<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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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 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.
[ ] 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 Former Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
N/A
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<PAGE> 2
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
3400 WEST WARREN AVENUE
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, of Sunrise
Technologies International, Inc. ("Sunrise" and, together with its subsidiaries,
the "Company"), to be held on June 8, 2000 at 10:00 a.m., local time, at the
Fremont Marriott, located at 46100 Landing Parkway, Fremont, California 94538.
At the Annual Meeting, you will be asked to consider and vote upon the
following proposals:
1. 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 2003, or until his or her successor is elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the Company for the year ending December 31, 2000.
3. To approve the adoption of the 2000 Long-Term Equity Compensation Plan.
4. To approve the adoption of the 2000 Non-Employee Directors' Stock Option
Plan.
5. Such other business as may properly come before the 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 20, 2000 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
Chairman of the Board
Fremont, California
May 8, 2000
<PAGE> 3
SUNRISE ANNUAL MEETING
------------------------
PROXY STATEMENT
------------------------
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS (THE "BOARD") 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 JUNE 8, 2000 AT 10:00 A.M., LOCAL TIME, AT THE FREMONT
MARRIOTT LOCATED AT 46100 LANDING PARKWAY, FREMONT, CALIFORNIA 94538. 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 May 9, 2000.
At the Annual Meeting, holders of common stock of Sunrise ("Sunrise Stock")
will be asked to consider and vote upon the following proposals (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 2003, or until his or her successor is elected and qualified; (ii) to
ratify the appointment of PricewaterhouseCoopers LLP as independent accountants
for the Company for the year ending December 31, 2000, (iii) to approve the
adoption of the 2000 Long-Term Equity Compensation Plan; and (iv) to approve the
adoption of the 2000 Non-Employee Directors' Stock Option Plan.
RECORD DATE; VOTING
The Board has fixed the close of business on April 20, 2000 as 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 20, 2000, there were 46,462,246
shares of Sunrise Stock issued and outstanding, held of record by 866 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 affirmative vote of a plurality of the votes of the shares present in
person or represented by proxy, at the Annual Meeting, is required for election
of the nominees as Class I directors of the Company. The affirmative vote of a
majority of the votes cast at the Annual Meeting is required to approve the
other Proposals. Accordingly, abstentions and broker non-votes will not have any
effect on the Proposals.
REVOCABILITY OF PROXIES
If a person who has executed and returned a proxy is present at the meeting
and wishes to vote in person, he or she 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 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
$3,500 plus out-of-pocket expenses.
<PAGE> 4
ChaseMellon Shareholder Services LLC, transfer agent and registrar for the
Sunrise Stock, will be paid its customary fee, estimated to be $4,500.
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Sunrise
Stock as of April 1, 2000 by: (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Sunrise Stock;
(ii) each of the Company's directors; (iii) each of the Company's executive
officers; and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS(2) SHARES SHARES
------------------- --------- ----------
<S> <C> <C>
C. Russell Trenary, III(3)............................. 1,239,316 2.66%
John Hendrick(4)....................................... 100,000 *
Peter E. Jansen(5)..................................... 87,620 *
Paul M. Malin(6)....................................... 358,926 *
Jeannie G. Cecka(7).................................... 362,046 *
Richard T. VanRyne(8).................................. 293,310 *
Edward F. Coghlan(9)................................... 74,807 *
Joseph D. Koenig(10)................................... 166,738 *
Alan H. Magazine(11)................................... 17,190 *
Michael S. McFarland, M.D.(12)......................... 76,000 *
R. Dale Bowerman(13)................................... 100,350 *
All executive officers and directors as a group (11
persons)(14)......................................... 2,873,303 6.18%
</TABLE>
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* Less than one percent
(1) Based on information provided by each of the identified officers, directors
and stockholders.
(2) Unless otherwise indicated, the persons named in the table above have the
sole voting and investment power with respect to all shares beneficially
owned by them, subject to applicable community property laws. Unless
otherwise indicated, the address of each beneficial owner is: c/o Sunrise
Technologies International, Inc., 3400 West Warren Avenue, Fremont,
California 94538.
(3) Includes 1,095,862 shares that Mr. Trenary does not currently own, but
which he has the right to acquire within 60 days of April 1, 2000, pursuant
to outstanding options granted under the Company's stock option plan
("Options"), 22,857 shares associated with warrants granted in February
1997 and 66,666 shares pursuant to outstanding warrants granted in January
1999.
(4) Includes 100,000 shares that Mr. Hendrick does not currently own, but which
he has the right to acquire withing 60 days of April 11, 2000, upon
exercise of Options.
(5) Includes 87,500 shares that Mr. Jansen does not currently own, but which he
has the right to acquire within 60 days of April 1, 2000, upon exercise of
Options.
(6) Includes 345,282 shares that Mr. Malin does not currently own, but which he
has the right to acquire within 60 days of April 1, 2000, upon exercise of
Options and 16,666 shares pursuant to outstanding warrants granted in
January 1999.
(7) Includes 338,513 shares that Ms. Cecka does not currently own, but which
she has the right to acquire within 60 days of April 1, 2000, upon exercise
of Options and 16,666 shares pursuant to outstanding warrants granted in
January 1999.
(8) Includes 56,250 shares that Mr. VanRyne does not currently own, but which
he has the right to acquire within 60 days of April 1, 2000, upon exercise
of Options, 175,791 shares pursuant to outstanding warrants granted in
January 1999 and 20,000 shares pursuant to warrants granted in January 1998
held by an IRA over which Mr. VanRyne holds voting and investment power.
2
<PAGE> 5
(9) Includes 31,249 shares that Mr. Coghlan does not currently own but which he
has the right to acquire within 60 days of April 1, 2000, upon exercise of
Options and 43,228 shares pursuant to outstanding warrants granted in
January 1999.
(10) Includes 20,000 shares that Mr. Koenig does not currently own, but which he
has the right to acquire within 60 days of April 1, 2000, upon exercise of
Options, 18,738 shares he has the right to acquire within 60 days upon
conversion of a 12% convertible note and 60,000 shares that he may acquire
within 60 days upon exercise of warrants.
(11) Includes 40,000 shares that Mr. Magazine does not currently own, but which
he has the right to acquire within 60 days of April 1, 2000 upon exercise
of a warrant.
(12) Includes 70,000 shares that Dr. McFarland does not currently own, but which
he has the right to acquire within 60 days of April 1, 2000, upon exercise
of Options.
(13) Includes 50,000 shares that Mr. Bowerman does not currently own, but which
he has the right to acquire within 60 days of April 1, 2000, upon exercise
of Options.
(14) Includes 2,194,656 shares that such persons do not currently own, but which
they have the right to acquire within 60 days of April 1, 2000, upon
exercise of Options, 18,738 shares they may acquire within 60 days upon
conversion of 12% convertible notes, 102,857 shares they may acquire within
60 days upon exercise of warrants and 312,351 shares they may acquire
pursuant to outstanding warrants granted in January 1999.
PROPOSAL 1
ELECTION OF DIRECTORS
Sunrise's Certificate of Incorporation (the "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 I directors, each to serve until the annual
meeting of stockholders to be held in the year 2003 or until his or her
respective successor is elected and qualified. Alan H. Magazine was appointed to
the Board in February 2000 to fill a vacant position as a Class II director.
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 the
nominees named below (the "Nominees"), unless authority to vote for such
Nominees is specifically withheld. If any Nominee is unavailable for election,
such shares will be voted for the election of a substitute nominee that
management of Sunrise may propose. Each Nominee has agreed in writing to serve
as a director if elected.
3
<PAGE> 6
The following table provides information regarding the Nominees and the
continuing directors of Sunrise:
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION/POSITION
NAME AGE CLASSIFICATION HELD WITH THE COMPANY
---- --- -------------- -----------------------------
<S> <C> <C> <C>
NOMINEE:
R. Dale Bowerman........... 60 Class I Retired, former President of
SHA, LLC, an HMO doing business
as Firstcare
John Hendrick.............. 48 Class I Chief Operating Officer of
Sunrise
CONTINUING DIRECTORS:
Alan H. Magazine........... 56 Class II Consultant
(term expires 2001)
Michael S. McFarland, 49 Class II Ophthalmologist
M.D...................... (term expires 2001)
Joseph D. Koenig........... 70 Class III Chairman of the Board of Sunrise
(term expires 2002) and Consultant for Koenig
Associates, a management
consulting firm
C. Russell Trenary, III.... 42 Class III President and Chief Executive
(term expires 2002) Officer of Sunrise
</TABLE>
NOMINEES
Mr. Bowerman was appointed to the Board of Directors of Sunrise 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.
John Hendrick was nominated to serve as a member of the Board of Directors
in April 2000. Mr. Hendrick has served as Chief Operating Officer of Sunrise
since March 2000. From 1994 until 2000, he served as Chief Operating Officer of
VidaMed, Inc., a urological company developing treatments for benign prostate
hyperplasia. From 1990 until 1994, Mr. Hendrick served as Vice President of
Operations for Allergan Medical Optics, a division of Allergan, Inc. which
manufactures vision care products, where he was responsible for ophthalmic
product and process development, worldwide manufacturing and quality assurance.
CONTINUING DIRECTORS
Alan H. Magazine was appointed to the Board of Directors in February 2000.
Mr. Magazine is a consultant on management and governmental issues. From 1990 to
1999 Mr. Magazine served as President of the Health Industry Manufacturers
Association, a health industry trade association. Prior thereto, Mr. Magazine
served as President of the Council on Competitiveness. Mr. Magazine is also a
director of PLC Systems, Inc., which makes a carbon dioxide laser system for use
in the treatment of coronary artery disease.
Dr. McFarland was appointed to the Board of Directors of Sunrise 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 Association in 1992 for his development of sutureless
cataract surgery. Dr. McFarland has a B.S. degree from Hendrix College and a
M.D. degree from the University of Arkansas.
Mr. 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 consulting firm, since October 1985. Mr. Koenig is also a director of
Ancot
4
<PAGE> 7
Corporation, Hench Controls Corporation and ORISA Technologies, Inc. Mr. Koenig
has 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 of Directors of Sunrise.
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 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 eight meetings during the year ended December 31, 1999.
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 1999, 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 Dr. McFarland, Mr. Bowerman
and Mr. Koenig, met two times in 1999.
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, Mr.
Bowerman and Dr. McFarland, met one time during 1999.
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.
Non-employee directors are also eligible for reimbursement for their expenses
incurred in connection with attendance at Board meetings in accordance with
Sunrise's 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 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 1986,
as amended (the "Code"). As of April 1, 2000 there were no remaining
non-employee Directors' Options to purchase shares of Sunrise Stock.
In certain instances, non-employee directors have been granted additional
options. As of April 1, 2000, non-employee Directors had options to purchase an
additional 270,000 shares of Sunrise Stock which were outstanding and 170,000 of
such options were fully vested and exercisable.
5
<PAGE> 8
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The following persons currently serve as executive officers of Sunrise:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
C. Russell Trenary, III..... 42 President and Chief Executive Officer and Director
Peter E. Jansen............. 63 Vice President, Finance and Chief Financial Officer
John Hendrick............... 48 Chief Operating Officer
Jeannie G. Cecka............ 37 Vice President, Clinical and Regulatory Affairs
Paul M. Malin............... 46 Vice President, International Sales and Marketing and
Worldwide Business Development
Richard T. VanRyne.......... 53 Vice President, U.S. Sales and Marketing
</TABLE>
Mr. Jansen was appointed Vice President, Finance and Chief Financial
Officer of Sunrise on May 28, 1999. Prior to joining Sunrise, Mr. Jansen served
as Chief Financial Officer of CoCenSys, Inc., a biopharmaceutical company, from
1996 to 1998. From 1994 to 1996, Mr. Jansen served as Chief Executive Officer of
PhytoMedica Health Products, Inc., a biopharmaceutical company, and from 1992 to
1994, Mr. Jansen was Senior Vice President and Chief Financial Officer of
Genelabs Technologies, Inc., a biotechnology company. Prior thereto, from 1975
to 1992, Mr. Jansen held various financial executive positions with Abbott
Laboratories.
Ms. Cecka was appointed Vice President, Clinical and Regulatory Affairs of
Sunrise 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 Research 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 has an M.B.A. degree from Pepperdine University and a B.S.
degree from UC Irvine.
Mr. Malin was appointed Vice President, International Sales and Marketing
and Worldwide Business Development of Sunrise in September 1998. Prior to
joining Sunrise in May 1996, 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. VanRyne was appointed Vice President, U.S. Sales and Marketing of
Sunrise in September 1998. From August 1997 to September 1998, Mr. VanRyne was
Sunrise's Director of Sales and Marketing for the Americas. Prior to joining
Sunrise, Mr. VanRyne was the Director of New Business Development at MedLogic
Global Corporation, a manufacturer of wound healing products, from April 1996 to
August 1997. From April 1995 to April 1996, Mr. VanRyne was a consultant for
medical device marketing and educational strategy. From 1986 to April 1995, Mr.
VanRyne was employed by Allergan, Inc. in a variety of senior sales and
marketing positions.
For additional information regarding each of the executive officers of
Sunrise who is also a director, see "Proposal 1 -- Election of Directors" above.
6
<PAGE> 9
SUMMARY COMPENSATION
The following table sets forth certain compensation information earned
during the last three fiscal years by the Chief Executive Officer and the four
other most highly compensated executive officers of Sunrise serving as executive
officers at December 31, 1999 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1)(2)(3) COMPENSATION(4)
--------------------------- ---- -------- -------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
C. Russell Trenary, III....... 1999 $323,380 $150,000 700,000 $13,590
President and 1998 $233,428 $125,000 386,000 $ 1,500
Chief Executive Officer 1997 $191,906 $ 20,000 776,500 $ 1,425
Jeannie G. Cecka.............. 1999 $153,392 $ 60,000 125,000 $ 2,148
Vice President, Clinical 1998 $131,778 $ 46,200 116,000 $ 988
and Regulatory Affairs 1997 $108,938 $ 15,000 317,700 $ 930
Robert A. Haddad(5)........... 1999 $171,224 $ 50,000 150,000 $ 2,316
Vice President, Operations 1998 $155,000 $ 52,800 116,000 $ 1,500
and Product Development 1997 $105,538 $ 25,000 392,700 $ 814
Paul M. Malin................. 1999 $142,330 $ 28,000 80,000 $ 9,209
Vice President,
International 1998 $136,782 $ 46,200 116,000 $ 1,500
Worldwide Business 1997 $127,917 $ 25,000 292,700 $ 1,425
Development
Richard VanRyne(6)............ 1999 $153,224 $ 55,000 527,000 $ 2,331
Vice President, Domestic 1998 $125,795 -- 30,000 $ 1,500
Sales and Marketing 1997 $ 33,333 -- 60,000 --
</TABLE>
- ---------------
(1) Securities are shares of Sunrise Stock underlying Options granted under
Sunrise's stock option plans and warrants issued in January 1999.
(2) Sunrise has not issued any restricted stock or stock appreciation rights and
has no other long-term incentive plans.
(3) The vesting of the Options accelerates upon a change of control. See
"Summary of Amended and Restated Change of Control Agreements" below.
(4) Includes Sunrise matching contributions on amounts electively deferred by
each Named Executive Officer under Sunrise's 401(k) plan and athletic club
dues, and with respect to Mr. Trenary, a car allowance.
(5) Mr. Haddad began employment with the Company in March 1997. Mr. Haddad's
employment with the Company terminated on April 18, 2000.
(6) Mr. VanRyne began employment with the Company in August 1997.
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"), the 1997 Stock Option Plan (the "1997 Plan") and the 1999
Long-Term Equity Compensation Plan (the "1999 Plan"). As of April 1, 2000,
Options to purchase an aggregate of 5,789,182 shares of Sunrise Stock were
outstanding under the 1988, 1997 and 1999 Plans. In addition, 907,000 warrants
to purchase shares of Sunrise Stock were granted to employees in January 1999.
7
<PAGE> 10
The following tables set forth certain information regarding Options
granted to and held by the Named Executive Officers in 1999.
OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE APPRECIATION FOR
SECURITIES GRANTED TO STOCK OPTION TERM(2)
UNDERLYING EMPLOYEES EXERCISE EXPIRATION -----------------------------
NAME OPTIONS(1) IN 1999 PRICE DATE 5% 10%
---- ---------- ---------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. Russell Trenary, III......... 500,000 20.50% $11.813 12/31/09 $3,714,200 $9,412,850
Jeannie G. Cecka................ 75,000 3.08% $11.813 12/31/09 $ 557,130 $1,411,928
Paul M. Malin................... 50,000 2.05% $11.813 12/31/09 $ 371,420 $ 941,285
Robert A. Haddad................ 75,000 3.08% $11.813 12/31/09 $ 557,130 $1,411,928
Richard VanRyne................. 75,000 3.08% $11.813 12/31/09 $ 557,130 $1,411,928
</TABLE>
- ---------------
(1) Options generally become exercisable, subject to a deferral of
exercisability in certain circumstances to preserve their qualification as
incentive stock options, at a rate of 25% of the underlying shares of
Sunrise Stock on the first anniversary following the grant date and 1/36 of
the remaining underlying shares vesting each month thereafter.
(2) The 5% and 10% assumed rates of appreciation applied to the fair market
value of the Sunrise Stock over the term of the Option are prescribed by the
rules of the Securities and Exchange Commission (the "Commission") and do
not represent Sunrise's estimate or projection of the future price of the
Sunrise Stock.
AGGREGATE YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR-END(1) YEAR-END($)(2)(3)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
C. Russell Trenary, III........ 400,372/1,848,128 $4,081,147/$10,060,769
Jeannie G. Cecka............... 147,159/486,541 $1,396,982/$2,826,673
Paul M. Malin.................. 158,865/429,835 $1,557,415/$2,621,541
Robert A. Haddad............... 40,472/475,356 $358,703/$2,815,261
Richard VanRyne................ 183,958/433,042 $1,275,512/$2,326,843
</TABLE>
- ---------------
(1) For certain Named Executive Officers, a portion of the Options that are
listed as unexercisable are vested and will become exercisable for a given
Named Executive Officer in the first calendar year that the $100,000 per
year limitation under Section 422 of the Code is not exceeded.
(2) 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.
(3) Amounts equal the closing price of Sunrise Stock on December 31, 1999
($11.8125 per share) less the option exercise price, multiplied by the
number of shares exercisable or unexercisable.
SUMMARY OF STOCKHOLDER RIGHTS PLAN
The Board adopted a Stockholder Rights Plan (the "Rights Plan") in which
common stock purchase rights (each, a "Right") were distributed as a dividend at
the rate of one Right for each share of Sunrise Stock held by stockholders of
record as of the close of business on October 24, 1997. The Rights will be
exercisable only if a person or group acquires beneficial ownership of 15% or
more of Sunrise Stock, or commences a tender or exchange offer upon consummation
of which such person or group would beneficially own 15% or more of Sunrise
Stock. The Rights Plan expires on October 24, 2007.
8
<PAGE> 11
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 certain of
the Named Executive Officers. 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. The Change of 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee of the Board was, during
the last fiscal year, an officer or employee of the Company, and there were no
interlocking arrangements requiring disclosure where, for example, an executive
officer of the Company served as a member of the compensation committee of
another entity, one of whose executive officers served on the Compensation
Committee of the Company.
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
development stage 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, 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. During 1999, Mr. Trenary
managed the Company during a challenging Food
9
<PAGE> 12
and Drug Administration ("FDA") pre-approval process. Under his leadership, the
Company (1) successfully filed an amended pre market approval application that
resulted in the FDA Ophthalmic Device Panel's determination to recommend that
the FDA approve Sunrise's application, (2) raised $10,000,000 in additional
financing, and (3) set the stage for the Company to commence manufacturing of
the Sunrise Hyperion Laser upon FDA approval.
Effective as of January 1, 1999, Mr. Trenary's 1999 compensation package
consisted of a salary of $325,000 and a bonus of $150,000. During 1999, the
Compensation Committee determined to increase Mr. Trenary's equity position in
Sunrise by granting him warrants to purchase 200,000 shares of stock at a price
of $5.94 per share. The Compensation Committee believes that Mr. Trenary's
salary puts him in the top half of salaries when compared to Chief Executive
Officers in peer companies as stated in a compensation report prepared by
AON/Radford Associates. This report details cash, bonus and stock option awards
for executives in similarly situated companies. The Compensation Committee has
chosen to continue Mr. Trenary's automobile and related expenses, not to exceed
$1,000 per month, and an allowance for club dues for business purposes.
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. It is our goal to have as much compensation paid to Sunrise's five most
highly compensated offices as possible qualify as deductible performance based
compensation. We have structured our compensation plans so that amounts paid
under those plans will be deductible. However, it is possible that some
compensation we pay cannot be deducted. Based on the complexity of managing an
enterprise such as Sunrise, the tight market for talented executives and the
rapid changes we expect in our industry, we nevertheless feel our compensation
structure is appropriate.
Submitted by:
The Compensation Committee
Joseph D. Koenig
R. Dale Bowerman
Michael S. McFarland, M.D.
February 17, 2000
THE BOARD UNANIMOUSLY RECOMMENDS AND NOMINATES EACH OF R. DALE BOWERMAN AND
JOHN HENDRICK FOR ELECTION AS A CLASS I DIRECTOR OF SUNRISE BY THE STOCKHOLDERS
AT THE ANNUAL MEETING TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD IN THE YEAR 2003, OR AS OTHERWISE PROVIDED IN THE CERTIFICATE.
Vote Required. The affirmative vote of a plurality of the votes of the
shares present in person or represented by proxy, at a meeting at which a quorum
is present, is required for election of the nominees as Class I directors.
10
<PAGE> 13
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,
1999, assuming dividend reinvestment.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
SUNRISE TECHNOLOGIES HAMBRECHT & QUIST TECH NASDAQ COMPOSITE US
-------------------- ---------------------- -------------------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
12/31/95 108.00 149.00 140.00
12/31/96 58.00 185.00 172.00
12/31/97 229.00 216.00 209.00
12/31/98 396.00 336.00 292.00
12/31/99 788.00 749.00 541.00
</TABLE>
- ---------------
Source: Beacon Hill Partners, Inc. www.bhpweb.com (212) 843-8500. Data from
Bloomberg Financial Markets.
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 1999 were
timely filed.
CERTAIN TRANSACTIONS
In December 1998, Sunrise completed a private placement of $11,800,000 of
Sunrise Stock priced at $3.50 per share. Portions of the gross proceeds were
evidenced by promissory notes bearing interest at a rate of 9% per annum due on
March 15, 1999. One Sunrise stockholder with beneficial ownership of more than
5% of Sunrise Stock as of March 22, 1999, Dr. David C. Brown, purchased
$2,000,000 of the shares through the issuance of a promissory note, which note
was repaid as of March 22, 1999. On March 21, 2000, Sunrise loaned $100,000 to
John Hendrick. This loan bears interest at an annual rate equal to 6.45% and
matures on March 22, 2003. This loan will be forgiven if Mr. Hendrick is
employed by Sunrise on March 21, 2003.
11
<PAGE> 14
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Sunrise has selected and intends to appoint PricewaterhouseCoopers LLP
("PWC") as Sunrise's independent accountants for the fiscal year ending December
31, 2000. PWC served as the principal independent accountants for Sunrise in
1999. Services provided to Sunrise by PWC in fiscal 1999 included the
examination of Sunrise's consolidated financial statements, limited reviews of
quarterly reports and services related to filings with the Commission.
Representatives of PWC 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 PWC;
however, the Audit Committee or the Board may determine, in their discretion and
without seeking approval from the stockholders of Sunrise, to change Sunrise's
accountants if the Audit Committee or Board determines it to be in the interests
of Sunrise and the stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS APPOINTMENT OF PRICEWATERHOUSE-COOPERS LLP
AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31,
2000.
Vote Required. The affirmative vote of a majority of the votes cast,
excluding abstentions and broker non-votes, at a meeting at which a quorum is
present is required to ratify the foregoing proposal.
PROPOSAL 3
APPROVAL OF THE 2000 LONG-TERM EQUITY COMPENSATION PLAN
Sunrise's success depends, in large measure, on its ability to recruit and
retain key employees, consultants and non-employee directors with outstanding
ability and experience. The Board also believes there is a need to align
stockholder and employee interests by encouraging employee stock ownership and
to motivate employees with compensation conditioned upon achievement of
Sunrise's financial goals. In order to accomplish these objectives, the Board
has adopted, and recommends that the stockholders approve, the Sunrise
Technologies International, Inc. 2000 Long-Term Equity Compensation Plan (the
"ECP"). The ECP is being presented to stockholders for approval in order to
assure federal income tax deductibility of certain amounts paid under the ECP to
certain executives.
The ECP is intended to replace Sunrise's 1999 Stock Option Plan, which does
not have a sufficient number of shares available to make stock option grants to
participating employees in 2000. Sunrise has continuously maintained an employee
stock option plan and made periodic grants to key employees thereunder since
1988. The Board believes that the existence of these plans has been of
substantial benefit to Sunrise by allowing Sunrise to compensate its key
employees in a manner that closely aligns the interests of management with the
interests of Sunrise's stockholders.
SUMMARY DESCRIPTION OF THE ECP
The following summary of the terms of the ECP is qualified in its entirety
by reference to the text of the plan, which is attached as Annex A to this Proxy
Statement. The ECP was adopted effective as of April 13, 2000, subject to
stockholder approval.
ADMINISTRATION
The ECP will be administered by the Compensation Committee of the Board.
ELIGIBILITY
Officers, key employees, consultants and non-employee directors of Sunrise
are eligible to participate in the ECP. As the ECP provides for broad discretion
in selecting participants and in making awards, the total
12
<PAGE> 15
number of persons who will participate and the respective benefits to be
accorded to them cannot be determined at this time.
STOCK AVAILABLE FOR ISSUANCE THROUGH THE ECP
The ECP provides for a number of forms of stock-based compensation, as
further described below. Up to 2,300,000 shares of Sunrise Stock are authorized
for issuance through the ECP. Shares issued under the ECP may be authorized but
unissued shares. Provisions in the ECP permit the reuse or reissuance by the ECP
of shares of common stock underlying canceled, expired or forfeited awards of
stock-based compensation. On April 20, 2000, the closing price for Sunrise Stock
on the Nasdaq National Market System was $7.00.
Stock-based compensation will typically be issued in consideration for the
performance of services to Sunrise. At the time of exercise, the full exercise
price for a stock option must be paid in cash or, if the Compensation Committee
so provides, in shares of common stock, by cashless exercise or by certain other
means designated by the Compensation Committee.
DESCRIPTION OF AWARDS UNDER THE PLAN
The Compensation Committee may award to eligible participants incentive and
nonqualified stock options, stock appreciation rights, restricted stock and
performance units/performance shares. As separately described under "Performance
Measures," the Compensation Committee may also grant awards subject to
satisfaction of specific performance goals. The forms of awards are described in
greater detail below.
STOCK OPTIONS
The Compensation Committee will have discretion to award incentive stock
options ("ISOs"), which are intended to comply with Section 422 of the Code, or
nonqualified stock options ("NQSOs"), which are not intended to comply with
Section 422 of the Code. Each option issued under the ECP must be exercised
within a period of ten years from the date of the grant, and the exercise price
of an option may not be less than the fair market value of the underlying shares
of common stock on the date of grant. If an award of stock options or stock
appreciation rights is intended to qualify as performance-based compensation
under Section 162(m) of the Code, the maximum number of shares which may be
subject to stock options with or without tandem stock appreciation rights, or
freestanding stock appreciation rights, granted in any calendar year to any one
participant is 1,000,000. Subject to the specific terms of the ECP, the
Compensation Committee will have discretion to set such additional limitations
on such grants as it deems appropriate.
Options granted to participants under the ECP will expire at such times as
the Compensation Committee determines at the time of the grant; provided,
however, that no option will be exercisable later than ten years from the date
of grant. Each option award agreement will set forth the extent to which the
participant will have the right to exercise the option following termination of
the participant's employment with the Company. The termination provisions will
be determined within the discretion of the Compensation Committee, may not be
uniform among all participants and may reflect distinctions based on the reasons
for termination of employment.
Upon the exercise of an option granted under the ECP, the option price is
payable in full to the Company by the participant, in a form so determined by
the Compensation Committee, either: (a) in cash or its equivalent; (b) by
tendering shares of Sunrise Stock having a fair market value at the time of
exercise equal to the total option price (provided such shares have been held
for at least six months prior to their tender); (c) by withholding Sunrise Stock
which otherwise would be acquired on exercise having a Fair Market Value at the
time of exercise equal to the total option price; (d) by promissory note; or (e)
by any combination of the foregoing methods of payment. The Compensation
Committee may also allow options granted under the ECP to be exercised by a
cashless exercise, as permitted under Federal Reserve Board Regulation T, or any
other means the Compensation Committee determines to be consistent with the
ECP's purpose and applicable law.
13
<PAGE> 16
STOCK APPRECIATION RIGHTS
The Compensation Committee may also award stock appreciation rights
("SARs") under the ECP upon such terms and conditions as it shall establish. The
exercise price of a freestanding SAR shall equal the fair market value of a
share of Sunrise Stock on the date of grant, while the exercise price of a
tandem SAR issued in connection with a stock option shall equal the option price
of the related option. If an award of SARs is intended to qualify as
performance-based compensation under Section 162(m) of the Code, the maximum
number of shares which may be subject to SARs is described above under "Stock
Options."
RESTRICTED STOCK
The Compensation Committee also may award shares of restricted Sunrise
Stock under the ECP upon such terms and conditions as it shall establish. If an
award of restricted Sunrise Stock is intended to qualify as performance-based
compensation under Section 162(m) of the Code, the maximum number of shares
which may be granted in the form of restricted Sunrise Stock in any one calendar
year to any one participant is 200,000. The award agreement will specify the
period(s) of restriction, the number of shares of restricted Sunrise Stock
granted, restrictions based upon the achievement of specific performance
objectives and/or restrictions under applicable federal or state securities
laws. Although recipients may have the right to vote these shares from the date
of grant, they will not have the right to sell or otherwise transfer the shares
during the applicable period of restriction or until earlier satisfaction of
other conditions imposed by the Compensation Committee in its sole discretion.
Participants may receive dividends on their shares of restricted Sunrise Stock
and the Compensation Committee, in its discretion, will determine how any such
dividends are to be paid.
Each award agreement for restricted Sunrise Stock will set forth the extent
to which the participant will have the right to retain unvested restricted
Sunrise Stock following termination of the participant's employment or
consulting arrangement with the Company. These provisions will be determined in
the sole discretion of the Compensation Committee, need not be uniform among all
shares of restricted Sunrise Stock issued pursuant to the ECP and may reflect
distinctions based on reasons for termination of employment. Except in the case
of terminations by reason of death, disability or retirement, the vesting of
restricted stock which qualifies for performance-based compensation under
Section 162(m) of the Code and which are held by "covered employees" under
Section 162(m) of the Code shall occur at the time it otherwise would have, but
for the employment termination.
PERFORMANCE UNITS/SHARES
The Compensation Committee has the discretion to award performance units
and performance shares under the ECP upon such terms and conditions as it shall
establish. If an award of performance units or performance shares is intended to
qualify as performance-based compensation under Section 162(m) of the Code, the
maximum aggregate payout for awards of performance units or performance shares
which may be granted in any one calendar year to any one participant shall be
the fair market value of 200,000 shares of Sunrise Stock. Performance units will
have an initial value as determined by the Compensation Committee while the
performance share will have an initial value equal to one share of Sunrise
Stock. The payout on the number and value of the performance units and
performance shares will be a function of the extent to which corresponding
performance goals are met.
PERFORMANCE MEASURES
The Compensation Committee may grant awards under the ECP to eligible
participants subject to the attainment of certain specified performance
measures. The number of performance-based awards granted to a participant in any
year is determined by the Compensation Committee in its sole discretion.
The value of each performance-based award shall be determined solely upon
the achievement of certain pre-established objective performance goals during
each performance period (the "Performance Period"). The duration of a
Performance Period will be set by the Compensation Committee. A new Performance
14
<PAGE> 17
Period may begin every year, or at more frequent or less frequent intervals, as
determined by the Compensation Committee.
The Compensation Committee shall establish, in writing, the objective
performance goals applicable to the valuation of performance-based awards
granted in each Performance Period, the performance measures which shall be used
to determine the achievement of those performance goals, and any formulas or
methods to be used to determine the value of the performance-based awards.
The value of performance-based awards may be based on absolute measures or
on a comparison of the Company's financial measures during a Performance Period
to the financial measures of a group of competitors. The performance measures
are net income either before or after taxes, market share, customer
satisfaction, profits, share price, earnings per share, total stockholder
return, return on assets, return on equity, operating income, return on capital
or investments, and economic value added.
Following the end of a Performance Period, the Compensation Committee shall
determine the value of the performance-based awards granted for the period based
on the attainment of the preestablished objective performance goals. The
Compensation Committee shall also have discretion to reduce (but not to
increase) the value of a performance-based award.
The Compensation Committee will certify, in writing, that the award is
based on the degree of attainment of the pre-established objective performance
goals. As soon as practicable thereafter, payment of the awards to participants,
if any, shall be made in the form of shares of Sunrise Stock or cash, as
applicable.
CONDITIONS TO AWARD PAYMENTS
All rights of a participant under any award under the ECP will cease on and
as of a date on which it is determined by the Compensation Committee that a
participant acted in a manner inimical to the best interests of the Company.
Participants who terminate employment with the Company for any reason other than
death while any award under the ECP remains outstanding, shall receive such
shares or benefit only if, during the entire period from his or her date of
termination to the date of such receipt, the participant shall: (i) consult and
cooperate with the Company on matters under his or her supervision during the
participant's employment; and (ii) refrain from engaging in any activity that is
directly or indirectly in competition with any activity of the Company. In the
event a participant fails to comply with such requirement, the participant's
rights under any outstanding award shall be forfeited unless otherwise provided
by the Company.
ADJUSTMENT AND AMENDMENTS
The ECP provides for appropriate adjustments in the number of shares of
Sunrise Stock subject to awards and available for future awards in the event of
changes in outstanding Sunrise Stock by reason of a merger, stock split or
certain other events.
The ECP may be modified or amended by the Board at any time and for any
purpose which the Board deems appropriate. However, no such amendment shall
adversely affect any outstanding awards without the affected holder's consent.
CHANGE IN CONTROL
In the event of a change in control, all Options and SARs granted under the
ECP shall become immediately exercisable, restriction periods and other
restrictions imposed on restricted Sunrise Stock which is not performance-based
shall lapse, and the target payout opportunities attainable under all
outstanding awards of performance-based restricted Sunrise Stock, performance
shares and performance units shall be deemed to have been fully earned for the
entire performance period as of the effective date of the change in control. The
vesting of such awards shall be accelerated.
15
<PAGE> 18
NONTRANSFERABILITY
No derivative security (including, without limitation, options) granted
pursuant to, and no right to payment under, the ECP shall be assignable or
transferable by a participant except by will or by the laws of descent and
distribution, and any option or similar right shall be exercisable during a
participant's lifetime only by the participant or by the participant's guardian
or legal representative. These limitations may be waived by the Compensation
Committee, subject to restrictions imposed under the Commission's short-swing
trading rules and federal tax requirements relating to incentive stock options.
DURATION OF THE PLAN
The ECP will remain in effect until all options and rights granted
thereunder have been satisfied or terminated pursuant to the terms of the plan,
and all performance periods for performance-based awards granted thereunder have
been completed. However, in no event will an award be granted under the ECP on
or after April 12, 2010.
FEDERAL INCOME TAX CONSEQUENCES
Options
With respect to options which qualify as ISOs, an ECP participant will not
recognize income for federal income tax purposes at the time options are granted
or exercised, and Sunrise will not be entitled to a deduction with respect to
the granting or exercise of such an option except in the limited circumstances
discussed below. If the participant disposes of shares acquired by exercise of
an ISO either before the expiration of two years from the date the options are
granted or within one year after the issuance of shares upon exercise of the ISO
(the "holding periods"), the participant will recognize in the year of
disposition: (a) ordinary income, to the extent that the fair market value of
the shares on the date of option exercise exceeds the option price; and (b)
capital gain, to the extent the amount realized on disposition exceeds the fair
market value of the shares on the date of option exercise. In addition, if the
holding periods are not met, Sunrise will be entitled to a deduction
corresponding to the ordinary income amount recognized by the participant. If
the shares are sold after expiration of the holding periods, the participant
generally will recognize capital gain or loss equal to the difference between
the amount realized on disposition and the option price.
With respect to NQSOs, the participant will not recognize any income and
Sunrise will not be entitled to a deduction upon grant of the option. Upon
exercise, the participant will recognize ordinary income, and Sunrise will be
entitled to a corresponding deduction, in an amount equal to the excess of the
fair market value of the shares on the date of option exercise over the amount
paid by the participant for the shares. Upon a subsequent disposition of the
shares received under the option, the participant generally will recognize
capital gain or loss to the extent of the difference between the fair market
value of the shares at the time of exercise and the amount realized on the
disposition.
SARS
The recipient of a grant of SARs will not realize taxable income and
Sunrise will not be entitled to a federal income tax deduction with respect to
such grant on the date of such grant. Upon the exercise of an SAR, the recipient
will realize ordinary income, and Sunrise will generally be entitled to a
corresponding deduction, equal to the amount of cash received.
Restricted Stock
A participant holding restricted Sunrise Stock will, at the time the shares
vest, realize ordinary income in an amount equal to the fair market value of the
shares and any cash received at the time of vesting, and Sunrise will generally
be entitled to a corresponding deduction for federal income tax purposes.
Dividends paid to the participant on the restricted Sunrise Stock during the
restriction period will generally be ordinary income to the participant and
deductible as such by the Company.
16
<PAGE> 19
Performance Units, Performance Shares
The recipient of a grant of performance units or performance shares will
not realize taxable income and Sunrise will not be entitled to a deduction with
respect to such grant on the date of such grant. Upon the payout of such award,
the recipient will realize ordinary income and Sunrise will generally be
entitled to a corresponding deduction, equal to the amount of cash or stock
received.
Section 162(m)
Under Section 162(m) of the Code, compensation paid by Sunrise in excess of
$1,000,000 for any taxable year to "covered employees" generally is deductible
by Sunrise for federal income tax purposes if it is based on the performance of
Sunrise, is paid pursuant to a plan approved by Sunrise's stockholders, and
meets certain other requirements. Generally, "covered employees" under Section
162(m) of the Code means the chief executive officer and the four other highest
paid executive officers of Sunrise as of the last day of the taxable year.
It is presently anticipated that the Compensation Committee will at all
times consist of "outside directors" as required for purposes of Section 162(m)
of the Code, and that the Compensation Committee will take the effect of Section
162(m) of the Code into consideration in structuring ECP awards.
OPTIONS GRANTED TO EXECUTIVE GROUP
On March 14, 2000 John Hendrick, an executive officer, received a grant of
options to purchase 500,000 shares of Common Stock, subject to shareholder
approval of the 2000 Long-Term Equity Compensation Plan.
OPTIONS GRANTED TO NON-EXECUTIVE OFFICER EMPLOYEE GROUP
Non-executive officer employees received grants of options to purchase
547,300 shares of Common Stock subject to stockholder approval of the 2000
Long-Term Equity Compensation Plan.
The table below sets forth the determinable benefits that would be granted
under the 2000 Long-Term Equity Compensation Plan for employees if the
stockholders approve that plan:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
2000 LONG-TERM EQUITY
COMPENSATION PLAN
------------------------------
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
----------------- ------------ ---------------
<S> <C> <C>
C. Russell Trenary, III, President and Chief Executive
Officer.................................................. -- --
Jeannie G. Cecka, Vice President, Clinical and Regulatory
Affairs.................................................. -- --
Robert A. Haddad, Vice President, Operations and Product
Development.............................................. -- --
Paul M. Malin, Vice President, International World Wide
Business Development..................................... -- --
Richard VanRyne, Vice President, Domestic Sales and
Marketing................................................ -- --
Executive Group............................................ (1) 500,000
Non-Executive Director Group............................... -- --
Non-Executive Officer Employee Group....................... (2) 547,300
</TABLE>
- ---------------
(1) Mr. Hendrick's shares have an exercise price of $7.5625.
(2) Includes 3,500 shares at an exercise price of $11.500, 104,300 shares at an
exercise price of $7.125, 47,500 shares at an exercise price of $8.438,
142,000 shares at an exercise price of $8.250, 4,500 shares at an exercise
price of $7.5625, 105,000 shares at an exercise price of $7.0469, 140,500
shares at an exercise price of $6.5625.
17
<PAGE> 20
THE BOARD UNANIMOUSLY RECOMMENDS THE APPROVAL OF THE 2000 LONG-TERM EQUITY
COMPENSATION PLAN.
Vote Required. The affirmative vote of a majority of the votes cast,
excluding abstentions and broker non-votes, at a meeting at which a quorum is
present, is required to adopt the foregoing proposal.
PROPOSAL 4
APPROVAL OF THE 2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
It is imperative to the success of Sunrise that it attract and retain
highly skilled, experienced and accomplished non-employee directors. To
accomplish this, the Board has adopted, and recommends that the stockholders
approve, the Sunrise Technologies International, Inc. 2000 Non-Employee
Directors' Stock Option Plan (the "SOP").
The SOP is intended to replace Sunrise's 1994 Non-Employee Directors' Stock
Option Plan, which has no shares available to make stock option grants to
participating directors in 2000 and beyond. The Board believes the existence of
these plans have been of substantial benefit to Sunrise by providing incentives
to non-employee directors to increase the value of Sunrise Stock.
SUMMARY DESCRIPTION OF THE SOP
The following summary of the terms of the SOP is qualified in its entirety
by reference to the text of the plan, which is attached as Annex B to this Proxy
Statement. The SOP was adopted effective as of April 13, 2000, subject to
stockholder approval.
ADMINISTRATION
The SOP will be administered by the Board. The Board may not delegate
administration of the SOP to a committee of the Board.
ELIGIBILITY
Non-employee directors of Sunrise are eligible to participate in the SOP.
Sunrise presently has four non-employee directors.
STOCK AVAILABLE FOR ISSUANCE THROUGH THE SOP
The SOP provides for the grants of stock options, as further described
below. Up to 240,000 shares, plus an annual increase of 60,000 shares each
January 1, beginning January 1, 2001, of Sunrise Stock are authorized for
issuance through the SOP. Shares issued under the SOP may be either authorized
but unissued shares or reacquired shares, bought on the market or otherwise.
Provisions in the SOP permit the reuse or reissuance by the SOP of shares of
Sunrise Stock underlying canceled, expired or forfeited awards of stock options.
On April 20, 2000, the closing price for Sunrise Stock on the Nasdaq National
Market System was $7.00.
DESCRIPTION OF AWARDS UNDER THE PLAN
The Board will have discretion to award nonqualified stock options
("Options"), which are not intended to comply with Section 422 of the Code. Each
Option issued under the SOP shall vest in consecutive monthly installments at a
rate of 1/36 of the total number of shares subject to each Option, must be
exercised within a period of ten years from the date of the grant, and the
exercise price of which may not be less than the fair market value of the
underlying shares of Sunrise Stock on the date of grant.
A participant whose service as a non-employee director terminates for any
reason other than death or disability while awarded Options remained
unexercised, may exercise his or her Options before the earlier of three months
after such termination or the expiration of the term of the Option. Generally,
if a participant's
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<PAGE> 21
service as a non-employee director terminates due to either disability or death,
then the participant may exercise any unexercised Options before the earlier of
twelve months after such termination of service or the expiration of the term of
the Option.
Upon the exercise of an Option granted under the SOP, the option price is
payable in full to Sunrise by the participant, either: (a) in cash or check; or
(b) by tendering shares of Sunrise Stock having a fair market value at the time
of exercise equal to the total option price (provided generally that such shares
have been held for at least six months prior to their tender). The Board may
also allow options granted under the SOP to be exercised by a cashless exercise,
as permitted under Federal Reserve Board Regulation T.
NON-DISCRETIONARY AWARDS
The Board shall grant each person who is elected or appointed for the first
time to be a non-employee director an Option to purchase 60,000 shares of
Sunrise Stock. Additionally, the Board shall grant each non-employee director an
Option to purchase 60,000 shares of Sunrise Stock at each three year anniversary
of the date of the initial grant of an Option pursuant to the SOP to such
non-employee director, provided that such non-employee director is still a
non-employee director.
ADJUSTMENT AND AMENDMENTS
The SOP provides for appropriate adjustments in the number of shares of
Sunrise Stock subject to awards and available for future awards in the event of
changes in outstanding Sunrise Stock by reason of a merger, stock split or
certain other events.
The SOP may be modified or amended by the Board at any time and for any
purpose which the Board deems appropriate. However, no such amendment shall
adversely affect any outstanding awards without the affected holder's consent.
CHANGE IN CONTROL
In the event of a change in control, all Options granted under the SOP
shall become immediately vested and exercisable.
TRANSFERABILITY
An Option shall be assignable or transferable by a participant by will or
the laws of descent and distribution In certain instances, an Option shall be
assignable or transferable by a participant by instrument to an inter vivos
testamentary trust or by gift to a family member. An Option shall be exercisable
during a participant's lifetime only by the participant or the participant's
permitted assignee and, in the event of the death of such participant, a third
party designated by the participant. These limitations may be waived by the
Board, subject to restrictions imposed under the Commission's short-swing
trading rules and federal tax requirements relating to incentive stock options.
DURATION OF THE PLAN
The SOP will remain in effect until terminated or suspended by the Board.
FEDERAL INCOME TAX CONSEQUENCES
Options
With respect to Options, the participant will not recognize any income and
Sunrise will not be entitled to a deduction upon grant of the Option. Upon
exercise, the participant will recognize ordinary income, and Sunrise will be
entitled to a corresponding deduction, in an amount equal to the excess of the
fair market value of the shares on the date of Option exercise over the amount
paid by the participant for the shares. Upon a subsequent disposition of the
shares received under the Option, the participant generally will recognize
capital
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<PAGE> 22
gain or loss to the extent of the difference between the fair market value of
the shares at the time of exercise and the amount realized on the disposition.
THE BOARD UNANIMOUSLY RECOMMENDS THE APPROVAL OF THE 2000 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN.
Vote Required. The affirmative vote of a majority of the votes cast,
excluding abstentions and broker non-votes, at a meeting at which a quorum is
present, 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 next annual
meeting of stockholders, proposals must be received by Sunrise no later than
January 9, 2001. Any such proposals should be directed to the Secretary of
Sunrise.
By Order of the Board
JOSEPH D. KOENIG
Chairman of the Board
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<PAGE> 23
ANNEX A
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
2000 LONG-TERM
EQUITY COMPENSATION PLAN
ESTABLISHED AS OF APRIL 13, 2000
<PAGE> 24
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
2000 LONG-TERM EQUITY COMPENSATION PLAN
ESTABLISHED AS OF APRIL 13, 2000
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION...................... 1
ARTICLE 2. DEFINITIONS................................................. 1
ARTICLE 3. ADMINISTRATION.............................................. 3
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS............... 3
ARTICLE 5. ELIGIBILITY AND PARTICIPATION............................... 4
ARTICLE 6. STOCK OPTIONS............................................... 4
ARTICLE 7. STOCK APPRECIATION RIGHTS................................... 6
ARTICLE 8. RESTRICTED STOCK............................................ 7
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES.................... 8
ARTICLE 10. PERFORMANCE MEASURES........................................ 9
ARTICLE 11. BENEFICIARY DESIGNATION..................................... 9
ARTICLE 12. DEFERRALS................................................... 10
ARTICLE 13. RETENTION RIGHTS............................................ 10
ARTICLE 14. AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS........ 10
ARTICLE 15. PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON............... 11
ARTICLE 16. CHANGE IN CONTROL........................................... 11
ARTICLE 17. WITHHOLDING................................................. 12
ARTICLE 18. INDEMNIFICATION............................................. 12
ARTICLE 19. SUCCESSORS.................................................. 13
ARTICLE 20. LEGAL CONSTRUCTION.......................................... 13
</TABLE>
i
<PAGE> 25
ARTICLE 1.
ESTABLISHMENT, OBJECTIVES AND DURATION
a. Establishment of the Plan. Sunrise Technologies International, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), hereby
establishes an incentive compensation plan to be known as the "Sunrise
Technologies International, Inc. 2000 Long-Term Equity Compensation Plan"
(hereinafter referred to as the "Plan"), as set forth in this document. The Plan
permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Performance Units.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 13, 2000 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 hereof.
b. Objectives of the Plan. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's goals and which link the personal interests of Participants
to those of the Company's stockholders; to provide Participants with an
incentive for excellence in individual performance; and to promote teamwork
among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
c. Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 14 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after April 12, 2010.
ARTICLE 2.
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
a. "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations of the Exchange Act.
b. "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares or Performance Units.
c. "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
d. "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such terms in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
e. "Board" or "Board of Directors" means the Board of Directors of the
Company.
f. "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
g. "Committee" means any committee appointed by the Board to administer the
Plan, as specified in Article 3 herein.
h. "Company" means Sunrise Technologies International, Inc., a Delaware
corporation, including any and all Subsidiaries and Affiliates, and any
successor thereto as provided in Article 19 herein.
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<PAGE> 26
i. "Consultant" means a consultant or advisor who provides bona fide
services to the Company as an independent contractor. Service as a Consultant
shall be considered employment for all purposes of the Plan, except for purposes
of an ISO grant under Article 6.
j. "Covered Employee" means a Participant who, as of the date of vesting
and/or payout of an Award, as applicable, is one of the group of "covered
employees," as defined in the regulations promulgated under Code Section 162(m),
or any successor statute.
k. "Director" means any individual who is a member of the Board of
Directors of the Company or any Subsidiary or Affiliate.
l. "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan, or if no such plan exists, at
the discretion of the Committee.
m. "Effective Date" shall have the meaning ascribed to such term in Section
1.1 hereof.
n. "Employee" means any full-time, active employee of the Company or its
Subsidiaries or Affiliates. Directors or Consultants who are not employed by the
Company shall not be considered Employees under this Plan.
o. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
p. "Fair Market Value" shall be determined on the basis of the closing sale
price at which Shares have been sold the regular way on the principal securities
exchange on which the Shares are traded on the last previous day on which there
was such a sale.
q. "Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.
r. "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
s. "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
t. "Non-Employee Director" shall mean a Director who is not also an
Employee. Service as a Non-Employee Director shall be considered employment for
all purposes of the Plan, except for purposes of an ISO grant under Article 6.
u. "Non-Qualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
v. "Option" means an Incentive Stock Option or a Nonqualified Stock Option,
as described in Article 6 herein.
w. "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
x. "Participant" means an Employee, Non-Employee Director or Consultant who
has been selected to receive an Award or who has outstanding an Award granted
under the Plan.
y. "Performance-Based Exception" means the performance-based exception from
the tax deductibility limitations of Code Section 162(m).
z. "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.
aa. "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.
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bb. "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
cc. "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
dd. "Restricted Stock" means an Award granted to a Participant pursuant to
Article 8 herein.
ee. "Retirement" shall have the meaning ascribed to such term in the
Company's tax-qualified retirement plan.
ff. "Shares" means the shares of common stock of the Company.
gg. "Stock Appreciation Right" or "SAR" means an Award, granted alone or,
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
hh. "Subsidiary" means any corporation, partnership, joint venture or other
entity in which the Company has a majority voting interest (including all
divisions, affiliates and related entities).
ii. "Tandem SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
ARTICLE 3.
ADMINISTRATION
a. The Committee. The Plan shall be administered by the Compensation
Committee of the Board consisting of not less than two (2) Directors who meet
the "outside director" requirements of Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act and the requirements of Code
Section 162(m), or by any other committee appointed by the Board, provided the
members of such committee meet such requirements.
b. Authority of the Committee. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select individuals who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 14 herein)
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law,
the Committee may delegate its authority as identified herein.
c. Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants and their
estates and beneficiaries.
ARTICLE 4.
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
a. Number of Shares Available for Grants. Subject to Sections 4.2 and 4.3
herein, the maximum number of Shares with respect to which Awards may be granted
to Participants under the Plan shall be two
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<PAGE> 28
million three hundred thousand (2,300,000). Shares issued under the Plan may be
either authorized but unissued Shares, treasury Shares or any combination
thereof.
Unless and until the Committee determines that an Award to a Covered
Employee shall not be designed to comply with the Performance-Based Exception,
the following rules shall apply to grants of such Awards under the Plan, subject
to Sections 4.2 and 4.3.
(a) STOCK OPTIONS AND SARS: The maximum aggregate number of Shares
that may be subject to Stock Options, with or without Tandem SARs, or
Freestanding SARs, granted in any one fiscal year to any one Participant
shall be one million (1,000,000).
(b) RESTRICTED STOCK: The maximum aggregate grant with respect to
Awards of Restricted Stock which are intended to qualify for the
Performance-Based Exception, and which are granted in any one fiscal year
to any one Participant shall be two hundred thousand (200,000) Shares.
(c) PERFORMANCE SHARES/PERFORMANCE UNITS: The maximum aggregate payout
(determined as of the end of the applicable performance period) with
respect to Awards of Performance Shares or Performance Units which are
intended to comply with the Performance-Based Exception, and which are
granted in any one fiscal year to any one Participant shall be equal to the
Fair Market Value of two hundred thousand (200,000) Shares.
b. Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan. The foregoing notwithstanding, the aggregate number of
Shares that may be issued under the Plan upon the exercise of ISOs shall not be
increased when Restricted Stock or other Shares are forfeited.
c. Adjustments. In the event of any change in corporate capitalization such
as a stock split, or a corporate transaction such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization (whether or not such reorganization comes within
the definition of such term in Code Section 368) or any partial or complete
liquidation of the Company, such adjustment shall be made in the number and
class of Shares which may be delivered under Section 4.1, in the number and
class of and/or price of Shares subject to outstanding Awards granted under the
Plan, and in the Award limits set forth in subsections 4.1(a), 4.l(b) and
4.l(c), as may be determined to be appropriate and equitable by the Committee,
in its sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall always be a whole
number.
ARTICLE 5.
ELIGIBILITY AND PARTICIPATION
a. Eligibility. Persons eligible to participate in this Plan include
Consultants, Non-Employee Directors and officers and certain key salaried
Employees of the Company with potential to contribute to the success of the
Company or its Subsidiaries, including Employees who are members of the Board.
b. Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Participants those to
whom Awards shall be granted, and shall determine the nature and amount of each
Award.
ARTICLE 6.
STOCK OPTIONS
a. Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
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<PAGE> 29
b. Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO, whose grant is intended not to fall under the provisions of Code Section
422.
c. Option Price. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
d. Duration of Options. Each Option granted to a Participant shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth anniversary
date of its grant and provided further that no Option shall be exercisable later
than the fifth anniversary date of its grant for an ISO granted to a
Participant, who at the time of such grant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company.
e. Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
f. Payment. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full in a form as determined by the Committee either: (a) in cash or
its equivalent; (b) by tendering previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the total Option Price
(provided that the Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their tender to satisfy the
Option Price); (c) by withholding Shares which otherwise would be acquired on
exercise having an aggregate Fair Market Value at the time of exercise equal to
the total Option Price; (d) by promissory note of the Participant; or (e) by any
combination of the foregoing methods of payment.
The Committee may also allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
In connection with the exercise of Options granted under the Plan, the
Company may make loans to the Participants as the Committee, in its discretion,
may determine. Such loans shall be subject to the following terms and conditions
and such other terms and conditions as the Committee shall determine not
inconsistent with the Plan. Such loans shall bear interest at such rates as the
Committee shall determine from time to time, which rates may be below then
current market rates or may be made without interest. In no event may any such
loan exceed the Fair Market Value, at the date of exercise, of the Shares
covered by the Option, or portion thereof, exercised by the Optionee. No loan
shall have an initial term exceeding two years, but any such loan may be
renewable at the discretion of the Committee. When a loan shall have been made,
Shares having a fair market value at least equal to 150 percent of the principal
amount of the loan shall be pledged by the Participant to the Company as
security for payment of the unpaid balance of the loan.
Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).
g. Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
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<PAGE> 30
h. Termination of Employment or Consulting Arrangement. Each Option Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment or consulting arrangement with the Company. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among
all Options issued pursuant to this Article 6, and may reflect distinctions
based on the reasons for termination of employment.
i. Nontransferability of Options.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant or
the Participant's legal representative (to the extent permitted under Code
Section 422).
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant or
the Participant's legal representative.
ARTICLE 7.
STOCK APPRECIATION RIGHTS
a. Grant of SARs. Subject to the terms and conditions of the Plan, SARs may
be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
b. Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
c. Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
d. SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
e. Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten years.
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<PAGE> 31
f. Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) the difference between the Fair Market Value of a Share on the
date of exercise over the grant price; by
(b) the number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value or in some combination thereof. The
Committee's determination regarding the form of SAR payout shall be set forth in
the Award Agreement pertaining to the grant of the SAR.
g. Termination of Employment or Consulting Arrangement. Each SAR Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the SAR following termination of the Participant's employment
or consulting arrangement with the Company and/or its Subsidiaries. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan and may reflect distinctions
based on the reasons for termination of employment.
h. Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or the Participant's legal representative.
ARTICLE 8.
RESTRICTED STOCK
a. Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
b. Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted and such other
provisions as the Committee shall determine.
c. Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock granted under the Plan may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant or the Participant's legal
representative.
d. Other Restrictions. Subject to Article 10 herein, the Committee shall
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional and/or individual),
time-based restrictions on vesting following the attainment of the performance
goals and/or restrictions under applicable federal or state securities laws.
The Company may retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
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e. Voting Rights. Participants holding Shares of Restricted Stock granted
hereunder may be granted the right to exercise full voting rights with respect
to those Shares during the Period of Restriction.
f. Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. Without limiting the generality
of the preceding sentence, if the grant or vesting of Restricted Shares granted
to a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Restricted
Shares, such that the dividends and/or the Restricted Shares maintain
eligibility for the Performance-Based Exception.
g. Termination of Employment or Consulting Arrangement. Each Restricted
Stock Award Agreement shall set forth the extent to which the Participant shall
have the right to receive unvested Restricted Shares following termination of
the Participant's employment or consulting arrangement with the Company. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with each Participant, need not be
uniform among all Shares of Restricted Stock issued pursuant to the Plan and may
reflect distinctions based on the reasons for termination of employment;
provided, however, that except in the cases of terminations by reason of death
or Disability, the vesting of Shares of Restricted Stock which qualify for the
Performance-Based Exception and which are held by Covered Employees shall occur
at the time they otherwise would have, but for the employment termination.
ARTICLE 9.
PERFORMANCE UNITS AND PERFORMANCE SHARES
a. Grant of Performance Units/Shares. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
b. Value of Performance Units/Shares. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participant. For purposes of this Article 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
c. Earning of Performance Units/Shares. Subject to the terms of this Plan,
after the applicable Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive payout on the number and value of
Performance Units/Shares earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding
performance goals have been achieved.
d. Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares shall be made in a single lump sum following the
close of the applicable Performance Period. Subject to the terms of this Plan,
the Committee, in its sole discretion, may pay earned Performance Units/ Shares
in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.
At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares, but not
yet distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture and payout restrictions as apply to dividends earned with
respect to Shares of Restricted
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Stock, as set forth in Section 8.6 herein). In addition, Participants may, at
the discretion of the Committee, be entitled to exercise their voting rights
with respect to such Shares.
e. Termination of Employment or Consulting Arrangement Due to Death,
Disability or Retirement. Unless determined otherwise by the Committee and set
forth in the Participant's Award Agreement, in the event the employment or
consulting arrangement of the Participant is terminated by reason of death,
Disability or Retirement during a Performance Period, the Participant shall
receive a payout of the Performance Units/Shares which is prorated, as specified
by the Committee in its discretion. Payment of earned Performance Units/Shares
shall be made at a time specified by the Committee in its sole discretion and
set forth in the Participant's Award Agreement. Notwithstanding the foregoing,
with respect to Covered Employees who retire during a Performance Period,
payments shall be made at the same time as payments are made to Participants who
did not terminate employment during the applicable Performance Period.
f. Termination of Employment or Consulting Arrangement for Other
Reasons. In the event the Participant's employment or consulting arrangement
terminates for any reason other than those reasons set forth in Section 9.5
herein, all Performance Units/Shares shall be forfeited by the Participant to
the Company unless determined otherwise by the Committee, as set forth in the
Participant's Award Agreement.
g. Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's legal representative.
ARTICLE 10.
PERFORMANCE MEASURES
Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be chosen from among net income either
before or after taxes, market share, customer satisfaction, profits, share
price, earnings per share, total stockholder return, return on assets, return on
equity, operating income, return on capital or investments, or economic value
added (including, but not limited to, any or all of such measures in comparison
to the Company's competitors, the industry or some other comparator group).
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by Covered Employees, may not be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
ARTICLE 11.
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior
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designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, the Participant's beneficiary shall be paid to the Participant's
estate.
ARTICLE 12.
DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 13.
RETENTION RIGHTS
a. Employment. Nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate the services of any Participant at any
time, nor confer upon any Participant any right to continue as an Employee,
Non-Employee Director or Consultant.
b. Participation. No Participant shall have the right to be selected to
receive an Award under this Plan or, having been so selected, to be selected to
receive a future Award.
ARTICLE 14.
AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS
a. Amendment, Modification, and Termination. Subject to the terms of the
Plan, the Board, upon recommendation of the Committee, may at any time and from
time to time, alter, amend, suspend or terminate the Plan in whole or in part.
b. Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan; provided that unless the Committee
determines otherwise, no such adjustment shall be authorized to the extent that
such authority would be inconsistent with the Plan or Awards meeting the
requirements of Code Section 162(m), as from time to time amended.
c. Awards Previously Granted. Notwithstanding any other provision of the
Plan to the contrary (but subject to Section 14.2 hereof), no termination,
amendment or modification of the Plan shall adversely affect in any material way
any Award previously granted under the Plan without the written consent of the
Participant holding such Award.
d. Compliance with Code Section 162(m). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article 14, make any adjustments it deems appropriate.
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ARTICLE 15.
PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON
a. Effect of Competitive Activity. Anything contained in the Plan to the
contrary notwithstanding, if the employment of any Participant who is an
Employee shall terminate, for any reason other than death, while any Award to
such Participant is outstanding hereunder, and such Participant has not yet
received the Shares covered by such Award or otherwise received the full benefit
of such Award, such Participant, if otherwise entitled thereto, shall receive
such Shares or benefit only if, during the entire period from the date of such
Participant's termination to the date of such receipt, such Participant shall
have earned out such Award by: (i) making himself or herself available, upon
request, at reasonable times and upon a reasonable basis, to consult with,
supply information to, and otherwise cooperate with the Company or any
Subsidiary or Affiliate thereof with respect to any matter that shall have been
handled by him or her or under his or her supervision while he or she was in the
employ of the Company or of any Subsidiary or Affiliate thereof; and (ii)
refraining from engaging in any activity that is directly or indirectly in
competition with any activity of the Company or any Subsidiary or Affiliate
thereof.
b. Nonfulfillment of Competitive Activity Conditions; Waivers Under the
Plan. In the event of a Participant's nonfulfillment of any condition set forth
in Section 15.1 hereof, such Participant's rights under any Award shall be
forfeited and canceled forthwith; provided, however, that the nonfulfillment of
such condition may at any time (whether before, at the time of, or subsequent to
termination of employment) be waived by the Committee upon its determination
that in its sole judgment there shall not have been and will not be any
substantial adverse effect upon the Company or any Subsidiary or Affiliate
thereof by reason of the nonfulfillment of such condition.
c. Effect of Inimical Conduct. Anything contained in the Plan to the
contrary notwithstanding, all rights of a Participant under any Award shall
cease on and as of the date on which it has been determined by the Committee
that such Participant at any time (whether before or subsequent to termination
of such Participant's employment in the case of a Participant who is an
Employee) acted in manner inimical to the best interests of the Company or any
Subsidiary or Affiliate thereof.
ARTICLE 16.
CHANGE IN CONTROL
a. Definition. For purposes of this Plan, a "Change in Control" of the
Company is deemed to have occurred as of the first day that any one or more of
the following conditions shall have been satisfied:
(a) the "Beneficial Ownership" of securities representing more than
thirty-three percent (33%) of the combined voting power of the Company is
acquired by any "person" as defined in Section 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company); or
(b) the stockholders of the Company approve a definitive agreement to
merge or consolidate the Company with or into another corporation or to
sell or otherwise dispose of all or substantially all of its assets, or
adopt a plan of liquidation; or
(c) during any period of three (3) consecutive years, individuals who
at the beginning of such period were members of the Board cease for any
reason to constitute at least a majority thereof (unless the election, or
the nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least a majority of the directors
then still in office who were directors at the beginning of such period or
whose election or nomination was previously so approved).
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b. Treatment of Outstanding Awards. Subject to Section 16.3 herein, upon
the occurrence of a Change in Control:
(a) any and all Options and SARs granted hereunder shall become
immediately exercisable and shall remain exercisable throughout their
entire term;
(b) any restriction periods and restrictions imposed on Restricted
Stock which are not performance-based shall lapse; and
(c) the target payout opportunities attainable under all outstanding
Awards of performance-based Restricted Stock, Performance Units and
Performance Shares shall be deemed to have been fully earned for the entire
Performance Period(s) as of the effective date of the Change in Control.
The vesting of all Awards denominated in Shares shall be accelerated as of
the effective date of the Change in Control, and there shall be paid out to
Participants within thirty (30) days following the effective date of the
Change in Control a pro rata number of Shares (or their cash equivalents)
based upon an assumed achievement of all relevant targeted performance
goals and upon the length of time within the Performance Period which has
elapsed prior to the Change in Control. Awards denominated in cash shall be
paid pro rata to Participants in cash within thirty (30) days following the
effective date of the Change in Control, with the proration determined as a
function of the length of time within the Performance Period which has
elapsed prior to the Change in Control, and based on an assumed achievement
of all relevant targeted performance goals.
c. Termination, Amendment and Modifications of Change-In-Control
Provisions. Notwithstanding any other provision of the Plan or any Award
Agreement provision, the provisions of this Article 16 may not be terminated,
amended or modified on or after the date of an event which is likely to give
rise to a Change in Control to affect adversely any Award theretofore granted
under the Plan without the prior written consent of the Participant with respect
to said Participant's outstanding Awards.
d. Pooling of Interest Accounting. Notwithstanding anything contained in
the Plan to the contrary, in the event that the consummation of a Change in
Control is contingent on using pooling of interests accounting methodology, the
Board may, in its discretion, take any action necessary to preserve the use of
pooling of interests accounting.
ARTICLE 17.
WITHHOLDING
a. Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
b. Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, and signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
ARTICLE 18.
INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or
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proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 19.
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
or assets of the Company.
ARTICLE 20.
LEGAL CONSTRUCTION
a. Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
b. Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
c. Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
d. Securities Law Compliance. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the Exchange Act. To the extent any provision of the Plan
or action by the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
e. Governing Law. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the State of California.
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ANNEX B
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED APRIL 13, 2000
1. PURPOSES.
(a) Eligible Option Recipients. The persons eligible to receive Options are
the Non-Employee Directors of the Company.
(b) Available Options. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.
(c) General Purpose. The Company, by means of the Plan, seeks to retain the
services of its Non-Employee Directors, to secure and retain the services of new
Non-Employee Directors and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Section 424(e) and (f), respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" means the common stock of the Company.
(e) "Company" means Sunrise Technologies International, Inc., a Delaware
corporation.
(f) "Consultant" means any person, including an advisor, (i) engaged by the
Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.
(g) "Continuous Service" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's service. For example, a change in status without interruption
from a Non-Employee Director of the Company to a Consultant of an Affiliate or
an Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(h) "Director" means a member of the Board of Directors of the Company.
(i) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(j) "Employee" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(l) "Fair Market Value" means, as of any date, the value of the Common
Stock determined on the basis of the closing sale price at which Common Stock
has been sold the regular way on the principal securities exchange on which the
Common Stock is traded on the last previous day on which there was such a sale.
(m) "Initial Grant" means an Option granted to a Non-Employee Director who
meets the criteria specified in subsection 6(a) of the Plan.
(n) "Non-Employee Director" means a Director who is not an Employee.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(r) "Option Agreement" means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(s) "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(t) "Plan" means this Sunrise Technologies International, Inc. 2000
Non-Employee Directors' Stock Option Plan.
(u) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(v) "Securities Act" means the Securities Act of 1933, as amended.
(w) "Term Grant" means an Option granted on the first day of each three (3)
year term to all Non-Employee Directors who meet the criteria specified in
subsection 6(b) of the Plan.
3. ADMINISTRATION.
(a) Administration by Board. The Board shall administer the Plan. The Board
may not delegate administration of the Plan to a committee.
(b) Powers of Board. The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(i) To determine the provisions of each Option to the extent not
specified in the Plan.
(ii) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement,
in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(iii) To amend the Plan or an Option as provided in Section 12.
(iv) To terminate or suspend the Plan as provided in Section 13.
(v) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the
Company that are not in conflict with the provisions of the Plan.
(c) Effect of Board's Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
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<PAGE> 40
4. SHARES SUBJECT TO THE PLAN.
(a) Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate 240,000 shares of
Common Stock plus an annual increase to be added each January 1, commencing with
January 1, 2001, equal to 60,000 shares of Common Stock. Notwithstanding the
foregoing, the Board may designate a smaller number of shares of Common Stock to
be added to the share reserve as of a particular January 1.
(b) Reversion of Shares to the Share Reserve. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Option
shall revert to and again become available for issuance under the Plan.
(c) Source of Shares. The shares of Common Stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
The Options as set forth in section 6 automatically shall be granted under
the Plan to all Non-Employee Directors.
6. NON-DISCRETIONARY GRANTS.
(a) Initial Grants. Without any further action of the Board, each person
who is elected or appointed for the first time to be a Non-Employee Director,
automatically shall, upon the date of such person's initial election or
appointment to be a Non-Employee Director by the Board or the Company's
stockholders, be granted an Option to purchase 60,000 shares of Common Stock (an
"Initial Grant") on the terms and conditions set forth herein.
(b) Term Grants. Without any further action of the Board, a Non-Employee
Director shall be granted an Option to purchase 60,000 shares of Common Stock at
each three (3) year anniversary date of the Initial Grant that he or she is
still a Non-Employee Director.
7. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) Exercise Price. The exercise price of each option shall be one hundred
percent (100%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable statutes and
regulations, in any combination of the following methods:
(i) By cash or check.
(ii) By delivery of already owned shares of Common Stock either that
the Optionholder has held for the period required to avoid a charge to the
Company's reported earnings (generally six months) or that the Optionholder
did not acquire, directly or indirectly from the Company, that are owned
free and clear of any liens, claims, encumbrances or security interests,
and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes shall include delivery to the Company of the
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Optionholder's attestation of ownership of such shares of Common Stock in a
form approved by the Company. Notwithstanding the foregoing, the
Optionholder may not exercise the Option by tender to the Company of Common
Stock to the extent such tender would violate the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
(iii) Pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of
Common Stock, results in either the receipt of cash (or check) by the
Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
(d) Transferability. An Option is transferable by will or by the laws of
descent and distribution. An Option also is transferable (i) by instrument to an
inter vivos or testamentary trust, in a form accepted by the Company, in which
the option is to be passed to beneficiaries upon the death of the trustor
(settlor) and (ii) by gift, in a form accepted by the Company, to a "family
member" of the Optionholder as that term is defined in the general instructions
to Form S-8 (promulgated under the Securities Act). An Option shall be
exercisable during the lifetime of the Optionholder only by the Optionholder and
a permitted transferee as provided herein. However, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(e) Exercise Schedule. An Option shall be exercisable only for whole shares
and then only as the shares of Common Stock subject to the Option vest.
(f) Vesting Schedule. Options shall vest in consecutive monthly
installments at a rate of one thirty-sixth (1/36th) of the total number of
shares subject to such Option. The first such installment shall vest one month
from the date of grant of such Option and shall continue until such Option has
fully vested, provided however, that vesting shall cease on termination of the
Optionholder's Continuous Service.
(g) Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than due to the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date that is
three (3) months after the date of such termination, or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her option within the
time specified in the Option Agreement, the Option shall terminate.
(h) Disability of Optionholder. In the event an Optionholder's Continuous
Service terminates due to the Optionholder's Disability, the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise it as of the date of termination), but only within such period of time
ending on the earlier of (i) the date that is twelve (12) months after the date
of such termination, or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(i) Death of Optionholder. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the three-month period after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise the
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date that is twelve (12)
months following the date of death or (2) the expiration of the term of such
Option as set forth in the Option Agreement. If, after death, the Option is not
exercised within the time specified herein, the option shall terminate.
(j) Extension of Termination Date. If exercise of the Option following the
termination of the Optionholder's Continuous Service would be prohibited at any
time solely because the issuance of shares would violate the registration
requirements under the Securities Act, then the option shall terminate on the
earlier of: (i) the expiration of the term of the Option set forth in subsection
7(a), or (ii) the expiration of the
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<PAGE> 42
applicable period of time after the termination of the Optionholder's Continuous
Service during which the exercise of the Option would not be in violation of
such registration requirements.
8. COVENANTS OF THE COMPANY.
(a) Availability of Shares. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Options.
(b) Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Options and to issue and sell shares of Common Stock
upon exercise of the options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or
any stock issued or issuable pursuant to any such Option. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
options unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
10. MISCELLANEOUS.
(a) Stockholder Rights. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.
(b) No Service Rights. Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Optionholder any right to
continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(c) Investment Assurances. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if
(iii) the issuance of the shares upon the exercise or acquisition of stock under
the option has been registered under a then currently effective registration
statement under the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the .Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(d) Withholding Obligations. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to
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<PAGE> 43
withhold shares from the shares of the Common Stock otherwise issuable to the
Optionholder as a result of the exercise or acquisition of stock under the
Option, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or
(iii) delivering to the Company owned and unencumbered shares of the Common
Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) Capitalization Adjustments. If any change is made in the stock subject
to the Plan, or subject to any Option, without the receipt of consideration by
the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject both to the Plan pursuant to
subsection 4(a) and to the nondiscretionary Options specified in Section 5, and
in the classes and maximum number of securities added to the Plan each January 1
pursuant to subsection 4(a), and the outstanding Options will be appropriately
adjusted in the class(es) and number of securities and price per share of stock
subject to such outstanding Options. The Board shall make such adjustments, and
its determination shall be final, binding and conclusive (The conversion of any
convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.)
(b) Dissolution or Liquidation. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate,
immediately prior to such event.
(c) Change in Control. In the event of (i) a sale, lease or other
disposition of all or substantially all of the securities or assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation may assume any Options outstanding under
the Plan or may substitute similar Options (including an option to acquire the
same consideration paid to the stockholders in the transaction described in this
subsection 11(c)) for those outstanding under the Plan, and the vesting of
Options held by Non-Employee Directors shall accelerate in full on the date
immediately preceding the date of such event. In the event no surviving
corporation or acquiring corporation assumes such Options or substitutes similar
Options for those outstanding under the Plan, then with respect to Options held
by Optionholders whose Continuous Service has not terminated, the vesting of
such Options (and the time during which such Options may be exercised) shall
accelerate in full on the date immediately preceding the date of such event, and
the Options shall terminate if not exercised at or prior to such event. With
respect to any other Options outstanding under the Plan, such options shall
terminate if not exercised prior to such event.
12. AMENDMENT OF THE PLAN AND OPTIONS.
(a) Amendment of Plan. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
(b) Stockholder Approval. The Board may, in its sole discretion, submit any
other amendment to the Plan for stockholder approval.
(c) No Impairment of Rights. Rights under any option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(d) Amendment of Options. The Board at any time, and from time to time, may
amend the terms of any one or more options; provided, however, that the rights
under any Option shall not be impaired by any
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<PAGE> 44
such amendment unless (i) the Company requests the consent of the Optionholder
and (ii) the Optionholder Consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) Plan Term. The Board may suspend or terminate the Plan at any time. No
Options may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on April 13, 2000, but no option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
15. CHOICE OF LAW.
All questions concerning the construction, validity and interpretation of
this Plan shall be governed by the law of the State of Delaware without regard
to such state's conflict of laws rules.
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<PAGE> 45
PROXY
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
3400 WEST WARREN AVENUE
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 JUNE 8, 2000.
The undersigned hereby appoints C. Russell Trenary, III and Eric M. Fogel 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
Fremont Marriott, 46100 Landing Parkway, Fremont, California, 94538 on June 8,
2000, 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.
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.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
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<PAGE> 46
Please mark
your votes as
indicated in [X]
this example.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW AND A
VOTE FOR PROPOSALS 2, 3 AND 4.
WITHHOLD
FOR FOR ALL
1. PROPOSAL 1: To elect two Class I
directors to hold office until the [ ] [ ]
Annual Meeting of Stockholders to be
held in the year 2003.
Nominees: R. Dale Bowerman
John Hendrick
(INSTRUCTION: To withhold authority to
vote for any nominee, write the
nominee's name in the space provided
below.)
______________________________________
FOR AGAINST ABSTAIN
2. PROPOSAL 2: To ratify the
appointment of
PricewaterhouseCoopers LLP as [ ] [ ] [ ]
independent accountants of the
Company for its fiscal year ending
December 31, 2000.
FOR AGAINST ABSTAIN
3. PROPOSAL 3: To approve the adoption
of the 2000 Long-Term Equity
Compensation Plan. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
4. PROPOSAL 4: To approve the adoption
of the 2000 Non-Employee Directors'
Stock Option Plan. [ ] [ ] [ ]
YES NO
I PLAN TO ATTEND THE MEETING. [ ] [ ]
Please vote, date and promptly return this proxy in the enclosed
envelope which is prepaid if mailed in the United States.
Signature(s)_________________________________________Date_____________________
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, 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.
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- FOLD AND DETACH HERE -
