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 ss.240.14a-11(c) or ss.240.14a-12
SUNRISE RESOURCES, 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
SUNRISE RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
November 18, 1996
TO THE SHAREHOLDERS OF SUNRISE RESOURCES, INC.:
The 1996 Annual Meeting of Shareholders of Sunrise Resources, Inc. will
be held at the Hyatt Regency Hotel, 1300 Nicollet Mall, Minneapolis, Minnesota,
at 3:30 p.m. (Minneapolis- time) on Monday, November 18, 1996, for the following
purposes:
1. To set the number of members of the Board of Directors at five (5).
2. To elect members of the Board of Directors.
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997.
4. To take action on any other business that may properly come before the
meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form
of Proxy and the Company's 1996 Annual Report.
Only shareholders of record as shown on the books of the Company at the
close of business on October 3, 1996 will be entitled to vote at the Annual
Meeting or any adjournment thereof. Each shareholder is entitled to one vote per
share on all matters to be voted on at the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, please sign, date and mail the enclosed
form of Proxy in the return envelope provided as soon as possible. Your
cooperation in promptly signing and returning your Proxy will help avoid further
solicitation expense to the Company.
BY ORDER OF THE BOARD OF DIRECTORS,
Thomas R. King, Secretary
Dated: October 10, 1996
Minneapolis, MN
<PAGE>
SUNRISE RESOURCES, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
to be held
November 18, 1996
The accompanying Proxy is solicited by the Board of Directors of
Sunrise Resources, Inc. (the "Company") for use at the Annual Meeting of
Shareholders of the Company to be held on Monday, November 18, 1996, at the
location and for the purposes set forth in the Notice of Annual Meeting, and at
any adjournment thereof.
The cost of soliciting proxies, including the preparation, assembly,
and mailing of the proxies and soliciting material, as well as the cost of
forwarding such material to the beneficial owners of the Company's Common Stock,
will be borne by the Company. Directors, officers and regular employees of the
Company may, without compensation other than their regular remuneration, solicit
proxies personally or by telephone.
Any shareholder giving a Proxy may revoke it any time prior to its use
at the Annual Meeting by giving written notice of such revocation to the
Secretary or other officer of the Company or by filing a later-dated written
Proxy with an officer of the Company. Personal attendance at the Annual Meeting
is not, by itself, sufficient to revoke a Proxy unless written notice of the
revocation or a later-dated Proxy is delivered to an officer before the revoked
or superseded Proxy is used at the Annual Meeting. Proxies will be voted as
specified by the shareholders.
The presence at the Annual Meeting in person or by proxy of the holders
of a majority of the outstanding shares of the Company's Common Stock entitled
to vote shall constitute a quorum for the transaction of business. If a broker
returns a "non-vote" proxy, indicating a lack of voting instructions by the
beneficial holder and a lack of discretionary authority on the part of the
broker to vote on a particular matter, then the shares covered by such non-vote
shall be deemed present at the Annual Meeting for purposes of determining a
quorum but shall not be deemed to be represented at the Annual Meeting for
purposes of calculating the vote with respect to such matter. If a shareholder
abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the Annual Meeting for purposes of determining a
quorum and for purposes of calculating the vote with respect to such matter, but
shall not be deemed to have been voted in favor of such matter. An abstention as
to any proposal will, therefore, have the same effect as a vote against the
proposal. Proxies which are signed but which lack any such specification will be
voted in favor of the proposals set forth in the Notice of Meeting and in favor
of the number and slate of directors proposed by the Board of Directors and
listed herein.
The mailing address of the principal executive office of the Company is
5500 Wayzata Boulevard, Suite 725, Minneapolis, Minnesota 55416. The Company
expects that this Proxy Statement, the related Proxy and Notice of Meeting will
first be mailed to shareholders on approximately October 10, 1996.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on October 3, 1996 as the record date for determining shareholders entitled to
vote at the Annual Meeting (the "Record Date"). Persons who were not
shareholders on the Record Date will not be allowed to vote at the Annual
Meeting. At the close of business on the Record Date, 7,188,721 shares of the
Company's Common Stock, par value $.01 per share, were issued and outstanding.
The Common Stock is the only outstanding class of capital stock of the Company.
Each share of Common Stock is entitled to one vote on each matter to be voted
upon at the Annual Meeting. Holders of Common Stock are not entitled to
cumulative voting rights.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT SHAREHOLDINGS
The following table provides information as of the Record Date
concerning the beneficial ownership of the Company's Common Stock by (i) each
director and nominee for director of the Company, (ii) the named executive
officers in the Summary Compensation Table, (iii) persons known to the Company
to be the beneficial owners of more than 5% of the Company's outstanding Common
Stock as of the Record Date and (iv) all directors and executive officers as a
group.
- 1 -
<PAGE>
Name (and Address of Number of shares Percent
5% Holders) or Identity of Group Beneficially Owned(1) of Class(2)
Donald R. Brattain 324,300(3) 4.5%
Thomas R. King 16,000(4) *
Daniel A. Leclerc 10,500(5) *
Thomas M. Strand 10,000(6) *
Andrew G. Sall 27,654(7) *
Barry J. Schwach 149,468(8) 2.1%
Dana C. Prescott 29,260(9) *
William B. King 3,000(10) *
Peter J. King 2,000(11) *
Craig H. Forsman 221,650(12) 3.1%
Stephen D. Higgins (13) 2,846,080(14) 39.6%
Stephen D. Higgins, Trustee, 431,999 6.0%
1996 Grantor Retained Annuity
Trust FBO Peter J. King (13)
Stephen D. Higgins, Trustee, 1,354,526 18.8%
William B. King Stock Trust (13)
Stephen D. Higgins, Trustee, 1,054,526 14.7%
Russell S. King Stock Trust (13)
All Executive Officers and 571,822(15) 7.8%
Directors as a Group
(10 persons)
*less than 1%
(1) Unless otherwise indicated, each person named or included in the group
has sole power to vote and sole power to direct the disposition of all
shares listed as beneficially owned by such person.
(2) Under the rules of the SEC, shares not actually outstanding are deemed
to be beneficially owned by an individual if such individual has the
right to acquire the shares within 60 days. Pursuant to such SEC rules,
shares deemed beneficially owned by virtue of an individual's right to
acquire them are also treated as outstanding when calculating the
percent of the class owned by such individual and when determining the
percent owned by any group in which the individual is included.
(3) Includes 4,000 shares of Common Stock which may be acquired by Mr.
Brattain within 60 days after the Record Date upon exercise of
outstanding nonqualified stock options.
(4) Includes 10,000 shares of Common Stock which may be acquired by Mr.
Thomas King within 60 days after the Record Date upon exercise of
outstanding nonqualified stock options.
(5) Includes 10,000 shares of Common Stock which may be acquired by Mr.
Leclerc within 60 days after the Record Date upon exercise of
outstanding nonqualified stock options.
(6) Includes 10,000 shares of Common Stock which may be acquired by Mr.
Strand within 60 days after the Record Date upon exercise of
outstanding nonqualified stock options.
(7) Includes 22,625 shares which may be acquired by Mr. Sall within 60 days
after the Record Date upon exercise of outstanding nonqualified stock
options.
- 2 -
<PAGE>
(8) Includes 28,750 shares of Common Stock which may be acquired by Mr.
Schwach within 60 days after the Record Date upon exercise of
outstanding incentive stock options.
(9) Includes 18,500 shares of Common Stock which may be acquired by Mr.
Prescott within 60 days after the Record Date upon exercise of
outstanding incentive stock options.
(10) Includes 3,000 shares of Common Stock which may be acquired by Mr.
William King within 60 days after the Record Date upon exercise of
outstanding incentive stock options. Does not include 1,354,526 shares
held in a trust for Mr. William King's benefit for which he has no
voting or investment power.
(11) Includes 2,000 shares held by The King Management Corporation, of which
Mr. Peter King is a principal shareholder, officer and director sharing
voting and investment power over such shares. Does not include 431,999
shares held in a trust for Mr. Peter King's benefit for which he has no
voting or investment power.
(12) Based upon information set forth in Mr. Forsman's Schedule 13G dated
January 24, 1996 for the year ended December 31, 1995.
(13) Address: 2500 World Trade Center, 30 East 7th Street, St. Paul, MN
55101.
(14) Includes 431,999 shares held by Mr. Higgins, as trustee under the 1996
Grantor Retained Annuity Trust for the benefit of Peter J. King, a
former officer and director of the Company, and 2,409,052 shares held
by Mr. Higgins, as trustee under the William B. King Stock Trust and
Russell S. King Stock Trust, for the benefit of William B. King, an
officer of the Company, and Russell S. King, respectively, both of whom
are sons of Mr. Peter King. Mr. Higgins disclaims beneficial ownership
of these shares.
(15) Includes 108,515 shares of Common Stock which may be acquired within 60
days after the Record Date upon the exercise of outstanding options.
Does not include 1,354,526 shares held in a trust for the benefit of an
officer for which the officer has no voting or investment power or
shares held by any former officer or director.
ELECTION OF DIRECTORS
(Proposals #1 and #2)
The Bylaws of the Company provide that the number of directors shall be
the number set by the shareholders, which shall not be less than one. The Board
of Directors unanimously recommends that the number of directors be set at five,
which is the current number of directors, and that five directors be elected.
Unless otherwise instructed, the Proxies will be so voted. Under applicable
Minnesota law, approval of the proposals to set the number of directors at five
and to elect the nominees requires the affirmative vote of the holders of the
greater of (1) a majority of the voting power of the shares represented in
person or by proxy at the Annual Meeting with authority to vote on such matter,
or (2) a majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the Annual Meeting.
In the absence of other instruction, the Proxies will be voted for each
of the following individuals. If elected, such individuals shall serve until the
next annual meeting of shareholders and until their successors shall be duly
elected and shall qualify. All of the nominees are members of the present Board
of Directors. Mr. Andrew Sall and former director Mr. Peter King were elected as
directors of the Company on February 13, 1995 pursuant to the Agreement and Plan
of Reorganization among the Company, The P. J. King Companies, Inc. d/b/a
International Leasing Corporation ("ILC") and affiliates of ILC, which provides
that Mr. Peter King and one other person chosen by the Company from a list of
persons proposed by Mr. Peter King would be elected to the Board of Directors.
In addition, the Agreement and Plan of Reorganization provides that Mr. Peter
King shall serve as Chairman of the Board of the Company until February 1998. In
June 1995, Mr. Peter King advised the Company that he was reserving all legal
rights as a former shareholder of ILC relating to the merger on the basis that,
in his view, materially adverse matters regarding the Company arose prior to the
merger and were not disclosed. However, with the concurrence of the Company's
Board of Directors, Mr. Peter King, subject to the condition that he abstain
from matters presenting a conflict of interest with his pending claims arising
from the merger with ILC, continued as a member of the Board of Directors and
its Executive Committee until his resignation on August 19, 1996.
- 3 -
<PAGE>
If, prior to the Annual Meeting, it should become known that any one of
the following individuals will be unable to serve as a director after the Annual
Meeting by reason of death, incapacity or other unexpected occurrence, the
Proxies will be voted for such substitute nominee(s) as is selected by the Board
of Directors. Alternatively, the Proxies may, at the Board's discretion, be
voted for such fewer number of nominees as results from such death, incapacity
or other unexpected occurrence. The Board of Directors has no reason to believe
that any of the following nominees will be unable to serve.
<TABLE>
<CAPTION>
Name and Age Current Positions with the Company and Principal Occupations Director
of Nominee and Other Information for the Past Five Years Since
<S> <C> <C>
Thomas R. King Mr. King has served as Secretary of the Company since July 1991
56 1991 and as a Director of the Company since December 1991.
Since February 1996, Mr. King has also served as the
Company's Interim Chairman of the Board. He has been an
officer and shareholder of Fredrikson & Byron, P.A., the
Company's legal counsel, for more than the past five years.
He is also a director of Datakey, Inc. Mr. King is not
related to Peter King, former director, or William King,
Vice President - National Vendor Programs.
Donald R. Brattain Donald R. Brattain has served as a Director of the Company 1989
56 since November 1989. Mr. Brattain served as a member of the
Company's Interim CEO Committee from July 1995 to July 1996
and as the Company's Chairman of the Board from July 1991
to February 1995. Mr. Brattain has served as President of
Brattain & Associates, LLC, an investment company, since
1981. He is also a director of Everest Medical Corporation,
Barefoot Grass Lawn Service, Inc., Harmony Brook, Inc.,
Koala Corporation and Featherlite Mfg., Inc.
Daniel A. Leclerc Mr. Leclerc has served as a Director of the Company since 1992
56 November 1992. He has been President and Chief Executive
Officer of Crestwood Capital Corp., a financial services
firm, since January 1994. Mr. Leclerc was a consultant
to Norwest Equipment Finance, Inc., an equipment finance
and leasing company, from January 1993 to December 1993.
From October 1989 to December 1992, he was President and
Chief Executive Officer of Norwest Equipment Finance. From
January 1984 to October 1989, he was President and Chief
Executive Officer of Crestwood Capital Corp. Mr. Leclerc is
a past director of the Equipment Leasing Association, a
national trade organization, and the author of many trade
journal articles on equipment leasing.
Thomas M. Strand Mr. Strand has served as a Director of the Company since 1993
51 January 1993. Since 1977, Mr. Strand has been an officer of
Dougherty Dawkins, Inc., an investment banking firm, serving
as Vice Chairman since March 1995, President from September
1989 to March 1995, Chief Executive Officer from November
1993 to March 1995 and Executive Vice President from 1977
to September 1989.
Andrew G. Sall Mr. Sall has served as a Director of the Company since 1995. 1995
63 February Mr. Sall served as Executive Vice President of The
Churchill Companies, a company which provides asset based
lending and mortgage banking services, from June 1990 to
June 1993 when he retired. Mr. Sall currently provides
consulting services to various companies.
</TABLE>
Board and Committee Meetings
During the fiscal year ended March 31, 1996, the Board of Directors
held six meetings and acted four times by unanimous written action. Each
director attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors plus the total number of meetings of all committees of
the Board on which he served. The Board of Directors has an Audit Committee and
a Compensation and Stock Option Committee.
- 4 -
<PAGE>
The Audit Committee recommends to the Board of Directors the selection
of independent accountants and reviews the activities and reports of the
independent accountants as well as the internal accounting controls of the
Company. The Audit Committee is comprised of Messrs. Sall, Leclerc and Strand.
During fiscal 1996, the Audit Committee held three meetings.
The Compensation and Stock Option Committee determines the compensation
for executive officers of the Company and administers the Company's 1991 Stock
Option Plan and 1992 Employee Stock Purchase Plan. The Compensation and Stock
Option Committee is comprised of Messrs. Thomas King, Brattain and Leclerc.
During fiscal 1996, the Compensation and Stock Option Committee held two
meetings.
Compensation of Directors
Meeting Fees. The Company pays each director who is not an employee of
the Company (a "Non-Employee Director") an annual retainer of $2,500 plus $1,000
for each Board of Directors meeting attended and $500 for each committee meeting
attended.
Stock Option Grants. The Company's 1991 Stock Option Plan provides for
the automatic grant of stock options to each Non-Employee Director to purchase
the following number of shares of the Company's Common Stock at exercise prices
equal to 100% of the current market price on the date of grant: (i) 10,000
shares upon such Non-Employee Director's initial election to the Board, which
option becomes exercisable to the extent of 20% immediately and 20% each year
thereafter so long as such person remains a director of the Company, and (ii)
2,000 shares upon such Non-Employee Director's annual re-election to the Board
of Directors, which option is immediately exercisable in full.
Report of Compensation and Stock Option Committee
The Compensation and Stock Option Committee's executive compensation
policies are designed to enhance the financial performance of the Company, and
thus shareholder value, by significantly aligning the financial interests of the
Company's key executives with those of the Company's shareholders. Compensation
of the Company's executive officers is comprised of four parts: base salary,
annual incentive bonuses, fringe benefits and long-term incentive opportunity in
the form of stock options. The Compensation and Stock Option Committee (the
"Committee") believes, but has not conducted any formal survey, that the base
salaries of the Company's executive officers are comparable to the salaries of
executive officers of comparable publicly-held companies. These base salaries
are combined with the opportunity to earn substantial cash bonuses if certain
Company financial and other performance goals are met. In fiscal 1996, because
of a significant restructuring, the Company did not implement an incentive bonus
plan but certain discretionary bonuses were paid. See "Bonuses." Long-term
incentives are based on stock performance through stock options granted pursuant
to the Company's 1991 Stock Option Plan. The Committee believes that stock
ownership by the Company's executive officers is beneficial in aligning
management's and shareholders' interests in the enhancement of shareholder
value. Overall, the intent is to have more significant emphasis on variable
compensation components and less on fixed cost components. The Committee
believes this philosophy and structure are in the best interests of the
Company's shareholders.
Bonuses. Although the Company did not adopt an incentive bonus program
in fiscal 1996, it did give discretionary bonuses to all employees who were
employed on April 1, 1995 through July 1996. All employees were placed in one of
three separate categories. Category 1 employees received a bonus equal to 2.5%
of their gross salaries, Category 2 employees received a bonus equal to 5% of
their gross salaries and Category 3 employees received a bonus equal to 10% of
their gross salaries. Errol Carlstrom, who became the Company's President and
Chief Operating Officer in January 1996 and the Company's Chief Executive
Officer in July 1996, received an individual bonus of $15,000. The Company's
Compensation Committee awarded the discretionary bonus because of the special
efforts of the employees in fiscal 1996 to make the restructuring a success. The
Compensation Committee does not intend to grant in future years discretionary
bonuses of this magnitude. It will rely primarily on a formal incentive bonus
plan.
Although the plan has not yet been formalized, the fiscal 1997 bonus
plan is expected to pay to four classes of employees (support staff, middle
management, senior management and the President) incentive bonuses up to a
maximum of 10%, 20%, 40% and 75% of their annual salaries, depending on the
Company's earnings performances and the attainments by the employee of certain
pre-set individual objectives. No bonuses will be paid unless the Company meets
a certain agreed minimum earnings goal.
- 5 -
<PAGE>
Stock Options and Other Incentives. The Company's stock option program
is the Company's long-term incentive plan for executive officers and key
managers. The objectives of the program are to align executive and shareholder
long-term interests by creating a strong and direct link between executive pay
and shareholder return, and to enable executives to develop and maintain a
significant, long-term ownership position in the Company's Common Stock.
The Company's 1991 Stock Option Plan authorizes the Committee to award
stock options to executive officers and other employees. Stock options are
generally granted each year, at an option price equal to the fair market value
of the Company's Common Stock on the date of grant, and vest over a period of
five years. The amount of stock options awarded is generally a function of the
recipient's salary and position in the Company. Awards are intended to be
generally competitive with other companies of comparable size and complexity,
although the Committee has not conducted any thorough comparative analysis.
Benefits. The Company provides the same health and disability insurance
benefits to its executive officers as are available to Company employees
generally, except that executive officers receive. The amount of perquisites, as
determined in accordance with the rules of the SEC relating to executive
compensation, did not exceed 10% of salary for fiscal 1996.
Chief Executive Officer Compensation. The fiscal 1996 base salary for
the Company's former Chief Executive Officer, Craig Forsman, who resigned as of
June 30, 1995, was set at $180,000. The Compensation Committee believes, but has
not conducted any formal survey, that Mr. Forsman's fiscal 1996 base salary of
$180,000 was comparable to the base salaries of chief executive officers of
comparable publicly-held companies. Mr. Forsman also would have been eligible to
receive a discretionary incentive bonus if certain financial goals had been met
by the Company. In connection with Mr. Forsman's resignation, the Company
entered into a Severance Agreement and Release, pursuant to which the Company
agreed to continue to pay Mr. Forsman his monthly base salary for one year from
the date of resignation. From June 30, 1995 to July 24, 1996, the duties of the
Chief Executive Officer were performed by a committee comprised of Peter King
and Donald Brattain, for which such individuals received no additional
compensation beyond what Mr. King received pursuant to his Consulting Agreement
and what Mr. Brattain received as a Non-Employee Director (see "Employment and
Severance Agreement or Arrangements" below and "Compensation of Directors"
above). In July 1996, Mr. Carlstrom was appointed Chief Executive Officer of the
Company. Mr. Carlstrom's current employment agreement provides for a $150,000
base salary; and, under the anticipated incentive bonus program for fiscal 1997,
he would be eligible for a bonus of up to $112,500.
Compensation and Stock Option Committee
Thomas R. King
Donald R. Brattain
Daniel A. Leclerc
- 6 -
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to each
person who served in the capacity of the Company's Chief Executive Officer
during fiscal 1996 and for each person who served as an executive officer during
fiscal 1996 whose total salary and bonus earned during fiscal 1996 exceeded
$100,000.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
------------------------------------------------ ----------------------- ---------
Restricted Options/ LTIP
Name and Principal Fiscal Other Annual Stock SARs Payouts All Other
Position Year Salary($) Bonus($)(1) Compensation($) Awards(s) (#) ($) Compensation($)
- -------------------- --------- ------------- -------------- ------------------- ------------ ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter J. King 1996 160,000(2) --- --- --- --- --- 12,500(2)
Interim CEO
Committee(2)
Donald R. Brattain 1996 ---(3) --- --- --- --- --- 10,000(3)
Interim CEO
Committee(3)
Craig H. Forsman 1996 55,000 --- --- --- --- --- 135,000(4)
Former Chief 1995 180,000 54,000 --- --- 40,000 --- 1,470
Executive Officer 1994 180,000 --- --- --- 20,000 --- 675
Barry J. Schwach 1996 126,000 62,600 --- --- --- --- 1,499(5)
Executive Vice 1995 23,750 7,750 --- --- 15,000 --- ---
President of Finance
and Administration
and CFO
Dana C. Prescott 1996 126,000 12,600 --- --- --- --- 1,123(5)
Senior Vice 1995 182,000 20,000 --- --- 10,000 --- 1,585
President - National 1994 140,000 --- --- --- --- --- 461
Sales Manager
William B. King 1996 112,998 12,600 --- --- --- --- 999(5)
Vice President - 1995 18,750 6,249 --- --- 12,000 --- 820
National Vendor
Programs
</TABLE>
- ------------------
(1) Reflects bonus earned during the fiscal year. In some instances all or
a portion of the bonus was paid during the next fiscal year.
(2) Mr. Peter King served as a member of the Interim CEO Committee from
July 1995 to July 1996, for which he received no compensation; all
compensation was paid to him pursuant to his Consulting and
Noncompetition Agreement described in the section entitled Certain
Transactions below.
(3) Mr. Brattain served as a member of the Interim CEO Committee from July
1995 to July 1996, for which he received no compensation; the
compensation paid to Mr. Brattain was pursuant to director compensation
for non-employee directors described in the section entitled
Compensation of Directors above.
(4) Reflects severance payments paid to Mr. Forsman from July 1, 1995 to
March 31, 1996 pursuant to a severance agreement.
(5) Represents total Company matching contributions to the Company's 401(k)
plan.
- 7 -
<PAGE>
Option Grants During 1996 Fiscal Year
No options or stock appreciation rights were granted to any of the
named executive officers during fiscal year 1996.
Option Exercises During 1996 Fiscal Year and Fiscal Year-End Option Values
The following table provides information related to options and
warrants exercised by the named executive officers during fiscal 1996 and the
number and value of options held at fiscal year-end. The Company does not have
any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money Options at
Shares Underlying Unexercised March 31, 1996
Acquired on Value Options at March 31, 1996 Exercisable/
Name Exercise Realized Exercisable/Unexercisable Unexercisable(1)
<S> <C> <C> <C> <C>
Peter J. King -- -- 0 exercisable $0 exercisable
0 unexercisable $0 unexercisable
Donald R. Brattain -- -- 4,000 exercisable $0 exercisable
0 unexercisable $0 unexercisable
Craig H. Forsman -- -- 0 exercisable $0 exercisable
0 unexercisable $0 unexercisable
Barry J. Schwach -- -- 3,750 exercisable $0 exercisable
11,250 unexercisable $0 unexercisable
Dana C. Prescott -- -- 18,500 exercisable $0 exercisable
7,500 unexercisable $0 unexercisable
William B. King -- -- 3,000 exercisable $0 exercisable
9,000 unexercisable $0 unexercisable
</TABLE>
(1) Value is calculated on the basis of the difference between the option
exercise price and the closing sale price for the Company's Common
Stock at March 31, 1996 as quoted on the Nasdaq National Market,
multiplied by the number of shares of Common Stock underlying the
option.
Employment and Severance Agreements or Arrangements
The Company entered into a Severance Agreement and Release (the
"Agreement") with Craig H. Forsman, the Company's former President and Chief
Executive Officer, in connection with Mr. Forsman's resignation as an officer,
director and employee of the Company as of June 30, 1995. Pursuant to the
Agreement, Mr. Forsman continued to receive, as severance, his base salary of
$15,000 per month for a period of twelve months. In addition, Mr. Forsman agreed
that, during such twelve-month period, he would not (i) compete with the
Company, (ii) disclose confidential information relating to the Company, (iii)
solicit any of the Company's employees to leave the Company, (iv) contact the
Company's customers or (v) cause the discontinuance of the Company's business.
In connection with the Company's February 1995 merger with ILC, the
Company assumed ILC's obligations under Employment Agreements with Barry Schwach
and William King. These agreements assure Mr. Schwach and Mr. King minimum
compensation of at least $115,000 and $95,000 per year, respectively. These
agreements also provide that if, prior to February 13, 1997, such officer's
employment is terminated without cause or his title or duties are adversely
changed without his consent, then such individual will be paid an amount equal
to his assured minimum compensation for the remaining period to February 13,
1997.
- 8 -
<PAGE>
Stock Performance Chart
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
five fiscal years ended March 31, 1996 with the cumulative total return on the
S&P 500 Composite Stock Index and the S&P 500 Financial (Diversified) Index, an
index of diverse financial companies. The comparison assumes $100 was invested
on October 3, 1991 (the date that the Company's stock began to be publicly
traded) in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
[ GRAPH OMITTED ]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
10/03/91 03/31/92 03/31/93 03/31/94 03/31/95 03/31/96
Sunrise Resources, Inc. $100.00 158.97 179.49 117.95 100.00 61.54
S&P 500 Financial $100.00 108.36 143.88 148.09 176.98 259.43
(Diversified) Index
S&P 500 Composite $100.00 111.05 127.96 129.85 150.06 198.23
Stock Index
</TABLE>
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<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into the following transactions in which
directors had a material financial interest.
Harmony Brook--In fiscal 1992, the Company leased approximately
$250,000 of water dispensing equipment to Harmony Brook, Inc., a
manufacturer of water purification systems, of which Mr. Brattain is a
shareholder, chairman and director. In fiscal 1996, the Company
received approximately $124,457 in gross rentals under such lease,
which terminated as of March 31, 1996.
In fiscal 1994, the Company entered into a $2,000,000 line of credit
with Harmony Brook. As of September 30, 1996, $1,517,414 was
outstanding. The line is used by Harmony Brook to fund the expansion of
its business operations and is collateralized by certain assets of
Harmony Brook.
Gift Certificate Centers--The Company has a direct-financing lease
outstanding with Gift Certificate Centers, of which Mr. Brattain is a
principal shareholder. The net book value as of September 30, 1996 was
$419,315.
Dougherty Dawkins--In December 1995, the Company sold to Dougherty
Dawkins, Inc., an investment banking firm of which Thomas Strand is
Vice Chairman, certain asset-based loans having an aggregate net value
of approximately $3,600,000 for a price approximately equal to such
aggregate net value. The Company and Dougherty Dawkins, Inc. have
entered into discussions relating to a lease securitization financing
program for which Dougherty Dawkins, Inc. would serve as the Company's
agent. There is no assurance that an agreement with Dougherty Dawkins,
Inc. relating to such financing will be consummated.
On February 13, 1995, the Company entered into a Consulting and
Noncompetition Agreement with Peter J. King, who is a principal shareholder and
was a director of the Company at the time such agreement was entered into.
Pursuant to the agreement, Mr. King would provide consulting services to the
Company for three years and would receive annual fees of $167,500 for the first
year, $107,500 for the second year and $60,000 for the third year. In addition,
the agreement provides for the payment of $12,500 on each of the date of the
agreement and the first anniversary date of the agreement as consideration for
Mr. King's agreement not to compete with the Company for a two-year period.
On February 13, 1995, the Company entered into a Sublease Agreement
with The King Management Corporation, of which Mr. Peter King is a principal
shareholder, officer and director, for the sublease by the Company to The King
Management Corporation of approximately 40% of the Company's office space at the
St. Paul World Trade Center. Prior to the merger, this office was occupied by
both ILC and The King Management Corporation. The King Management Corporation
paid its pro rata share of all rent and other occupancy expenses of
approximately $95,600 through termination of the lease in March 1996.
The Company has a note in the original principal amount of $11,733,000
payable to The King Management Corporation, a majority of the common stock of
which is owned by Peter J. King. This note is collateralized by certain rental
equipment which is presently on lease to various customers. The note was due in
semi-monthly installments, payable in full February 16, 1996, and bears interest
at prime (currently 8.25%). As of September 30, 1996, there was a balance due of
$1,593,485. The Company is negotiating an extension of the note. On October 1,
1996, The King Management Corporation loaned to the Company the sum of $2
million. The loan is due within 60 days and carries an annual interest rate
equal to the prime rate (currently at 8.25%). The Company is also in the process
of negotiating a $10 million equipment leasing facility from The King Management
Corporation under which the Company and The King Management Corporation will
share the profits equally once the principal and interest are repaid. There is
no assurance that the Company and The King Management Corporation will be able
to reach agreement on the terms of such a facility.
On September 26, 1995, the Company entered into a Consulting Agreement
with Andrew G. Sall, a director of the Company, whereby Mr. Sall provided
consulting services to the Company for a sixteen-week period commencing July 15,
1995. As consideration for his services, Mr. Sall received an option to purchase
18,625 shares of the Company's Common Stock at $3.00 per share.
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<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
April 1, 1995 through March 31, 1996, all filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with, except that a Form 3 timely filed by Peter King, as a former director of
the Company, inadvertently omitted holdings, which holdings were reported late
on an amended Form 3. In addition, the Company is aware of three transactions
which have not been reported on either a Form 4 or 5 by Thomas Anderson, a
former officer of the Company.
OTHER BUSINESS
Management knows of no other matters to be presented at the 1996 Annual
Meeting. If any other matter properly comes before the Annual Meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgment.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1997 Annual Meeting must be received by the
Company by April 4, 1997 to be includable in the Company's proxy statement and
related proxy for the 1997 Annual Meeting.
PROPOSAL #3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors unanimously recommends that the shareholders
ratify the appointment of Arthur Andersen LLP, independent public accounts, as
the Company's independent public accountants for the fiscal year ending March
31, 1997. Unless otherwise instructed, the Proxies will be so voted. Arthur
Andersen LLP has served as the Company's independent accountants since August
1993. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting, will be given an opportunity to make a statement regarding
financial and accounting matters of the Company if they so desire, and will be
available to respond to appropriate questions from shareholders. The
ratification of the appointment of Arthur Andersen LLP, as the Company's
independent public accountants for the fiscal year ending March 31, 1997
requires the affirmative vote of the holders of the greater of (1) a majority of
the voting power of the shares represented in person or by proxy at the Annual
Meeting with authority to vote on such matter, or (2) a majority of the voting
power of the minimum number of shares that would constitute a quorum for the
transaction of business at the Annual Meeting.
FORM 10-K
THE COMPANY WILL PROVIDE AT NO CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, TO ANY BENEFICIAL OWNER OF
SHARES ENTITLED TO VOTE AT THE 1996 ANNUAL MEETING. PLEASE ADDRESS YOUR REQUEST
TO THE ATTENTION OF BARRY J. SCHWACH, CHIEF FINANCIAL OFFICER. YOUR REQUEST MUST
CONTAIN A REPRESENTATION THAT, AS OF OCTOBER 3, 1996, YOU WERE A BENEFICIAL
OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas R. King, Secretary
Dated: October 10, 1996
- 11 -
<PAGE>
SUNRISE RESOURCES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ERROL F. CARLSTROM and BARRY J.
SCHWACH, and each of them, with power to appoint a substitute, to vote all
shares the undersigned is entitled to vote at the Annual Meeting of Shareholders
of Sunrise Resources, Inc. to be held on November 18, 1996, and at all
adjournments thereof, as specified below on the following matters which are
further described in the Proxy Statement related hereto, and, in their
discretion, upon any other matters which may be brought before the meeting.
1. THE PROPOSAL TO SET THE NUMBER OF DIRECTORS AT FIVE (5).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS. NOMINEES: Donald R. Brattain, Thomas R. King, Daniel
A. Leclerc, Thomas M. Strand and Andrew G. Sall.
[ ] VOTE FOR all nominees listed above (except vote withheld
from the following nominees, if any, whose names are written
below)
---------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted for all directors
named in Item 2 and for Proposals 1 and 3.
Dated: , 1996
Please sign exactly as name appears at left. When shares are
held as joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please
have signed in full corporate name by President or other
authorized officer. If a partnership, please have signed in
partnership name by authorized person.
-----------------------------------------------------------
Signature
-----------------------------------------------------------
Signature if held jointly
PLEASE MAKE, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY, USING THE ENCLOSED ENVELOPE
