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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)
Sunrise International Leasing Corporation
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
86769K-10-5
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(CUSIP Number)
Peter J. King
c/o The King Management Corporation
5500 Wayzata Boulevard, Suite 750
Minneapolis, Minnesota 55416
(612) 593-0051
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 23, August 28, and September 18, 1998
------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box: [ ]
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SCHEDULE 13D
CUSP No. 86769K-10-5
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1) NAME OF REPORTING PERSON AND S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON
Peter J. King
###-##-####
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
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3) SEC USE ONLY
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4) SOURCE OF FUNDS
00
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
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6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7) SOLE VOTING POWER
3,987,550 (1)
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8) SHARED VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH 1,438,729 (2)
REPORTING PERSON ------------------------------------------------------------
WITH 10) SHARED DISPOSITIVE POWER
-0-
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,987,550 (1)
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12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- --------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.8% (3)
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14) TYPE OF REPORTING PERSON
IN
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(1) Pursuant to a Shareholder Voting Trust Agreement dated as of May 27, 1998,
Mr. King has the sole power to vote the following shares of common stock, $.01
par value (the "Common Stock"), of Sunrise International Leasing Corporation
("Sunrise"): (a) 517,158 shares held by Mr. King, individually, (b) 400,818
shares held by The King Management Corporation ("King Management"), of which Mr.
King is Chief Executive Officer, Chairman of the Board of Directors and a
principal shareholder, (c) 1,286,439 shares held by the William B. King Stock
Trust UA dated November 21, 1989 for the benefit of William B. King (the "WBK
Trust"), and (d) 1,262,382 shares held by the Russell S. King Stock Trust UA
dated November 11, 1989 for the benefit of Russell S. King (the "RSK Trust").
Also includes an aggregate of 520,753 shares of Common Stock issuable pursuant
to outstanding options held by Mr. King that are exercisable immediately in
full. Does not include (i) an option to purchase 270,753 shares of Common
Stock of Sunrise that was granted by Sunrise on June 18, 1997 and is
exercisable beginning on June 18, 2001; and (ii) an option to purchase
400,000 shares of Common Stock of Sunrise that was
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granted by Sunrise effective as of June 23, 1998 and is exercisable on
June 23, 2004 or earlier depending upon the attainment of certain performance
criteria.
(2) Includes: (a) 517,158 shares held by Mr. King, individually, (b) options
to purchase an aggregate of 520,753 shares of Common Stock of Sunrise that are
exercisable immediately in full; and (c) an aggregate of 400,818 shares of
Common Stock of Sunrise held by King Management. Does not include (i) an option
to purchase 270,753 shares of Common Stock of Sunrise that was granted by
Sunrise on June 18, 1997 and is exercisable beginning on June 18, 2001; or (ii)
an option to purchase 400,000 shares of Common Stock of Sunrise that was granted
by Sunrise effective as of June 23, 1998 and is exercisable on June 23, 2004 or
earlier depending upon the attainment of certain performance criteria.
(3) Based upon 7,822,796 shares of Common Stock outstanding as of August 7,
1998, as reflected in Sunrise's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
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SCHEDULE 13D
Pursuant to Rule 13d-2(a), this Amendment No. 7 amends Mr. King's Schedule
13D dated February 13, 1995, Amendment No. 1 thereto dated May 1, 1996,
Amendment No. 2 thereto dated April 30, 1997, Amendment No. 3 thereto dated
September 19, 1997, Amendment No. 4 thereto dated February 25, 1998, Amendment
No. 5 thereto dated May 28, 1998 and Amendment No. 6 thereto dated June 23,
1998.
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $.01 per share
("Common Stock"), of Sunrise International Leasing Corporation, a Delaware
corporation formerly known as Sunrise Resources, Inc., a Minnesota corporation
("Sunrise"), the principal executive offices of which are located at 5500
Wayzata Boulevard, Suite 725, Minneapolis, Minnesota 55416.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed by Peter J. King, whose business address is 5500
Wayzata Boulevard, Suite 750, Minneapolis, Minnesota 55416. Mr. King is the
Chief Executive Officer and Chairman of the Board of Directors of Sunrise.
Mr. King is also Chief Executive Officer, Chairman of the Board of Directors and
a principal shareholder of The King Management Corporation ("King Management"),
a corporation principally engaged in the leasing of reverse vending machines,
the sale of software and operating coin operated copiers. King Management's
principal business address is 5500 Wayzata Boulevard, Suite 750, Minneapolis,
Minnesota 55416.
During the last five years, Mr. King has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) and has not
been a party to a proceeding involving (and is not otherwise subject to) a
judgment or other order prohibiting or mandating activities subject to United
States federal or state securities laws.
Mr. King is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On August 28, 1998, King Management purchased 30,000 shares of Common Stock
of Sunrise in an open market brokerage transaction. Corporate funds of King
Management in the amount of approximately $105,004 (including brokerage
commissions) were used to purchase these shares. No funds used to purchase any
of the shares of Common Stock reported on this statement were borrowed. King
Management deposited such shares into a voting trust on August 28, 1998 pursuant
to a Voting Trust Agreement dated as of May 27, 1998 (the "Voting Trust
Agreement"). See "Item 6 -- Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer." Mr. King, the William
B. King Stock Trust UA dated November 21, 1989 for the benefit of William B.
King (the "WBK Trust"), the Russell S. King Stock Trust UA dated November 11,
1989 for the benefit of Russell S. King (the "RSK Trust")
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and King Management constitute a group with respect to the 30,000 shares of
Common Stock deposited into the voting trust and any other shares of Common
Stock previously deposited into the voting trust within the meaning of Rule
13d-5(b)(1).
As of June 23, 1998, Mr. King was deemed to beneficially own 335,329 shares
of Common Stock, as reported in Mr. King's Schedule 13D Amendment No. 6 dated
June 23, 1998, held by Stephen D. Higgins, as trustee of the WBK Trust, pursuant
to a proxy granted by Mr. Higgins to Mr. King giving Mr. King sole power to vote
335,329 shares of Common Stock of Sunrise solely with respect to a matter
relating to the adoption of a revised stock option program for employees,
directors and consultants of Sunrise (the "Proxy"). This Proxy expired on
September 18, 1998 upon the adjournment of the annual meeting of Sunrise held on
September 18, 1998, and Mr. King is no longer deemed to beneficially own these
shares.
ITEM 4. PURPOSE OF TRANSACTION.
King Management purchased the 30,000 shares of Common Stock in an open
market broker transaction. These shares were acquired for investment purposes.
Mr. King (either individually or through King Management) may from time to time
purchase shares of Common Stock, either in brokerage transactions, in the
over-the-counter market or in privately negotiated transactions. Any decision
to increase the holdings in Sunrise will depend, however, on numerous factors,
including without limitation the price of the shares of Common Stock, the terms
and conditions relating to their purchase and sale and the prospects and
profitability of Sunrise, and general economic conditions and stock and money
market conditions. At any time, Mr. King may also determine to dispose of some
or all of the Common Stock, depending on various similar considerations. Other
than as to matters that Mr. King, as Chief Executive Officer and Chairman of the
Board of Sunrise, may consider and discuss with other Sunrise officers and board
members from time to time, Mr. King does not have any present plans or proposals
which relate to or would result in any of the events listed in Item 4(a) through
(j) of Schedule 13D.
Effective as of June 23, 1998, the Company granted Mr. King a ten-year
option to purchase 250,000 shares (the "First Option") of Common Stock of the
Company, immediately exercisable in full. The First Option was granted in
consideration for Mr. King's services to the Company as Chief Executive Officer.
Mr. King was also granted a five-year option to purchase an additional
400,000 shares of Common Stock of the Company (the "Second Option") effective as
of June 23, 1998. The Second Option is exercisable as follows: (i) 125,000
shares will become immediately exercisable if the closing price of the Company's
Common Stock, as reflected by the Nasdaq National Market System, averages $5.00
for ten consecutive business days; (ii) 125,000 shares will become immediately
exercisable if the closing price of the Company's Common Stock averages $6.00
for ten consecutive business days; and (iii) 150,000 shares will become
immediately exercisable if the closing price of the Company's Common Stock
averages $7.00 for ten consecutive days. If none of the foregoing events
occurs, this option will become
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immediately exercisable on June 23, 2004. For purposes of this Amendment No. 7
to Schedule 13D, the Second Option is not included in Mr. King's aggregate
amount beneficially owned.
As of June 23, 1998, Mr. King was deemed to beneficially own 335,329 shares
of Common Stock, as reported in Mr. King's Schedule 13D Amendment No. 6 dated
June 23, 1998, held by Stephen D. Higgins, as trustee of the WBK Trust, pursuant
to a Proxy granted by Mr. Higgins to Mr. King giving Mr. King sole power to vote
335,329 shares of Common Stock of Sunrise solely with respect to a matter
relating to the adoption of a revised stock option program for employees,
directors and consultants of Sunrise. This Proxy expired on September 18, 1998
upon the adjournment of the annual meeting of Sunrise held on September 18,
1998, and Mr. King is no longer deemed to beneficially own these shares.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The 3,987,550 shares of Common Stock constitute 47.8% of Sunrise's
outstanding Common Stock based on Sunrise's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998.
Pursuant to a Voting Trust Agreement dated as of May 27, 1998 , Mr. King
has sole voting power with respect to an aggregate of 3,466,797 shares of Common
Stock, the voting trust certificates of which are currently held by Mr. King,
King Management, the WBK Trust and the RSK Trust. Also included within the
3,987,550 shares of Common Stock of which Mr. King has sole voting power are
options to purchase an aggregate of 520,753 shares of Common Stock that are
fully exercisable. Mr. King has sole dispositive power with respect to
1,438,729 shares of Common Stock. The 1,438,729 shares of Common Stock include:
(a) 517,158 shares of Common Stock held by Mr. King individually; (b) an option
to purchase 270,753 shares of Common Stock that was granted to Mr. King by
Sunrise on June 18, 1997 that is fully exercisable; (c) an option to purchase
250,000 shares of Common Stock that was granted to Mr. King by Sunrise effective
as of June 23, 1998 that is fully exercisable; and (d) an aggregate of 400,818
shares of Common Stock held by King Management, of which Mr. King is Chief
Executive Officer, Chairman of the Board of Directors and a principal
shareholder. The shares reported by this statement do not include an option to
purchase 270,753 shares of Common Stock that was granted by Sunrise to Mr. King
on June 18, 1997 and is exercisable beginning on June 18, 2001 or an option to
purchase 400,000 shares of Common Stock that was granted by Sunrise to Mr. King
effective on June 23, 1998 and is exercisable as follows: (i) 125,000 shares
will become immediately exercisable if the closing price of the Company's Common
Stock, as reflected by the Nasdaq National Market System, averages $5.00 for ten
consecutive business days; (ii) 125,000 shares will become immediately
exercisable if the closing price of the Company's Common Stock averages $6.00
for ten consecutive business days; and (iii) 150,000 shares will become
immediately exercisable if the closing price of the Company's Common Stock
averages $7.00 for ten consecutive days. If none of the foregoing events
occurs, this option will become immediately exercisable on June 23, 2004.
Mr. King (either individually or through King Management) has not effected
any transactions in the Common Stock of Sunrise since June 23, 1998, the date
that Amendment No.
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6 to the Schedule 13D was filed with the Securities and Exchange Commission,
except for the purchase by King Management of 30,000 shares of Common Stock on
August 28, 1998 in an open market brokerage transaction for $3.50 per share.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Effective as of May 27, 1998, Mr. King, King Management, the WBK Trust, the
RSK Trust and the 1996 Grantor Retained Annuity Trust for the benefit of Peter
J. King (collectively, the "Shareholders") entered into the Voting Trust
Agreement with respect to an aggregate of 3,386,797 shares of Common Stock of
Sunrise. On June 24, 1998, King Management deposited an additional 50,000
shares of Common Stock into the voting trust and subject to the Voting Trust
Agreement. Under the Voting Trust Agreement, Mr. King is the Sole Voting
Trustee and King Management is the Substitute Voting Trustee (the Sole Voting
Trustee and the Substitute Voting Trustee are referred to as the "Voting
Trustee"). The record ownership of the 3,436,797 shares of Common Stock
deposited by the Shareholders with the Voting Trustee was transferred into the
name of the Voting Trustee on the books of Sunrise. In exchange for such shares
of Common Stock, the Voting Trustee issued to the Shareholders a voting trust
certificate representing the number of shares of Common Stock deposited with the
Voting Trustee. In the event of a stock split, stock dividend or distribution
of shares of Common Stock of Sunrise, the Voting Trustee will issue additional
voting trust certificates to the then registered holders of the outstanding
voting trust certificates to reflect appropriately the interests of the
Shareholders in the shares of Common Stock held by the Voting Trustee. Subject
to any transfer restrictions set forth in the Articles of Incorporation and
Bylaws of Sunrise and imposed by applicable securities laws, the Shareholders
may sell or transfer the voting trust certificates as they determine to be
proper. Every transferee of a voting trust certificate will, by the acceptance
of such certificate, become a party to the Voting Trust Agreement.
The Voting Trustee is entitled to exercise all shareholders' rights of
every kind with respect to voting, including the right to vote and the right to
take part in, or consent to, any corporate or shareholders' action including a
merger, exchange or consolidation involving Sunrise or the sale, lease, transfer
or other disposition of all or substantially all of Sunrise's assets, except as
such right is specifically limited in the Voting Trust Agreement. The Voting
Trustee will vote on all matters which come before any shareholders' meeting of
Sunrise and must exercise his best judgment from time to time to select suitable
directors to the end that the affairs of Sunrise are properly managed. The
holder of each voting trust certificate is entitled to receive, from time to
time, dividends or distributions payable in cash or property (other than shares
of any class of Sunrise). The majority of the interest of the holders of the
voting trust certificates may approve amendments to the Voting Trust Agreement.
The Voting Trust Agreement will terminate automatically on December 31, 2007,
unless terminated earlier in the event that: (i) the Voting Trustee elects at
any time to terminate the Agreement, (ii) the Sole Voting Trustee resigns, dies
or is determined to be incompetent or incapacitated by the Substitute Voting
Trustee, after consultation with a licensed physician who has examined the Sole
Voting Trustee, and the Substitute Voting Trustee has been dissolved or
liquidated, (iii) Sunrise is dissolved or liquidated, or (iv) no Voting Trustee
is acting under the Agreement. The foregoing
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summary of certain provisions of the Voting Trust Agreement is qualified by the
copy of the Voting Trust Agreement filed as Exhibit 1 to Amendment No. 5 to Mr.
King's Schedule 13D filed with the Securities and Exchange Commission on June
22, 1998, and which is incorporated herein in its entirety by this reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Stock Option Agreement effective as of June 23, 1998
executed by the Company in favor of Peter J. King.
Exhibit 2 Stock Option Agreement effective as of June 23, 1998
executed by the Company in favor of Peter J. King.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/s/ Peter J. King
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September 23, 1998 Peter J. King
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit Description Method of Filing
------- ----------- ----------------
No.
---
<S> <C> <C>
1 Stock Option Agreement effective as of June Filed herewith
23, 1998 executed by the Company in favor of electronically
Peter J. King.
2 Stock Option Agreement effective as of June Filed herewith
23, 1998 executed by the Company in favor of electronically
Peter J. King.
</TABLE>
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EXHIBIT 1
SUNRISE INTERNATIONAL LEASING CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made effective as of this 23rd day of June, 1998, by and
between SUNRISE INTERNATIONAL LEASING CORPORATION, a Delaware corporation (the
"Company"), and PETER J. KING (the "Optionee");
W I T N E S S E T H :
WHEREAS, the Optionee on the date hereof is an employee of the Company;
WHEREAS, to induce the Optionee to further the Optionee's efforts in its
behalf, the Company desires to grant to the Optionee a nonqualified stock option
to purchase shares of its Common Stock;
WHEREAS, the Company's Board of Directors has adopted a stock option plan
providing for the grant of nonqualified stock options known as the "Sunrise
International Leasing Corporation 1991 Stock Option Plan" (hereinafter referred
to as the "Plan"); and
WHEREAS, on the date hereof, the Company's Board of Directors (or, if so
appointed and empowered by the Board, the Board's Stock Option Committee)
authorized the grant of this nonqualified stock option to the Optionee;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Optionee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee, on the
date of this Agreement, the option to purchase 250,000 shares of Common Stock of
the Company (the "Option Stock") subject to the terms and conditions herein
contained, and subject only to adjustment in such number of shares as provided
in Section 17 of the Plan.
2. OPTION PRICE. During the term of this option the purchase price for
the shares of Option Stock granted herein is $3.25 per share (the fair market
value of the Company's Common Stock as of the date hereof), subject only to
adjustment of such price as provided in Section 12 of the Plan.
3. TERM OF OPTION. Unless terminated earlier under the provisions of
Paragraphs 10, 11 or 12 below, this option shall be exercisable at any time on
or before the close of business on the ten-year anniversary of the date of this
Agreement.
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4. PERSONAL EXERCISE BY OPTIONEE. This option shall, during the lifetime
of the Optionee, be exercisable only by said Optionee and shall not be
transferable by the Optionee, in whole or in part, other than by will or by the
laws of descent and distribution.
5. MANNER OF EXERCISE OF OPTION. This option is to be exercised by the
Optionee (or by the Optionee's successor or successors) by giving written notice
to the Company of an election to exercise such option. Such notice shall
specify the number of shares to be purchased hereunder and shall specify a date
(not more than 30 calendar days and not less than 10 calendar days from the date
of delivery of the notice to the Company) on which the Optionee shall deliver
payment of the full purchase price for the shares being purchased and the
Company shall deliver certificates to the Optionee representing the shares so
purchased. Such notice shall be delivered to the Company at its principal place
of business. An option shall be considered exercised at the time the Company
receives such notice. Upon receipt of such notice and subject to the provisions
of Paragraph 9 below, the Company shall, on the date specified in such notice
and against payment by the Optionee of the required purchase price, deliver to
the Optionee certificates for the shares so purchased. Payment for shares of
Option Stock may be made in the form of cash, certified check, Common Stock of
the Company, or any combination thereof. Any stock so tendered as part of such
payment shall be valued at its then "fair market value" as provided in the Plan.
All requisite original issue or transfer documentary stamp taxes shall be paid
by the Company.
6. RIGHTS AS A SHAREHOLDER. The Optionee or a transferee of this option
shall have no rights as a shareholder with respect to any shares covered by this
option until the date of the issuance of a stock certificate for such shares.
No adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
provided in Section 12 of the Plan.
7. TYPE OF OPTION; STOCK OPTION PLAN. The option evidenced by this
Agreement is intended to constitute a nonqualified stock option and not an
incentive stock option under Section 422 of the Internal Revenue Code. The
option hereunder is granted pursuant to the Plan, a copy of which Plan is
attached hereto or has been made available to the Optionee and is hereby made a
part of this Agreement. This Agreement is subject to and in all respects
limited and conditioned as provided in the Plan. The Plan governs this option
and the Optionee, and in the event of any question as to the construction of
this Agreement or of a conflict between the Plan and this Agreement, the Plan
shall govern, except as the Plan otherwise provides.
8. WITHHOLDING TAXES. In order to permit the Company to receive a tax
deduction in connection with the exercise of this option, the Optionee agrees
that as a condition to any exercise of this option, the Optionee will also pay
to the Company, or make arrangements satisfactory to the Company regarding
payment of, any federal, state, local or other taxes required by law to be
withheld with respect to the option's exercise.
9. INVESTMENT PURPOSE. The Company requires as a condition to the grant
and exercise of this option that any stock acquired pursuant to this option be
acquired for only investment if, in the opinion of counsel for the Company, such
is required or deemed advisable
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under securities laws or any other applicable law, regulation or rule or any
government or governmental agency. In this regard, if requested by the Company,
the Optionee, prior to the acquisition of any shares pursuant to this option,
shall execute an investment letter to the effect that the Optionee is acquiring
shares pursuant to the option for investment purposes only and not with the
intention of making any distribution of such shares and will not dispose of the
shares in violation of the applicable federal and state securities laws.
10. TERMINATION OF EMPLOYMENT.
(a) If the Optionee ceases to be an employee of the Company or any
Subsidiary for any reason (including termination of employment as a result of
the reorganization, sale or liquidation by the Company of the Subsidiary which
employs or retains the Optionee, where the Optionee does not thereafter continue
as an employee of the Company or another Subsidiary), other than because of
"cause" (as described in Subparagraph (b) below), because of death (as described
in Paragraph 11 below), because of disability (as described in Paragraph 12
below), or because of the sale, merger, consolidation or liquidation of the
Company (which is covered by the provisions of Section 12 of the Plan), then
this option shall completely terminate on the earlier of (i) the close of
business sixty (60) days after the date of such termination of employment, and
(ii) the expiration date under this option. During such period, this option
shall be exercisable only to the extent the option was exercisable on the date
of termination of employment but had not previously been exercised.
(b) If the Optionee ceases to be an employee of the Company or any
Subsidiary for "cause", then this option shall, without notice of any kind,
immediately terminate concurrent with such termination for "cause." For purposes
of this Subparagraph (b), "cause" shall be as defined in any employment or
service agreement or policy applicable to the Optionee or, if no such agreement
or policy exists, shall mean (i) dishonesty, fraud, misrepresentation,
embezzlement or material or deliberate injury or attempted injury, in each case
related to the Company or any Subsidiary, (ii) any unlawful or criminal activity
of a serious nature, (iii) any willful breach of duty, habitual neglect of duty
or unreasonable job performance, or (iv) any material breach of a
confidentiality or non-compete agreement entered into with the Company or any
Subsidiary.
11. DEATH OF OPTIONEE. If the Optionee dies (i) while an employee of the
Company, or (ii) within a period of sixty (60) days after the termination of
employment with the Company as provided in Paragraphs 10 and 12, this option
shall terminate on the earlier of (i) the close of business on the twelve-month
anniversary date of the Optionee's death, and (ii) this option's originally
stated expiration date. During such period following the Optionee's death, this
option may be exercised only by the person or persons to whom the Optionee's
rights under this option shall have passed by the Optionee's will or by the laws
of descent and distribution, and only to the extent the option was exercisable
on the date of death but had not previously been exercised.
12. DISABILITY OF OPTIONEE. If the Optionee ceases to be an employee of
the Company before the original stated expiration of this option and such
termination is due to disability (as defined in Section 22(e)(3) of the Internal
Revenue Code), then this option shall completely
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terminate on the earlier of (i) the close of business twelve months after (on
the twelve-month anniversary of) the termination of employment and (ii) the
expiration date under this option, whichever is earlier. During such period
following termination due to disability, this option shall be exercisable only
to the extent the option was exercisable on the date of termination of
employment but had not previously been exercised.
13. RECAPITALIZATIONS, SALES, MERGERS, EXCHANGES, CONSOLIDATIONS,
LIQUIDATION. In the event of a stock dividend or stock split, the number of
shares of Option Stock and option exercise price shall be adjusted as provided
in Section 12 of the Plan. Similarly, in the event of a sale, merger, exchange,
consolidation or liquidation of the Company, this option shall be adjusted as
provided in Section 12 of the Plan.
14. SCOPE OF AGREEMENT. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and the Optionee and any
successor or successors of the Optionee permitted by Paragraph 4 above.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement in the manner appropriate to each, as of the day and year first above
written.
SUNRISE INTERNATIONAL LEASING CORPORATION
By /s/ Jeffrey G. Jacobsen
-----------------------------------------------
Jeffrey G. Jacobsen, Executive Vice President
COMPANY
/s/ Peter J. King
--------------------------------------------------
Peter J. King
OPTIONEE
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EXHIBIT 2
NON-QUALIFIED (CLIFF-VESTING) STOCK OPTION AGREEMENT
SUNRISE INTERNATIONAL LEASING CORPORATION
THIS AGREEMENT, made effective as of the 23rd day of June, 1998, by and
between Sunrise International Leasing Corporation, a Minnesota corporation (the
"Company"), and Peter J. King ("Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee has agreed to serve as the Chief Executive Officer of
the Company; and
WHEREAS, in consideration of Optionee's willingness to agree to serve as
the Company's Chief Executive Officer and for other significant considerations,
the Company wishes to grant a non-qualified cliff-vesting stock option to
Optionee to purchase shares of the Company's Common Stock; and
WHEREAS, the Company's Board of Directors has authorized the grant of a
non-qualified stock option to Optionee and has determined that, as of the
effective date of this Agreement, the fair market value of the Company's Common
Stock is $3.25 per share;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee on the date
set forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of Four Hundred Thousand (400,000)
shares of Common Stock of the Company at a per share price of $3.25, on the
terms and conditions set forth herein, which the Company deems to be the fair
market value of the stock as of June 23, 1998. This Option is a nonqualified
stock option and will not be treated as an incentive stock option, as defined
under Section 442, or any successor provision, of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder.
2. DURATION AND EXERCISABILITY.
a. The term during which this Option may be exercised shall
terminate on June 23, 2005, unless terminated earlier under the provisions of
Paragraphs 2f, 2g or 4e below. Unless any of the events set forth in Paragraph
2b through 2e occur, this Option shall not be exercisable until June 23, 2004,
at which time the Option shall become exercisable to the extent of one hundred
percent (100%) of the total number of shares granted if, at such time, the
Optionee continues to be employed by the Company. Once the Option becomes
exercisable to
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the extent of one hundred percent (100%) of the aggregate number of shares
specified in Paragraph 1 above, the Optionee may continue to exercise this
Option under the terms and conditions of this Agreement until the termination of
the Option as provided herein. If Optionee does not purchase upon an exercise
of this Option the full number of shares which Optionee is then entitled to
purchase, Optionee may purchase upon any subsequent exercise prior to this
Option's termination such previously unpurchased shares in addition to those
Optionee is otherwise entitled to purchase.
b. Notwithstanding the vesting provisions of Paragraph 2a above,
this option shall become immediately exercisable as to 125,000 shares if the
closing price of the Company's Common Stock, as reflected by the Nasdaq
National Marketing System, averages $5.00 for ten consecutive business days.
Once these 125,000 shares become vested, they will remain exercisable in full
throughout the term of this Agreement, subject to the terms and conditions
thereof.
c. Notwithstanding the vesting provisions of Paragraph 2a above,
this option shall become immediately exercisable as to 125,000 shares if the
closing price of the Company's Common Stock, as reflected by the Nasdaq
National Marketing System, averages $6.00 for ten consecutive business days.
Once these 125,000 shares become vested, they will remain exercisable in full
throughout the term of this Agreement, subject to the terms and conditions
thereof.
d. Notwithstanding the vesting provisions of Paragraph 2a above,
this option shall become immediately exercisable as to 150,000 shares if the
closing price of the Company's Common Stock, as reflected by the Nasdaq
National Marketing System, averages $7.00 for ten consecutive business days.
Once these 150,000 shares become vested, they will remain exercisable in full
throughout the term of this Agreement, subject to the terms and conditions
thereof.
e. Notwithstanding the vesting provisions of Paragraph 2a above,
this Option shall become immediately exercisable to the extent of one hundred
percent (100%) of the total number of shares granted upon whichever of the
following events is first to occur:
(i) Any exchange, reorganization, reclassification,
extraordinary dividend, divestiture (including a spin-off), merger,
consolidation or similar transaction (collectively referred to as the
"transaction") to which the Company is a party if the individuals and
entities who were shareholders of the Company immediately prior to the
effective date of such transaction have, immediately following the
effective date of such transaction, beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of less than
fifty percent (50%) of the total combined voting power (with respect
to the election of directors) of all classes of securities issued by
the surviving corporation;
(ii) Obtaining the direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
securities of the
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Company representing, in the aggregate, fifty percent (50%) or more of
the total combined voting power of all classes of the Company's then
issued and outstanding securities by any person or entity or by a
group of associated persons or entities acting in concert other than
Peter King or any person or entity affiliated with Peter King;
(iii) The sale of substantially all of the properties and assets
of the Company to any person or entity who or which is not a
wholly-owned subsidiary of the Company;
(iv) The approval of any plan or proposal for the liquidation
of the Company by the shareholders of the Company.
f. During the lifetime of Optionee, the Option shall be exercisable
only by the Optionee while he serves as an employee of the Company or within
three months after his employment is terminated or by the Optionee's guardian or
other legal representative, and shall not be assignable or transferable by the
Optionee, in whole or in part. If Optionee dies while in the employ of the
Company, this option must be exercised within twelve months, following his
death, to the extent this option has vested at the time of Optionee's death, by
his personal representative. To the extent this Option is not exercised within
the one-year period following his death, all rights under this Option shall be
forfeited.
g. If Optionee ceases to be an employee of the Company due to his
total disability, as defined and determined in accordance with the Company's
Long-term Disability Plan, this option must be exercised by Optionee or his
duly-appointed guardian within twelve months following his termination of
employment to the extent this option has vested at the time of Optionee's
disability. If the Optionee or his duly-appointed guardian does not exercise
this option within the one-year period, all rights under this Option shall be
forfeited.
3. MANNER OF EXERCISE.
a. The Option may be exercised only by Optionee (or other proper
party in the event of death or disability) to the extent the Option has vested
by delivering within the Option Period written notice of exercise to the Company
at its principal office. The notice shall state the number of shares as to which
the Option is being exercised and shall be accompanied by payment in full of the
Option price for all shares designated in the notice. The exercise of the
Option shall be deemed effective upon receipt of such notice by the Company and
the appropriate payment that complies with the terms of this Agreement. The
Option may be exercised with respect to any number or all of the shares as to
which it can then be exercised and, if partially exercised, may be so exercised
as to the unexercised shares any number of times during the Option period as
provided herein.
b. Payment of the Option price by Optionee shall be in the form of
cash, check or previously acquired shares of Common Stock of the Company, or any
combination thereof; provided, however, that the Board may, in its sole
discretion, limit the form of payment
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to cash or check and may exercise its discretion any time prior to the
termination of this Option or upon any exercise of this Option by the Optionee.
Any stock so tendered as part of such payment shall be valued at its fair market
value which shall be determined by reference to the closing price of the stock
on the Nasdaq National Over-the-Counter Market. As soon as practicable after
the effective exercise of all or any part of the Option, the Optionee shall be
recorded on the stock transfer books of the Company as the owner of the shares
purchased, and the Company shall deliver to the Optionee one or more duly issued
stock certificates evidencing such ownership. For purposes of this Agreement,
"previously acquired shares of Common Stock" shall include shares of Common
Stock that are already owned by the Optionee at the time of exercise.
4. MISCELLANEOUS.
a. RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a
shareholder with respect to shares subject to this Option until such shares have
been issued to Optionee upon exercise of this Option.
b. MERGERS, RECAPITALIZATIONS, STOCK SPLITS, ETC. Certain changes
in the number or character of the Common Stock of the Company (through sale,
merger, consolidation, exchange, reorganization, divestiture (including a
spin-off), liquidation, recapitalization, stock split, stock dividend or
otherwise) shall result in an appropriate adjustment, reduction or enlargement
by the Board of Directors, to reflect any such changes, in Optionee's rights
with respect to any unexercised portion of the Option (I.E., Optionee shall have
such "anti-dilution" rights under the Option with respect to such events, but
shall not have "preemptive" rights).
c. SHARES RESERVED. The Company shall at all times during the
option term reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of this Agreement.
d. WITHHOLDING TAXES. The Company may take such action as it deems
appropriate to insure that all applicable federal and state payroll, income or
other taxes are withheld from any amounts payable by the Company to Optionee.
If the Company is unable to withhold such federal and state taxes, for whatever
reason, the Optionee hereby agrees to pay to the Company an amount equal to the
amount the Company would otherwise be required to withhold under federal or
state law. The Optionee may, subject to the approval and discretion of the
Board of Directors or such other administrative rules it may deem advisable,
elect to have all or a portion of such tax withholding obligations satisfied by
delivering shares of the Company's Common Stock having a fair market value equal
to such obligations.
e. TERMINATION OF EMPLOYMENT FOR CAUSE. If Optionee is terminated
for cause, this Option shall terminate and all rights under this Option shall be
forfeited as of the date of such termination. "Cause" shall be defined as
follows: (1) gross misconduct, dishonesty or disloyalty; (2) willful and
material breach of this Agreement by Optionee; or (3) conviction or entry of a
plea of guilty or nolo contendere to any felony or gross misdemeanor or the
entry of
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any final civil judgment in connection with any allegation of fraud,
misrepresentation, misappropriation or any other intentional tort or statute
violation.
f. SCOPE OF AGREEMENT. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and the Optionee and any
successor or successors of the Optionee permitted by Paragraph 2c and 2g above.
g. TRANSFER OF OPTION. No option shall be transferable, in whole or
in part, by the Optionee other than by will or by the laws of descent and
distribution and, during the Optionee's lifetime, the option may be exercised
only by the Optionee. If the Optionee shall attempt any transfer of any option
granted under the Plan during the Optionee's lifetime, such transfer shall be
void and the option, to the extent not fully exercised, shall terminate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
SUNRISE INTERNATIONAL LEASING CORPORATION
By Special Committee of the Board of Directors
/s/ Donald R. Brattain
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/s/ Thomas R. King
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OPTIONEE:
/s/ Peter J. King
-----------------------------------------------------------
Peter J. King
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