<PAGE> 1
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))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials (Amended and Restated)
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-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 transaction
applies: N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
<PAGE> 2
[ ] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE> 3
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
47265 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 July 10, 1998 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 II directors of Sunrise, each to serve a
three-year term expiring upon the annual meeting of stockholders to be
held in the year 2001, or until his or her respective successor is
elected and qualified.
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors for the Company for the year ending December 31, 1998.
3. To approve an amendment to the 1997 Stock Option Plan to increase the
number of shares of Sunrise Stock available for issuance thereunder by
3,000,000 shares.
4. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of preferred stock from
2,000,000 to 5,000,000.
5. 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 June 4, 1998 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 at the Annual Meeting,
you must obtain from the record holder a proxy issued in your name.
Sincerely,
JOSEPH D. KOENIG
Joseph D. Koenig
Chairman of the Board
Fremont, California
June 18, 1998
<PAGE> 4
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 JULY 10,
1998, 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 18, 1998.
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 II directors of Sunrise, each to serve a three-year term
expiring upon the annual meeting of stockholders to be held in the year 2001, or
until his or her respective successor is elected and qualified; (ii) to ratify
the appointment of Coopers & Lybrand L.L.P. as independent auditors for the
Company for the year ending December 31, 1998; (iii) to approve an amendment to
the 1997 Stock Option Plan to increase the number of shares of Sunrise Stock
available for issuance thereunder by 3,000,000 shares; and (iv) to approve an
amendment to the Company's Certificate of Incorporation (the "Certificate") to
increase the number of authorized shares of preferred stock from 2,000,000 to
5,000,000.
RECORD DATE; VOTING
The Board of Directors of Sunrise (the "Board") has fixed the close of
business on June 4, 1998 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 April 30, 1998, there were 33,786,230 shares of
Sunrise Stock issued and outstanding, held of record by 672 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 Proposals.
The two persons properly nominated and receiving the highest number of
votes will be elected as Class II 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 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 April 30, 1998, the directors and executive officers of the Company,
together with their respective affiliates, held 132,450 shares of Sunrise Stock,
representing 0.4% 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
1
<PAGE> 5
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 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 $2,500 plus out-of-pocket
expenses.
ChaseMellon Shareholder Services LLC, transfer agent and registrar for the
Sunrise Stock, will be paid its customary fee, estimated to be $3,500.
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Sunrise Stock as
of April 30, 1998 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.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------
NUMBER OF PERCENT OF
SHARES SHARES
--------- ----------
<S> <C> <C>
C. Russell Trenary, III(2)............................... 480,654 1.0
Timothy A. Marcotte(3)................................... 76,533 *
Jeannie G. Cecka(4)...................................... 99,861 *
Paul M. Malin(5)......................................... 104,533 *
Robert A. Haddad(6)...................................... 145,490 *
R. Dale Bowerman(7)...................................... 128,016 *
Joseph D. Koenig(8)...................................... 97,083 *
Michael S. McFarland, M.D.(9)............................ 27,666 *
All executive officers and directors as a group (8
persons)(10)........................................... 1,159,836 2.5
</TABLE>
- -------------------------
* Less than one percent
(1) Based on information provided by each of the identified officers and
directors.
(2) Includes 410,083 shares that Mr. Trenary does not currently own, but which
he has the right to acquire within 60 days of April 30, 1998, pursuant to
outstanding options granted under the Company's stock option plan
("Options"), and 68,571 shares associated with convertible notes and
warrants purchased in February 1997.
(3) Consists of 76,533 shares that Mr. Marcotte does not currently own, but
which he has the right to acquire within 60 days of April 30, 1998,
pursuant to Options.
(4) Includes 94,761 shares that Ms. Cecka does not currently own, but which she
has the right to acquire within 60 days of April 30, 1998, pursuant to
Options.
(5) Includes 101,533 shares that Mr. Malin does not currently own, but which he
has the right to acquire within 60 days of April 30, 1998, pursuant to
Options.
(6) Includes 92,157 shares that Mr. Haddad does not currently own, but which he
has the right to acquire within 60 days of April 30, 1998, pursuant to
Options, and 53,333 shares associated with the indirect ownership of
convertible notes and warrants purchased in January 1998.
(7) Includes 11,666 shares that Mr. Bowerman does not currently own, but which
he has the right to acquire within 60 days of April 30, 1998, pursuant to
Options.
(8) Consists of 70,416 shares that Mr. Koenig does not currently own, but which
he has the right to acquire within 60 days of April 30, 1998, pursuant to
Options, and 26,667 shares associated with convertible notes and warrants
purchased in January 1998.
2
<PAGE> 6
(9) Includes 21,666 shares that Dr. McFarland does not currently own, but which
he has the right to acquire within 60 days of April 30, 1998, pursuant to
Options.
(10) Includes 878,815 shares that such persons do not currently own, but which
they have the right to acquire within 60 days of April 30, 1998 pursuant to
Options, and 148,571 shares associated with the ownership of convertible
notes and warrants purchased by such persons.
3
<PAGE> 7
PROPOSAL 1
ELECTION OF DIRECTORS
Sunrise's Certificate and Bylaws provide that the Board 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 presently has five members. At the Annual Meeting, stockholders
will be asked to elect two Class II directors to serve until the annual meeting
of stockholders to be held in the year 2001 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 II 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 that 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.
The following table provides information regarding the Nominees and the
continuing directors of the Company.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION/POSITION
NAME AGE CLASSIFICATION HELD WITH THE COMPANY
---- --- -------------- -----------------------------
<S> <C> <C> <C>
NOMINEES:
Timothy A. Marcotte..... 41 Class II Vice President, Finance and Chief
Financial Officer of Sunrise
Michael S. McFarland,
M.D.................. 47 Class II Ophthalmologist
CONTINUING DIRECTORS:
R. Dale Bowerman........ 58 Class I) Retired
(term expires 2000
Joseph D. Koenig........ 68 Class III) Chairman of the Board of Sunrise and
(term expires 1999 Consultant for Koenig Associates, a
management consultant firm
C. Russell Trenary,
III.................. 40 Class III) President and Chief Executive Officer of
(term expires 1999 Sunrise
</TABLE>
NOMINEES
Mr. Marcotte was appointed Vice President, Finance and Chief Financial
Officer of Sunrise in August 1997. He was also appointed to the Board in
November 1997. From December 1996 to August 1997, Mr. Marcotte was Vice
President and Chief Financial Officer of InfoGain Corporation, an information
technology consulting firm. From June 1996 to December 1996, Mr. Marcotte was
the Vice President and Chief Financial Officer of IRIDEX Corporation, a medical
device manufacturer of ophthalmic laser products. From May 1995 to June 1996,
Mr. Marcotte served as the Executive Vice President of Finance and Operations,
Chief Financial Officer and Secretary for Now Software, Inc., a desktop software
developer, and from April 1993 to May 1995, he served as Vice President of
Finance and Operations and Chief Financial Officer at the same company. From
January 1992 to April 1993, Mr. Marcotte was the Corporate Controller at Central
Point Software Incorporated, a desktop software developer. Mr. Marcotte has an
M.B.A. degree and a B.S. degree from the University of Michigan.
4
<PAGE> 8
Dr. McFarland was appointed to the Board in October 1997. From 1980, Dr.
McFarland has been a practicing ophthalmologist in Arkansas. Dr. McFarland was
the recipient of the Innovators Award of the Irish American Ophthalmological
Society in 1992 for his development of sutureless cataract surgery. Dr.
McFarland has a B.S. degree from Hendrix College and an M.D. degree from the
University of Arkansas.
CONTINUING DIRECTORS
Mr. Bowerman was appointed to the Board in November 1997. From 1994 until
his retirement in 1997, Mr. Bowerman had been employed by SHA, LLC d/b/a
Firstcare, a Texas health maintenance organization, most recently as President
and Chief Executive Officer. From 1973 to 1994, Mr. Bowerman was Vice President,
Finance and Chief Financial Officer at High Plains Baptist Health Systems. Mr.
Bowerman is also a director of Carrington Laboratories, Inc., a pharmaceutical
research company. Mr. Bowerman has a B.B.A. degree in Accounting from West Texas
State University.
Mr. Koenig was appointed to the Board 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 1985. Mr. Koenig is also a director of Ancot Corporation, Hench Controls
Corporation and ORISA Technologies, Inc. Mr. Koenig received a B.S. degree in
Electrical Engineering from the University of Illinois.
Mr. Trenary was appointed the Chief Executive Officer of Sunrise in June
1997. In November 1996, Mr. Trenary was appointed President and Chief Operating
Officer of Sunrise and was also appointed to the Board. Mr. Trenary was
appointed President and Chief Operating Officer of Laser Biotech, Inc., a wholly
owned subsidiary of Sunrise, in April 1996. 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 medical device business. Mr. Trenary has an
M.B.A. degree from Michigan State University and a B.S. degree from Miami
University (Ohio).
None of the members of management were 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 eleven meetings during the fiscal year ended December 31,
1997.
The Board has two standing committees: the Audit Committee and the
Compensation Committee (each, a "Committee"). The Board does not have a standing
nominating committee or any committee performing the function of such committee.
During 1997, each Board member attended 100% 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. Bowerman and Mr.
Koenig, met one time in 1997.
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
Dr. McFarland, met one time during 1997.
5
<PAGE> 9
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 1997 was $7,800.
Non-employee directors are also 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 40,000 shares
of Sunrise Stock (a "Directors' Option") under the Non-Employee Directors' Stock
Option Plans. 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, 1998, non-employee Directors' Options
to purchase 251,666 shares of Sunrise Stock were outstanding and 144,164 of such
options were fully vested and exercisable as of April 30, 1998.
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The following persons currently serve as executive officers of Sunrise:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH SUNRISE
---- --- --------------------------
<S> <C> <C>
C. Russell Trenary, III................ 40 President and Chief Executive Officer and Director
Timothy A. Marcotte.................... 41 Vice President, Finance and Chief Financial
Officer and Director
Jeannie G. Cecka....................... 35 Vice President, Clinical and Regulatory Affairs
Paul M. Malin.......................... 44 Vice President, Sales and Marketing
Robert A. Haddad....................... 51 Vice President, Operations and Product Development
</TABLE>
Ms. Cecka was appointed Vice President, Clinical and Regulatory Affairs in
August 1996. From February 1996 to August 1996, Ms. Cecka was Quality Systems
Auditor at Tuv Product Service. From March 1995 to February 1996, Ms. Cecka was
Director of Clinical and Regulatory Affairs at MedAcoustics, Inc. From September
1992 to March 1995, Ms. Cecka was Manager of Clinical Affairs for Baxter
Novacor, a developer and marketer of left ventricular assist devices. Prior to
September 1992, Ms. Cecka spent seven years at Allergan, Inc. 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. Prior to joining Sunrise, Mr. Malin was the Director of Marketing at
IRIDEX Corporation, a medical device manufacturer of ophthalmic laser products
from July 1995 to May 1996. From October 1983 to July 1995, Mr. Malin held
various senior sales and marketing positions at Allergan, Inc. Mr. Malin has an
M.B.A. degree from Pepperdine University and a B.A. degree from Washington and
Lee University.
Mr. Haddad joined Sunrise in March 1997 as Vice President, Operations and
Product Development. From March 1991 to March 1997, Mr. Haddad was Vice
President, Operations of IRIDEX Corporation, a medical device manufacturer of
ophthalmic laser products. Mr. Haddad has an M.B.A. degree from Sacramento State
University and a B.S. degree from California State Polytechnic University.
For additional information regarding each of the executive officers of
Sunrise who is also a director, see "Proposal 1 -- 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 salaries and bonuses for the year ended 1997
exceeded $100,000 (collectively, the "Named Executive Officers").
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(1)(2)(3) COMPENSATION(4)
--------------------------- ------ ----- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
C. Russell Trenary, III(5)........... 1997 $191,906 $20,000 776,500 $1,425
President and 1996 $124,045 Nil 400,000 Nil
Chief Executive Officer 1995
Jeannie G. Cecka(6).................. 1997 $108,938 $15,000 317,700 $ 930
Vice President, Clinical 1996 $ 44,962 Nil 75,000 Nil
and Regulatory Affairs 1995
Robert A. Haddad(7).................. 1997 $105,538 $25,000 392,700 $ 814
Vice President, Operations 1996
and Product Development 1995
Paul M. Malin(8)..................... 1997 $127,917 $25,000 292,700 $1,425
Vice President, Sales 1996 $ 73,398 Nil 100,000 Nil
and Marketing 1995
</TABLE>
- -------------------------
(1) Securities are shares of Sunrise Stock underlying Options granted under
Sunrise's stock option plan.
(2) Sunrise does not have any restricted stock, stock appreciation right or
long-term incentive plans.
(3) The vesting of the Options accelerates upon a change of control. See
"Summary of Change of Control Agreements" below.
(4) Represents contributions made by Sunrise to Sunrise's 401(k) plan on behalf
of the Named Executive Officers during 1997.
(5) Mr. Trenary began employment with Sunrise in April 1996.
(6) Ms. Cecka began employment with Sunrise in August 1996.
(7) Mr. Haddad began employment with Sunrise in March 1997.
(8) Mr. Malin began employment with Sunrise in May 1996.
EMPLOYEE STOCK OPTIONS
Sunrise grants Options to purchase Sunrise Stock to its employees,
including the executive officers, under both the 1988 Stock Option Plan, as
amended (the "1988 Plan"), and the 1997 Stock Option Plan (the "1997 Plan"). As
of April 30, 1998, Options to purchase an aggregate of 4,800,524 shares of
Sunrise Stock were outstanding under the 1988 Plan and 1997 Plan.
The following tables set forth certain information regarding Options
granted to and held by the Named Executive Officers in 1997.
7
<PAGE> 11
OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE APPRECIATION
SECURITIES OPTIONS GRANTED FOR OPTION TERM(2)
UNDERLYING TO EMPLOYEES EXERCISE EXPIRATION ----------------------------
NAME OPTIONS(1) IN 1997 PRICE DATE 5% 10%
---- ---------- --------------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
C. Russell Trenary, III... 400,000 16.6% $1.25 6/26/07 $314,447 $ 796,871
376,500 15.6% $3.94 10/16/07 $932,909 $2,364,174
Jeannie G. Cecka.......... 50,000 2.1% $1.25 6/26/07 $ 39,306 $ 99,609
267,700 11.1% $3.94 10/16/07 $663,319 $1,680,981
Paul M. Malin............. 50,000 2.1% $1.25 6/26/07 $ 39,306 $ 99,609
242,700 10.1% $3.94 10/16/07 $601,373 $1,523,997
Robert A. Haddad.......... 175,000 7.2% $1.19 4/21/07 $130,967 $ 331,897
217,700 9.0% $3.94 10/16/07 $539,427 $1,367,013
</TABLE>
- -------------------------
(1) Options generally become exercisable at a rate of 1/48th of the underlying
shares of Sunrise Stock each month following the grant date.
(2) The 5% and 10% assumed rates of appreciation applied to the fair market
value of the Sunrise Stock over the term of the Option are prescribed by the
rules of the Commission and do not represent Sunrise's estimate or
projection of the future price of the Sunrise Stock.
AGGREGATE YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR-END YEAR-END ($)(1)
NAME EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
---- --------------------------- ---------------------------
<S> <C> <C>
C. Russell Trenary, III......................... 259,438/917,062 $576,438/$1,263,563
Jeannie G. Cecka................................ 40,842/351,858 $ 70,172/$ 220,078
Paul M. Malin................................... 47,613/345,087 $ 89,000/$ 261,500
Robert A. Haddad................................ 9,071/383,629 $ --/$ 393,750
</TABLE>
- -------------------------
(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.
SUMMARY OF STOCKHOLDER RIGHTS PLAN
The Board adopted a Stockholder Rights Plan (the "Rights Plan") in which
common stock purchase rights (the "Rights") will be distributed as a dividend at
the rate of one Right for each share of common stock of Sunrise held by
stockholders of record as of the close of business on October 24, 1997. The
Rights Plan will expire on October 24, 2007.
Each Right will entitle stockholders to buy newly-issued shares of common
stock of Sunrise at an exercise price of $20.00. The Rights will be exercisable
only if a person or group acquires beneficial ownership of 15% or more of
Sunrise's common stock or commences a tender or exchange offer upon consummation
of which such person or group would beneficially own 15% or more of Sunrise's
common stock. Sunrise will be entitled to redeem the Rights at $.001 per Right
at any time until 10 days following a public announcement that a 15% position
has been acquired. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Plan.
SUMMARY OF AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENTS
The Board adopted separate amended and restated change of control
agreements (collectively, the "Change of Control Agreements") with the Named
Executive Officers and Mr. Marcotte. The Change of
8
<PAGE> 12
Control Agreements provide these executives with separation pay and benefits
following a "change of control" in Sunrise and: (i) the executive's subsequent
termination of employment by Sunrise (unless such termination is for "cause") or
such termination results from the executive's death, disability or retirement;
or (ii) the executive resigns for "good reason." An eligible termination must
occur within two years of the change of control or the agreement entered into
with the executive is void. Each Change of Control Agreement will continue until
May 8, 2001 and renew for three year periods from that date unless the executive
receives written notice of termination of the Change of Control Agreement at
least 120 days prior to the renewal date.
Under the Change of Control Agreements, the separation pay equals: (i) for
the President and Chief Executive Officer, one and one-half times his annualized
base salary and, for the other executives, one times their respective annualized
base salaries; plus (ii) the target cash bonus for the year of termination. The
executives are also entitled to health, disability and life insurance in
accordance with the plans maintained for executives. In the case of the
President and Chief Executive Officer, these benefits are for a period of one
and one-half years from the date of termination, and for the other executives,
for a period of one year (provided that such benefits shall cease if the
executive becomes employed during such period and receives similar benefits). In
the event of a change of control of Sunrise, stock options granted to the
executives shall fully vest on such date and become immediately exercisable. If
the total payments to any executive constitutes an "excess parachute payment"
within the meaning of Section 280G of the Code, then Sunrise shall reimburse the
executive for certain income and excise taxes.
A "change of control" for purposes of the Change of Control Agreements is
deemed to occur if: (a) the beneficial ownership of securities representing more
than 33% of the combined voting power of Sunrise is acquired by any "person" as
defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934; (b)
the stockholders of Sunrise approve a definitive agreement to merge or
consolidate Sunrise with or into another corporation, to sell or otherwise
dispose of all or substantially all of its assets, or to adopt a plan of
liquidation; or (c) during any period of three consecutive years, individuals
who at the beginning of such period were members of the Board of Directors cease
for any reason to constitute at least a majority thereof. The Change of Control
Agreements were designed to attract and retain valued executives of Sunrise and
to ensure that the performance of these executives is not undermined by the
possibility, threat or occurrence of a change of control.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee aims to structure Sunrise's executive
compensation programs to enable Sunrise to attract and retain executives capable
of leading Sunrise to meet its business objectives and to motivate them to
enhance long-term stockholder value. Annual compensation for Sunrise'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 Sunrise'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 Sunrise
and the progress of Sunrise 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 Sunrise.
In selecting new executive officers, the Compensation Committee considers
the specific needs of Sunrise 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
9
<PAGE> 13
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, which ultimately determines each executive
officer's compensation package.
Compensation of Chief Executive Officer
C. Russell Trenary, III was retained by Sunrise to serve as President in
November 1996 and Chief Executive Officer in June 1997. His initial compensation
package consisted of an annual salary of $198,500. The Compensation Committee
believes that Mr. Trenary's salary was in the low range compared to chief
executive officers in peer companies. To increase Mr. Trenary's equity position
and further align his interests with Sunrise's stockholders, Sunrise granted Mr.
Trenary an option to purchase 400,000 shares of Sunrise Stock at $1.25 per share
and an option to purchase 376,500 shares of Sunrise Stock at $3.94 per share.
Under the leadership of Mr. Trenary, Sunrise achieved specific milestones during
1997, including the successful completion of a private financing, the furthering
of the FDA approval process and underlying clinical trials related to Sunrise's
holmium laser corneal shaping product and an increase in Sunrise's stock price.
Mr. Trenary was awarded a cash bonus as a result of Sunrise's undertaking and
achieving the results described above. The Compensation Committee determined to
increase Mr. Trenary's base salary for 1998 to $250,000, adopt a bonus plan for
Mr. Trenary that will pay him 50% of his base salary based on certain
performance standards and increase Mr. Trenary's equity position in Sunrise by
granting him an option to purchase 384,000 shares of Sunrise Stock at $7.63 per
share.
Policies with Respect to Deductibility of Compensation
Section 162(m) of the Code limits Sunrise to a deduction for federal income
tax purposes of no more than $1,000,000 of compensation paid to certain Named
Executive Officers in a taxable year. Compensation above $1,000,000 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 $1,000,000. 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 Sunrise.
Submitted by:
The Compensation Committee
Joseph D. Koenig
Michael S. McFarland, M.D.
April 28, 1998
THE BOARD UNANIMOUSLY RECOMMENDS AND NOMINATES TIMOTHY A. MARCOTTE AND
MICHAEL S. MCFARLAND, M.D. FOR ELECTION AS CLASS II DIRECTORS OF SUNRISE BY THE
STOCKHOLDERS AT THE ANNUAL MEETING TO SERVE UNTIL THE NEXT ANNUAL MEETING OF
STOCKHOLDERS OR AS OTHERWISE PROVIDED IN THE CERTIFICATE.
Vote Required. The affirmative vote of a majority of the outstanding shares
of Sunrise Stock is required to elect Mr. Marcotte and Dr. McFarland as
Directors of Sunrise.
10
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Sunrise Stock with the cumulative return on the NASDAQ Composite (U.S.) and the
Hambrecht & Quist Technology Index for the five year period ended December 31,
1997, assuming dividend reinvestment.
<TABLE>
<S> <C> <C> <C> <C>
Sunrise Tech- Hambrecht & Nasdaq Com-
Total Return Analysis nologies Quist Tech. posite (US)
12/31/92 100 100 100
12/31/93 50 116 115
12/30/94 18 140 111
12/29/95 19 209 155
12/31/96 10 259 191
12/31/97 40 304 232
</TABLE>
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 1997 were
timely filed except as follows: Jeannie G. Cecka, Robert A. Haddad, Joseph D.
Koenig, Paul C. Malin, Michael S. McFarland and C. Russell Trenary, III.
11
<PAGE> 15
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On December 9, 1997, Sunrise dismissed Ernst & Young LLP ("E&Y") as its
independent accounting firm. E&Y's report on the financial statements for 1995
and 1996 did not contain an adverse opinion or a disclaimer of opinion; however,
the report was modified to include an explanatory paragraph with respect to
Sunrise's ability to continue as a going concern. During 1995 and 1996 and the
subsequent interim period preceding such dismissal, there were no disagreements
with E&Y on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure. The decision to change
accountants was recommended and approved by the Audit Committee of the Board.
On December 10, 1997, Sunrise engaged Coopers & Lybrand L.L.P. ("C&L") as
the new independent accountant to audit the Company's financial statements.
During 1995 and 1996 and the subsequent interim period prior to engaging C&L,
Sunrise had not consulted C&L regarding either: (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on Sunrise's financial
statements, and no written report was provided to Sunrise and no oral advice was
provided that C&L concluded was an important factor considered by Sunrise in
reaching a decision as to the accounting, auditing or financial reporting issue;
or (ii) any matter that was either the subject of a disagreement (as defined in
paragraph 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described
in paragraph 304(a)(1)(v) of Regulation S-K).
The Board has selected and intends to appoint C&L, Ten Almaden Boulevard,
Suite 1600, San Jose, California 95113, as Sunrise's independent accountant for
the year ending December 31, 1998. Representatives of C&L are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and are expected to be available to respond to appropriate
questions from stockholders.
The Board is seeking stockholder ratification of the appointment of C&L;
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 UNANIMOUSLY RECOMMENDS APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1998.
Vote Required. The affirmative vote of a majority of the outstanding shares
of Sunrise Stock is required to ratify the foregoing proposal.
PROPOSAL 3
AMENDMENT TO THE COMPANY'S
1997 STOCK OPTION PLAN
The Board has adopted the 1997 Plan, as amended, subject to stockholder
approval. If the requested stockholder approval is received, the 1997 Plan will
be amended as set forth in Annex A.
At Sunrise's 1997 annual meeting, the stockholders approved the 1997 Plan
for the purposes of attracting and retaining the best available personnel for
positions of substantial responsibility, providing additional incentive to the
employees and consultants of Sunrise, and promoting the success of Sunrise's
business. The 1997 Plan permits grants of non-qualified and incentive stock
options, within the meaning of the Code.
A total of 3,000,000 shares of Sunrise Stock were approved for issuance at
the 1997 annual meeting and are reserved for issuance under the 1997 Plan. At
May 31, 1998, options granted under the 1997 Plan to purchase 2,827,466 shares
were issued and outstanding, including options to purchase 51,000 shares issued
to non-employee directors and 94,166 shares issued to a former director,
consultants and distributors. At a meeting of the Board on May 8, 1998, the
Board adopted a proposal to amend the 1997 Plan to increase from
12
<PAGE> 16
3,000,000 to 6,000,000 the aggregate number of shares of Sunrise Stock reserved
for issuance under the 1997 Plan.
As of March 31, 1998, the market value of the 6,000,000 shares reserved for
issuance under the 1997 Plan (inclusive of those shares to be added through the
proposed amendment herein) was $42,180,000. Cash payments received by Sunrise
under the 1997 Plan will be used for general corporate purposes.
As of December 31, 1997, 1,140,700 shares remained available for grant
under the 1997 Plan. By May 31, 1998, an additional 968,166 options were granted
under the 1997 Plan, leaving only 172,534 shares available for grant. Management
and the Board believe that additional options must be available for future years
to continue to attract and retain key employees. Accordingly, the Board
approved, subject to stockholder approval, a proposal to amend the 1997 Plan to
authorize the Board to increase the number of shares of Sunrise Stock available
for grants under the 1997 Plan by 3,000,000 shares.
The 1997 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code and nonstatutory stock options ("Awards").
Optionees receive the right to purchase a specified number of shares of
Sunrise Stock at an option price and subject to such terms and conditions as are
specified at the time of the grant. Incentive stock options and options that the
Board intends to qualify as performance-based compensation under Section 162(m)
of the Code may not be granted at an exercise price less than the fair market
value of the Sunrise Stock on the date of grant (or less than 110% of the fair
market value in the case of options granted to optionees holding 10% or more of
the voting stock of Sunrise). All other options may be granted at an exercise
price that may be not less than 85% of the fair market value of the Sunrise
Stock on the date of grant. Sunrise believes that all options granted under the
1997 Plan to date have been granted at fair market value. The exercise price of
options must generally be paid in full at the time of exercise.
The Board may amend, suspend or terminate the 1997 Plan at any time. To the
extent necessary and desirable to comply with applicable laws, stockholder
approval shall be obtained. No such amendment or termination shall affect
options already granted, unless mutually agreed to by the Board and the
optionee. No Award may be made under the Plan after March 10, 2007, but Awards
previously granted may extend beyond that date.
THE BOARD UNANIMOUSLY RECOMMENDS THE INCREASE FROM 3,000,000 TO 6,000,000
THE AGGREGATE NUMBER OF SHARES OF SUNRISE STOCK RESERVED FOR ISSUANCE UNDER THE
1997 PLAN.
Vote Required. The affirmative vote of a majority of the outstanding shares
of Sunrise Stock is required to adopt the foregoing proposal.
PROPOSAL 4
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF PREFERRED STOCK FROM 2,000,000 TO 5,000,000
Under Sunrise's Certificate, the Board is authorized to issue up to
2,000,000 shares of "blank check" preferred stock, par value $.001 per share
(the "Preferred Stock"). The Certificate as amended in accordance with this
proposal would authorize the Board to issue up to 5,000,000 shares of Preferred
Stock, an increase of 3,000,000 shares, in one or more series, with such rights
and preferences as determined by the Board. Pursuant to this provision, the
Board may, without Sunrise stockholder approval, authorize the issuance of
Preferred Stock which ranks senior to the Sunrise Stock with respect to the
payment of dividends and the distribution of assets upon liquidation and may
issue Preferred Stock with voting and conversion rights which could adversely
affect the voting power of the holders of Sunrise Stock. The Board believes that
the amendment is necessary to allow Sunrise the flexibility to raise additional
capital. A copy of the proposed amendment is attached as Annex B to Proxy
Statement.
13
<PAGE> 17
In addition to potentially diluting the ownership interest of existing
Sunrise stockholders, an increase in the number of authorized shares of
Preferred Stock may, in conjunction with Section 203 of the Delaware General
Corporation Law (prohibiting certain "business combinations" between a Delaware
corporation whose stock is publicly-traded and an "interested shareholder"), the
lack of cumulative voting rights of Sunrise Stock and certain "Change of
Control" provisions of the Change of Control Agreements of affiliates of
Sunrise, render more difficult or discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of Sunrise's
securities and the removal of incumbent management, even if such actions would
be beneficial to the interests of existing stockholders. The authorization of
the Preferred Stock may be used by management of Sunrise to create voting
impediments or to frustrate persons seeking to effect a merger or otherwise gain
control of Sunrise. Such use is not currently contemplated by Sunrise.
RECOMMENDATION OF THE BOARD: The Board recommends a vote for an increase in
the number of authorized shares of Preferred Stock from 2,000,000 to 5,000,000.
Vote Required. The affirmative vote of a majority of the outstanding shares
of Sunrise Stock is required to adopt the foregoing proposal.
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 1999 annual
meeting of stockholders, proposals must be received by Sunrise no later than
January 1, 1999. Any such proposals should be directed to the Secretary of
Sunrise.
By Order of the Board
JOSEPH D. KOENIG
Joseph D. Koenig
Chairman of the Board
14
<PAGE> 18
ANNEX A
AMENDMENT NO. 1 TO
SUNRISE TECHNOLOGIES, INC.
STOCK OPTION PLAN
WHEREAS, the Sunrise Technologies, Inc. 1997 Stock Option Plan (the
"Plan"), currently provides for the issuance of up to 3,000,000 shares of Common
Stock of Sunrise Technologies International, Inc. (the "Company") pursuant to
options;
WHEREAS, the Board of Directors of the Company desires to increase the
maximum number of shares of Common Stock which may be issued pursuant to options
under the Plan by 3,000,000; and
WHEREAS, in furtherance of this objective, the Board of Directors of the
Company has approved that certain Amendment No. 1 to the Plan, effective as of
May 8, 1998.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. The maximum number of shares of Common Stock which may be issued
for all purposes under Section 3 of the Plan shall be increased from
3,000,000 to 6,000,000.
A-1
<PAGE> 19
ANNEX B
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify as follows:
1. The Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware (the "Secretary of State")
on June 3, 1993.
2. Subparagraph (a) of Paragraph 4 of the Certificate of Incorporation is
hereby amended by deleting the phrase "Two Million (2,000,000)" and
substituting in its place the phrase "Five Million (5,000,000)."
3. In accordance with Section 242 of the Delaware General Corporation Law,
the above statement of amendment has been duly approved by the board of
directors of Sunrise Technologies International, Inc. at a meeting duly
called and held on July 10, 1998, and by the stockholders of Sunrise
Technologies International, Inc. at the Annual Meeting of Stockholders
duly called and held on July 10, 1998. At the Annual Meeting, which was
held upon notice duly given in accordance with Section 222 of the
General Corporation Law of the State of Delaware, at least a majority of
the shares issued and outstanding on the record date for the meeting
constituting the requisite vote as required by statute were voted in
favor of the Amendment.
IN WITNESS WHEREOF, said SUNRISE TECHNOLOGIES INTERNATIONAL, INC. has
caused this Certificate to be signed by C. Russell Trenary, III, its President
and Chief Executive Officer, who does make this certificate and declares and
certifies under penalty of perjury that this is the act and deed of the
Corporation, and that the facts stated herein are true, and accordingly have set
his hand hereto this th day of , 1998.
SUNRISE TECHNOLOGIES
INTERNATIONAL, INC.
By:
------------------------------------
Name: C. Russell Trenary III
Title: President and Chief Executive
Officer
B-1
<PAGE> 20
PROXY
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
47265 FREMONT BLVD.
FREMONT, CA 94538
510-623-9001
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders to be held
July 10, 1998
The undersigned hereby appoints C. Russell Trenary, III and Timothy A.
Marcotte 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. (the "Company") which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at the Newark-Fremont Hilton Hotel, 39900 Balentine Drive, Newark, California
94560 on July 10, 1998, 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> 21
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4 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 DIRECTORS LISTED BELOW AND
VOTES FOR PROPOSALS 2, 3 AND 4.
1. PROPOSAL 1: To elect two Class II directors to hold office until the
Annual Meeting of Stockholders to be held in the year 2001.
FOR WITHHOLD
FOR ALL
[ ] [ ]
NOMINEES: Timothy A. Marcotte, Michael S. McFarland, M.D.
(INSTRUCTION: To withhold authority to vote for any nominee, write the
nominee's name in the space provided below.)
2. PROPOSAL 2: To ratify selection of Coopers & Lybrand L.L.P. as
independent public accountants of the Company for its fiscal year
ending December 31, 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL 3: To approve an amendment to the 1997 Stock Option Plan to
increase the number of shares of Common Stock available for issuance
thereunder by 3,000,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. PROPOSAL 4: To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Preferred
Stock from 2,000,000 to 5,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<TABLE>
<S> <C>
- -------------------------------- [ ]
I PLAN TO ATTEND THE MEETING
Please sign exactly as your name appears hereon. If the
stock is registered in the names of two or more persons,
Date: each should sign. Executors, administrators, trustees,
--------------------------- guardians or 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
- --------------------------------
Signature (if held jointly)
</TABLE>
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE WHICH
IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
