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 INTERNATIONAL LEASING CORPORATION
(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 INTERNATIONAL LEASING CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
September 8, 1999
TO THE SHAREHOLDERS OF SUNRISE INTERNATIONAL LEASING CORPORATION:
The 1999 Annual Meeting of Shareholders of Sunrise International
Leasing Corporation will be held at the Hyatt Regency Hotel, 1300 Nicollet Mall,
Minneapolis, Minnesota, at 10:00 a.m. (Minneapolis-time) on Wednesday, September
8, 1999, for the following purposes:
1. To set the number of members of the Board of Directors at four
(4).
2. To elect members of the Board of Directors.
3. 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 1999 Annual Report.
Only shareholders of record as shown on the books of the Company at the
close of business on July 16, 1999 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,
Jeffrey G. Jacobsen, Secretary
Dated: July 29, 1999
Minneapolis, MN
<PAGE>
SUNRISE INTERNATIONAL LEASING CORPORATION
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
to be held
September 8, 1999
The accompanying Proxy is solicited by the Board of Directors of
Sunrise International Leasing Corporation (the "Company") for use at the Annual
Meeting of Shareholders of the Company to be held on Wednesday, September 8,
1999, 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 or about July 29, 1999.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on July 16, 1999 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, 7,262,646 shares of the
Company's Common Stock, par value $.01 per share, were issued and outstanding
and entitled to vote. 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.
Name (and Address of Number of shares Percent
5% Holders) or Identity of Group Beneficially Owned(1) of Class(2)
Peter J. King 4,888,303(3) 60.7%
5500 Wayzata Boulevard, #725
Minneapolis, MN 55416
The King Management Corporation 1,030,818(4) 14.2%
5500 Wayzata Boulevard, #750
Minneapolis, MN 55416
Donald R. Brattain 373,300(5) 5.1%
15500 Wayzata Blvd., #626
Wayzata, MN 55391
Thomas R. King 44,000(6) *
Jeffrey G. Jacobsen 44,362(7) *
Stephen D. Higgins, Individually 2,889,179(8) 39.8%
and as a Trustee
23785 Strehler Road
Loretto, MN 55357
All Current Executive Officers and 5,356,315(9) 65.6%
Directors as a Group
(5 persons)
- -------------
*less than 1%
<PAGE>
(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) Represents (i) 3,466,797 shares that are subject to a Shareholder
Voting Trust Agreement dated May 27, 1998, pursuant to which Mr. Peter
King has the sole power to vote such shares, which shares include (a)
517,158 shares held by Mr. King directly, (b) 400,818 shares held by
The King Management Corporation ("King Management"), of which Mr. King
is a principal shareholder, officer and director, (c) 1,286,439 shares
held by Stephen D. Higgins, Trustee, 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 Stephen D. Higgins, Trustee,
Russell S. King Stock Trust UA dated November 21, 1989 for the benefit
of Russell S. King (the "RSK Trust"); (ii) 630,000 shares held by King
Management; and (iii) 791,506 shares which may be acquired by Mr. King
within 60 days after the Record Date upon exercise of outstanding stock
options. Mr. King does not have dispositive power over the shares held
by the WBK Trust or RSK Trust, but does have sole dispositive power
over all other shares described in this footnote. The Company has
relied on information contained in Schedule 13D dated March 2, 1999
filed by Mr. King with the Securities and Exchange Commission and
information provided by Mr. King.
(4) Represents (i) 400,818 shares that are subject to a Shareholder Voting
Trust Agreement dated May 27, 1998, pursuant to which Mr. Peter King
has the sole power to vote such shares and (ii) 630,000 shares (see
note (3) above). The Company and KMC have agreed orally that KMC will
sell and the Company will purchase the 630,000 shares not subject to
the Shareholder Voting Trust Agreement (see section entitled Certain
Transactions).
(5) Includes 28,000 shares which may be acquired by Mr. Brattain within 60
days after the Record Date upon exercise of outstanding stock options.
(6) Includes 36,000 shares which may be acquired by Mr. Thomas King within
60 days after the Record Date upon exercise of outstanding stock
options.
(7) Includes 39,333 shares which may be acquired by Mr. Jacobsen within 60
days after the Record Date upon exercise of outstanding stock options.
<PAGE>
(8) Represents (i) 2,548,821 shares, of which (a) 1,286,439 shares are held
by Mr. Higgins as Trustee of the WBK Trust and (b) 1,262,382 shares
held by Mr. Higgins as Trustee of the RSK Trust, all of which shares
are subject to a Shareholder Voting Trust Agreement dated May 27, 1998,
pursuant to which Mr. Peter King has the sole power to vote such shares
(see note (3) above); (ii) 335,329 shares held by Mr. Higgins as
Trustee of the WBK Trust, of which Mr. Higgins has sole voting power;
and (iii) 5,029 shares held by Mr. Higgins directly, of which he has
sole voting power. Mr. Higgins has sole dispositive power over all of
the shares described in this footnote. The Company has relied on
information contained in Schedule 13D dated March 2, 1999 filed by Mr.
Higgins with the Securities and Exchange Commission.
(9) Includes 898,172 shares of Common Stock which may be acquired within 60
days after the Record Date upon the exercise of outstanding options,
1,030,818 shares held by a corporation and 2,884,150 held by certain
trusts described above.
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 recommends that the number of directors be set at four, and that
four directors be elected. Unless otherwise instructed, the Proxies will be so
voted. Under applicable Delaware law, approval of the proposal to set the number
of directors at four requires the affirmative vote of the holders of 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.
Directors are elected by a plurality of the votes cast.
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.
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.
<PAGE>
<TABLE>
<CAPTION>
Name and Age Current Positions with the Company and Principal Occupations for the Director
of Nominee Past Five Years and Other Information Since
<S> <C> <C>
Peter J. King Mr. King has served as the Company's Chief Executive Officer since April 1997
71 1, 1998 and as Chairman of the Board since June 1997. Mr. King also
served as Chief Financial Officer from April to June 1998. Mr. King had
previously served as Chairman of the Board from February 1995 to
February 1996 and as a Director from February 1995 to July 1996. Mr.
King also had previously served as a member of the Company's Interim CEO
Committee from July 1995 until July 1996. Mr. King founded
International Leasing Corporation ("ILC") in 1974 and served as its
President until ILC was merged into the Company in February 1995.
Mr. King also currently serves as Chairman and Chief Executive Officer
of The King Management Corporation. Mr. King is not related to Thomas
King, a Director of the Company.
Donald R. Brattain From July 1995 to July 1996, Mr. Brattain served as a member of the 1989
58 Company's Interim CEO Committee; and, from July 1991 to February 1995,
he served as the Company's Chairman of the Board. Mr. Brattain has served
as President of Brattain & Associates, LLC, an investment company, since
1981. He is also a director of Everest Medical Corporation and Featherlite
Mfg., Inc.
Thomas R. King Mr. King served as Secretary of the Company from July 1991 to July 1997 1991
59 and as the Company's Interim Chairman of the Board from February 1996 to
June 1997. 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, Chairman of the Board and Chief Executive Officer.
Jeffrey G. Jacobsen Mr. Jacobsen has served as Executive Vice President and Chief Financial 1997
51 Officer of the Company since June 1998 and as Secretary of the Company
since July 1997. Mr. Jacobsen served as President of The King
Management Corporation from April 1997 to June 1998 and currently serves
as its Treasurer. From March 1983 to April 1997, Mr. Jacobsen served as Vice
President of Network Systems Corporation, a Minneapolis-based publicly
traded computer networking company, currently owned by Storage Technology
Corporation.
</TABLE>
<PAGE>
Board and Committee Meetings
During the fiscal year ended March 31, 1999, the Board of Directors
held four meetings. Each director attended all of the meetings of the Board of
Directors and all of the meetings of the committees of the Board on which he
served. The Board of Directors has an Executive Committee, an Audit Committee
and a Compensation and Stock Option Committee.
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. During fiscal 1999, the Audit Committee held two meetings. The Audit
Committee is comprised of Thomas King and Donald Brattain. Mr. Jacobsen also
served as a member of the Audit Committee until June 1998 when he became an
executive officer and employee of the Company.
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. During fiscal 1999, the
Compensation and Stock Option Committee did not meet. The Compensation and Stock
Option Committee is comprised of Thomas King and Donald Brattain. Mr. Jacobsen
also served as a member of the Compensation and Stock Option Committee until
June 1998 when he became an executive officer and employee of the Company.
Compensation of Directors
Meeting Fees. Each director who is not an employee of the Company (a
"Non-Employee Director") receives an annual retainer of $10,000 plus $1,500 for
each Board of Directors meeting attended and $500 for each committee meeting
attended.
Stock Option Grants. Currently 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) 15,000 shares upon such Non-Employee Director's initial election to the
Board, which option becomes exercisable to the extent of 2,000 shares on the
date of grant, 2,500 shares on the first anniversary of the date of grant, 3,000
shares on the second anniversary of the date of grant, 3,500 shares on the third
anniversary of the date of grant and 4,000 shares on the fourth anniversary of
the date of grant 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.
<PAGE>
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 opportunities
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. 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. The Company's fiscal 1999 Incentive Compensation Plan provided
for incentive bonuses to four classes of employees (support staff, middle
management, senior management and the President) in amounts up to a maximum of
10%, 20%, and 25% of their annual salaries, depending on the Company's earnings
performances and the attainment by the employee of certain pre-set individual
objectives. The Plan provided that no bonuses would be paid unless the Company
met a certain agreed minimum earnings goal, which goal was met in fiscal 1999
and bonuses totaling $215,338 were paid in July 1999. In addition, the Board of
Directors approved an additional bonus to each employee based on the length of
employment as a reward for Company performance. These additional bonuses totaled
$34,900 and were also paid in July 1999.
No bonus plan has yet been adopted for fiscal 2000. The Committee is in
the process of reviewing the Company's compensation plans for senior management,
and expects to bring its recommendations to the Board of Directors in the near
future.
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.
<PAGE>
The Company's 1991 Stock Option Plan authorizes the Committee to award
stock options to directors, executive officers, employees and consultants of the
Company. 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. 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 1999.
Chief Executive Officer Compensation. Pursuant to an agreement dated
June 23, 1998, described in the section entitled Employment and Severance
Agreements or Arrangements, Peter King will serve as the Company's CEO until at
least June 30, 2000 at an annual salary of $200,000 plus additional benefits
which the Company makes available to its officers. Mr. King also received stock
options described below.
Compensation and Stock Option Committee
Thomas R. King
Donald R. Brattain
<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 during fiscal 1999 in the capacity of (i) Chief Executive
Officer or (ii) an executive officer whose total salary and bonus earned during
fiscal 1999 exceeded $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------------------------- ------------------------- -------
Restricted
Stock Options/ LTIP
Name and Principal Fiscal Other Annual Awards(s) SARs Payouts All Other
Position Year Salary($) Bonus($)(1) Compensation($) ($) (#) ($) Compensation($)
- -------------------- ------ ------------- ----------- ---------------- ---------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter J. King 1999 200,000 --- --- --- 650,000 --- ---
Chief Executive 1998 120,000(2) --- --- --- --- --- ---
Officer 1997 104,000(2) --- --- --- --- --- ---
Jeffrey G. Jacobsen 1999 99,200 43,250 70,800(3) --- 100,000 --- ---
Executive VP and
Chief Financial
Officer
- ------------------
</TABLE>
(1) Reflects bonus earned during the fiscal year. In some instances all or
a portion of the bonus was paid during the next fiscal year.
(2) Represents payments received by Mr. King pursuant to a consulting
agreement between Mr. King and the Company for services as Chairman of
the Board and/or an agreement among Mr. King, The King Management
Corporation and the Company for services to be provided to the Company.
No compensation was received by Mr. King as a member of the Interim CEO
Committee on which he served during fiscal year 1997.
(3) Represents salary payments made to Mr. Jacobsen by King Management
which were reimbursed to King Management by the Company See the section
entitled Certain Transactions.
<PAGE>
Option Grants During 1999 Fiscal Year
The following table provides information related to stock options
granted to the named executive officer during fiscal 1999. The Company has not
granted any stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------------------------------------------------
% of Total
Options Potential Realizable Value at Assumed
Options Granted to Exercise or Annual Rates of Stock Price
Granted Employees in Base Price Appreciation for Option Term(1)
Name (#) Fiscal Year ($/Sh)(2) Expiration Date 0% 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter J. King 250,000(3) 32.6% $3.25 06/23/08 -- $510,977 $1,294,916
400,000(4) 52.1% $3.25 06/23/05 -- $620,692 $1,486,665
Jeffrey G. Jacobsen 100,000(5) 13.0% $3.25 06/23/08 -- $204,391 $517,966
</TABLE>
(1) The potential realizable value portion of the foregoing table
illustrates value that might be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation on the Company's Common
Stock over the term of the options. These numbers do not take into
account provisions of certain options providing for termination of the
option following termination of employment, nontransferability or
vesting terms.
(2) The option exercise price may be paid in shares of Common Stock owned
by the executive officer, in cash, or in any other form of valid
consideration or a combination of any of the foregoing, as determined
by the Stock Option Committee in its discretion.
(3) The option was immediately exercisable, and the exercise price was
equal to the fair market value of the Common Stock on the date of
grant.
(4) The option becomes exercisable in full on June 23, 2004, subject to
acceleration upon the closing price of the Company's stock reaching
certain targets. The exercise price was equal to the fair market value
of the Common Stock on the date of grant.
(5) The option becomes exercisable to the extent of one-third of the shares
on each of the first three anniversary dates of the date of grant. The
exercise price was equal to the fair market value of the Common Stock
on the date of grant.
<PAGE>
Option Exercises During 1999 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 1999 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, 1999
Acquired on Value Options at March 31, 1999 Exercisable/
Name Exercise Realized Exercisable/Unexercisable Unexercisable(1)
<S> <C> <C> <C> <C>
Peter J. King -- -- 520,753 exercisable $31,250 exercisable
670,753 unexercisable $50,000 unexercisable
Jeffrey G. Jacobsen -- -- 39,333 exercisable $4,167 exercisable
70,667 unexercisable $8,333 unexercisable
</TABLE>
(1) Value is calculated on the basis of the difference between the option
exercise price and $3.375, the closing sale price for the Company's
Common Stock at March 31, 1999 as quoted on the Nasdaq National Market,
multiplied by the number of shares of Common Stock underlying the
option. All outstanding options held by named executive officers were
at or above the closing price.
Employment and Severance Agreements or Arrangements
Pursuant to an agreement by and among the Company, Mr. Peter King and
The King Management Corporation ("King Management"), a corporation which is
controlled by Mr. King, dated June 16, 1997, as amended on June 23, 1998 (the
"Management Agreement"), it was agreed that Mr. King or King Management would
provide certain management services to the Company. Pursuant to the Management
Agreement, Mr. King is an employee of the Company and will serve as Chief
Executive Officer until June 30, 2000 at a salary of $200,000 per year. Pursuant
to the Management Agreement, Mr. King was granted stock options to purchase an
aggregate of 541,506 shares at $3.375 per share on June 16, 1997, and on June
23, 1998, Mr. King was granted (i) a fully vested seven-year nonqualified stock
option to purchase 250,000 shares at $3.25 per share under the Company's 1991
Stock Option Plan and (ii) a seven-year nonqualified cliff vesting stock option
to purchase 400,000 shares at $3.25 per share outside of the Company's 1991
Stock Option Plan. The cliff vesting options, which were approved by the
Company's shareholders at the 1998 Annual Meeting, vest after six years if Mr.
King continues to be an employee of the Company. Vesting is accelerated if the
Company's Common Stock attains certain agreed closing average stock prices, as
reflected in the Nasdaq Market System, for a period of ten consecutive business
days, as follows: 125,000 shares at $5.00, 125,000 shares of $6.00 and 150,000
shares at $7.00. The Management Agreement provides that Mr. King and/or King
Management will provide certain services to the Company, including but not
limited to working with management on current and prospective vendor
relationships, monitoring problem leases and loans, assisting the Company on
meeting financing requirements and working with the Company's bankers. See the
section entitled Certain Transactions for additional arrangements pursuant to
the Management Agreement.
<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, 1999 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
March 31, 1994 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
03/31/94 03/31/95 03/31/96 03/31/97 03/31/98 03/31/99
<S> <C> <C> <C> <C> <C> <C>
Sunrise International $100.00 $84.78 $52.17 $67.39 $67.39 $58.70
Leasing Corporation
S&P 500 Composite Stock $100.00 $115.57 $152.67 $182.93 $270.74 $320.72
Index
S&P 500 Financial $100.00 $119.51 $175.18 $210.71 $371.43 $491.10
(Diversified) Index
</TABLE>
<PAGE>
CERTAIN TRANSACTIONS
The Company has adopted a policy of not entering into transactions in
which any officer, director, shareholder or affiliate of the Company has a
material financial interest unless the transaction has been approved by a
majority of the disinterested directors of the Company based upon a
determination that the terms of such transactions are no less favorable to the
Company than those which could be obtained from unaffiliated third parties. The
Company has entered into the following transactions in which officers and
directors had a material financial interest:
Pursuant to an agreement by and among the Company, Mr. Peter King and
The King Management Corporation ("King Management"), a corporation which is
controlled by Mr. King, dated June 16, 1997, as amended on June 23, 1998 (as
amended, the "Management Agreement"), it was agreed that Mr. King or King
Management agreed to provide certain management services to the Company through
June 30, 2000. Pursuant to the Management Agreement, Mr. King is an employee of
the Company and will serve as Chief Executive Officer until June 30, 2000 (see
Employment and Severance Agreements or Arrangements above). The Management
Agreement provides that Mr. King and/or King Management would provide certain
services, including but not limited to working with management on current and
prospective vendor relationships, monitoring problem leases and loans; assisting
the Company on meeting financing requirements and working with the Company's
bankers. Pursuant to the Management Agreement, King Management had provided the
Company access to certain of its employees, including Jeffrey Jacobsen, a
director of the Company and its Chief Financial Officer, and James Teal,
Corporate Controller of the Company. These employees expended at least 85% of
their time on Sunrise matters from April 1, 1998 through June 30, 1998. For
these services, King Management was paid $125,000. Mr. Jacobsen and Mr. Teal
became full-time employees of the Company on June 23, 1998. Three King
Management employees continue to provide services to the Company for which King
Management will be reimbursed. Employees of the Company may also provide
services to King Management for which the Company may be reimbursed. Upon
joining the Company as employees on June 23, 1998, Mr. Jacobsen received
ten-year options to purchase 100,000 shares of Common Stock, and Mr. Teal
received options to purchase 10,000 shares. In addition, options for 17,000
shares have been granted to the three other King Management employees providing
services to the Company and who remain King Management employees. All of these
options have an exercise price of $3.25 per share. Pursuant to the Management
Agreement, King Management has agreed to provide subordinated debt financing,
direct financing and/or other financial assistance to the Company for a period
of three years in consideration of King Management's right to participate as
lessor to the extent of 25% of certain higher-risk vendor leasing programs and
risk pools and to the extent of 15% of all other vendor leasing programs of the
Company. King Management has agreed to provide to the Company the use of its
balance sheet resources to enable the Company to meet its vendor leasing program
financing requirements.
In connection with the Company's stock repurchase program, a
shareholder indicated a desire to sell 630,000 shares of the Company's Common
Stock to the Company; however, the Company was not in a position to purchase the
shares at the time, and King Management offered to purchase the shares with the
understanding that the Company would repurchase the shares at the same price at
which King Management purchased the shares and reimburse King Management for any
commissions, brokerage or consulting fees and accrued interest incurred. On
March 2, 1999, King Management purchased the shares for $4.35 per share, or an
aggregate of $2,740,500. The Company and King Management have agreed orally that
the Company will purchase the shares from King Management for $4.35 per share
and reimburse King Management for $31,500 in consulting fees and accrued
interest incurred.
<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 fiscal year
1999, all filing requirements applicable to its officers, directors and greater
than ten-percent beneficial owners were complied with.
OTHER BUSINESS
Management knows of no other matters to be presented at the 1999 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 annual meeting in calendar year 2000 must be
received by the Company by March 31, 2000 to be includable in the Company's
proxy statement and related proxy for the 2000 annual meeting.
Also, if a shareholder proposal intended to be presented at the 2000
annual meeting but not included in the Company's proxy statement and proxy is
received by the Company after June 14, 2000, then management named in the
Company's proxy form for the 2000 annual meeting will have discretionary
authority to vote the shares represented by such proxies on the shareholder
proposal, if presented at the meeting, without including information about the
proposal in the Company's proxy materials.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
On November 12, 1997 the Company dismissed Arthur Andersen LLP and
engaged Deloitte & Touche LLP as the independent public accountants for the
Company. There were not, in connection with the audits of the two years ended
March 31, 1997, and the subsequent interim period through November 12, 1997, any
disagreements with Arthur Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to Arthur Andersen's satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement. The audit reports of Arthur Andersen on the
consolidated financial statements of the Company as of and for the years ended
March 31, 1997, 1996 and 1995 did not contain any adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope
or accounting principles.
Representatives of Deloitte & Touche 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 the Company's shareholders.
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 1999 ANNUAL MEETING. PLEASE ADDRESS YOUR REQUEST
TO THE ATTENTION OF PETER J. KING, CHIEF EXECUTIVE OFFICER. YOUR REQUEST MUST
CONTAIN A REPRESENTATION THAT, AS OF JULY 16, 1999, YOU WERE A BENEFICIAL OWNER
OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS. THE COMPANY'S
FORM 10-K MAY ALSO BE ACCESSED THROUGH THE SEC'S WEB SITE AT WWW.SEC.GOV.
BY ORDER OF THE BOARD OF DIRECTORS
Jeffrey G. Jacobsen
Executive Vice President and Secretary
Dated: July 29, 1999
<PAGE>
SUNRISE INTERNATIONAL LEASING CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PETER J. KING and JEFFREY G. JACOBSEN,
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
International Leasing Corporation to be held on September 8, 1999, 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. SET THE NUMBER OF DIRECTORS AT FOUR (4).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS. NOMINEES:Peter J. King, Donald R. Brattain,
Thomas R. King and Jeffrey G. Jacobsen.
[ ] 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.
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 Proposal 1.
Dated:______________________________, 1999
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
