting 25% per year on the first, second, third, and fourth
anniversaries of the PBU grant date.
Under the terms of the Transaction, the vesting of all of your unvested Regular
PBUs is accelerated so that you are 100% vested in all of your Regular PBUs for
a period of at least 20 days prior to the closing of the Transaction. As of the
closing date, you are entitled to receive a cash payment for all Regular PBUs
that have an exercise price below the offering price of $10 per share. This
payment will equal the amount by which the $10 per share offering price is
greater than the PBU exercise price, multiplied by the number of units covered
by such Regular PBUs (see the tables below for details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your PBUs. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK FOR
THE PBU "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER YOUR
EXERCISE PRICE) FOLLOWING THE CLOSING. Any Regular PBUs with an exercise price
of $10 or more will have no value and you will not receive any payment for them.
MEGAGRANT PBU PROGRAM
"Megagrant PBUs" are those PBUs whose vesting occurs in three equal tranches:
(i) One-third (1/3) time vesting (equal time vesting over four years);
(ii) One-third (1/3) performance vesting based on attainment of earnings per
share targets; and
(iii) One-third (1/3) performance vesting based on attainment of stock price
targets.
<PAGE>
As a result of the Transaction, vesting of the first two-thirds (2/3) of your
total Megagrant PBUs (time vesting and earnings per share performance vesting)
accelerates. The one-third (1/3) of your total Megagrant PBUs that vest on the
basis of stock price performance do not vest or accelerate as a result of the
Transaction because the offering price of $10 per share does not exceed the per
unit stock price performance targets.
Thus, [number of options vested] of your Megagrant PBUs are 100% vested as of
the closing of the Transaction for a total value of $[Total Megagrant Spread]
before tax. You can roll over 100% of this amount (less applicable taxes)
into an investment in the new company in accordance with the terms and
conditions of an investment agreement to be entered into with the new
company. This is the investment opportunity mentioned during the Senior
Leadership Group meeting in Carlsbad. We will cover the details of this
investment opportunity with you in the near future. As we discussed at the
Senior Leadership Group meeting, this investment opportunity is limited to a
small group of people. If you decide to not be part of the ownership group
going forward, you can elect to receive a cash payment for the vested
two-thirds (2/3).
PERFORMANCE BONUS UNIT TABLES
The attached statement provides details on all of the PBUs you hold, including
their exercise prices. The tables below show the number of PBUs for which you
are entitled to receive payment and indicate the exercise price of each grant
and the resulting "spread." Your pretax gain is the "spread" multiplied by the
number of units covered by such PBUs.
[Insert tables]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel summary is as of October 23, 2000. This letter and
the PBU summary assume that you are a current Associate as of the close of the
Transaction.
At the closing of the Transaction, the Performance Bonus Unit program will be
terminated and all outstanding units will be cancelled to the fullest extent
permitted by the applicable plan or as consented to by optionees. Because
Sunrise Medical will no longer be a publicly held company, a new program more
appropriate to a privately held company is being finalized. The new program
will provide cash compensation to eligible Associates (other than those in
the ownership group) if the Company meets specific performance goals, in
accordance with the terms of the program.
<PAGE>
CONFIDENTIALITY REMINDER
Certain benefits being provided to you are being provided to only a handful
of Associates in the Company and are not being provided to Associates
generally. There is a significant risk of substantial harm to the Company if
the existence or matters discussed in this letter are made known to other
Associates. The Company is therefore relying on your promise to keep this
letter and the matters discussed in this letter confidential. YOU SHOULD NOT
DISCUSS THESE MATTERS WITH OTHER ASSOCIATES, EVEN THOSE IN THE SENIOR
LEADERSHIP GROUP (BUT IT IS ALL RIGHT TO DISCUSS WITH ME AND OTHER MEMBERS OF
THE G7). And, you may discuss the terms of this letter with your spouse (if
any) or any outside legal counsel or financial adviser you may choose to
consult, so long as they agree to be bound by such secrecy obligation and you
remain liable for any breach of such secrecy by them.
If you have any questions about your PBUs or the payment you will receive, or if
you wish to exercise your vested PBUs, please call Debi Ward at (760) 930-1547
or Suzanne DeSpain at (760) 930-1542. Also, Larry Cagney at Debevoise & Plimpton
has been hired to advise management on the going private investment plan. We
will make Larry available to answer questions you may have in this regard.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR PBUS TO RECEIVE THE PAYMENT OUTLINED
ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your stock options
are affected by the deal.
Under the terms of the Transaction, the vesting of all of your unvested stock
options is accelerated so that you are 100% vested in all of your stock options
for a period of at least 20 days prior to the closing of the Transaction. As of
the closing date, you are entitled to receive a cash payment for all stock
options that have an exercise price below the offering price of $10 per share.
This payment will equal the amount by which the $10 per share offering price is
greater than the exercise price, multiplied by the number of shares covered by
such stock options (see the table below for details).
YOU DO NOT HAVE TO TAKE ANY ACTION TO RECEIVE THIS PAYMENT. Specifically, you do
NOT have to exercise your stock options or tender the shares you would receive
on exercise to receive this payment. IF YOU DO NOTHING, YOU WILL RECEIVE A CHECK
FOR THE OPTION "SPREAD" (THE EXCESS OF THE OFFERING PRICE OF $10 PER SHARE OVER
YOUR EXERCISE PRICE) FOLLOWING THE CLOSING. Any stock options with an exercise
price of $10 or more per share will have no value and you will not receive any
payment for them.
STOCK OPTION TABLE
The attached statement provides details on all of the stock options you hold,
including their exercise prices. The table below shows the number of stock
options for which you are entitled to receive payment and indicates the exercise
price of each grant and the resulting "spread." Your pretax gain is the "spread"
multiplied by the number of shares covered by such options.
[Insert table]
Please note that the gain shown above is BEFORE taxes. Taxes at the appropriate
rate will be withheld automatically by the Company. Information in the above
table and attached personnel option summary is as of October 23, 2000. This
letter and the option summary assume that you are a current Associate as of the
close of the Transaction.
<PAGE>
At the closing of the Transaction, all stock option programs will be
terminated and the payment of the spread will effectively cancel all of your
outstanding options. Because Sunrise Medical will no longer be a publicly
held company, a new program more appropriate to a privately held company is
being finalized. This new program will provide cash compensation to eligible
Associates (other than those in the ownership group) if the Company meets
specific performance goals, in accordance with the terms of the program.
If you have any questions about your stock options or the payment you will
receive, or if you wish to exercise your vested stock options, please call Debi
Ward at (760) 930-1547 or Suzanne DeSpain at (760) 930-1542.
REMEMBER, YOU DO NOT NEED TO EXERCISE YOUR STOCK OPTIONS TO RECEIVE THE PAYMENT
OUTLINED ABOVE.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear [insert name]:
As you know, Sunrise Medical is being sold to an investor group that includes
senior managers of the Company. The sale involves a tender offer for all shares
at an offering price of $10 per share, followed by the merger of the Company
with a corporation formed by the investor group (the "Transaction"). The
Transaction is currently expected to close around calendar-year end, assuming
(as we expect) that our stockholders will embrace this deal. This letter and the
attached statement provide you with a detailed account of how your stock options
are affected by the deal.
Under the terms of the Transaction, the vesting of all of your unvested stock
options is accelerated so that you are 100% vested in all of your stock options
for a period of at least 20 days prior to the closing of the Transaction. Only
stock options with an exercise price less than the $10 per share offering price
will result in any payment in the Transaction. Stock options with an exercise
price of $10 or more per share offering price will have no value. The attached
statement provides details on all of the stock options you hold, including their
exercise prices. As the statement illustrates, all of your stock options have an
exercise price greater than the $10 per share offering price and thus you will
not receive any payment for these options in the Transaction.
At the closing of the Transaction, all outstanding stock options will be
canceled and all stock option programs will be terminated. Because Sunrise
Medical will no longer be a publicly held company, a new program more
appropriate to a privately held company is being finalized. This new program
will provide cash compensation to eligible Associates (other than those in the
ownership group) if the Company meets specific performance goals, in accordance
with the terms of the program.
Information in your personnel summary is as of October 23, 2000. This letter and
the option summary assume that you are a current Associate as of the close of
the Transaction.
If you have any questions about your stock options, or if you wish to exercise
your vested stock options, please call Debi Ward at (760) 930-1547 or Suzanne
DeSpain at (760) 930-1542.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
<PAGE>
November 7, 2000
Dear Former Sunrise Medical Associate:
The Sunrise Medical Board of Directors has agreed to sell the company to an
investor group that includes senior managers of the Company. The sale involves a
tender offer for all shares at an offering price of $10 per share, followed by
the merger of the Company with a corporation formed by the investor group (the
"Transaction"). The Transaction is currently expected to close around
calendar-year end, assuming (as we expect) that our stockholders will embrace
this deal. Although you are no longer an Associate, you still hold options
granted to you during your employment. This letter and the attached statement
will describe what happens regarding your options.
1. All option programs will terminate, and all options (regardless of the
exercise price and regardless of whether vested or unvested) will be
cancelled when the transaction is completed. Your options, however, may
terminate sooner by their own terms.
2. Your unvested options expired upon your termination of employment.
3. If your vested options are priced lower than the offering price of
$10.00 per share, you can exercise your options and tender the shares
received upon exercise in the tender offer (separate documentation
concerning the tender offer will be forwarded to you). Thereby you will
receive payment for the difference between the offering price and your
option price.
4. If your vested options are priced higher than the offering price, they
have no value and you will not receive any payment if you exercise and
tender those shares.
5. In order to exercise any vested options, you will need to complete the
enclosed Option Exercise and Disposition forms for each separate option
grant that you hold. Please complete the attached form(s) and return
them to the address indicated on the form. For your ease of reference,
we have enclosed a summary of your option holdings (including exercise
prices, termination dates and vesting schedule).
If you have any questions, please call Debi Ward at (760) 930-1547 or Suzanne
DeSpain at (760) 930-1542.
Sincerely,
Steven A. Jaye
Senior Vice President and CAO
Enclosure
