SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 1)
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 Rule 14a-11(c) or Rule 14a-12
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
| | Fee paid previously with preliminary materials.
| | Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- ---------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
47257 FREMONT BOULEVARD
FREMONT, CALIFORNIA 94538
NOTICE OF ANNUAL MEETING
TO THE STOCKHOLDERS OF SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
You are cordially invited to attend the annual meeting (the "Annual
Meeting") of the holders of common stock, par value $0.001 per share ("Sunrise
Stock"), of Sunrise Technologies International, Inc. ("Sunrise" and, together
with its subsidiaries, the "Company"), to be held on Thursday, June 26, 1997, at
10:00 a.m., local time, at the Newark-Fremont Hilton Hotel, located at 39900
Balentine Drive, Newark, California, 94560.
At the Annual Meeting, you will be asked to consider and vote upon the
following matters:
1. To elect two (2) Class I directors of Sunrise, each to serve a
three-year term expiring upon the annual meeting of stockholders to be
held in the year 2000, or until his or her respective successor is
elected and qualified.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the year ending December 31, 1997.
3. To adopt a new stock option plan, pursuant to which Sunrise could issue
up to 3,000,000 shares of Sunrise Stock (1,000,000 shares if Sunrise
effects a proposed 3-to-1 reverse stock split) to employees of and
consultants to the Company.
4. For the transaction of such other business as may properly come before
said meeting or adjournments thereof.
A Proxy Statement and proxy card accompany this Notice of Annual Meeting.
The Board of Directors has fixed the close of business on April 28, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournment or postponement thereof.
All of such stockholders are cordially invited to attend the Annual Meeting in
person. However, TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
URGED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE.
A pre-addressed postage-paid envelope is enclosed herewith for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if he or she
returned a proxy. Please note, however, that if your shares are held of record
by a broker, bank or other nominee and you wish to vote the Annual Meeting, you
must obtain from the record holder a proxy issued in your name.
Sincerely,
David W. Light
Chairman of the Board and Chief
Executive Officer
Fremont, California
April 30, 1997
<PAGE>
SUNRISE ANNUAL MEETING
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by management of Sunrise Technologies International, Inc. ("Sunrise"
and, together with its subsidiaries, the "Company"), for use at the annual
meeting of stockholders (the "Annual Meeting") scheduled to be held on Thursday,
June 26, 1997, at 10:00 a.m., local time, at the Newark-Fremont Hilton Hotel,
located at 39900 Balentine Drive, Newark, California, 94560. Sunrise intends to
mail this Proxy Statement and the accompanying proxy card to all stockholders
entitled to vote at the Annual Meeting on or about June 2, 1997.
At the Annual Meeting, holders of common stock of Sunrise ("Sunrise Stock")
will be asked to consider and vote upon the following matters (the "Proposals"):
(i) to elect two Class I directors of Sunrise, each to serve a three-year term
expiring upon the annual meeting of stockholders to be held in the year 2000, or
until his or her respective successor is elected and qualified; (ii) to ratify
the appointment of Ernst & Young LLP as independent auditors for the Company for
the year ending December 31, 1997; and (iii) to adopt a new stock option plan
(the "New Stock Option Plan"), pursuant to which Sunrise could issue up to
3,000,000 shares of Sunrise Stock (1,000,000 shares if Sunrise effects a
proposed 3-to-1 reverse stock split) to employees of and consultants to the
Company.
RECORD DATE; VOTING
The Board of Directors of Sunrise (the "Board") has fixed the close of
business on April 28, 1997 as the record date (the "Record Date") for the
determination of holders of Sunrise Stock entitled to notice of and to vote at
the Annual Meeting. As of the Record Date, there were 27,886,247 shares of
Sunrise Stock issued and outstanding, held of record by 705 persons.
Each share of Sunrise Stock is entitled to one vote on each of the
Proposals. The presence, whether in person or by proxy, of a majority of the
outstanding shares of Sunrise Stock is necessary to constitute a quorum at the
Annual Meeting. Abstentions from voting and broker non-votes on a particular
Proposal will be counted for purposes of determining the presence of a quorum
but will not be counted as affirmative or negative votes on the Proposal.
The two persons properly nominated and receiving the highest number of
votes will be elected as Class I directors of the Company. The affirmative vote
of a majority of the votes present or represented by proxy at the Annual Meeting
is required to approve each of the other Proposals. Accordingly, abstentions and
broker non-votes will not have any effect on the election of directors, but will
have the effect of voting against the other Proposals.
As of the Record Date, the directors and executive officers of the Company,
together with their respective affiliates, held 841,013 shares of Sunrise Stock,
representing three percent (3%) of the shares eligible to vote at the Annual
Meeting.
REVOCABILITY OF PROXIES
If a person who has executed and returned a proxy is present at the meeting
and wishes to vote in person, such person may elect to do so and thereby suspend
the power of the proxy holders to vote such proxy. A proxy also may be revoked
before it is exercised by filing with the Secretary of Sunrise a duly signed
revocation or a proxy bearing a later date.
SOLICITATION
Sunrise will bear the entire cost of the solicitation of proxies from its
stockholders, including preparation, assembly, printing and mailing of this
Proxy Statement, the proxy card and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Sunrise Stock beneficially owned by others to forward to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
facsimile, telegram or personal solicitation by directors, officers or other
regular employees of Sunrise. No additional compensation will be paid to such
persons for such services. Sunrise also intends
1
<PAGE>
to employ the services of Beacon Hill Partners, Inc., a professional
solicitation company ("Beacon Hill"), to assist with solicitation of
stockholders. Beacon Hill will be paid a fee of $4,000 plus $3 per telephone
call made by Beacon Hill to a stockholder entitled to vote at the Annual
Meeting.
ChaseMellon Shareholder Services LLC, transfer agent and registrar for the
Sunrise Stock, will be paid its customary fee, estimated to be $1,500.
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Sunrise Stock as
of April 24, 1997 by certain members of management and by all executive officers
and directors of Sunrise, as a group. Sunrise is not aware of any person who
beneficially owns more than 5% of the outstanding Sunrise Stock.
BENEFICIAL OWNERSHIP(1)
------------------------
NUMBER OF PERCENT OF
SHARES SHARES
------ ------
David W. Light(2) .............................. 551,250 2.0
C. Russell Trenary, III(3) ..................... 224,821 *
Clara Munley ................................... Nil Nil
Joseph W. Shaffer .............................. 797,288 2.9
Paul S. Malin(4) ............................... 18,750
Jeannie G. Cecka(5) ............................ 17,163 *
Catherine Caserza(6) ........................... 125,000 *
Joseph D. Koenig(7) ............................ 29,167 *
Ronald A. Slocum(8) ............................ 39,167 *
All executive officers and directors as a group
(9 persons)(9) ................................ 1,802,592 6.5
- ----------
* Less than one percent
(1) Based on information provided by each of the identified officers and
directors.
(2) Includes 511,250 shares that Mr. Light does not currently own, but which he
has the right to acquire within 60 days of April 24, 1997, pursuant to
outstanding options granted under the Company's stock option plan
("Options").
(3) Consists of shares that Mr. Trenary does not currently own, but which he
has the right to acquire within 60 days of April 24, 1997, pursuant to
Options.
(4) Consists of shares that Mr. Malin does not currently own, but which he has
the right to acquire within 60 days of April 24, 1997, pursuant to Options.
(5) Includes 14,063 shares that Ms. Cecka does not currently own, but which she
has the right to acquire within 60 days of April 24, 1997, pursuant to
Options.
(6) Consists of shares that Ms. Caserza does not currently own, but which she
has the right to acquire within 60 days of April 24, 1997, pursuant to
Options.
(7) Consists of shares that Mr. Koenig does not currently own, but which he has
the right to acquire within 60 days of April 24, 1997, pursuant to Options.
(8) Includes 29,167 shares that Mr. Slocum does not currently own, but which he
has the right to acquire within 60 days of April 24, 1997.
(9) Includes 961,592 shares that such persons do not currently own, but which
they have the right to acquire within 60 days of April 24, 1997.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Sunrise's Certificate of Incorporation and Bylaws provide that the Board of
Directors shall be divided into three classes, each class consisting, as nearly
as possible, of one-third of the total number of directors, with each class
having a three-year term. Vacancies on the Board may be filled only by persons
elected by a majority of the remaining directors. A director elected by the
Board to fill a vacancy shall serve for the remainder of the term of the class
of directors in which the vacancy occurred and until such director's successor
is elected and qualified.
The Board of Directors presently has five members. At the Annual Meeting,
stockholders will be asked to elect two Class I directors to serve until the
annual meeting of stockholders to be held in the year 2000 or until his or her
respective successor is elected and qualified.
The two persons who are properly nominated and who receive the highest
number of votes at the Annual Meeting will be elected as Class I directors.
Shares represented by executed proxies will be voted for the election of each of
the nominees named below (the "Nominees"), unless authority to vote for such
Nominees is specifically withheld. In the event either of the Nominees is
unavailable for election, such shares will be voted for the election of a
substitute nominee that management of Sunrise may propose. Each of the Nominees
has agreed in writing to serve as a director if elected.
<TABLE>
The following table provides information regarding each of the Nominees and
directors of the Company.
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION/POSITION
NAME AGE CLASSIFICATION HELD WITH THE COMPANY
- ------------------------ ----- ------------------- -------------------------------------------
<S> <C> <C> <C>
NOMINEES:
David W. Light ............52 Class I Chief Executive Officer and Chairman
of the Board of Sunrise
Ronald A. Slocum ..........57 Class I Retired
CONTINUING DIRECTORS:
Joseph W. Shaffer .........51 Class II Vice President and Secretary of
(term expires 1998) Sunrise
Joseph D. Koenig ..........67 Class III Consultant for Koenig Associates,
(term expires 1999) a management consultant firm
C. Russell Trenary, III. ..39 Class III President and Chief Operating Officer
(term expires 1999) of Sunrise
</TABLE>
NOMINEES
Mr. Light was appointed Chief Executive Officer and Chairman of the Board
of Sunrise in November 1996. From October 1994 to November 1996, Mr. Light
served as President and Chief Executive Officer of Sunrise. Mr. Light was
appointed to the Board of Directors of Sunrise in October 1994. From March 1994
until the time he joined Sunrise, Mr. Light was a private consultant to Sunrise.
Prior to March 1994, Mr. Light was Vice President of Operations of Advanced
Polymer Systems, Inc., a polymer-based drug delivery company. Mr. Light received
a B.B.A. degree from Boise State University and is a licensed Certified Public
Accountant.
Mr. Slocum was appointed to the board of directors of Sunrise in December
1994. From 1991 until his retirement in 1996, Mr. Slocum had been employed Bank
of America Idaho, most recently as President, Chief Executive Officer and
Chairman of the Board. Mr. Slocum is also a Director of Bank of America Oregon.
Mr. Slocum received a B.S. degree in Business Management from San Diego
University.
3
<PAGE>
CONTINUING DIRECTORS
Mr. Shaffer, a co-founder of Sunrise, has been a director of Sunrise and
has held an executive officer position with Sunrise since its inception. From
April 1987 to October 1988, Mr. Shaffer served as President and Chief Executive
Officer and, from October 1988 until January 1991, Mr. Shaffer served as
President. Since 1991, Mr. Shaffer has been a Vice President of Sunrise. Prior
to founding Sunrise, Mr. Shaffer was employed by the medical division of
Coherent, Inc., a laser manufacturer, as Electrical Engineering Section Manager.
Mr. Shaffer holds a B.S. degree in Electrical Engineering from the University of
New Mexico.
Joseph D. Koenig was appointed to the board of directors of Sunrise in
December 1994. Mr. Koenig had also served as a director of Sunrise from August
1991 through January 1994. He has been a consultant for Koenig Associates, a
management consultant firm, since October 1984. Mr. Koenig is also a director of
Ancot Corporation, Hench Controls Corporation and Cardiac Mariners. Mr. Koenig
received a B.S. degree in Electrical Engineering from the University of
Illinois.
Mr. Trenary was appointed President and Chief Operating Officer of Laser
Biotech, Inc., a wholly owned subsidiary of Sunrise, in April 1996. In November
1996, Mr. Trenary was appointed President and Chief Operating Officer of Sunrise
and was also appointed to the Board of Directors of Sunrise as a Class III
director. From 1995 until the time he joined Sunrise, Mr. Trenary served as
Senior Vice President of sales and marketing for Vidamed, Inc. Prior to 1995,
Mr. Trenary served in various positions with Allergan, Inc., most recently as
Senior Vice President, General Manager of AMO Surgical Products, an ophthalmic
business. Mr. Trenary received a B.S. degree from Miami University and an M.B.A.
degree from Michigan State University.
None of the members of management was selected as an executive officer or
director of Sunrise pursuant to any arrangement or understanding. There are no
family relationships between any of the members of management.
BOARD MEETINGS AND COMMITTEES
The Board held six meetings during the fiscal year ended December 31, 1996.
The Board has three standing committees: the Audit Committee, the
Compensation Committee and the Regulatory Oversight Committee (each, a
"Committee"). The Board does not have a standing nominating committee or any
committee performing the function of such committee. During 1996, each Board
member attended at least 75% of the aggregate number of meetings of the Board
and the Committee of the Board on which he served.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial records. The Audit Committee, comprised of Mr. Koenig, Mr. Slocum and
Mr. Light, met two times in 1996.
The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation, awards stock options to employees and
consultants under the Company's stock option plans and otherwise determines
compensation levels and performs such other functions regarding compensation as
the Board may delegate. The Compensation Committee, comprised of Mr. Koenig and
Mr. Slocum, met three times during 1996.
The Regulatory Oversight Committee reviews independent reports from the
Vice President of Regulatory and Clinical Affairs and certain outside
consultants, and considers performance and results in the clinical trial
process. The Regulatory Oversight Committee, comprised of Mr. Koenig, Mr.
Slocum and Mr. Light, met three times in 1996.
4
<PAGE>
DIRECTOR COMPENSATION
Each director of Sunrise who is not an employee of the Company (a
"non-employee director") receives a fee of $300 for each Board meeting attended.
The total compensation paid to non-employee directors in 1996 was $2,400.
Non-employee directors also are eligible for reimbursement for their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.
Each non-employee director of Sunrise, when first elected or appointed as a
director of Sunrise, is automatically granted an option to acquire 20,000 shares
of Sunrise Stock (a "Directors' Option") under the 1994 Non-Employee Directors'
Stock Option Plan. Directors' Options are not intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1984, as amended (the "Code"). As of April 30, 1997, Directors' Options to
purchase 140,000 shares of Sunrise Stock were outstanding.
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The following persons currently serve as executive officers of Sunrise:
NAME AGE POSITION HELD WITH SUNRISE
- ------------------------ ----- -------------------------------------------------
David W. Light ...........52 Chief Executive Officer and Chairman of the Board
and Director
C. Russell Trenary, III ..39 President and Chief Operating Officer and
Director
Clara Munley .............43 Vice President, Finance and Chief Financial
Officer
Joseph W. Shaffer ........51 Vice President and Secretary and Director
Catherine M. Caserza ....36 Vice President and General Manager, Dental
Division
Jeannie G. Cecka .........34 Vice President, Regulatory and Clinical Affairs
Paul Malin ...............43 Vice President, Sales and Marketing
Ms. Munley was appointed Vice President, Finance and Chief Financial
Officer of Sunrise in February 1997. From August 1986 through April 1996, Ms.
Munley was Vice President and Controller at Ampex Recording Media Corporation, a
manufacturer of professional recording media for use in audio, video and
instrumentation markets. Prior to 1986, Ms. Munley was Corporate Finance Manager
at Ampex Corporation and held various positions with it's parent, The Signal
Companies. Ms. Munley holds a B.S. degree from Marywood College and is a
licensed Certified Public Accountant in the State of Texas.
Ms. Caserza was appointed Vice President and General Manager of the
Company's Dental Division in December 1995. From July 1995 to December 1995, Ms.
Caserza served as U.S. Sales Manager for the Company. From March 1994 to June
1995, Ms. Caserza was an independent consultant to companies in the medical
device filed. Prior to that time, Ms. Caserza worked for Fuji Optical Systems,
Inc., holding positions ranging from Product Manager to Director of Sales and
Marketing. Ms. Caserza holds a Master of Science degree from the University of
San Francisco and a B.A. degree from California State University, San Jose.
Ms. Cecka was appointed Vice President, Clinical and Regulatory Affairs in
July 1996. From March 1995 to April 1996 Ms. Cecka was Director of Clinical and
Regulatory Affairs at MedAcoustics, Inc. From September 1992 to February 1995
Ms. Cecka was Manager of Clinical Research for Baxter Novacor, a developer and
marketer of left ventricular assist devices. Prior to September 1992 Ms. Cecka
spent seven years at Allergan Medical Optics holding positions ranging from
Manager, Clinical Affairs to Director, Worldwide Clinical Research. Ms. Cecka
holds an M.B.A. degree from Pepperdine University and a B.S. degree from UC
Irvine.
Mr. Malin was appointed Vice President, Sales and Marketing of Sunrise in
May 1996. He has been engaged in various medical sales and marketing positions
since 1976. Most recently, Mr. Malin had been
5
<PAGE>
Business Director at Allergan, Inc. until 1995 and Director of Marketing at Iris
Medical Instrument, an ophthalmic laser company until 1996. Mr. Malin has an
M.B.A. degree from Pepperdine University and a B.A. degree from Washington and
Lee University.
For additional information regarding each of the executive officers of
Sunrise who is also a director, see "Proposal I--Election of Directors" above.
SUMMARY COMPENSATION
The following table sets forth certain compensation information earned
during the last three fiscal years by the Chief Executive Officer and the other
executive officers of Sunrise whose salary and bonus for the year ended 1996
exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
---------------------
ANNUAL COMPENSATION
-------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1)
- --------------------------- ------ ------------- ------- ---------------------
David W. Light(2) 1996 220,000(3) Nil 1,100,000
Chief Executive Officer and 1995 220,000(3) Nil 500,000(4)
Chairman of the Board 1994 47,680 Nil 500,000(4)
C. Russell Trenary, III(5) 1996 124,175 Nil 400,000
President and 1995 -- -- --
Chief Operating Officer 1994 -- -- --
Catherine M. Caserza(6) 1996 114,550 Nil 125,000
Vice President and General 1995 49,300 Nil 70,000
Manager, Dental Division 1994 -- -- --
- ----------
(1) Securities are shares of Sunrise Stock underlying Options granted under the
Company's stock option plan.
(2) Mr. Light began employment with the Company in October 1994.
(3) $60,000 of Mr. Light's salary each year is paid in a lump sum on the
anniversary of his employment with the Company.
(4) In 1994, Mr. Light was granted an option to purchase 500,000 shares of
Sunrise Stock. In June 1995, Mr. Light exchanged such option pursuant to an
option exchange program. See "Board Compensation Committee Report on
Executive Compensation--Report on Repricing of Options."
(5) Mr. Trenary began employment with the Company in April 1996.
(6) Ms. Caserza began employment with the Company in July 1995.
EMPLOYEE STOCK OPTIONS
Sunrise grants options to purchase Sunrise Stock to its employees,
including the executive officers, under the 1988 Stock Option Plan, as amended
(the "1988 Plan"). As of April 24, 1997, options to purchase an aggregate of
2,742,438 shares of Sunrise Stock were outstanding under the 1988 Plan, some of
which were granted subject to stockholder approval of the New Stock Option Plan.
See "Proposal 3--Adoption of New Stock Option Plan."
6
<PAGE>
<TABLE>
The following tables set forth certain information regarding Options
granted to and held by the Named Executive Officers in 1996.
<CAPTION>
OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1996
INDIVIDUAL GRANTS
-------------------------------------------------
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM (2)
UNDERLYING EMPLOYEES EXERCISE EXPIRATION -------------------------
NAME OPTIONS(1) IN 1996 PRICE DATE 5% 10%
- ------------------------ ------------ ------------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David W. Light ............ 600,000 38.3% $1.03 9/10/06 388,656.84 984,932.84
C. Russell Trenary, III ... 400,000 25.6% $1.03 9/10/06 259,104.56 656,621.89
Catherine M. Caserza ...... 25,000 1.6% $1.03 9/10/06 16,194.04 41,038.87
30,000 1.9% $1.75 6/1/06 19,432.84 49,246.64
<FN>
- ----------
(1) Options generally become exercisable as to 25% of the underlying shares of
Sunrise Stock one year after the grant date and as to an additional 1/36th
of the underlying shares of Sunrise Stock each month thereafter. However,
in the case of Mr. Light, the Option granted was immediately vested as to
100,000 shares and vests as to 1/48th of the underlying shares each month
beginning in October 1996 until fully vested, and in the case of Mr.
Trenary, the Option granted was immediately vested as to 100,000 shares and
vests as to 1/48th of the underlying shares each month beginning October
1996 until fully vested.
(2) The 5% and 10% assumed rates of appreciation applied to the fair market
value of the Sunrise Stock over the term of the Option are prescribed by
the rules of the Commission and do not represent the Company's estimate or
projection of the future price of the Sunrise Stock.
</FN>
</TABLE>
AGGREGATE YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR-END YEAR-END ($) (1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ ------------------------- -------------------------
David W. Light .......... 410,208 / 689,792 0 / 0
C. Russell Trenary, III.. 123,125 / 276,875 0 / 0
Catherine M. Caserza ... 27,528 / 97,472 0 / 0
- ----------
(1) Options are deemed to be "in-the-money" if the fair market value of the
underlying Sunrise Stock exceeds the exercise price of the Option.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee aims to structure the Company's executive
compensation programs to enable the Company to attract and retain executives
capable of leading the Company to meet its business objectives and to motivate
them to enhance long-term shareholder value. Annual compensation for the
Company's executive officers consists of three elements: a cash salary, cash
bonuses and stock option grants. The Compensation Committee considers a variety
of factors in evaluating the Company's executive officers and making
compensation decisions. These include the compensation paid by comparable
companies to individuals in comparable positions, the individual contributions
of each officer to the Company and the progress of the Company towards achieving
its long-term objectives.
Compensation Policies and Procedures
Performance reviews of executive officers are conducted by the Compensation
Committee. Each executive officer is evaluated based on the executive officer's
achievement of goals set by the Compensation Committee or the Chief Executive
Officer, as applicable, and one or more interviews of the executive officer by
the Compensation Committee. Evaluations of executive officers other than the
Chief Executive Officer are also based on the Chief Executive Officer's
assessment of the executive officer's contribution to the Company.
7
<PAGE>
In selecting new executive officers, the Compensation Committee considers
the specific needs of the Company and the expertise and special skills offered
by a candidate. The Compensation Committee then determines starting compensation
based on its assessment of the package needed to attract executive officers to a
distressed company that has incurred substantial losses. Compensation of
continuing executive officers is also reviewed periodically against this
assessment. As a result, the Compensation Committee may recommend compensation
packages in the upper range of cash and equity compensation paid to executive
officers by companies of comparable size in similar industries.
Based on the foregoing policies, the Compensation Committee makes its
recommendations to the Board of Directors, which ultimately determines each
executive officer's compensation package.
Compensation of Chief Executive Officer
David Light was retained by Sunrise in 1994 to serve as President and Chief
Executive Officer. His initial compensation package consisted of a salary of
$220,000, which includes a deferred payment of $60,000 to be made on the
anniversary of his commencement of employment with the Company, and eligibility
to receive Options and a cash bonus. In 1994, Mr. Light was granted an Option to
purchase 500,000 shares of Sunrise Stock at $2.00 per share. In 1995, pursuant
to an option exchange program established by the Board of Directors of the
Company in 1994, Mr. Light exchanged his Option for an Option to purchase
500,000 shares of Sunrise Stock at $1.00 per share, which was the fair market
value of the Sunrise Stock at the time of the exchange. Mr. Light was not
granted any additional Options in 1995, nor did he receive a cash bonus in
either 1994 or 1995.
The Compensation Committee believes that equity compensation, in lieu of
salary increases or cash bonuses, will provide the most effective incentive for
Mr. Light to remain with the Company to pursue its long-term goals and
objectives. By granting Options to Mr. Light, the Company is able to preserve
cash needed for working capital and other expenses of the Company, while further
aligning Mr. Light's interests with those of the stockholders. In 1996, Mr.
Light was granted an option to purchase 600,000 shares of Sunrise Stock at $1.03
per share.
Policies with Respect to Deductibility of Compensation
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code. The Compensation Committee believes that at the present time it is
unlikely that the compensation paid to any Named Executive Officer in a taxable
year will exceed $1 million. Therefore, the Compensation Committee has not yet
established a policy for determining which forms of incentive compensation
awarded to its Named Executive Officers shall be designed to qualify as
"performance-based compensation." The Compensation Committee intends to continue
to evaluate the effects of the statute and the final Treasury regulations and to
comply with Section 162(m) of the Code in the future to the extent consistent
with the best interests of the Company.
Submitted by:
The Compensation Committee
Joseph D. Koenig
Ronald A. Slocum
April 30, 1997
8
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Sunrise Stock with the cumulative return on the Russell 3000 Index and the
Hambrecht & Quist Technology Index for the five year period ended December 31,
1996, assuming dividend reinvestment.
COMPARISON OF CUMULATIVE TOTAL RETURN
(value of $100 invested)
Sunrise Russell 3000 H & Q Technology
Technologies Index Index
------------ ------------ ------------
December 31, 1991 100.00 100.00 100.00
December 31, 1992 48.92 106.59 118.11
December 31, 1993 24.46 116.26 138.17
December 31, 1994 8.63 112.41 165.25
December 31, 1995 9.36 150.36 246.36
December 31, 1996 5.04 173.97 306.47
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, officers, directors and beneficial owners of 10% of the Sunrise Stock
outstanding (collectively "insiders") are required to file reports with the
Commission to report beneficial ownership of, and transactions in, securities of
Sunrise. All such reports required to be filed by insiders during 1996 were
timely filed except as follows: Each of Messrs. Light and Trenary failed to
timely file a Form 5 to report grants of options to purchase Common Stock
granted in September 1996; Ms. Munley was appointed Chief Financial Officer of
Sunrise in February 1997, but failed to timely file a Form 3 to report her
beneficial ownership of securities of Sunrise; Mr. Shaffer failed to timely file
a Form 4 to report the sale of 20,000 shares of Common Stock in November 1996.
9
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected and intends to appoint Ernst & Young L.L.P. ("E &
Y"), 1451 California Avenue, Palo Alto, California 94303, as the Company's
independent accountants for the year ending December 31, 1997. E & Y has served
as the Company's independent accountants since the Company's inception in 1987.
Representatives of E & Y are expected to be present at the Annual Meeting, will
have an opportunity to make a statement if they so desire and are expected be
available to respond to appropriate questions from stockholders.
The Board is seeking stockholder ratification of the appointment of E & Y;
however, the Audit Committee or the Board may determine, in their discretion and
without seeking approval from the stockholders of the Company, to change the
Company's accountants if the Audit Committee or Board determines it to be in the
interests of the Company and the stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS APPOINTMENT OF ERNST & YOUNG
L.L.P. AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER
31, 1997.
PROPOSAL 3
ADOPTION OF NEW STOCK OPTION PLAN
BACKGROUND
Sunrise is authorized to issue up to 3,750,000 shares of Sunrise Stock
pursuant to Options granted under the 1988 Plan. As of April 24, 1997, options
to purchase an aggregate of 2,742,438 shares of Sunrise Stock were outstanding
under the 1988 Plan, some of which were granted subject to stockholder approval
of the New Stock Option Plan. The 1988 Plan expires in 1998.
Rather than increasing the number of shares of Sunrise Stock issuable under
and extending the term of the 1988 Plan, the Board of Directors has determined
it to be preferable to adopt the New Stock Plan for grants of Options to
employees and consultants of the Company. Under the New Stock Option Plan,
Options would also be issuable to directors of the Company.
GENERAL
The stated purposes of the New Stock Option Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to the employees, directors and consultants of the
Company and to promote the success of the Company's business.
Under the New Stock Option Plan, Sunrise would be authorized to issue up to
3,000,000 shares of Sunrise Stock pursuant to options ("New Plan Options") that
may be granted to persons who are either (a) employed by the Company or an
affiliate of the Company, including any officers and directors of the Company,
or (b) engaged by the Company or an affiliate of the Company to render
consulting services, provided that such person is compensated for such services
(collectively, "Eligible Optionees"). As of April 24, 1997, approximately 60
persons would have qualified as Eligible Optionees under the New Stock Option
Plan. Sunrise intends to hold a special meeting of stockholders, at which
meeting the stockholders will be asked to approve a 3-to-1 reverse stock split
of the Sunrise Stock, pursuant to which every three shares of Sunrise Stock
would be amalgamated into one share of Sunrise Stock. If such reverse stock
split is effected and if the New Stock Option Plan is adopted, Sunrise would be
authorized to issue up to 1,000,0000 shares of Sunrise Stock pursuant to New
Plan Options.
New Plan Options may be incentive stock options within the meaning of
Section 422 of the Code ("ISOs") or nonstatutory stock options ("NSOs").
The New Stock Option Plan, if adopted, will expire in 2007, after which
date no additional New Plan Options could be issued thereunder. However, any New
Plan Options then outstanding would not be affected by the expiration of the New
Stock Option Plan.
10
<PAGE>
The New Stock Option Plan will be administered by the Board of Directors,
except to the extent the Board of Directors elects to delegate such powers and
responsibilities to a committee (in either case, the "Administrator"). The
Administrator will have the power to determine from time to time the Eligible
Optionees to be granted New Plan Options, as well as the power to determine the
terms and conditions of such New Plan Options, within the parameters set forth
in the New Stock Option Plan. The Board of Directors may amend or terminate the
New Stock Option Plan at any time and for any reason, subject to any required
regulatory approval and any required approval of the stockholders of the
Company.
Approval of the Proposal to adopt the New Stock Option Plan requires the
affirmative vote of holders of a majority of the Sunrise Stock present or
represented by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE NEW STOCK PLAN.
DESCRIPTION OF NEW PLAN OPTIONS
The provisions of individual New Plan Options need not be identical, but
each New Plan Option shall be subject to the following provisions: (a) the term
of a New Plan Option may not be longer than ten (10) years from the date of
grant, (b) the exercise price of an ISO shall not be less than 100% of the fair
market value of the underlying Sunrise Stock, and the exercise price of an NSO
shall not be less than 85% of the fair market value of the underlying Sunrise
Stock, and (c) a New Plan Option shall not be transferable except by will or by
the laws of descent and distribution or pursuant to a qualified domestic
relations order (as defined in the Code); provided that an NSO may also be
transferred to an immediate family member of the optionee, a trust for the
benefit of immediate family members of the optionee or a partnership in which
immediate family members are the only partners.
EXERCISE OF NEW PLAN OPTIONS
A New Plan Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company and full payment for the Sunrise
Stock to be purchased pursuant thereto has been received by the Company. Payment
of the exercise price of a New Plan Option shall be made in the form authorized
by the Administrator, which may be (a) by cash, check or promissory note or (b)
with shares of Sunrise Stock that either (i) have been owned by the optionee for
more than six (6) months on the date of surrender or (ii) were not acquired,
directly or indirectly, from the Company.
ALLOCATION OF NEW PLAN OPTIONS
The potential benefit to be received by an optionee is dependent on
increases in the price of the Sunrise Stock prior to the exercise of the option.
Accordingly, the ultimate dollar value of options is not currently
ascertainable. On April 24, 1997, the closing bid price of the Sunrise Stock on
the OTC Bulletin Board was $0.94 per share.
<TABLE>
The following table sets forth certain information with respect to Options
granted in 1996 under the 1988 Plan to the current executive officers of the
Company as a group and to all employees of the Company as a group, not including
executive officers. For information regarding Options granted to Named Executive
Officers in 1996, see "Executive Compensation." Allocation of Options among such
groups and such persons in 1996 is not necessarily indicative of the allocation
to be made of New Plan Options in 1997.
<CAPTION>
1988 STOCK OPTION PLAN
SHARES OF SUNRISE STOCK
RANGE OF EXERCISE PRICES UNDERLYING OPTIONS
------------------------ ----------------------
<S> <C> <C>
Executive Officer Group ..................$1.03 - 1.75 1,230,000
Non-Executive Officer Employee Group .... $1.03 - 2.88 335,000
</TABLE>
Options granted in 1996 generally become exercisable as to 25% of the
underlying shares of Sunrise Stock one year after the grant date and as to
1/36th of the remaining underlying shares each month thereafter until fully
vested.
11
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal anticipated United States
federal income tax considerations of the grant and exercise of a New Plan Option
to and by an optionee who is resident in the United States. It is based on the
current provisions of the Code and the rules and regulations thereunder (the
"Current Tax Rules"). This discussion is general only and is not a substitute
for independent advice from an individual's own tax and other advisors.
Incentive Stock Options
No taxable income will be recognized by an Eligible Optionee upon the grant
of an ISO, and no taxable income will be recognized at the time the ISO is
exercised, so long as the optionee remains an employee of the Company (or a
parent or subsidiary corporation) at all times during the period beginning on
the grant date of the ISO and ending on the date three months before the date of
exercise. However, the difference between the fair market value of the Sunrise
Stock purchased on exercise of the ISO and the exercise price of the ISO
generally will constitute a tax preference item for purposes of the alternative
minimum tax. If the optionee does not dispose of the Sunrise Stock so purchased
within two years of the grant date of the ISO, nor within one year of the date
of exercise (together, the "Holding Periods"), any profit or loss recognized
upon a subsequent disposition will be long-term capital gain or loss.
Nonstatutory Stock Options
An optionee will not recognize any taxable income at the time an NSO is
granted. Upon exercise of the NSO, an optionee generally will recognize ordinary
income, for United States income tax purposes, equal to the excess, if any, of
the then fair market value of the Sunrise Stock acquired over the exercise price
of the NSO. Any taxable income recognized in connection with the exercise of any
NSO generally will be subject to tax withholding by the Company, and the Company
generally will be entitled to United States income tax deductions to the extent
and in the year that such taxable income is recognized by the optionee.
When an optionee sells Sunrise Stock acquired pursuant to the exercise of
an NSO, any difference between the sale price and the optionee's tax basis in
such Sunrise Stock will be treated as capital gain or loss.
OTHER MATTERS
To the best of the knowledge, information and belief of the directors of
Sunrise, there are no other matters which are to be acted upon at the Annual
Meeting. If such matters arise, the form of proxy confers discretionary
authority on the proxy holders designated therein to vote with respect to such
matters.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Proxy Statement for the 1998 annual
meeting of stockholders, proposals must be received by Sunrise no later than
January 1, 1998. Any such proposals should be directed to the Secretary of
Sunrise.
By Order of the Board of Directors
David W. Light
Chief Executive Officer
and Chairman of the Board
12
<PAGE>
Appendix A
PROXY SUNRISE TECHNOLOGIES INTERNATIONAL, INC. PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 1997
The undersigned hereby appoints David W. Light and Joseph W. Shaffer and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Sunrise Technologies
International, Inc. which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of Sunrise Technologies International, Inc. to be held
at the Newark-Fremont Hilton Hotel, located at 39900 Balentine Drive, Newark,
California, 94560 on June 26, 1997, at 10:00 a.m., local time, and at any and
all continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.
(Continued, and to be signed on the other side)
<PAGE>
<TABLE>
<S> <C> <C>
[X] Please mark
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS your votes
PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN as this
PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF
SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY
WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR PROPOSAL 2: To ratify selection of FOR AGAINST ABSTAIN
DIRECTORS LISTED BELOW AND A VOTE FOR PROPOSALS 2 Ernst & Young LLP as independent public
AND 3. accountants of the Company for its fiscal [ ] [ ] [ ]
year ending December 31, 1997.
PROPOSAL 1: To elect two Class 1 directors to PROPOSAL 3: To adopt a new stock option FOR AGAINST ABSTAIN
hold office until the Annual Meeting of Stockholders plan, pursuant to which Sunrise could
to be held in the year 2000. WITHHOLD issue up to 3,000,000 shares of Sunrise [ ] [ ] [ ]
FOR FOR ALL Stock (1,000,000 shares if Sunrise
effects a proposed 3-to-1 reverse stock
[ ] [ ] split) to employees of and consultants
to the Company.
NOMINEES: David W. Light,
Ronald A. Slocum
(INSTRUCTION: To withhold authority to vote for any
nominee, write the nominee's name in the space
provided below.)
- --------------------------------------------------- Please sign exactly as your name appears hereon. If the stock is
I PLAN TO ATTEND THE MEETING registered in the names of two or more persons, each should sign.
[ ] Executors, administrators, trustees, guardians and attorneys-in-fact
should add their titles. If signer is a corporation, please give
full corporate name and have a duly authorized officer sign, stating
title. If signer is a partnership, please sign in partnership name
by authorized person.
Signature(s) Date
------------------------------------------------------ -------------------------------------------------
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
</TABLE>
